exv4w1



 



Exhibit 4.1


CERTIFICATE OF RIGHTS AND PREFERENCES

OF

SERIES B-2 CUMULATIVE CONVERTIBLE PREFERRED STOCK

OF

CHAMPION ENTERPRISES, INC.



     1.     Number. The number of shares constituting the Series B-2 Cumulative
Convertible Preferred Stock shall be Twelve Thousand (12,000).


     2.     Definitions. Unless the context otherwise requires, when used herein
the following terms shall have the meaning indicated.


     “Acquiring Person” means, in connection with any Business Combination, the
continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of all or substantially all
of the properties or assets of the Company, the corporation consolidating with
or merging into the Company in a consolidation or merger in connection with
which the Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, the entity or
group acting in concert acquiring or possessing the power to cast the majority
of the eligible votes at a meeting of the Company’s shareholders at which
directors are elected, or, in the case of a capital reorganization or
reclassification, the Company.


     “Acquisition Price” means (i) the Daily Market Price of the Common Stock
on the date immediately preceding the date on which a Business Combination is
consummated, or (ii) if a purchase, tender or exchange offer is made by the
Acquiring Person (or by any of its affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than fifty percent
(50%) of the outstanding shares of Common Stock, the greater of (x) the price
determined in accordance with the provisions of the foregoing clause (i) of
this sentence and (y) the Daily Market Price on the date immediately preceding
the acceptance of such offer by the holders of more than fifty percent (50%) of
the outstanding shares of Common Stock.


     “Articles” means the Restated Articles of Incorporation of the Company, as
amended.


     “Average Market Price” means, with respect to any reference date, the
average of the Daily Market Prices of the Common Stock for the thirty (30)
Business Days ending on and including the third Business Day before such
reference date, but not greater than the average of the Daily Market Prices of
the Common Stock for the five (5) Business Days ending on and including the
twenty-eighth Business Day before such reference date.


     “Board” means the Board of Directors of the Company.


     “Business Combination” is defined in Section 6(F)(i).


     “Business Day” means any day on which the Common Stock may be traded on
the NYSE, or if not admitted for trading on the NYSE, on any day other than a
Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed.


     “Capital Stock” means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
limited partnership, limited liability company or other equity interests of
such Person.


     “Cash Redemption Closing Date” is defined in Section 6(B)(ii).


 






 


     “Certificate of Rights and Preferences” means this Certificate of Rights
and Preferences of the Series B-2 Preferred Stock.


     “Common Stock” means the Company’s common stock, par value one dollar
($1.00) per share, and any Capital Stock for or into which such Common Stock
hereafter is exchanged, converted, reclassified or recapitalized by the Company
or pursuant to a Business Combination to which the Company is a party.


     “Company” means Champion Enterprises, Inc., a Michigan corporation.


     “Conversion Closing Date” is defined in Section 6(A)(i).


     “Conversion Notice” is defined in Section 6(A)(i).


     “Conversion Price” means the greater of (i) one hundred and twenty percent
(120%) of the Average Market Price calculated as of the Subsequent Closing Date
(as defined in the Main Agreement) and (ii) seven dollars and fifty cents
($7.50), in each case subject to adjustment for stock splits, recombinations,
stock dividends and the like.


     “Conversion Rate” means (i) the Stated Value of one share of Series B-2
Preferred Stock plus accrued and unpaid dividends divided by (ii) the
Conversion Price.


     “Daily Market Price” means, on any date, the amount per share of the
Common Stock (or, for purposes of determining the Daily Market Price of the
common stock of an Acquiring Person or its Parent under Section 6(F), the
common stock of such Acquiring Person or such Parent), equal to (i) the daily
volume-weighted average price on the NYSE or, if no such sale takes place on
such date, the average of the closing bid and asked prices on the NYSE thereof
on such date, in each case as reported by Bloomberg, L.P. (or by such other
Person as the Holder and the Company may agree), or (ii) if such Common Stock
or common stock of an Acquiring Person or its Parent is not then listed or
admitted to trading on the NYSE, the higher of (x) the book value per share
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of the
last day of any month ending within sixty (60) days preceding the date as of
which the determination is to be made or (y) the fair value per share thereof
determined in good faith by the Board of Directors of the Company as of a date
which is no more than ten (10) Business Days before and excluding the date as
of which the determination is to be made.


     “Dividend Payment Date” is defined in Section 3(A).


     “Dividend Period” is defined in Section 3(A).


     “Dividend Rate” means a rate equal to five percent (5%) per annum times
the Stated Value subject to Sections 3(E) and 3(F).


     “Exchange Act” means the Securities Exchange Act of 1934, as amended.


     “Fletcher” means Fletcher International, Ltd. a company organized under
the laws of Bermuda, together with its successors.


     “Holder” shall mean a holder of Series B-2 Preferred Stock.


     “Issue Date” means with respect to any shares of Series B-2 Preferred
Stock the original date of issuance of such shares of Series B-2 Preferred
Stock.


     “Junior Securities” means Capital Stock that, with respect to dividends
and distributions upon Liquidation, ranks junior to the Series B Preferred
Shares (as defined in the Main Agreement), including but not limited to Common
Stock, Series A Preferred Stock, and any other class or series of Capital Stock


 






 


issued by the Company or any Subsidiary of the Company on or after the
date of the Main Agreement, but excluding any Parity Securities and Senior
Securities issued (i) to Fletcher or its authorized assignees under the Main
Agreement, (ii) with the approval of the Holders of a Majority of the Series
B-2 Preferred Stock or (iii) upon the conversion, redemption or exercise of
securities described in clause (i) or (ii).


     “Liquidation” means the voluntary or involuntary liquidation, dissolution
or winding up of the Company; provided, however, that a consolidation, merger
or share exchange shall not be deemed a Liquidation, nor shall a sale,
assignment, conveyance, transfer, lease or other disposition by the Company of
all or substantially all of its assets, which does not involve a distribution
by the Company of cash or other property to the holders of Common Stock, be
deemed to be a Liquidation.


     “Liquidation Preference” is defined in Section 4.


     “Main Agreement” means the Agreement dated as of June 29, 2001, between
the Company and Fletcher pursuant to which twenty thousand (20,000) shares of
Series B-1 Preferred Stock are to be issued by the Company, including all
schedules and exhibits thereto.


     “Majority of the Series B-2 Preferred Stock” means more than fifty percent
(50%) of the then outstanding shares of Series B-2 Preferred Stock.


     “NYSE” shall have the meaning set forth in the Main Agreement.


     “Other Securities” means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holders of the Series
B-2 Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series B-2 Preferred Stock in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities.


     “Parent” means, as to any Acquiring Person, any corporation that (i)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (ii) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent’s Annual Report on
Form 10-K (if the Parent is required to file such a report) and (iii) is not
itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).


