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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.

                                       20<PAGE>   1
                                                                     EXHIBIT 4.2

                                    AGREEMENT

          This Agreement (this "Agreement") dated as of June 29, 2001 is entered
into by and between Champion Enterprises, Inc., a corporation organized under
the laws of Michigan (together with its successors, "Champion"), and Fletcher
International, Ltd., a company organized under the laws of Bermuda (together
with its successors, "Fletcher").

          The parties hereto agree as follows:

          1. Purchase and Sale. In consideration of and upon the basis of the
representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:

               (a) Fletcher agrees to purchase from Champion, and Champion
     agrees to sell to Fletcher on the Initial Closing Date (as defined below),
     in accordance with Section 2 below, twenty thousand (20,000) shares (the
     "Initial Preferred Shares") of Champion's Series B-1 Cumulative Convertible
     Preferred Stock (the "Series B-1 Preferred Stock"), having the terms and
     conditions set forth in the Certificate of Rights and Preferences attached
     hereto as Annex A (the "Certificate of Rights and Preferences"), at a price
     of one thousand dollars ($1,000) per share for an aggregate purchase price
     of twenty million dollars ($20,000,000). Fletcher shall have the right to
     convert the outstanding Initial Preferred Shares into shares of Common
     Stock of Champion, par value one dollar ($1.00) (the "Common Stock"), in
     the manner, and subject to the terms, specified in this Agreement and in
     the Certificate of Rights and Preferences.

               (b) The closing (the "Initial Closing") of the sale of the
     Initial Preferred Shares shall occur on the second (2nd) Business Day,
     after and excluding the date hereof, or at such other date and time as
     Fletcher and Champion shall mutually agree (such date, the "Initial Closing
     Date").

               (c) Champion grants Fletcher rights (the "Fletcher Rights") to
     require Champion to issue to it from time to time, in whole or in part, up
     to an aggregate of twelve thousand (12,000) shares of additional series of
     Champion preferred stock (e.g., Series B-2 Cumulative Convertible Preferred
     Stock, Series B-3 Cumulative Convertible Preferred Stock, etc.) having,
     except as set forth below, similar terms, conditions, rights, preferences
     and privileges as the Series B-1 Preferred Stock (such shares shall
     collectively be referred to as the "Additional Preferred Shares" and
     together with the Initial Preferred Shares, the "Series B Preferred
     Shares") at a price of one thousand dollars ($1,000) per share for an
     aggregate purchase price for all Fletcher Rights of twelve million dollars
     ($12,000,000). Fletcher shall have the right to convert the outstanding
     Additional Preferred Shares into shares of Common Stock in the manner, and
     subject to the terms, specified in this Agreement and in a certificate of
     rights and preferences for each such series of Additional Preferred Shares
     (each, a "Subsequent Certificate of Rights and Preferences" and
     collectively, the "Subsequent Certificates of Rights and Preferences").
     Each Subsequent Certificate of Rights and Preferences shall have the same
     terms and conditions as the Certificate of Rights and Preferences, except

<PAGE>   2

     that (A) the Conversion Price (as defined therein) shall equal the greater
     of (i) one hundred twenty percent (120%) of the Average Market Price (as
     defined therein) calculated as of the corresponding Subsequent Closing Date
     and (ii) seven dollars and fifty cents ($7.50); and (B) the number of
     Additional Preferred Shares issued pursuant to each Subsequent Certificate
     of Rights and Preferences may differ from the number of shares of Series
     B-1 Preferred Stock. To exercise any Fletcher Rights, Fletcher shall
     deliver one or more written notices substantially in the form attached
     hereto as Annex B (a "Fletcher Notice") to Champion from time to time
     commencing from the date six months after and excluding the date hereof and
     ending no later than twenty-one (21) months after and excluding the date
     hereof (the "Fletcher Rights Period"). Upon satisfaction or, if applicable,
     waiver of the relevant conditions set forth in Sections 14 and 15 hereof,
     the closing of each exercise of Fletcher Rights (each, a "Subsequent
     Closing") shall take place on the date that is two (2) Business Days
     following and excluding delivery of the Fletcher Notice, or at such other
     date and time as Fletcher and Champion shall mutually agree (such date and
     time being referred to herein as the "Subsequent Closing Date," and
     together with the Initial Closing Date, each a "Closing Date").

               (d) Champion grants Fletcher the rights to redeem all or part of
     each series of Series B Preferred Shares (including any accrued and unpaid
     dividends) commencing twenty-four (24) months following and excluding the
     Initial Closing Date, pursuant to the terms and conditions set forth in the
     Certificate of Rights and Preferences or Subsequent Certificate of Rights
     and Preferences of each such series (the "Redemption Rights"), upon
     delivery of a notice of redemption in the form attached hereto as Annex C
     (the "Redemption Notice"). Under certain circumstances set forth in the
     Certificate of Rights and Preferences or Subsequent Certificate of Rights
     and Preferences of each such series, Champion may satisfy its redemption
     obligations by delivering shares of Common Stock (the amount of which shall
     be determined pursuant to the terms and conditions set forth in the
     Certificate of Rights and Preferences or Subsequent Certificate of Rights
     and Preferences of each such series) (the "Redemption Common Stock").

               (e) As used herein, the term "Common Shares" means the Redemption
     Common Stock and shares issuable upon conversion or redemption of or as
     dividends under the Series B Preferred Shares, and all other Common Stock
     issuable under the Certificate of Rights and Preferences, Subsequent
     Certificates of Rights and Preferences or this Agreement; the term
     "Investment Securities" means the Series B Preferred Shares issued
     hereunder, and all Common Shares; the term "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; and
     the term "NYSE" means the New York Stock Exchange, but if the New York
     Stock Exchange is not then the principal U.S. trading market for the Common
     Stock, or such other applicable common stock, then "NYSE" shall be deemed
     to mean the principal U.S. national securities exchange (as defined in the
     Securities Exchange Act of 1934, as amended (the "Exchange Act")) on which
     the Common Stock, or such other applicable common stock, is then traded, or
     if such Common Stock, or such other applicable common stock, is not then
     listed or admitted to trading on any national securities exchange but is
     designated as a national market system security or a Nasdaq SmallCap Market
     Security by the National

                                       2
<PAGE>   3

     Association of Securities Dealers, Inc. ("NASD"), then such market system,
     or if such Common Stock, or such other applicable common stock, is not
     listed or quoted on any of the foregoing, then the OTC Bulletin Board.

          2. Initial Closing. The Initial Closing shall take place initially via
facsimile on the Initial Closing Date in the manner set forth below; provided
that original certificates representing shares of Series B-1 Preferred Stock
shall be delivered via Federal Express or another reputable overnight carrier to
Fletcher as Fletcher instructs in writing. At the Initial Closing, the following
deliveries shall be made:

               (a) Series B-1 Preferred Stock. Champion shall deliver to
     Fletcher four (4) stock certificates, each representing five thousand
     (5,000) shares of Series B-1 Preferred Stock, duly executed by Champion in
     definitive form, and shall register such shares in the shareholder register
     of Champion.

