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                                                                     EXHIBIT 4.1

                      CERTIFICATE OF RIGHTS AND PREFERENCES
                                       OF
                SERIES B-1 CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       OF
                           CHAMPION ENTERPRISES, INC.


         Pursuant to Section 450.1302 of the Michigan Business Corporation Act,
CHAMPION ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of Michigan, hereby certifies that the following resolution was
duly adopted by the Board of Directors of the Company on June 29, 2001, pursuant
to authority conferred upon the Board of Directors by the Restated Articles of
Incorporation of the Company, which authorizes the issuance of up to Five
Million (5,000,000) shares of preferred stock, no par value.

         RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors of the Company and pursuant to the provisions of the
Articles of Incorporation, the Board of Directors hereby creates a series of
preferred stock, herein designated and authorized as the Series B-1 Cumulative
Convertible Preferred Stock, no par value, which shall consist of Twenty
Thousand (20,000) of the Five Million (5,000,000) shares of preferred stock
which the Company now has authority to issue, and the Board of Directors hereby
fixes the powers, designations and preferences and the relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations and restrictions thereof as follows:

         1. Number. The number of shares constituting the Series B-1 Cumulative
Convertible Preferred Stock shall be Twenty Thousand (20,000).

         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, 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.


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         "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-1 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 (i) until and excluding December 29, 2001,
$15.93, and (ii) on and after December 29, 2001, one hundred and twenty percent
(120%) of the Average Market Price calculated as of December 29, 2001; provided
that the Conversion Price shall not be greater than $15.93 or less than 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-1
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),



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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-1 Preferred Stock.

         "Issue Date" means with respect to any shares of Series B-1 Preferred
Stock the original date of issuance of such shares of Series B-1 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-1 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.



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         "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-1 Preferred Stock" means more than fifty
percent (50%) of the then outstanding shares of Series B-1 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-1 Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series B-1 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-1 Preferred Stock.

         "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-1 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.



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         "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-1 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).

         "Stated Value" is an amount equal to one thousand dollars ($1,000) per
share of Series B-1 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.





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         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-1 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-1 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



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         Main Agreement and has used and is using its best efforts to obtain the
         Required Consent. 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-1 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-1 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 (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 all dividends to which the Holders of the Series B-1
         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.

                  (E) Whenever, at any time or times, dividends payable on any
         share of Series B Preferred Stock (as defined in the Main Agreement)
         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.



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                  (F) Whenever, at any time or times (i) an Issuance Blockage
         (as defined in the Main 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 (ii) the Company shall
         fail to redeem any shares of Series B-1 Preferred Stock for cash by the
         date it is obligated to do so under Section 6(B) hereof 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-1 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-1 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-1 Preferred Stock
held 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
Liquidation and no more (such 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-1
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-1 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-1 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-1 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-1 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-1 Preferred Stock:

                  (A) Each share of Series B-1 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-1 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:



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                           (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-1 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-1 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-1 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-1 Preferred
                                    Stock to the rights upon liquidation of the
                                    holders of any other capital stock of the
                                    Company;

                                             3. Make the Series B-1 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 security 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-1 Preferred
                  Stock in any manner.



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         6. Conversion and Redemption.

                  (A) Procedure for Conversion.

                           (i) Shares of Series B-1 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-1
                  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-1 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-1 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-1
                  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



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                           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-1 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-1 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



                                       11
<PAGE>   12
                  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-1 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-1
                  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-1 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-1 Preferred Stock may require the
                           Company to redeem any or all shares of Series B-1
                           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.

                                    B. On July 3, 2008, the Company shall redeem
                           all of the Series B-1 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)



                                       12
<PAGE>   13
                           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.

                           (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-1 Preferred Stock shall be for cash. At such
                  closing, the Holder shall surrender the certificate
                  representing the shares of Series B-1 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



                                       13
<PAGE>   14
                  (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-1 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-1 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-1 Preferred Stock shall be for
                  Registered Common Stock. At such closing, the Holder shall
                  surrender the certificate representing the shares of Series
                  B-1 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-1 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



                                       14
<PAGE>   15
                  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-1 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-1 Preferred Stock being redeemed (calculated as of
                  the Stock Redemption Closing Date) divided by (y) the lesser
                  of (1) the Average Market Price calculated as of the
                  Redemption Notice Date, (2) the Daily Market Price on the date
                  the Company delivers its election to redeem such shares for
                  Registered Common Stock and (3) 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. 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.



                                       15
<PAGE>   16
                                    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.

                  (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-1 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-1 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-1 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-1 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-1 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-1 Preferred



                                       16
<PAGE>   17
         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-1 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-1
                  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-1 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 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

                                       17
<PAGE>   18
                                    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-1 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-1 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-1
                           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



                                       18
<PAGE>   19
                  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-1 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-1 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-1 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-1 Preferred Stock multiplied
                  by (y) the Merger Adjustment Percentage and provided further,
                  that if such Holder converts or redeems shares of Series B-1
                  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




                                       19
<PAGE>   20
                  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-1 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-1 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-1 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-1
                  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-1
Preferred Stock. The Company shall return to the status of unauthorized and
undesignated shares of Preferred Stock each share of Series B-1 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-1 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-1 Preferred Stock. The Company will
not issue any further shares of Series B-1 Preferred Stock. Except for
redemptions pursuant to Section 6(B), the Company shall have no right to redeem
the shares of Series B-1 Preferred Stock without the consent of a Majority of
the Holders.



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