     “Parity Securities” means any class or series of Capital Stock that, with
respect to dividends or distributions upon Liquidation, is pari passu with the
Series B-2 Preferred Stock including the Series C Preferred Stock and the
Series B Preferred Shares (as defined in the Main Agreement).


     “Person” means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.


     “Preferred Stock” means the Company’s preferred stock authorized pursuant
to the provisions of the Articles.


     “Record Date” is defined in Section 3(A).


     “Redemption Amount” means a dollar amount for each share of the
then-outstanding Series B-2 Preferred Stock redeemed by such Holder equal to
the Stated Value per share plus an amount equal to all accrued but unpaid
dividends thereon, whether or not earnings are available in respect of such
dividends or such dividends have been declared, to and including the date full
payment is tendered to the Holders with respect to such redemption.


     “Redemption Notice” is defined in Section 6(B)(i).


 






 


     “Redemption Notice Date” is defined in Section 6(B)(i).


     “Registered Common Stock” means Common Stock that has been registered
under the Securities Act and is freely tradable.


     “Restatement” means that Champion adversely restates net income or
shareholders’ equity, in any material respect, in any portion of its financial
statements as included in a Form 10-K or Form 10-Q filed with the Securities
and Exchange Commission in the form of an amendment thereto, press release,
Form 8-K or any other method except as is required as a result of a change
occurring after the date of the Main Agreement in (i) applicable law or (ii)
generally accepted accounting principles promulgated by the Financial
Accounting Standards Board or the Securities and Exchange Commission, which
change is implemented by the Company in the manner and at the time prescribed
by such law or such generally accepted accounting principle.


     “Restatement Conversion Price” means one hundred twenty percent (120%) of
the Average Market Price calculated on the date ninety (90) days after and
excluding the Restatement Date.


     “Restatement Date” means the most recent date on which a Restatement
occurs.


     “Restatement Notice” means a written notice from Champion to Fletcher, (i)
stating the Restatement Date and (ii) including the documents in which the
Restatement was publicly disclosed.


     “Securities Act” means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.


     “Senior Securities” means any class or series of Capital Stock that, with
respect to dividends or distributions upon Liquidation, ranks senior to the
Series B-2 Preferred Stock.


     “Series A Preferred Stock” means the Series A Preferred Stock of the
Company, the powers, designations, preferences and relative, participating,
optional and other special rights of which are specified in the Articles.


     “Series B-1 Preferred Stock” means the Series B-1 Cumulative Convertible
Preferred Stock of the Company or successor as contemplated by Section
6(F)(ii).


     “Series B-2 Preferred Stock” means the Series B-2 Cumulative Convertible
Preferred Stock of the Company or successor as contemplated by Section
6(F)(ii).


     “Series C Preferred Stock” means the Series C Cumulative Convertible
Preferred Stock of the Company or successor.


     “Series C Preferred Stock Agreement” means the Agreement by and between
the Company and Fletcher International, Ltd. dated as of March 29, 2002
relating to the sale of Series C Preferred Stock and a warrant.


     “Stated Value” is an amount equal to one thousand dollars ($1,000) per
share of Series B-2 Preferred Stock.


     “Stock Redemption Closing Date” is defined in Section 6(B)(iii).


     “Subsidiary” of a Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is at
the time of determination, directly or indirectly, owned by such Person or by
one or more Subsidiaries of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has a least a
majority ownership interest.


 






 


     The foregoing definitions will be equally applicable to both the singular
and plural forms of the defined terms.


     3.     Dividends and Distributions.



		
	 	     (A) Holders shall be entitled to receive out of the assets of the
Company legally available for that purpose, dividends at the Dividend
Rate to be paid in accordance with the terms of this Section 3. Such
dividends shall be fully cumulative from the Issue Date, shall accumulate
regardless of whether the Company earns a profit and shall be payable in
arrears, when and as declared by the Board, on March 31, June 30,
September 30 and December 31 of each year (each such date being herein
referred to as a “Dividend Payment Date”), commencing on September 30,
2001. The period from the Issue Date to September 30, 2001, and each
quarterly period between consecutive Dividend Payment Dates shall
hereinafter be referred to as a “Dividend Period.” The dividend for any
Dividend Period for any share of Series B-2 Preferred Stock that is not
outstanding on every day of the Dividend Period shall be prorated based
on the number of days such share was outstanding during the period. Each
such dividend shall be paid to the Holders of record as their names
appear on the share register of the Company on the corresponding Record
Date. As used above, the term “Record Date” means, with respect to the
dividend payable on March 31, June 30, September 30 and December 31,
respectively, of each year, the preceding March 15, June 15, September 15
and December 15, or such other record date designated by the Board with
respect to the dividend payable on such respective Dividend Payment Date
not exceeding thirty (30) days preceding such Dividend Payment Date.
Dividends on account of arrears for any past Dividend Periods may be
declared and paid at any time, without reference to any Dividend Payment
Date, to Holders of record on a date designated by the Board, not
exceeding thirty (30) days preceding the payment date thereof, as may be
fixed by the Board. For purposes of determining the amount of dividends
accrued as of the first Dividend Payment Date and as of any date that is
not a Dividend Payment Date, such amount shall be calculated on the basis
of the Dividend Rate for the actual number of days elapsed from and
including the Issue Date (in case of the first Dividend Payment Date and
any date prior to the first Dividend Payment Date) or the last preceding
Dividend Payment Date (in case of any other date) to the date as of which
such determination is to be made, based on a three hundred sixty (360)
day year.




		
	 	     (B) Dividends payable on the Series B-2 Preferred Stock may be paid,
at the option of the Company, either in cash or by the issuance of
Registered Common Stock, provided, however, that the Company’s right to
pay dividends on any Dividend Payment Date by the issuance of Registered
Common Stock shall continue only so long as the number of shares of
Common Stock issued and issuable under the Main Agreement (including one
year of dividends from such Dividend Payment Date, assuming that all such
dividends will be paid in shares of Common Stock as they accrue) and all
previously issued and issuable shares of Common Stock and all issued and
issuable but unconverted Series B Preferred Shares (as defined in the
Main Agreement) (on an as-converted basis as of that date) does not
exceed seventeen and one-half percent (17.5%) of the Original Number (as
defined in the Main Agreement), or, if such number of shares exceeds
seventeen and one-half percent (17.5%) of the Original Number and does
not exceed nineteen and ninety-nine one-hundredths percent (19.99%) of
the Original Number, the Company has notified its shareholders of a
shareholder’s meeting for the purpose of voting on a Required Consent (as
defined in the Main Agreement) in accordance with the Main Agreement and
has used and is using its best efforts to obtain the Required Consent.
Although it is the intent and view of the Company that the issuance of
Common Stock with respect to Series B Preferred Shares (as defined in the
Main Agreement) is to be treated as independent of any issuance of Common
Stock with respect to Series C Preferred Stock, in the event any such
issuances of Common Stock are deemed to be related pursuant to the
listing requirements and rules of the NYSE by the NYSE, the provisions of
this Section 3(B) (including, but not limited to, the obligation to
obtain the Required Consent) shall be deemed to apply to the number of
shares of Common Stock in the aggregate issued and issuable with respect
to both the Series B Preferred Shares (as defined in the Main Agreement)
and the Series C Preferred Stock. Subject to the foregoing, payments on
any Dividend Payment Date shall be made in Registered Common Stock