               (b) Purchase Price. Fletcher shall cause to be wire transferred
     to Champion, in accordance with the instructions set forth in Section 20,
     the aggregate purchase price of twenty million dollars ($20,000,000) in
     immediately available United States funds.

               (c) Closing Documents. The closing documents required by Sections
     14 and 15 shall be delivered to Fletcher and Champion, respectively.

               (d) Delivery Notice. An executed copy of the delivery notice in
     the form attached hereto as Annex E shall be delivered to Fletcher.

The deliveries specified in this Section 2 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.

          3. Subsequent Closing. Each Subsequent Closing shall take place
initially via facsimile on the Subsequent Closing Date in the manner set forth
below; provided that original certificates representing Additional Preferred
Shares shall be delivered via Federal Express or another reputable overnight
carrier to Fletcher as Fletcher instructs in writing. At each Subsequent
Closing, the following deliveries shall be made:

               (a) Additional Preferred Shares. Champion shall issue and deliver
     to Fletcher stock certificates, each representing five thousand (5,000)
     Additional Preferred Shares (except that to the extent the number of
     Additional Preferred Shares to be delivered is not evenly divisible by five
     thousand (5,000), one (1) stock certificate shall represent the remaining
     shares), duly executed by Champion, and shall register such shares in the
     shareholder register of Champion.

               (b) Purchase Price. Fletcher shall cause to be wire transferred
     to Champion, in accordance with the instructions set forth in Section 20,
     one thousand dollars ($1,000) per Additional Preferred Share, in the
     aggregate the "Additional Issuance Price" as specified in the applicable
     Fletcher Notice (the "Additional Issuance Price")

                                       3
<PAGE>   4

     payable on such Subsequent Closing Date, in immediately available United
     States dollars.

               (c) Closing Documents. The closing documents required by Sections
     14 and 15 shall be delivered to Fletcher and Champion, respectively.

               (d) Delivery Notice. An executed copy of the delivery notice in
     the form attached hereto as Annex E shall be delivered to Fletcher.

The deliveries specified in this Section 3 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.

          4. Representations and Warranties of Champion. Champion hereby
represents and warrants to Fletcher on each Closing Date, as follows:

               (a) Champion has been duly incorporated and is validly existing
     in good standing under the laws of Michigan or, after the Initial Closing
     Date, if another entity has succeeded Champion in accordance with the terms
     hereof, under the laws of one of the states of the United States.

               (b) The execution, delivery and performance of this Agreement,
     the Certificate of Rights and Preferences and Subsequent Certificates of
     Rights and Preferences (including the authorization, sale, issuance and
     delivery of the Investment Securities) have been duly authorized by all
     requisite corporate action and no further consent or authorization of
     Champion, its Board of Directors or its shareholders is required, except as
     otherwise contemplated by this Agreement.

               (c) This Agreement has been duly executed and delivered by
     Champion and, when this Agreement is duly authorized, executed and
     delivered by Fletcher, will be a valid and binding agreement enforceable
     against Champion in accordance with its terms, subject to bankruptcy,
     insolvency, reorganization, moratorium and similar laws of general
     applicability relating to or affecting creditors' rights generally and to
     general principles of equity. The issuance of the Investment Securities are
     not and will not be subject to any preemptive right or rights of first
     refusal that have not been properly waived or complied with.

               (d) Champion has full corporate power and authority necessary to
     (i) own and operate its properties and assets, execute and deliver this
     Agreement, (ii) perform its obligations hereunder and under the Certificate
     of Rights and Preferences or Subsequent Certificates of Rights and
     Preferences (including, but not limited to, the issuance of the Investment
     Securities) and (iii) carry on its business as presently conducted and as
     presently proposed to be conducted. Champion and its subsidiaries are duly
     qualified and are authorized to do business and are in good standing as
     foreign corporations in all jurisdictions in which the nature of their
     activities and of their properties (both owned and leased) makes such
     qualification necessary, except for those jurisdictions in which failure to
     do so would not have a material adverse effect on the

                                       4
<PAGE>   5

     business affairs, assets, results of operations or prospects of Champion
     and its subsidiaries, taken as a whole. Set forth on Schedule 4(d) attached
     hereto, is a complete list of all subsidiaries of Champion as of the date
     hereof.

               (e) No consent, approval, authorization or order of any court,
     governmental agency or other body is required for execution and delivery by
     Champion of this Agreement or the performance by Champion of any of its
     obligations hereunder and under the Certificate of Rights and Preferences
     or Subsequent Certificates of Rights and Preferences other than such as may
     already have been received.

               (f) Neither the execution and delivery by Champion of this
     Agreement nor the performance by Champion of any of its obligations
     hereunder and under the Certificate of Rights and Preferences or Subsequent
     Certificates of Rights and Preferences:

                    (i) violates, conflicts with, results in a breach of, or
          constitutes a default (or an event which with the giving of notice or
          the lapse of time or both would be reasonably likely to constitute a
          default) or creates any rights in respect of any person under (A) the
          certificates of incorporation or by-laws of Champion or any of its
          subsidiaries, (B) any decree, judgment, order, or determination of any
          court, governmental agency or body, or arbitrator having jurisdiction
          over Champion or any of its subsidiaries or any of their respective
          properties or assets or any material law, treaty, rule or regulation,
          (C) the terms of any bond, debenture, note, indenture, credit
          agreement or any other evidence of indebtedness, or any material
          agreement, stock option or other similar plan, lease, mortgage, deed
          of trust or other instrument to which Champion or any of its
          subsidiaries is a party, by which Champion or any of its subsidiaries
          is bound, or to which any of the properties or assets of Champion or
          any of its subsidiaries is subject, (D) the terms of any "lock-up" or
          similar provision of any underwriting or similar agreement to which
          Champion or any of its subsidiaries is a party, (E) any material rule
          or regulation of the NASD or the New York Stock Exchange or any rule
          or regulation of the markets where Champion's securities are publicly
          traded or quoted applicable to Champion or the transactions
          contemplated hereby or (F) the Rights Agreement by and between
          Champion and Harris Trust and Savings Bank, dated January 9, 1996,
          except for such violations, conflicts, breaches or defaults referred
          to in clauses (B), (C), (D) and (E) that would not affect Champion's
          ability to execute and deliver or to perform any of its obligations
          under this Agreement, the Certificate of Rights and Preferences or any
          Subsequent Certificate of Rights and Preferences; or

                    (ii) results in the creation or imposition of any lien,
          charge or encumbrance upon any Investment Securities or any material
          lien, charge or encumbrance upon any of the properties or assets of
          Champion or any of its subsidiaries.

