CERTIFICATE OF DETERMINATION OF
PREFERENCES OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
OF APPLE COMPUTER, INC.
The undersigned, John B. Douglas, III, and Paul D. Carmichael, hereby
certify that:
1. They are a duly elected Senior Vice President and Assistant Secretary,
respectively, of Apple Computer, Inc., a California corporation (the
"Corporation").
2. The Corporation hereby designates one hundred and fifty
thousand (150,000) shares of Series A Non-Voting Convertible Preferred Stock.
3. None of the shares of the Series A Non-Voting Convertible Preferred
Stock have been issued.
4. Pursuant to authority given by the Corporation's Restated Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Corporation provide
for a class of shares known as Preferred Stock, issuable from time to time in
one or more series; and
WHEREAS, the Board of Directors of the Corporation is authorized within the
limitations and restrictions stated in the Restated Articles of Incorporation to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed on any wholly unissued series of Preferred Stock, to fix the
number of shares constituting any such series, and to determine the designation
thereof; and
WHEREAS, the Corporation has not issued any shares of Preferred Stock, and
the Board of Directors of this Corporation desires to determine the rights,
preferences, privileges and restrictions relating to this initial series of
Preferred Stock, and the number of shares constituting said series, and the
designation of said series;
NOW, THEREFORE, BE IT
RESOLVED: That the President and the Secretary of this Corporation are
each authorized to execute, verify and file a certificate of determination
of preferences with respect to the Series A Non-Voting Convertible
Preferred Stock in accordance with the laws of the State of California.
RESOLVED FURTHER: That the Board of Directors hereby determines the
rights, preferences, privileges and restrictions relating to said series of
Series A Non-Voting Convertible Preferred Stock shall be as set forth
below:
"A. One hundred and fifty thousand (150,000) of the authorized shares
of Preferred Stock of the Corporation, none of which have been issued or
are outstanding, are hereby designated "Series A Non-Voting Convertible
Preferred Stock" (the "Series A Preferred Stock").
B. The rights, preferences, privileges, restrictions and other
matters relating to the Series A Preferred Stock are as follows:
1. DIVIDEND RIGHTS. The holders of outstanding shares of
Series A Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors, out of any assets at the time legally available
therefor, a dividend at the rate of 3% of the Original Issue Price per
share per annum, payable in preference and priority to any payment of any
dividend on Common Stock of the Corporation. If, in any twelve month
period, the Board of Directors declares dividends on the Common Stock that
would exceed the dividends declared on the Series A Preferred Stock in such
period determined on a Common Share Equivalent Basis (as defined below),
the Board shall declare and pay an equivalent additional dividend on the
Series A Preferred Stock so that the total dividends on the Common Stock
and the Series A Preferred Stock are on a parity determined on a Common
Share Equivalent Basis. Common Share Equivalent Basis shall be determined
by comparing the dividend that would have been or will be declared or paid
on the number of shares of Common Stock into which the shares of Series A
Preferred Stock would have been or will be convertible as of the record
date(s) to the dividends which were paid or will be paid on the Common
Stock during such twelve month period. The right to receive dividends on
shares of Series A Preferred Stock shall not be cumulative, and no right to
such dividends shall accrue to holders of Series A Preferred Stock by
reason of the fact that dividends on said shares are not declared or paid
in any year. The Original Issue Price of the Series A Preferred Stock (as
adjusted for any combination, consolidation, share distributions or share
dividends with respect to such shares) shall be equal to $1,000 per share.
2. VOTING RIGHTS. Except as otherwise provided by law, the
holders of Series A Preferred Stock shall have no voting rights and their
consent shall not be required for taking any corporate action.
3. LIQUIDATION, DISSOLUTION OR WINDING UP. Subject to any
preferential liquidation rights of any series of Preferred Stock as may
then be outstanding, in the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the entire
assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Common Stock and the
Series A Preferred Stock in proportion to, in the case of holders of Common
Stock, the number of shares of Common Stock held and, in the case of
holders of Series A Preferred Stock, the number of shares of Common Stock
into which the shares of Series A Preferred Stock are then convertible.
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4. CONSOLIDATION, MERGER, EXCHANGE, ETC. In case the
Corporation shall enter into any consolidation, merger, combination,
statutory share exchange or other transaction in which the Common Stock is
exchanged for or changed into other shares or securities, money and/or any
other property, then in any such case the Series A Preferred Stock shall at
the same time be either, at the option of the Corporation, (a) similarly
exchanged or changed into preferred shares of the surviving entity
providing the holders of the Series A Preferred Stock with (to the extent
possible) the same relative rights and preferences as the Series A
Preferred Stock or (b) converted into the shares of stock and other
securities, money and/or any other property receivable upon or deemed to be
held by holders of Common Stock immediately following such consolidation,
merger, combination, statutory share exchange or other transaction, and the
holders of the Series A Preferred Stock shall be entitled upon such event
to receive such amount of securities, money and/or any other property as
the shares of the Common Stock of the Corporation into which such shares of
Series A Preferred Stock could have been converted immediately prior to
such consolidation, merger, combination, statutory share exchange or other
transaction would have been entitled.