 






 







		
	 	unless the Company notifies the Holders in writing of its intention
to pay cash on or before, but no more than fifteen (15) days before, and
including, the immediately preceding Dividend Payment Date. The number
of shares of Registered Common Stock to be issued shall be determined by
dividing the cash amount of the dividend otherwise payable by the Average
Market Price calculated as of such Dividend Payment Date; provided,
however, if the Company shall combine, subdivide or reclassify its Common
Stock, or shall declare any dividend payable in shares of its Common
Stock, or shall take any other action of a similar nature affecting such
shares, the number of shares of Registered Common Stock to be issued
shall be adjusted to the extent appropriate to reflect such event,
including appropriate adjustments to account for any such event that
occurs during the period used for calculating such Average Market Price.
The number of shares of Registered Common Stock to be issued as a
dividend shall be rounded up to the nearest whole share after aggregating
all shares of Series B-2 Preferred Stock owned by a Holder.




		
	 	     (C) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on
such date are paid, such dividends shall cumulate and shall accrue
additional dividends to and including the date of payment thereof at the
Dividend Rate then in effect, compounded quarterly on each subsequent
Dividend Payment Date. Unpaid dividends for any period less than a full
Dividend Period shall cumulate on a day to day basis and shall be
computed on the basis of a three hundred sixty (360) day year.




		
	 	     (D) So long as any shares of the Series B-2 Preferred Stock shall be
outstanding, (i) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in cash,
property or otherwise, set aside any cash or property for the payment of
dividends, or make any other distribution on any Junior Securities, (ii)
the Company shall not and shall not allow its Subsidiaries to declare or
pay any dividend whatsoever, whether in cash, property or otherwise, set
aside any cash or property for the payment of dividends, or make any
other distribution on any Parity Securities, except for dividends paid to
the Company or any of its wholly-owned Subsidiaries and dividends paid on
the Series B Preferred Shares (as defined in the Main Agreement) and the
dividends paid on the Series C Preferred Stock and (iii) the Company
shall not and shall not allow its Subsidiaries to repurchase, redeem or
otherwise acquire for value or set aside any cash or property for the
repurchase or redemption of any Junior Securities or Parity Securities,
unless in each such case (x) all dividends to which the Holders of the
Series B-2 Preferred Stock shall have been entitled to receive for all
previous Dividend Periods shall have been paid and dividends for the
subsequent four Dividend Periods shall have been designated and set aside
and (y) a dividend (including the amount of any dividends paid pursuant
to the provisions of Section 3(A)) is paid with respect to all
outstanding shares of Series B-2 Preferred Stock in an amount for each
such share of Series B-2 Preferred Stock equal to the aggregate amount of
such dividend for the number of shares of Common Stock equal to (i) the
Stated Value plus any accrued but unpaid dividends as of the record date
of such dividend divided by (ii) the Conversion Price (or in the event of
a Restatement, the Restatement Conversion Price, if the Restatement
Conversion Price is lower than the then-current Conversion Price) on such
record date (or, if such record date is not a Business Day, the last
Business Day preceding such record date).




		
	 	     (E) Whenever, at any time or times, dividends payable on any Series
B Preferred Share (as defined in the Main Agreement) or any share of
Series C Preferred Stock shall be in arrears in an aggregate amount
greater than two (2) quarterly dividends, the Dividend Rate shall mean a
rate equal to fifteen percent (15%) per annum times the Stated Value
until such date that all accrued and unpaid dividends shall have been
declared and paid in full.




		
	 	     (F) Whenever, at any time or times (i) an Issuance Blockage (as
defined in the Main Agreement or in the Series C Preferred Stock
Agreement) shall exist at any time ninety (90) calendar days after and
excluding the date of the first Excess Rights Notice (as defined in the
Main Agreement or in the Series C Preferred Stock Agreement) or (ii) the
Company shall fail to redeem any Series B Preferred Shares (as defined in
the Main Agreement) or any shares of Series C Preferred Stock for cash by
the date it is obligated to do so under Section 6(B) hereof or under
Section 6(B) of any Subsequent Certificates of Rights and Preferences (as
defined in the Main



 






 







		
	 	Agreement) or the Certificate of Rights and Preferences of the
Series C Preferred and such failure to pay cash is ongoing, then (x) the
Dividend Rate shall mean a rate equal to fifteen percent (15%) per annum
times the Stated Value until such date as the circumstances described in
clause (i) and (ii) no longer exist and (y) all dividends payable with
respect to such periods shall be paid in additional shares of Series B-2
Preferred Stock.



     4.     Liquidation Preference. In the event of any Liquidation, after payment
or provision for payment by the Company of the debts and other liabilities of
the Company and the liquidation preference of any Senior Securities that rank
senior to the Series B-2 Preferred Stock with respect to distributions upon
Liquidation, each Holder shall be entitled to receive an amount in cash for
each share of the then outstanding Series B-2 Preferred Stock held by such
Holder equal to the greater of (a) the Stated Value per share plus an amount
equal to all accrued but unpaid dividends thereon, whether or not earnings are
available in respect of such dividends or such dividends have been declared, to
and including the date full payment is tendered to the Holders with respect to
such Liquidation and no more and (b) the amount the Holders would have received
if the Holders had converted all outstanding shares of Series B-2 Preferred
Stock into Common Stock in accordance with the provisions of Section 6(A)
hereof as of the Business Day immediately preceding the date of such
Liquidation (such greater amount being referred to herein as the “Liquidation
Preference”), before any distribution shall be made to the holders of any
Junior Securities (and any Senior Securities or Parity Securities that, with
respect to distributions upon Liquidation, rank junior to the Series B-2
Preferred Stock) upon the Liquidation of the Company. In case the assets of
the Company available for payment to the Holders are insufficient to pay the
full Liquidation Preference on all outstanding shares of the Series B-2
Preferred Stock and all outstanding shares of Parity Securities and Senior
Securities that, with respect to distributions upon Liquidation, are pari passu
with the Series B-2 Preferred Stock in the amounts to which the holders of such
shares are entitled, then the entire assets of the Company available for
payment to the Holders and to the holders of such Parity Securities and Senior
Securities shall be distributed ratably among the Holders of the Series B-2
Preferred Stock and the holders of such Parity Securities and Senior
Securities, based upon the aggregate amount due on such shares upon
Liquidation. Written notice of any Liquidation of the Company, stating a
payment date and the place where the distributable amounts shall be payable,
shall be given by facsimile and overnight delivery not less than ten (10) days
prior to the payment date stated therein, to the Holders of record of the
Series B-2 Preferred Stock, if any, at their respective addresses as the same
shall appear on the books of the Company.