               (g) Champion has validly reserved for issuance to Fletcher the
     Preferred Shares and any Additional Preferred Shares under this Agreement
     and five

                                       5
<PAGE>   6

     million (5,000,000) shares of Common Stock. When issued to Fletcher against
     payment therefor, each Investment Security:

                    (i) will have been duly and validly authorized, duly and
          validly issued, fully paid and non-assessable;

                    (ii) will be free and clear of any security interests,
          liens, claims or other encumbrances; and

                    (iii) will not have been issued or sold in violation of any
          preemptive or other similar rights of the holders of any securities of
          Champion.

               (h) As of the date hereof, Champion satisfies all maintenance
     criteria of the New York Stock Exchange and, after the Closing Date,
     Champion satisfies all maintenance criteria for the New York Stock
     Exchange, Nasdaq National Market, or American Stock Exchange, or has a
     valid exemption from such criteria of which it has previously notified
     Fletcher in writing. To the best knowledge of Champion, after due inquiry,
     no present set of facts or circumstances will (with the passage of time or
     the giving of notice or both or neither) cause any of the Common Stock to
     be delisted from the New York Stock Exchange. At the Initial Closing Date,
     all of the Covered Securities (as defined in Section 5.b) will, when
     issued, be duly listed and admitted for trading on all of the markets where
     shares of Common Stock are traded, including the New York Stock Exchange.
     At each Subsequent Closing Date, all of the Covered Securities (as defined
     in Section 5.b) will, when issued, be duly listed and admitted for trading
     on all of the markets where shares of Common Stock are traded, including
     one of the following: (i) the New York Stock Exchange, (ii) the Nasdaq
     National Market, or (iii) the American Stock Exchange.

               (i) There is no pending or, to the best knowledge of Champion,
     threatened action, suit, proceeding or investigation before any court,
     governmental agency or body, or arbitrator having jurisdiction over
     Champion or any of its affiliates that would materially affect the
     execution by Champion of, or the performance by Champion of its obligations
     under, this Agreement, the Certificate of Rights and Preferences or
     Subsequent Certificates of Rights and Preferences.

               (j) Since March 31, 1998, none of Champion's filings with the
     United States Securities and Exchange Commission (the "SEC") under the
     Securities Act of 1933, as amended (the "Securities Act") or under Section
     13(a) or 15(d) of the Exchange Act (each an "SEC Filing") contained any
     untrue statement of a material fact or omitted to state any material fact
     necessary in order to make the statements, in the light of the
     circumstances under which they were made, not misleading. Since March 31,
     1998, there has not been any pending or, to the best knowledge of Champion,
     threatened action, suit, proceeding or investigation before any court,
     governmental agency or body, or arbitrator having jurisdiction over
     Champion or any of its affiliates that could cause a material adverse
     change in the condition, financial or otherwise, or in the business
     affairs, assets, results of operations or prospects of Champion, whether or
     not arising in the ordinary course of business, except as disclosed in
     Champion's SEC Filings on or before the date

                                       6
<PAGE>   7

     immediately prior to and excluding the date hereof. Since the date of
     Champion's most recent SEC Filing, there has not been, any material adverse
     change in the condition, financial or otherwise, or in the business
     affairs, assets, results of operations or prospects of Champion, whether or
     not arising in the ordinary course of business.

               (k) The offer and sale of the Investment Securities to Fletcher
     pursuant to this Agreement will, subject to compliance by Fletcher with the
     applicable representations and warranties contained in Section 8 hereof and
     with the applicable covenants and agreements contained in Section 12
     hereof, be made in accordance with an exemption from the registration
     requirements of the Securities Act and any applicable state law. Neither
     Champion nor any agent on its behalf has solicited or will solicit any
     offers to sell or has offered to sell or will offer to sell all or any part
     of the Series B Preferred Shares to any person or persons so as to bring
     the sale of such Series B Preferred Shares by Champion within the
     registration provisions of the Securities Act.

               (l) Immediately prior to the Initial Closing Date, the authorized
     capital stock of Champion consists of one hundred twenty million
     (120,000,000) shares of Common Stock, par value one dollar ($1.00), and
     five million (5,000,000) shares of preferred stock, no par value
     ("Preferred Stock") of which seven hundred and fifty thousand (750,000) are
     designated Series A Preferred Stock. Immediately prior to the Initial
     Closing Date, (A) forty-seven million nine hundred and forty-seven thousand
     one hundred and sixty-five (47,947,165) shares of Common Stock and no
     shares of Series A Preferred Stock were issued and outstanding, (B) seven
     million two hundred and sixty-three thousand one hundred and sixty-seven
     (7,263,167) shares of Common Stock and seven hundred and fifty thousand
     (750,000) shares of Series A Preferred Stock are currently reserved and
     subject to issuance upon the exercise of outstanding stock options,
     warrants or other convertible rights, (C) no shares of Common Stock are
     held in the treasury of Champion, and (D) up to three hundred and
     thirty-four thousand one hundred and forty-seven (334,147) additional
     shares of Common Stock may be issued under the Champion Enterprises, Inc.
     Savings Plan. All of the outstanding shares of Preferred Stock and Common
     Stock are, and all shares of capital stock which may be issued pursuant to
     stock options, warrants or other convertible rights will be, when issued
     and paid for in accordance with the respective terms thereof, duly
     authorized, validly issued, fully paid and non-assessable, free of any
     preemptive rights in respect thereof and issued in material compliance with
     all applicable state and federal laws concerning issuance of securities. As
     of the date hereof, except as set forth above, and except for shares of
     Common Stock or other securities issued upon conversion, exchange, exercise
     or purchase associated with the securities, options, warrants, rights and
     other instruments referenced above, no shares of capital stock or other
     voting securities of Champion were outstanding, no equity equivalents,
     interests in the ownership or earnings of Champion or other similar rights
     were outstanding, and there were no existing options, warrants, calls,
     subscriptions or other rights or agreements or commitments relating to the
     capital stock of Champion or any of its subsidiaries or obligating Champion
     or any of its subsidiaries to issue, transfer, sell or redeem any shares of
     capital stock, or other equity interest in, Champion or any of its
     subsidiaries or obligating Champion or any of its subsidiaries to grant,
     extend or enter into any such option, warrant, call, subscription or other
     right, agreement or commitment. Attached hereto as Schedule 4(l) is a true
     and correct list as

                                       7
<PAGE>   8

     of the date of this Agreement of all outstanding options, warrants, calls,
     subscriptions and other rights or agreements or commitments relating to the
     issuance of additional shares of capital stock of Champion and with respect
     to each a description of the number and class of securities and the
     exercise price thereof.

