<PAGE>
                                                                     EXHIBIT 4.2



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

                            CERTIFICATE OF RESOLUTION


         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, as
amended and restated by a resolution duly adopted by the Board of Directors on
March 29, 2002, 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, 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




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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-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.



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         "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), 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



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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-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 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-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.



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         "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-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).

         "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-1 Preferred Stock.

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         "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-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





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         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-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.



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                  (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 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-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 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-1 Preferred Stock in an amount for each such share
         of Series B-1 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-1 Preferred Stock.



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         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 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-1
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-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:

                           (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:



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                                    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 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-1 Preferred
                  Stock in any manner.

         6. Conversion and Redemption.

                  (A)      Procedure for Conversion.

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<PAGE>
                           (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) at the option of the Holder thereof at any
                  time, from time to time, in whole or in part. 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").

                           (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.



                                       11
<PAGE>
                                    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 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




                                       12
<PAGE>
                  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 the Initial Closing Date
                  (as defined in the Series C Preferred Stock Agreement), 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). 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-1 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 March 29, 2004, 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) 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





                                       13
<PAGE>
                  received upon redemption if such Holder had converted all of
                  such Holder's Series B-1 Preferred Stock into Common Stock in
                  accordance with the provisions of Section 6(A) hereof as of
                  the Business Day immediately preceding March 29, 2004 (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) In connection with a redemption under Section 6(B)(i)(B),
         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 February 23, 2004 (the "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 March 29, 2004) (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





                                       14
<PAGE>
         of March 29, 2004 (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-1 Preferred Stock which have not been redeemed via
         reputable overnight courier to such address specified by the Holder.

                  (iii) If the Holder elects to redeem pursuant to Section
         6(B)(i)(A) hereof 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, in
         the case of a redemption pursuant to Section 6(B)(i)(A), the seventh
         Business Day after and excluding the Redemption Notice Date, or, in the
         case of a redemption pursuant to Section 6(B)(i)(B), on March 29, 2004,
         or in either case on such other date as the Company and such Holder
         agree in writing (the "Stock Redemption Closing Date"). 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



                                       15
<PAGE>
         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 greater of
         (1) the lesser of (A) the Average Market Price calculated as of the
         Redemption Notice Date or the Redemption Reference Date, as applicable,
         (B) in the case of elections pursuant to Section 6(B)(i)(B) only (and
         not in the case of elections pursuant to Section 6(B)(i)(A)), if the
         Company fails to deliver an election to redeem such shares for cash by
         the Redemption Reference Date, the Daily Market Price on the fifth
         (5th) Business Day immediately preceding the Stock Redemption Closing
         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




                                       16
<PAGE>
                  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-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.

                                       17
<PAGE>
         (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 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-1 Preferred Stock, with




                                       18
<PAGE>

                  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-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;

                                       19
<PAGE>
                  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-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


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<PAGE>
                  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-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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