     5.     Voting Rights. The Holders shall have the following voting rights with
respect to the Series B-2 Preferred Stock:



		
	 	     (A) Each share of Series B-2 Preferred Stock shall entitle the
holder thereof to the voting rights specified in Section 5(B) and no
other voting rights except as required by law.




		
	 	     (B) The consent of the Holders of at least a Majority of the Series
B-2 Preferred Stock, voting separately as a single class with one vote
per share, in person or by proxy, either in writing without a meeting or
at an annual or a special meeting of such Holders called for the purpose,
shall be necessary to:




		
	 	     (i) amend, alter or repeal any of the provisions of the
Articles, including the Certificate of Rights and Preferences, or
Bylaws of the Company so as to:




		
	 	     A. change any of the rights, preferences or privileges
of Holders. Without limiting the generality of the
preceding sentence, such change includes any action that
would:




		
	 	     1. Reduce the Dividend Rate on the Series B-2
Preferred Stock, or make such dividends
non-cumulative, or defer the date from which
dividends will accrue, or cancel accrued and unpaid
dividends, or change the relative seniority rights of
the holders of Series B-2 Preferred Stock as to the
payment of dividends in relation to the holders of
any other capital stock of the Company;



 






 







		
	 	     2. Reduce the amount payable to the holders of
the Series B-2 Preferred Stock upon the voluntary or
involuntary liquidation, dissolution, or winding up
of the Company, or change the relative seniority of
the liquidation preferences of the holders of the
Series B-2 Preferred Stock to the rights upon
liquidation of the holders of any other capital stock
of the Company;




		
	 	     3. Make the Series B-2 Preferred Stock
redeemable at the option of the Company, except as
provided in Section 6 hereof.




		
	 	     B. authorize, create or issue any shares of Parity
Securities or Senior Securities (or amend the provisions of
any existing class of Capital Stock to make such class of
Capital Stock a class of Parity Securities or Senior
Securities) on any date before and excluding January 4,
2003, when there shall be issued and outstanding Series B
Preferred Shares (as defined in the Main Agreement) with an
aggregate Redemption Amount of at least twenty million
dollars ($20,000,000).




		
	 	     (ii) permit any Subsidiary of the Company to issue or sell,
or obligate itself to issue or sell, except to the Company or any
wholly owned Subsidiary, any Capital Stock of such Subsidiary; or




		
	 	     (iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred
Stock or amend any provisions of any Parity Securities or Senior
Securities so as to make such Parity Securities or Senior
Securities redeemable by the Company.




		
	 	     (iv) Notwithstanding the foregoing, so long as the Company
complies with the requirements of Section 6(F) of this Certificate
of Rights and Preferences and Section 11 of the Main Agreement,
with respect to a Business Combination, such Business Combination
shall not be deemed to alter or change the powers, preferences or
rights of the Series B-2 Preferred Stock in any manner.



     6.     Conversion and Redemption.



		
	 	     (A) Procedure for Conversion.




		
	 	     (i) Shares of Series B-2 Preferred Stock are convertible into
Registered Common Stock (or, at the sole option of the Holder,
unregistered Common Stock) at the Conversion Rate per share (in
the event of a Restatement, for purposes of calculating the
Conversion Rate, the Conversion Price shall equal the Restatement
Conversion Price, if the Restatement Conversion Price is lower
than the then-current Conversion Price) (i) at the option of the
Holder thereof at any time, from time to time, in whole or in
part, and (ii) at the option of the Company any time on or after
July 3, 2006, for all but not less than all of the shares of
Series B-2 Preferred Stock if (x) the Daily Market Price exceeds
two hundred percent (200%) of the Conversion Price on at least
twenty-five (25) Business Days during a period of thirty (30)
consecutive Business Days and (y) the Company has sufficient
Registered Common Stock to deliver to the Holder or Holders upon
the closing of such conversion. The Conversion of shares of
Series B-2 Preferred Stock at the option of the Holder may be
effected by delivering a duly executed written Preferred Stock
Conversion Notice, in form and substance as attached to the Main
Agreement as Annex G (the “Conversion Notice”), by facsimile, mail
or overnight courier delivery, to the Company’s address set forth
in Section 20 of the Main Agreement. The closing of such exercise
shall take place (a) on the second Business Day following and
excluding the date the Conversion Notice is delivered, (b) such
later date as the conditions set forth in Section 6(A)(ii) have
been waived or satisfied or (c) any



 






 







		
	 	other date upon which the exercising Holder and the Company
mutually agree (the “Conversion Closing Date”). Conversion of
shares of Series B-2 Preferred Stock at the option of the Company
may be effected by delivering a duly executed written notice to
all Holders substantially in the form attached as Annex J to the
Main Agreement (the “Five Year Conversion Notice”), by facsimile,
mail or overnight courier delivery, to the Holder’s address set
forth in Section 20 of the Main Agreement; the Conversion Closing
Date shall be (a) the twenty-fifth Business Day after and
excluding the date the Five Year Conversion Notice is delivered to
the Holders, (b) such later date as the conditions set forth in
Section 6(A)(ii) have been waived or satisfied or (c) any other
date upon which the Company and the Holders mutually agree; such
conversion shall apply to only those shares of Series B-2
Preferred Stock still outstanding on such Conversion Closing Date.




		
	 	     (ii) It shall be a condition of the converting Holder’s
obligation to close that each of the following are satisfied,
unless waived by such Holder:




		
	 	     A. (1) the representations and warranties made by the
Company in the Main Agreement shall be true and correct as
of the Conversion Closing Date, except those
representations and warranties that address matters only as
of a particular date, which shall be true and correct as of
such date; (2) the Company shall have complied fully with
all of the covenants and agreements in the Main Agreement;
(3) all shares to be issued upon such conversion shall be
registered under the Securities Act, shall be freely
tradable and shall be duly listed and admitted to trading
on the New York Stock Exchange, Nasdaq National Market or
American Stock Exchange (unless, with respect to clause (3)
only, the Holder expressly consents in writing to the
issuance of unregistered Common Stock); and such Holder
shall have received a certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company dated
such date and to the effect of clauses (1), (2) and (3).




		
	 	     B. On the Conversion Closing Date, the Company shall
have delivered to the Holder an opinion of Dykema Gossett
PLLC (or such other counsel reasonably satisfactory to such
Holder) reasonably satisfactory to such Holder, dated the
date of delivery, confirming in substance the matters
covered in paragraphs (a), (b), (c), (d), (e), (f) and
subsection (i) of (g) of Section 4 of the Main Agreement
and to the effect that the offer and sale of such
Registered Common Stock to such Holder hereunder do not
require registration under the Securities Act.




		
	 	     C. As of the Conversion Closing Date, the Company
shall have delivered to the Holder all Restatement Notices
required to be delivered following a Restatement.