               (m) Solvency. The sum of the assets of Champion, at a fair
     valuation, exceeds its liabilities. Champion has sufficient capital with
     which to conduct its business as presently conducted and as proposed to be
     conducted and Champion has not incurred debts, and does not intend to incur
     debts, beyond its ability to pay such debts as they mature. For purposes of
     this paragraph, "debt" means any liability on a claim, and "claim" means
     (x) a right to payment, whether or not such right is reduced to judgment,
     liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
     undisputed, legal, equitable, secured, or unsecured, or (y) a right to an
     equitable remedy for breach of performance if such breach gives rise to a
     payment, whether or not such right to an equitable remedy is reduced to
     judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
     secured, or unsecured.

               (n) Audited Financials. Attached hereto as Annex F is a true,
     correct and complete copy of (i) the report of PricewaterhouseCoopers LLP
     dated February 13, 2001, together with the accompanying consolidated
     financial statements and schedules of Champion at December 31, 2000 and the
     results of Champion's operations and cash flows for each of the three (3)
     years in the period ended December 31, 2000, as such report appears in the
     Annual Report on Form 10-K for the fiscal year ended December 31, 2000
     filed by Champion with the SEC (the "Auditor Report") and (ii) the written
     consent of PricewaterhouseCoopers LLP to the inclusion of its report
     described in clause (i) herein.

               (o) Equivalent Value. As of the Initial Closing Date, the
     consideration that Champion is receiving from Fletcher is equivalent in
     value to the consideration Fletcher is receiving from Champion pursuant to
     this Agreement. As of the Initial Closing Date, under the terms of this
     Agreement, Champion is receiving fair consideration from Fletcher for the
     agreements, covenants, representations and warranties made by Champion to
     Fletcher.

               (p) No Non-Public Information. Fletcher has not requested from
     Champion, and Champion has not furnished to Fletcher, any material
     non-public information concerning Champion or its subsidiaries.

               (q) Restatement Notices. As of each Subsequent Closing Date,
     Champion has provided Fletcher with all Restatement Notices (as defined in
     the Certificate of Rights and Preferences or Subsequent Certificates of
     Rights and Preferences) required to be delivered following a Restatement
     (as defined in the Certificate of Rights and Preferences or Subsequent
     Certificates of Rights and Preferences).

                                       8
<PAGE>   9

          5. Registration Provisions.

               (a) Champion shall, as soon as practicable and at its own
     expense, but in no event later than twenty (20) calendar days after, and
     including, the Initial Closing Date, file a Registration Statement (as
     defined below) under the Securities Act covering the resale of all of the
     Common Shares and shall use its best efforts to cause such Registration
     Statement to be declared effective on or prior to one hundred and fifteen
     (115) calendar days following, and including, the Initial Closing Date (the
     "Required Registration Date") and shall promptly amend such Registration
     Statement or file an additional Registration Statement from time to time if
     the maximum number of Common Shares issued or issuable upon conversion of
     the Series B Preferred Shares is greater than the number of Common Shares
     registered pursuant to such Registration Statement. The obligations to have
     the Registration Statement declared effective and to maintain such
     effectiveness as provided in this Section 5 are referred to herein as the
     "Registration Requirement." Pursuant to the preceding sentence, Champion
     shall register pursuant to such Registration Statement not less than the
     number of shares of Common Stock equal to 1.5 times the total number of
     Common Shares issued or issuable under this Agreement (including all shares
     issued or issuable under the Series B Preferred Shares, whether upon
     conversion or redemption) within the year following such date or otherwise
     on an as-converted basis as of such date (the "Registrable Number").
     Champion shall promptly amend such Registration Statement (or, if
     necessary, file a new Registration Statement) at any time that the number
     of Common Shares issued and issuable under this Agreement exceeds eighty
     percent (80%) of the number of shares then registered so that the
     Registrable Number (as determined on such date) of Common Shares shall be
     registered and freely tradable.

               (b) Each Common Share is a "Covered Security" and the
     registration statement filed or required to be filed under the Securities
     Act in accordance with Section 5(a) hereof, along with any amendments and
     additional registration statements, is referred to as the "Registration
     Statement". Champion shall provide prompt written notice to Fletcher when
     the Registration Statement has been declared effective by the SEC.

               (c) Champion will use its best efforts to: (A) keep the
     Registration Statement effective until the earlier of (x) the later of (i)
     the second anniversary of the issuance of the last Covered Security that
     may be issued, or (ii) such time as all of the Covered Securities issued or
     issuable to Fletcher can be sold by Fletcher or any of its affiliates
     within a three (3)-month period without compliance with the registration
     requirements of the Securities Act pursuant to Rule 144 under the
     Securities Act ("Rule 144") or (y) the date all of the Covered Securities
     issued or issuable shall have been sold by Fletcher (such later period, the
     "Registration Period"); (B) prepare and file with the SEC such amendments
     and supplements to the Registration Statement and the prospectus used in
     connection with the Registration Statement (as so amended and supplemented
     from time to time, the "Prospectus") as may be necessary to comply with the
     provisions of the Securities Act with respect to the disposition of all
     Covered Securities by Fletcher or any of its affiliates; (C) furnish such
     number of Prospectuses and other documents incident thereto, including any
     amendment of or supplement to the Prospectus, as Fletcher from time to time
     may reasonably request; (D) cause all Covered Securities to be

                                       9
<PAGE>   10

     listed on each securities exchange and quoted on each quotation service on
     which similar securities issued by Champion are then listed or quoted; (E)
     provide a transfer agent and registrar for all Covered Securities and a
     CUSIP number for all Covered Securities; (F) otherwise comply with all
     applicable rules and regulations of the SEC, the New York Stock Exchange
     and any other exchange or quotation service on which the Covered Securities
     are obligated to be listed or quoted under this Agreement; and (G) file the
     documents required of Champion and otherwise obtain and maintain requisite
     blue sky clearance in (x) New York and all other jurisdictions in which any
     of the shares of Common Stock were originally sold and (y) all other states
     specified in writing by Fletcher, provided, however, that as to this clause
     (y), Champion shall not be required to qualify to do business or consent to
     service of process in any state in which it is not now so qualified or has
     not so consented. Fletcher shall have the right to approve the description
     of the selling shareholder, plan of distribution and all other references
     to Fletcher contained in any Registration Statement and any Prospectus.

               (d) Champion shall furnish to Fletcher upon request a reasonable
     number of copies of a supplement to or an amendment of any Prospectus as
     may be necessary in order to facilitate the public sale or other
     disposition of all or any of the Covered Securities by Fletcher or any of
     its affiliates pursuant to the Registration Statement.