5. CONVERSION.
(a) Each share of Series A Preferred Stock shall
automatically be converted into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Original Issue
Price by the Conversion Price in effect at the time of the conversion upon
any sale, pledge, conveyance, hypothecation, assignment or other transfer
of such share, whether or not for value, or attempt thereof, by the initial
registered holder thereof, other than any such transfer by such holder to a
nominee of such holder (without any change in beneficial ownership, as such
term is defined under Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")); provided that any transfer by the initial
registered holder to any majority-owned subsidiary of the initial
registered holder shall not give rise to automatic conversion hereunder
unless and until such transferee ceases to be a majority-owned subsidiary
of the initial registered holder; and further provided that in the event
any pledge, conveyance, hypothecation, assignment or other transfer shall
not give rise to automatic conversion hereunder, then any subsequent
transfer or attempt thereof by the holder (other than any such transfer by
such holder to a nominee of such holder (without any change in beneficial
ownership, as such term is defined under Section 13(d) of the Exchange Act)
shall be subject to automatic conversion upon the terms and conditions set
forth herein. The price at which shares of Common Stock shall be
deliverable upon conversion shall initially $16.50 with respect to shares
of Series A Preferred Stock (the "Conversion Price"). The initial
Conversion Price shall be subject to adjustment as provided below.
(b) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the conversion of the shares of the Series A
Preferred Stock, such number of its
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shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Series A Preferred Stock.
6. ADJUSTMENT OF CONVERSION FOR DIVIDEND AND DISTRIBUTIONS.
(a) In the event the Corporation shall at any time after
issuance of the Series A Preferred Stock declare or pay any dividend or
other distribution on Common Stock, payable in Common Stock or other
securities or rights convertible into, or exchangeable for, Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise) into a greater or lesser
number of Common Stock, then in each such case the number of Common Stock
issuable upon the conversion of the Series A Preferred Stock shall be
adjusted (the "Adjustment") by multiplying the number of Common Stock to
which the holder was entitled before such event by a fraction, the
numerator of which will be the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which will be the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) In the event the Corporation shall at any time after
issuance of the Series A Preferred Stock, distribute to holders of its
Common Stock, other than as part of a dissolution or liquidation or the
winding up of its affairs, any shares of its capital stock, any evidence of
indebtedness, or other securities or any of its assets (other than Common
Stock or securities convertible into or exchangeable for Common Stock),
then, in any such case, the Series A Preferred Stock holder shall be
entitled to receive, at the same time as such distribution is made to the
holders of Common Stock, with respect to each share of Common Stock
issuable upon such conversion, the amount of cash or evidence of
indebtedness or other securities or assets which such Series A Preferred
Stock holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had the
Series A Preferred Stock holder converted to Common Stock immediately prior
to the record date or other date determining the shareholders entitled to
participate in such distribution (the "Determination Date").
7. MINIMAL ADJUSTMENTS. No adjustment in the Original Issue
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than $0.01
which is not made shall be carried forward and shall be made at the time of
and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of $0.01 or more in the Conversion Price.
8. FRACTIONAL SHARES. In lieu of any fractional shares to
which the holder of the Series A Preferred Stock would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied
by the closing price of one share of the Corporation's Common Stock on the
trading day prior to conversion, if such price is available. If such price
is not available, this Corporation shall pay cash for fractional shares
equal to such fraction multiplied by the fair market value of one share of
Series A Preferred Stock as
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determined by the Board of Directors of the Corporation. Whether or not
fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Series A Preferred Stock of
each holder at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
9. VOTE TO CHANGE THE TERMS OF SERIES A PREFERRED STOCK. The
approval of the Board of Directors and the affirmative vote at a meeting
duly called by the Board of Directors for such purpose (or the written
consent without a meeting) of the holders of not less than fifty
percent (50%) of the then outstanding shares of Series A Preferred Stock
shall be required to amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series A Preferred Stock.
10. NO OTHER RIGHTS, PRIVILEGES, ETC. Except as specifically
set forth herein, the holders of the Series A Preferred Stock shall have no
other rights, privileges or preferences with respect to the Series A
Preferred Stock.
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IN WITNESS WHEREOF, the undersigned each declares under penalty of perjury
that the matters set out in the foregoing certificate are true of his own
knowledge, and the undersigned have executed this certificate at Cupertino,
California as of the 5th day of August, 1997.
/s/ John B. Douglas, III
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John B. Douglas, III
Senior Vice President
/s/ Paul D. Carmichael
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Paul D. Carmichael
Assistant Secretary
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