     The Company shall use its commercially reasonable efforts to cause each of
the foregoing conditions to be satisfied at the earliest possible date. If
such conditions are not satisfied or waived prior to the third Business Day
following and excluding the date the Conversion Notice is delivered, then the
Holder may, at its sole option, and at any time, withdraw the Conversion Notice
by written notice to the Company regardless of whether such conditions have
been satisfied or waived as of the withdrawal date and, after such withdrawal,
shall have no further obligations with respect to such Conversion Notice and
may submit a Conversion Notice with respect to the shares referenced in the
withdrawn Conversion Notice at any time.



		
	 	     (iii) Each conversion of Series B-2 Preferred Stock shall be
deemed to have been effected immediately prior to the close of
business on the Business Day on which the Conversion Notice is
delivered as provided in Section 6(A)(i), and at such time the
Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such conversion as provided



 






 







		
	 	in Section 6(A)(iv) shall be deemed to have become the holder
or holders of record thereof. The foregoing notwithstanding, such
conversion shall not be deemed effective if and as of the date
that the Holder delivers written notice of withdrawal to the
Company as set forth in Section 6(A)(ii) above.




		
	 	     (iv) On the Conversion Closing Date, the Holder shall
surrender the certificate representing the shares of Series B-2
Preferred Stock to be converted to the Company at the address set
forth for notices to the Company in Section 20 of the Main
Agreement, and such Holder shall thereupon be entitled to receive
the number of duly authorized, validly issued, fully paid and
nonassessable shares of Registered Common Stock (or Other
Securities or, if appropriate, unregistered Common Stock) to which
such Holder is entitled upon such conversion.




		
	 	     (v) On the Conversion Closing Date, the Company at its
expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the
Holder whose Series B-2 Preferred Stock is being converted via
book-entry transfer (if available to the Company), or if such
Holder shall direct, at such address specified by the Holder via
reputable overnight courier, one or more certificates for the
number of duly authorized, validly issued, fully paid and
nonassessable shares of Registered Common Stock (or Other
Securities or, if appropriate, unregistered Common Stock) to which
such Holder shall be entitled upon such conversion, plus, in lieu
of any fractional share to which such Holder would otherwise be
entitled, cash in an amount equal to the same fraction of the
Daily Market Price per share on the Business Day immediately
preceding the date of such conversion, and, in case such
conversion is for only part of the shares represented by the
certificate surrendered, at such address specified by the Holder
via reputable overnight courier, a new Preferred Stock certificate
of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Series B-2 Preferred Stock
which have not been converted into Registered Common Stock (or
Other Securities or, if appropriate, unregistered Common Stock)
upon such conversion.




		
	 	     (vi) The Company shall deliver a Restatement Notice to the
Holder no later than two (2) days after and excluding each
Restatement Date.




		
	 	         (B) Procedure for Redemption.




		
	 	     (i) Redemption of the Series B-2 Preferred Stock shall occur
under any of the following circumstances:




		
	 	     A. At any time on or after July 3, 2003, a Holder of
Series B-2 Preferred Stock may require the Company to
redeem any or all shares of Series B-2 Preferred Stock held
by such Holder by delivering an optional redemption notice
to the Company substantially in the form attached as Annex
C to the Main Agreement (a “Redemption Notice”). The date
such Redemption Notice is delivered shall be the
“Redemption Notice Date”. All such redemptions shall be
made for shares of Registered Common Stock (unless the
Holder expressly consents in writing to the issuance of
unregistered Common Stock) pursuant to Section 6(B)(iii),
unless the Company satisfies the conditions for cash
redemption set forth in Section 6(B)(ii) and elects to
redeem such shares for cash. The Holder may not redeem
Series B Preferred Shares (as defined in the Main
Agreement) and Series C Preferred Stock with an aggregate
Redemption Amount greater than thirty million dollars ($30
million) in any twelve-month period. In the event that the
aggregate value of the Common Stock to be received by a
Holder pursuant to this Section 6(B)(i)(A) is less than the
amount such Holder would have received upon redemption if
such Holder had converted the Series B-2 Preferred Stock
subject to the Redemption Notice into Common



 






 







		
	 	Stock in accordance with the provisions of Section
6(A) hereof as of the Business Day immediately preceding
the Redemption Notice Date (as if the Conversion Notice had
been delivered on such date and the Conversion Closing Date
had occurred on such date), then such Holder shall receive
Common Stock with an aggregate value equivalent to such
amount in lieu of the amount of Common Stock that would
otherwise be issuable pursuant to this Section 6(B)(i)(A).




		
	 	     B. On July 3, 2008, the Company shall redeem all of
the Series B-2 Preferred Stock held by all Holders. All
such redemptions shall be made for shares of Registered
Common Stock (unless the Holder expressly consents in
writing to the issuance of unregistered Common Stock)
pursuant to Section 6(B)(iii), unless the Company satisfies
the conditions for cash redemption set forth in Section
6(B)(ii) and elects to redeem such shares for cash. In the
event that the aggregate value of the Common Stock and
cash, if any, to be received by a Holder pursuant to this
Section 6(B)(i)(B) is less than the amount such Holder
would have received upon redemption if such Holder had
converted all of such Holder’s Series B-2 Preferred Stock
into Common Stock in accordance with the provisions of
Section 6(A) hereof as of the Business Day immediately
preceding July 3, 2008 (as if the Conversion Notice had
been delivered on such date and the Conversion Closing Date
had occurred on such date), then such Holder shall receive
Common Stock and cash, if any, pursuant to Section 6(B)(ii)
or Section 6(B)(iii), as the case may be, with an aggregate
value equivalent to such amount in lieu of the amount of
Common Stock and cash, if any, that would otherwise be
issuable pursuant to this Section 6(B)(i)(B).