               (e) With a view to making available to Fletcher and its
     affiliates the benefits of Rule 144 and Form S-3 under the Securities Act,
     Champion covenants and agrees to: (A) make and keep available adequate
     current public information (within the meaning of Rule 144(c)) concerning
     Champion, until the earlier of (x) the second (2nd) anniversary of the
     issuance of the last Covered Security to be issued or (y) such date as all
     of the Covered Securities shall have been resold by Fletcher or any of its
     affiliates; and (B) furnish to Fletcher upon request, as long as Fletcher
     owns any Covered Securities, (x) a written statement by Champion that it
     has complied with the reporting requirements of the Securities Act and the
     Exchange Act, (y) a copy of the most recent annual or quarterly report of
     Champion, and (z) such other information as may be reasonably requested in
     order to avail Fletcher and its affiliates of Rule 144 or Form S-3 with
     respect to such Covered Securities.

               (f) Notwithstanding anything else in this Section 5, if, at any
     time during which a Prospectus is required to be delivered in connection
     with the sale of any Covered Security, Champion determines in good faith
     that a development has occurred or a condition exists as a result of which
     the Registration Statement or the Prospectus contains a material
     misstatement or omission, or that a material transaction in which Champion
     is engaged or proposes to engage would require an amendment to the
     Registration Statement, a supplement to the Prospectus, or a filing under
     the Exchange Act or other public disclosure of material information and the
     disclosure of such transaction would be premature or injurious to the
     consummation of the transaction, Champion will immediately notify Fletcher
     thereof by telephone and in writing. Upon receipt of such notification,
     Fletcher and its affiliates will immediately suspend all offers and sales
     of any Covered Security pursuant to the Registration Statement. In such
     event, Champion will amend or supplement the Registration Statement and the
     Prospectus or

                                       10
<PAGE>   11

     make such filings or public disclosures as promptly as practicable and will
     use its best efforts to take such other steps as may be required to permit
     sales of the Covered Securities thereunder by Fletcher and its affiliates
     in accordance with applicable federal and state securities laws. Champion
     will promptly notify Fletcher after it has determined in good faith that
     such sales have become permissible in such manner and will promptly deliver
     copies of the Registration Statement and the Prospectus (as so amended or
     supplemented, if applicable) to Fletcher in accordance with paragraphs (c)
     and (d) of this Section 5. Notwithstanding the foregoing, (A) under no
     circumstances shall Champion be entitled to exercise its right to suspend
     sales of any Covered Securities as provided in this Section 5(f) and
     pursuant to the Registration Statement for more than a total of sixty (60)
     days in any twelve (12)-month period, (B) the period during which such
     sales may be suspended (each a "Blackout Period") at any time shall not
     exceed thirty (30) days, and (C) no Blackout Period may commence less than
     thirty (30) days after the end of the preceding Blackout Period.

               (g) Upon the commencement of a Blackout Period pursuant to this
     Section 5, Fletcher will notify Champion of any contract to sell, assign,
     deliver or otherwise transfer any Covered Security (each a "Sales
     Contract") that Fletcher or any of its affiliates has entered into prior to
     the commencement of such Blackout Period and that would require delivery of
     such Covered Securities during such Blackout Period, which notice will
     contain the aggregate sale price and volume of Covered Securities pursuant
     to such Sales Contract. Upon receipt of such notice, Champion will
     immediately notify Fletcher of its election either (i) to terminate the
     Blackout Period and, as promptly as practicable, amend or supplement the
     Registration Statement or the Prospectus in order to correct the material
     misstatement or omission and deliver to Fletcher copies of such amended or
     supplemented Registration Statement and Prospectus in accordance with
     paragraphs (c) and (d) of this Section 5, or (ii) to continue the Blackout
     Period in accordance with this paragraph. If Champion elects to continue
     the Blackout Period (and, in any case, if a Blackout Period continues), and
     Fletcher or any of its affiliates are therefore unable to consummate the
     sale of Covered Securities pursuant to the Sales Contract, Champion will
     promptly indemnify each Fletcher Indemnified Party (as such term is defined
     in Section 18.a. below) against any Proceeding (as such term is defined in
     Section 18.a. below) that each Fletcher Indemnified Party may incur arising
     out of or in connection with Fletcher's breach or alleged breach of any
     such Sales Contract, and Champion shall reimburse each Fletcher Indemnified
     Party for any reasonable costs or expenses (including reasonable legal
     fees) incurred by such party in investigating or defending any such
     Proceeding.

               (h) In addition to any other remedies available to Fletcher under
     this Agreement or at law or equity, if the Registration Statement has not
     been declared effective by the Required Registration Date or such
     Registration Statement is not available with respect to all Covered
     Securities at any time on or after the Required Registration Date (except
     during a Blackout Period permitted under Section 5(f)), then the Conversion
     Prices (as defined in the Certificate of Rights and Preferences and
     Subsequent Certificates of Rights and Preferences) shall be permanently
     decreased by one fifteenth of one percent (1/15 of 1%) for each day,
     compounded monthly, that such

                                       11
<PAGE>   12

     Registration Statement is not available with respect to all Covered
     Securities (except during a Blackout Period permitted under Section 5(f)).

               (i) If the Registration Requirement is not met at any point in
     time during the Registration Period then the Fletcher Rights Period shall
     be extended by one (1) day for each day (or portion thereof) that the
     Registration Requirement shall have not been met.

          6. "Market Stand-Off" Agreement. If requested by Champion and an
underwriter in a firm commitment underwritten public offering of Common Stock
with net proceeds of at least twenty-five million dollars ($25,000,000) to
Champion, after underwriter's discounts or commissions and other fees or
expenses, Fletcher shall not sell or otherwise transfer or dispose of any Common
Stock (other than Common Stock included in the registration) during the ninety
(90) day period (or such shorter period, if so notified by Champion in writing)
following the effective date of a registration statement of Champion filed under
the Securities Act, provided that:

               (a) such agreement shall only apply to registration statements of
     Champion including securities to be sold on its behalf to the public in an
     underwritten offering where the effective date of any such registration
     statement shall not occur before the first anniversary of the effective
     date of the immediately prior registration statement with respect to which
     Fletcher was required to provide such agreement;

               (b) all officers and directors of Champion and all purchasers or
     subsequent holders of Offered Shares (other than subsequent holders who
     acquire such securities through bona fide purchases in the public market)
     are bound by and have entered into similar agreements; and

               (c) Champion shall (and shall cause such underwriter to) use best
     efforts to cause such stand-off period not to exist or, if it does exist,
     to terminate at the earliest practicable date.

The obligations described in this Section 6 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a transaction on Form S-4 or similar forms that may be promulgated in the
future.

          7. Conversion and Redemption of Preferred Shares.

               (a) Preferred Shares and Additional Preferred Shares are
     convertible and redeemable into Common Shares in accordance with the terms
     and conditions set forth in Section 6 of the Certificate of Rights and
     Preferences and Subsequent Certificates of Rights and Preferences. The form
     of the "Preferred Stock Conversion Notice" to be executed and delivered by
     Fletcher to Champion as specified therein is attached hereto as Annex G and
     the form of the "Preferred Stock Conversion Delivery Notice" to be executed
     and delivered by Champion to Fletcher as specified therein is attached
     hereto as Annex H.