		
	 	     (ii) If the Company is permitted under the terms of its then
outstanding credit facilities and elects in a writing
substantially in the form attached as Annex D to the Main
Agreement delivered to the redeeming Holder on or before the fifth
Business Day following and excluding the date of the Redemption
Notice (or, in the case of redemption pursuant to Section
6(B)(i)(B), by May 29, 2008 (the “Seven Year Redemption Reference
Date”)) (each such date, a “Redemption Reference Date”) to redeem
such shares for cash, then (a) such shares shall be redeemed for
cash, (b) the closing of such redemption shall take place on the
second Business Day after and excluding the end of the calendar
quarter in which the Redemption Reference Date occurs, provided
that if the Redemption Reference Date is less than thirty (30)
days before and excluding the end of such calendar quarter, then
such closing shall occur on the thirtieth (30th) day after and
excluding the Redemption Reference Date, unless otherwise agreed
in writing by the Company and the redeeming Holder (or, in the
case of a cash redemption pursuant to Section 6(B)(i)(B), by July
3, 2008) (each such date, a “Cash Redemption Closing Date”) and
(c) unless otherwise agreed in writing by the Holder and the
Company, all future redemptions of Series B-2 Preferred Stock
shall be for cash. At such closing, the Holder shall surrender
the certificate representing the shares of Series B-2 Preferred
Stock to be redeemed to the Company at the address set forth for
notices to the Company in Section 20 of the Main Agreement, and
the Company shall deliver to the Holder via wire transfer of
immediately available U.S. funds cash equal to the aggregate
Redemption Amount of such shares calculated as of the Cash
Redemption Closing Date. In the case of a cash redemption
pursuant to Section 6(B)(i)(B), if the Company acting in good
faith is unable to tender cash as provided in this Section
6(B)(ii) on or before the Cash Redemption Closing Date and
certifies such circumstance in a writing signed by the Chief
Executive Officer and the Chief Financial Officer of the Company
that is delivered to the Holder before the Cash Redemption Closing
Date, then (x) (without limiting any other available remedies,
including without limitation under Section 3(F) or at law or in
equity) the Company may redeem such shares for Registered Common
Stock as set forth in Section 6(B)(iii), (y) the Stock Redemption
Closing Date shall be the thirty-fifth (35th) calendar day after
and excluding



 






 







		
	 	the date on which the Holder receives such notice (provided
that the Holder may, by written notice to the Company, accelerate
this date to the second (2nd) Business Day after and excluding the
date the Company receives notice from such Holder), and (z) the
rights of the Holder under this Certificate of Rights and
Preferences (other than the accrual of dividends under Section 3
and the right to receive consideration for redemption as set forth
herein) shall cease as of July 3, 2008 (provided that if the
Company fails to redeem such shares on the Stock Redemption
Closing Date provided above, then all such rights shall be
reinstated in full). In the case of redemptions pursuant to
Section 6(B)(i)(A) only, if the Company fails to tender cash as
provided in this Section 6(B)(ii) on or before the Cash Redemption
Closing Date, then the Holder may, at its sole option (and without
limiting any other available remedies, including without
limitation under Section 3(F) or at law or in equity) elect to (1)
withdraw the Redemption Notice by written notice to the Company
and, after such withdrawal, shall have no further obligations with
respect to such Redemption Notice and may submit a Redemption
Notice with respect to the shares referenced in the withdrawn
Redemption Notice at any time or (2) receive shares of Registered
Common Stock as set forth in Section 6(B)(iii), in which case the
Stock Redemption Closing Date shall be the second Business Day
after and excluding the date on which the Holder notifies the
Company in writing of such election. In the case of redemptions
pursuant to Section 6(B)(i)(B) only, if the Company fails to
tender cash as provided in this Section 6(B)(ii) on or before the
Cash Redemption Closing Date, then the Holder may, at its sole
option (and without limiting any other available remedies,
including without limitation under Section 3(F) or at law or in
equity) elect to receive shares of Registered Common Stock as set
forth in Section 6(B)(iii), in which case the Stock Redemption
Closing Date shall be the second Business Day after and excluding
the date on which the Holder notifies the Company in writing of
such election. If such redemption is for only part of the shares
represented by the certificate surrendered, the Company shall send
a new Preferred Stock certificate of like tenor, calling in the
aggregate on the face or faces thereof for the number of shares of
Series B-2 Preferred Stock which have not been redeemed via
reputable overnight courier to such address specified by the
Holder.




		
	 	     (iii) If the Company elects in a writing substantially in the
form attached as Annex D to the Main Agreement delivered to the
redeeming Holder on or before the fifth Business Day following and
excluding the Redemption Notice Date to redeem such shares of
Series B-2 Preferred Stock for shares of Registered Common Stock,
or if the Company fails to timely elect cash redemption as set
forth in Section 6(B)(ii), then (a) all such shares shall be
redeemed for Registered Common Stock (unless the Holder expressly
consents in writing to the issuance of unregistered Common Stock),
and (b) the closing of such redemption shall take place on the
earlier of (1) the second Business Day after and excluding the
delivery of the Company’s election and (2) the seventh Business
Day after and excluding the Redemption Notice Date, or on such
other date as the Company and such Holder agree in writing (the
“Stock Redemption Closing Date”) and (c) unless otherwise agreed
in writing by the Holder and the Company, all future redemptions
of Series B-2 Preferred Stock shall be for Registered Common
Stock. At such closing, the Holder shall surrender the
certificate representing the shares of Series B-2 Preferred Stock
to be redeemed to the Company at the address set forth for notices
to the Company in Section 20 of the Main Agreement and the Company
at its expense (including the payment by it of any applicable
issue taxes) shall cause to be issued in the name of and delivered
to the Holder whose Series B-2 Preferred Stock is being redeemed
via book-entry transfer (if available to the Company), the number
of duly authorized, validly issued, fully paid and nonassessable
shares of Registered Common Stock (unless the Holder expressly
consents in writing to the issuance of unregistered Common Stock
in which case all references to Registered Common Stock in this
Section 6(B)(iii) shall be to unregistered Common Stock, but only
with respect to the shares of Common Stock subject to such
Redemption Notice) to which such Holder shall be entitled upon
such redemption, plus, in lieu of any fractional share to which
such Holder



 






 







		
	 	would otherwise be entitled, cash in an amount equal to the
same fraction of the Daily Market Price per share on the Business
Day immediately preceding the Stock Redemption Closing Date, and,
in case such redemption is for only part of the shares represented
by the certificate surrendered, at such address specified by the
Holder via reputable overnight courier, a new Preferred Stock
certificate of like tenor, calling in the aggregate on the face
thereof for the number of shares of Series B-2 Preferred Stock
which have not been redeemed. The number of shares of Registered
Common Stock to be delivered at such closing shall equal the
quotient of (x) the aggregate Redemption Amount of the shares of
Series B-2 Preferred Stock being redeemed (calculated as of the
Stock Redemption Closing Date) divided by (y) the greater of (1)
the lesser of (A) the Average Market Price calculated as of the
Redemption Notice Date, (B) the Daily Market Price on the date the
Company delivers its election to redeem such shares for Registered
Common Stock and (C) if the Company fails to deliver an election
to redeem such shares for Registered Common Stock by the fifth
Business Day following and excluding the Redemption Notice Date,
the Daily Market Price on the fifth Business Day following and
excluding the Redemption Notice Date and (2) in the case of
redemptions pursuant to Section 6(B)(i)(A) only (and not in case
of redemption pursuant to Section 6(B)(i)(B)), an amount equal to
the product of (a) the quotient of six dollars divided by eight
dollars and fifty cents ($6.00/$8.50) times (b) the Main Agreement
Date Price (as defined in the Certificate of Rights and
Preferences of Series C Cumulative Convertible Preferred Stock).
It shall be a condition of the redeeming Holder’s obligation to
close that each of the following are satisfied, unless waived by
such Holder:




		
	 	     A. (1) the representations and warranties made by the
Company in the Main Agreement shall be true and correct as
of the Stock Redemption Closing Date, except that those
representations and warranties which only address matters
on a particular date shall only be true and correct as of
such date; (2) the Company shall have complied fully with
all of the covenants and agreements in the Main Agreement;
(3) all shares to be issued upon such redemption shall be
registered under the Securities Act, shall be freely
tradable and shall be duly listed and admitted to trading
on the New York Stock Exchange, Nasdaq National Market or
American Stock Exchange (unless, with respect to clause (3)
only, the Holder expressly consents in writing to the
issuance of unregistered Common Stock); and such Holder
shall have received a certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company dated
such date and to the effect of clauses (1), (2) and (3).