                                       12
<PAGE>   13

               (b) If the number of Common Shares issued and issuable under this
     Agreement (including, but not limited to, all Common Shares issued or
     issuable upon conversion or redemption (notwithstanding any limitations on
     redemption on any date on or after the date one-hundred and twenty (120)
     days before and excluding the second anniversary of the Main Agreement) of
     Series B Preferred Shares issued or issuable under this Agreement) on the
     date of any Preferred Stock Conversion Notice (each a "Fletcher Notice
     Date") or Redemption Notice would result in Fletcher receiving more than
     seventeen and one-half percent (17.5%) of the shares of Common Stock
     outstanding as of the date of this Agreement (the "Original Number") and
     Fletcher's receipt of twenty percent (20%) or more of the Original Number
     would require the approval (the "Required Consent") of the holders of
     Common Stock pursuant to the listing requirements or rules of the NYSE,
     Champion (A) shall not issue Common Shares (the "Issuance Blockage") to the
     extent that the total number of Common Shares issued hereunder would exceed
     nineteen and ninety-nine one-hundredths percent (19.99%) of the Original
     Number, (B) shall notify Champion's shareholders of a shareholder meeting
     for the purpose of voting on the Required Consent within twenty (20)
     Business Days from and including the Fletcher Notice Date or Redemption
     Notice, which meeting shall be held on or before the sixtieth (60th)
     calendar day after the Fletcher Notice Date, and (C) shall otherwise use
     its best efforts to obtain, on or before the sixtieth (60th) day after the
     Fletcher Notice Date or Redemption Notice, the Required Consent for the
     issuance of all Common Shares issued or issuable under this Agreement
     (including, but not limited to, all Common Shares issued or issuable upon
     conversion or redemption of Series B Preferred Shares issued or issuable
     under this Agreement) including, but not limited to, recommending to
     Champion's shareholders that such shareholders give the Required Consent
     and not withdrawing such recommendation. Notwithstanding anything else in
     this paragraph, if at any time before the Required Consent has been
     obtained, or if Champion otherwise does not have sufficient authorized
     shares to fulfill its obligation, (i) Fletcher shall have the right to
     convert and redeem (subject to any restrictions on redemption) Series B
     Preferred Shares, the conversion or redemption of which would not cause the
     total number of shares issued hereunder to exceed nineteen and ninety-nine
     one-hundredths percent (19.99%) of the Original Number (or up to the total
     number of available authorized shares, if less) into Common Stock and (ii)
     Fletcher shall have the right to convert and redeem up to that amount of
     the Series B Preferred Shares (regardless of any remaining time period that
     must pass before redemption may occur under the Certificate of Rights and
     Preferences or any Subsequent Certificate of Rights and Preferences), the
     conversion or redemption of which would cause the total number of shares
     issued hereunder to exceed nineteen and ninety-nine one-hundredths percent
     (19.99%) of the Original Number or that number which is unavailable for
     issuance, as the case may be, into the rights described herein (the "Excess
     Rights"). Fletcher shall exercise such right to obtain Excess Rights by
     delivering one or more written notices in the form attached hereto as Annex
     I (an "Excess Rights Notice") to Champion from time to time. The stated
     value of the Excess Rights shall be an amount equal to the product of (A)
     the Average Price on the Excess Notice Date multiplied by (B) the number of
     Common Shares that would be issuable in respect of such conversion but for
     the Issuance Blockage (without regard to any requirement to deliver a 65
     Day Notice). At any time on or after the date of the first Excess Rights
     Notice, Fletcher may, at its sole option, convert its Excess Rights

                                       13
<PAGE>   14

     into a new series of Additional Preferred Shares. "Average Price" means (A)
     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 entity as Fletcher and Champion may agree), or (B)
     if such Common Stock is not then listed or admitted to trading on the NYSE,
     the higher of (1) 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 Champion 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 and (2) the fair value per share thereof determined in good
     faith by the Board of Directors of Champion of a date which is within ten
     (10) days of the date as of which the determination is to be made

               (c) The aggregate number of Common Shares issuable upon
     conversion or redemption of the Series B Preferred Shares, when combined
     with all shares of Common Stock then beneficially owned (as determined
     pursuant to Exchange Act Rule 13d-3) by Fletcher, shall not exceed the
     Maximum Number of shares of Common Stock. The "Maximum Number" equals the
     sum of four million six hundred and seventy-four thousand eight hundred and
     forty-nine (4,674,849) plus the Exercisable Number. The "Exercisable
     Number" is initially zero (0) and thereafter may be increased upon
     expiration of a sixty-five (65) day period (the "Notice Period") after
     Fletcher delivers a notice (a "65 Day Notice") to Champion designating an
     aggregate number of Common Shares in excess of the Maximum Number which
     shall be issuable upon conversion or redemption of the Series B Preferred
     Shares. A 65 Day Notice may be given at any time. From time to time
     following the Notice Period, Common Stock may be issued to Fletcher on any
     Business Day for any quantity of Common Stock, such that the aggregate
     number of shares of Common Stock issued hereunder is less than or equal to
     the Maximum Number. Nothing in this Section 6(c) shall limit or apply to
     the creation or conversion of Excess Rights under Section 6(b).

          8. Representations and Warranties of Fletcher. Fletcher hereby
represents and warrants to Champion on each Closing Date:

               (a) Fletcher has been duly incorporated and is validly existing
     under the laws of Bermuda.

               (b) The execution, delivery and performance of this Agreement by
     Fletcher have been duly authorized by all requisite corporate action and no
     further consent or authorization of Fletcher, its Board of Directors or its
     shareholders is required. This Agreement has been duly executed and
     delivered by Fletcher and, when duly authorized, executed and delivered by
     Champion, will be a valid and binding agreement enforceable against
     Fletcher in accordance with its terms, subject to bankruptcy, insolvency,
     reorganization, moratorium and similar laws of general applicability
     relating to or affecting creditors' rights generally and to general
     principles of equity.

               (c) Fletcher understands that no United States federal or state
     agency has passed on, reviewed or made any recommendation or endorsement of
     the Investment Securities.

                                       14
<PAGE>   15

               (d) Fletcher is an "accredited investor" as such term is defined
     in Regulation D promulgated under the Securities Act.

               (e) Fletcher is purchasing the Investment Securities for its own
     account for investment only and not with a view to, or for resale in
     connection with, the public sale or distribution thereof in the United
     States, except pursuant to sales registered under the Securities Act or an
     exemption therefrom.

               (f) Fletcher understands that the Investment Securities are being
     or will be offered and sold to it in reliance on specific exemptions from
     the registration requirements of United States federal securities laws and
     that Champion is relying on the truth and accuracy of, and Fletcher's
     compliance with, the representations, warranties, agreements,
     acknowledgments and understandings of Fletcher set forth herein in order to
     determine the availability of such exemptions and the eligibility of
     Fletcher to acquire the Investment Securities.