		
	 	     B. On the Stock Redemption Closing Date, the Company
shall have delivered to the Holder an opinion of Dykema
Gossett PLLC (or such other counsel reasonably satisfactory
to such Holder) reasonably satisfactory to such Holder,
dated the date of delivery, confirming in substance the
matters covered in paragraphs (a), (b), (c), (d), (e), (f)
and subsection (i) of (g) of Section 4 of the Main
Agreement and to the effect that the offer and sale of such
Registered Common Stock to such Holder hereunder do not
require registration under the Securities Act.




		
	 	     C. There shall not exist an Issuance Blockage (as
defined in the Main Agreement) and the issuance of Common
Stock shall not cause the Company to exceed the Maximum
Number (as defined in the Main Agreement).




		
	 	The Company shall use its best efforts to cause each of the
foregoing conditions to be satisfied at the earliest possible
date. If such conditions are not satisfied or waived on or before
the Stock Redemption Closing Date, then the Holder may, at its
sole option, and at any time, (1) withdraw the Redemption Notice
by written notice to the Company regardless of whether such
conditions have been satisfied or waived as of the withdrawal date
and, after such withdrawal, shall have no further obligations with
respect to such



 






 







		
	 	Redemption Notice and may submit a Redemption Notice with respect
to the shares referenced in the withdrawn Redemption Notice at any
time or (2) elect cash redemption as set forth in Section
6(B)(ii), in which case, the Cash Redemption Closing Date shall be
the second Business Day after and excluding the date on which the
Holder notifies the Company in writing of its election for cash
redemption to the extent permitted under the terms of the
Company’s credit facilities set forth in Champion’s SEC Filings
(as defined in the Main Agreement) made on or before the date of
the Main Agreement and excluding any subsequent amendments or
extensions thereto.




		
	 	     (C) The Company shall at all times reserve for issuance such number
of its shares of Common Stock as shall be required under the Main
Agreement.




		
	 	     (D) The Company will procure, at its sole expense, the listing of
the Common Stock issuable upon conversion or redemption of the Series B-2
Preferred Stock and shares issuable as dividends hereunder, subject to
issuance or notice of issuance, on all stock exchanges and quotation
systems on which the Common Stock is then listed or quoted, no later than
the date on which such Series B-2 Preferred Stock is issued to the Holder
and thereafter shall use its best efforts to prevent delisting or removal
from quotation of such shares. The Company will pay any and all
documentary stamp or similar issue or transfer taxes that may be payable
in respect of the issuance or delivery of shares of Common Stock on
conversion or redemption of shares of the Series B-2 Preferred Stock.
The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involving the issue and delivery of
shares of Common Stock in a name other than that in which the shares of
Series B-2 Preferred Stock so converted or redeemed were registered, and
no such issue and delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax,
or has established, to the reasonable satisfaction of the Company, that
such tax has been paid.




		
	 	     (E) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion or redemption of the Series B-2
Preferred Stock. If any such conversion or redemption would otherwise
require the issuance of a fractional share of Common Stock, an amount
equal to such fraction multiplied by the current Daily Market Price per
share of Common Stock on the date of conversion or redemption shall be
paid to the Holder in cash by the Company. If more than one share of
Series B-2 Preferred Stock shall be surrendered for conversion or
redemption at one time by or for the same Holder, the number of full
shares of Common Stock issuable upon conversion or redemption thereof
shall be computed on the basis of the aggregate number of shares of
Series B-2 Preferred Stock so surrendered.




		
	 	     (F) Business Combinations.




		
	 	     (i) In case the Company after the date of the Main Agreement
is party to (a) any acquisition of the Company by means of merger
or other form of corporate reorganization in which outstanding
shares of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the Acquiring
Person or its Parent, Subsidiary or affiliate, (b) a sale of all
or substantially all of the assets of the Company (on a
consolidated basis) in a single transaction or series of related
transactions, (c) any other transaction or series of related
transactions by the Company in which the power to cast the
majority of the eligible votes at a meeting of the Company’s
shareholders at which directors are elected is transferred to a
single entity or group acting in concert, or (d) a capital
reorganization or reclassification of the Common Stock or Other
Securities (other than a reorganization or reclassification in
which the Common Stock or Other Securities are not converted into
or exchanged for cash or other property, and, immediately after
consummation of such transaction, the shareholders of the Company
immediately prior to such transaction own the Common Stock, Other
Securities or other voting stock of the Company in substantially
the same proportions relative to each other as such shareholders
owned immediately prior to such transaction), then, and in the
case of each such transaction (each of which is referred to herein
as “Business



 






 







		
	 	Combination”), proper provision shall be made so that, upon
the basis and the terms and in the manner provided herein, the
Holder of each unconverted and unredeemed share of Series B-2
Preferred Stock, upon conversion or redemption hereof at any time
after the consummation of such Business Combination, shall be
entitled to receive upon such conversion or redemption, in lieu of
the cash, Common Stock or Other Securities issuable upon such
conversion or redemption prior to such consummation, any of the
following, as shall be elected, in whole or in part, from time to
time, by such Holder:




		
	 	     A. the stock and other securities, cash and property
to which such Holder would have been entitled upon such
consummation if such Holder had converted such Series B-2
Preferred Stock immediately prior thereto;




		
	 	     B. the stock and other securities, cash and property
to which such Holder would have been entitled upon such
consummation if (i) such Holder had elected redemption of
such Series B-2 Preferred Stock, with the Redemption Notice
Date occurring immediately prior thereto (notwithstanding
any restrictions on redemption existing on such Redemption
Notice Date) and (ii) the Company had elected to redeem
such shares for Registered Common Stock immediately prior
thereto




		
	 	     C. the number of shares of common stock of the
Acquiring Person or its Parent, at the election of the
Holder, determined by dividing (A) the amount equal to the
product obtained by multiplying (1) the number of shares of
the Company’s Common Stock (or Other Securities) to which
such Holder would have been entitled had such holder
converted such Series B-2 Preferred Stock immediately prior
to such consummation, times (2) the greater of the
Acquisition Price and the Conversion Price in effect on the
Business Day immediately preceding the date of such
consummation, by (B) the Daily Market Price per share of
the common stock of the Acquiring Person or its Parent, as
the case may be, on the Business Day immediately preceding
the date of such consummation;




		
	 	     D. the number of shares of common stock of the
Acquiring Person or its Parent, at the election of the
Holder, determined by dividing (A) the aggregate Redemption
Amount of such shares of Series B-2 Preferred Stock by (B)
the lesser of (1) the Average Market Price of the common
stock of the Acquiring Person or its Parent, as the case
may be, calculated as of the date the Business Combination
is consummated, and (2) the quotient of (a) the product of
(i) the Conversion Price (but if before such consummation
the Company shall combine, subdivide or reclassify its
Common Stock, shall declare any dividend payable in shares
of Common Stock, or shall take any other action of a
similar nature affecting such shares, this amount shall be
adjusted to the extent appropriate to reflect such event or
events) and (ii) the Daily Market Price per share of the
common stock of the Acquiring Person or its Parent, as the
case may be, on the Business Day immediately preceding the
date of such consummation divided by (b) the Daily Market
Price per share of the Company’s Common Stock on the
Business Day immediately preceding the date of such
consummation. The foregoing notwithstanding, if the
Acquiring Person or its Parent, as the case may be, shall
combine, subdivide or reclassify its Common Stock, or shall
declare any dividend payable in shares of its Common Stock,
or shall take any other action of a similar nature
affecting such shares, the conversion or redemption price
in this clause (D) shall be adjusted to the extent
appropriate to reflect such event, including appropriate
adjustments to account for any such event that occurs
during any of the measurement periods set forth in the
previous sentence; or



 






 







		
	 	     E. cash in an amount equal to one hundred thirty-three
percent (133%) of the aggregate Redemption Amount of such
shares of Series B-2 Preferred Stock;




		
	 	provided, that if the Company delivers to such Holder a written
notice in the form of Annex K to the Main Agreement (a “Business
Combination Restriction Notice”) no later than the fifteenth
(15th) calendar day after and excluding the date on which the
proposed Business Combination is first publicly disclosed and no
later than the fifteenth (15th) calendar day before and excluding
the closing date of such Business Combination, then in lieu of
clauses (A), (B), (C), (D) and (E) above and all other rights and
preferences under this Certificate of Rights and Preferences, the
Holder shall receive, on such closing date, in exchange for the
shares of Series B-2 Preferred Stock then held by such Holder, (1)
the stock and other securities, cash and property to which such
Holder would have been entitled upon such closing date if such
Holder had, (a) converted such Series B-2 Preferred Stock
immediately prior to such closing date or (b) redeemed
(notwithstanding any restrictions on redemption existing on such
Redemption Notice Date) such Series B-2 Preferred Stock effective
upon such closing date, calculated as if the Redemption Notice
Date occurred immediately prior to such closing date and the
Company had elected to redeem such shares for Registered Common
Stock immediately prior thereto (the selection of (a) or (b) shall
be made by such Holder in its sole discretion by written notice
delivered to the Company no later than the third (3rd) Business
Day before and including such closing date; provided that such
Holder may change such election at any time if any material change
shall occur in (i) the closing date, (ii) the consideration
deliverable to Common Stock holders in such Business Combination,
(iii) the Acquisition Price, or (iv) any material term or
condition of such Business Combination) and (2) in addition to all
consideration received by such Holder under clause (1) above, cash
equal to the product of (x) the aggregate Redemption Amount of
such shares of Series B-2 Preferred Stock multiplied by (y) the
Merger Adjustment Percentage and provided further, that if such
Holder converts or redeems shares of Series B-2 Preferred Stock on
or after the date of delivery of the Business Combination
Restriction Notice and before the date of closing of such Business
Combination, then in addition to the stock and other securities,
cash and property that such Holder has received, or is entitled to
receive, upon the conversion or redemption of such shares, such
Holder shall be entitled to receive upon the date of closing of
such Business Combination the cash amount described in clause (2)
above (but not the stock and other securities, cash and property
described in clause (1) above) with respect to all such previously
converted or redeemed shares. The “Merger Adjustment Percentage”
shall equal the product of the Merger Payment Percentage
multiplied by a fraction the numerator of which shall be the
number of days remaining until the seventh (7th) anniversary of
the Issue Date and the denominator of which shall be two thousand
five hundred and twenty (2,520); provided that the Merger
Adjustment Percentage shall not be less than zero percent (0%).
The “Merger Payment Percentage” shall equal (A) fifty percent
(50%) minus (B) the product of (1) ten percent (10%) multiplied by
(2) the quotient (which shall not be less than zero percent (0%))
of (x) the Acquisition Price in effect on the Business Day
immediately preceding the date of such consummation minus the
Conversion Price in effect on the Business Day immediately
preceding the date of such consummation divided by (y) the
Conversion Price in effect on the Business Day immediately
preceding the date of such consummation.




		
	 	     (ii) Notwithstanding anything contained herein or in the Main
Agreement to the contrary, the Company will not effect any
Business Combination unless the requirements of Section 11 of the
Main Agreement have been met and unless, prior to the consummation
thereof, each Person (other than the Company) that may be required
to deliver any stock, securities, cash or property upon conversion
of Series B-2 Preferred Stock as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to,
the Holders of a Majority of the Series B-2 Preferred Stock, (A)
the obligations of the Company under this Certificate of Rights
and Preferences (and if the



 






 







		
	 	Company shall survive the consummation of such transaction,
such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this
Certificate of Rights and Preferences) and (B) the obligation to
deliver to the Holders of Series B-2 Preferred Stock such shares
of stock, securities, cash or property as, in accordance with the
foregoing provisions of this Section 6(F), such Holders may be
entitled to receive, and such Person shall have similarly
delivered to such Holders an opinion of counsel for such Person,
which counsel shall be reasonably satisfactory to Holders of a
Majority of the Series B-2 Preferred Stock, stating that the
rights of such Holders under this Certificate of Rights and
Preferences shall thereafter continue in full force and effect and
the terms hereof, including, without limitation, all of the
provisions of this Section 6(F) shall be applicable to the stock,
securities, cash or property which such Person may be required to
deliver upon any conversion of Preferred Stock or exercise of any
rights pursuant hereto.



     7.     Status of Converted and Redeemed Shares; Limitations on Series B-2
Preferred Stock. The Company shall return to the status of unauthorized and
undesignated shares of Preferred Stock each share of Series B-2 Preferred Stock
which shall be converted, redeemed or for any other reason acquired by the
Company, and such shares thereafter may have such characteristics and
designations as the Board may determine (subject to Section 5), provided,
however, no share of Series B-2 Preferred Stock which shall be converted,
redeemed or otherwise acquired by the Company shall thereafter be reissued,
sold or transferred by the Company as Series B-2 Preferred Stock. The Company
will not issue any further shares of Series B-2 Preferred Stock. Except for
redemptions pursuant to Section 6(B), the Company shall have no right to redeem
the shares of Series B-2 Preferred Stock without the consent of a Majority of
the Holders.