               (g) Fletcher has had access to documents publicly filed with the
     SEC by Champion, and has been given a reasonable opportunity to ask
     questions of Champion's officers regarding publicly available information
     concerning Champion.

          9. Right of First Offer. Subject to the terms and conditions specified
in this Section 9, Champion hereby grants to (i) Fletcher or (ii) any affiliate
or wholly-owned subsidiary of Fletcher (collectively, the "First Offer
Shareholders"), a right of first offer with respect to future sales by Champion
of its Offered Shares (as hereinafter defined). The term "Offered Shares" means
any shares of, or securities convertible into or exercisable or exchangeable for
any shares of, any class of its capital stock where the aggregate number of
shares or price per share of such capital stock issuable at closing, or upon
conversion, redemption exercise, exchange or otherwise, cannot be determined as
of the date such agreement is entered into or is subject to change as of any
date for any reason other than stock splits, recombinations, stock dividends or
the like. Each time Champion has a bona fide intention to offer to sell to a
third party any Offered Shares, Champion shall first negotiate with the First
Offer Shareholders to sell such Offered Shares in accordance with the following
provisions:

               (a) Champion shall deliver a notice in accordance with Section 20
     of this Agreement ("Offer Notice") to Fletcher stating (i) its bona fide
     intention to offer such Offered Shares, (ii) the number of such Offered
     Shares proposed to be offered and (iii) the price and terms upon which it
     proposes to offer such Offered Shares.

               (b) For three (3) Business Days after delivery of the Offer
     Notice, Champion shall negotiate exclusively and in good faith with the
     First Offer Shareholders with respect to the proposed sale of Offered
     Shares and Champion shall not enter into or continue negotiations with,
     respond to, furnish information to, or consummate any transaction with any
     person or entity concerning any transaction regarding any shares of, or
     securities convertible into or exercisable or exchangeable for any shares
     of, any class of its capital stock.

                                       15
<PAGE>   16

               (c) Within three (3) Business Days after delivery of the Offer
     Notice, the First Offer Shareholders may elect by delivering a written
     notice to Champion, to purchase or obtain, at the price and on the terms
     specified in the Offer Notice (or on terms that are substantially similar
     to, or more favorable to Champion than, the terms contained in the Offer
     Notice), all but not less than all of the Offered Shares; provided, that
     Champion shall use commercially reasonable efforts to cause the First Offer
     Shareholders to be able to participate in the purchase of the Offered
     Shares to the extent the First Offer Shareholders desire to do so. If the
     Offer Notice specifies consideration other than cash is to be paid for the
     Offered Shares, the First Offer Shareholders may, at their sole option, (if
     they choose to purchase such Offered Shares) deliver either of (i) such
     consideration or (ii) cash equal to the fair market value of such
     consideration on the date and at the time such offer is accepted. The
     closing of any such transaction shall occur not later than twenty (20)
     Business Days after Champion receives written notice of such election. If
     the First Offer Shareholders do not so elect within three (3) days after
     delivery of the Offer Notice or if Champion and the First Offer
     Shareholders are unable to reach agreement on the terms of a sale of the
     Offered Shares to the First Offer Shareholders, then Champion may sell the
     Offered Shares to any Person at the price and on terms that are no less
     favorable to Champion than the terms contained in the Offer Notice within
     ninety (90) days after the date of the Offer Notice.

               (d) The right of first offer in this Section 9 shall not be
     applicable to any issuance or sale of the following securities.

                    (i) Common Stock issued as consideration for the acquisition
          of at least fifty percent (50%) of the voting capital stock or assets
          of a bona fide operating company in a similar or complementary line of
          business to that of Champion, as determined reasonably and in good
          faith by Champion's Board of Directors whether through purchase,
          merger, consolidation, tender offer or otherwise, provided that the
          purpose of Champion entering into any such transaction shall not be to
          raise capital, directly or indirectly, or otherwise to avoid the
          requirements of this Section 9;

                    (ii) Common Stock issued pursuant to any stock split,
          dividend or distribution payable in additional shares of Common Stock
          or other securities or rights convertible into, or entitling the
          holder thereof to receive directly or indirectly, additional shares of
          Common Stock without payment of any consideration by such holder;

                    (iii) Common Stock issuable or issued to employees,
          consultants or directors of Champion directly or pursuant to a stock
          option plan, employee stock purchase plan or restricted stock plan, or
          other similar arrangements related to compensation for services in
          effect on the date of this Agreement or approved by Champion's
          shareholders, in each case in the ordinary course of business
          consistent with Champion's past practice; or

                                       16
<PAGE>   17

                    (iv) Common Stock issued as dividends on, or upon conversion
          or redemption of, Champion's Series A Preferred Stock outstanding as
          of the date of this Agreement and Series B Preferred Shares.

                    (v) Common Stock issued in a bona fide firm commitment
          underwritten offering to the public with net proceeds of at least
          twenty-five million dollars ($25,000,000) to Champion, after
          underwriter's discounts or commissions and other fees or expenses.

               (e) Notwithstanding the provisions of this Section 9, the right
     of first offer hereunder shall apply only during those periods from time to
     time when Fletcher, together with its affiliates and wholly-owned
     subsidiaries, owns Series B Preferred Shares (i) convertible or redeemable
     (without regard to any 65 Day Notice requirement, Issuance Blockage or
     passage of time required until the redemption rights vest) into a number of
     Common Shares that exceeds three and one-half percent (3.5%) of the
     Original Number or (ii) with an aggregate Redemption Amount of at least
     fifteen million dollars ($15,000,000).

          10. Covenants of Champion. Champion covenants and agrees with Fletcher
as follows:

               (a) For so long as Fletcher owns or has the right to purchase any
     Series B Preferred Shares, and for a period of one (1) year thereafter,
     Champion will (i) maintain the eligibility of the Common Stock for listing
     on the New York Stock Exchange, Nasdaq National Market, or American Stock
     Exchange and (ii) regain the eligibility of the Common Stock for listing or
     quotation on all markets and exchanges including the New York Stock
     Exchange, Nasdaq National Market, or American Stock Exchange, in the event
     that the Common Stock is delisted by the New York Stock Exchange or any
     other applicable market or exchange; and will use commercially reasonable
     efforts to (iii) cause the representations and warranties contained in
     Section 4 to be and remain true and correct.

               (b) Champion will provide Fletcher with an opportunity, which
     shall not be less than one (1) full Business Day to review and comment on
     any public disclosure by Champion of information regarding this Agreement
     and the transactions contemplated hereby, prior to such public disclosure.
     Beginning on the date hereof and for so long as Fletcher owns or has the
     right to purchase any Series B Preferred Shares and for a period of ninety
     (90) days thereafter, Champion will promptly notify Fletcher immediately
     following any press release or other information disseminated to any
     shareholder, analyst, or media source.

               (c) As soon as such information is available (but in no event
     later than two (2) weeks after the Closing Date), Champion shall deliver to
     Fletcher a written notice stating the number of outstanding shares of
     Common Stock as of the Initial Closing Date.

               (d) Champion will make all filings required by law with respect
     to the transactions contemplated hereby.

                                       17
<PAGE>   18

               (e) Champion will comply with the terms and conditions of the
     Series B Preferred Shares as set forth in the Certificate of Rights and
     Preferences and Subsequent Certificates of Rights and Preferences, and will
     not amend the Certificate of Rights and Preferences or Subsequent
     Certificates of Rights and Preferences without the required consent of the
     holders of Series B Preferred Shares.

               (f) For so long as Fletcher holds any Series B Preferred Shares
     or Fletcher Rights, prior to the filing of each of its quarterly reports on
     Form 10-Q with the SEC, Champion shall deliver to Fletcher a review report
     relating to the final consolidated unaudited financial statements contained
     therein, prepared by PricewaterhouseCoopers LLP in accordance with
     Statements of Auditing Standard No. 71. For so long as Fletcher holds any
     Series B Preferred Shares or Fletcher Rights, Fletcher shall pay for
     one-half (1/2) of the cost of the two (2) such quarterly reviews for the
     quarters ending March 31 and September 30 of each year for up to an
     aggregate maximum of $50,000; provided, however, that Champion shall pay
     all other amounts payable for such reports and the full amount payable for
     the quarter ending June 30 of each year.

               (g) Champion shall use commercially reasonable efforts to cause
     the Common Shares to be eligible for book-entry transfer through The
     Depository Trust Company (or any successor thereto) as soon as practicable
     after the date of this Agreement and thereafter to use commercially
     reasonable efforts to maintain such eligibility.

               (h) Champion shall at all times reserve for issuance such number
     of its shares of Common Stock as shall from time to time be sufficient to
     effect the conversion of all such Series B Preferred Shares and to satisfy
     its delivery obligation upon such conversion and to effect the redemption
     of the Series B Preferred Shares.

               (i) Champion shall deliver a notice (an "Increase Notice")
     stating the increase, if any, in the aggregate number of shares of Common
     Stock outstanding as of the last day of the preceding month over the number
     outstanding as of the last day of the second preceding month, or in the
     case of the last day of the month immediately following the Initial Closing
     Date, the number of shares outstanding specified in Section 4(l). Unless
     expressly waived by Fletcher, Champion shall deliver an Increase Notice to
     Fletcher on or before the tenth (10th) day of every calendar month from and
     including the Initial Closing Date;

               (j) Champion shall, within one (1) Business Day after and
     excluding each Closing Date publicly distribute a press release disclosing
     the material terms of such Closing and shall, within three (3) Business
     Days after and excluding each Closing Date file a report with the SEC on
     Form 8-K with respect to the same.

          11. Consolidation, Merger, Etc. In case Champion shall be a party to
any Business Combination (as defined in the Certificate of Rights and
Preferences or Subsequent Certificates of Rights and Preferences), Fletcher and
its assigns shall have the rights set forth in the Certificate of Rights and
Preferences and Subsequent Certificates of Rights and Preferences regarding
Business Combinations in addition to the rights contained in this Agreement.

                                       18
<PAGE>   19

"Acquirer" means, in connection with any Business Combination, the continuing or
surviving corporation of a consolidation or merger with Champion (if other than
Champion), the transferee of all or substantially all of the properties or
assets of the Company, the corporation consolidating with or merging into
Champion in a consolidation or merger in connection with which 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, Champion. Champion agrees that it will not enter into an
agreement with an Acquirer for a Business Combination unless such agreement
expressly obligates the Acquirer to assume all of Champion's obligations under
this Agreement, the Certificate of Rights and Preferences and the Subsequent
Certificates of Rights and Preferences including, but not limited to, the
dividend, liquidation, conversion, exercise, redemption, voting and other
provisions regarding the Series B Preferred Stock and the Fletcher Rights
contained herein and therein. Without limiting the foregoing, all unexercised
and unexpired Fletcher Rights shall automatically be converted into equivalent
rights with respect to the Acquirer including, but not limited to, the right to
receive the equivalent of the Additional Preferred Shares issuable upon the
exercise of such rights and to receive the consideration for such Additional
Preferred Shares set forth in Section 6(F) of the Subsequent Certificate of
Rights and Preferences governing such series of Additional Preferred Shares;
provided that if the Company delivers to Fletcher a written notice in the form
attached as Annex K hereto stating its election to redeem the Fletcher Rights 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 upon such closing date, any Fletcher Rights that
remain unexercised as of such closing date shall be redeemed and Champion shall
pay to Fletcher (or shall cause Acquirer to pay to Fletcher) on or before such
closing date cash equal to the product of (i) the aggregate amount of such
Fletcher Rights multiplied by (ii) the Merger Payment Percentage (as defined in
the Certificate of Rights and Preferences). On or before the date an agreement
is entered into with an Acquirer for a Business Combination, the Company shall
deliver to Fletcher written notice that the Acquirer has assumed such
obligations. Provided that Champion is in compliance with this Section 11 and
Section 6(F) of the Certificate of Rights and Preferences and each Subsequent
Certificate of Rights and Preferences, Fletcher and other holders of Series B
Preferred Shares shall vote their Series B Preferred Shares in favor of any
Business Combination upon which, in accordance with applicable law or the
Certificate of Rights and Preferences or any Subsequent Certificate of Rights
and Preferences, Fletcher or such holders shall have the right to vote as a
single class not aggregated with holders of the Common Stock; provided, however,
that the Business Combination agreements must provide either for (i) such
rights, preferences and privileges for the Series B Preferred Shares pursuant to
the provisions of this Agreement, the Certificate of Rights and Preferences or
any Subsequent Certificate of Rights and Preferences or (ii) the redemption of
any unexercised and unexpired Fletcher Rights as provided in this Section 11,
and the payment in exchange for the Series B Preferred Shares pursuant to a
Business Combination Restriction Notice under Section 6F of the Certificate of
Rights and Preferences and any Subsequent Certificate of Rights and Preferences.
Notwithstanding the foregoing, this Section 11 shall not be construed to
obligate Fletcher or its assigns to vote their Common Shares in favor of any
Business Combination.

          12. Covenants of Fletcher. Fletcher hereby covenants and agrees with
Champion that:

                                       19
<PAGE>   20

               (a) Neither Fletcher, nor any of its affiliates, will at any time
     offer or sell any Investment Securities other than pursuant to registration
     under the Securities Act or pursuant to an available exemption therefrom.

               (b) Neither Fletcher, nor any of its affiliates, shall engage an
     underwriter for an underwritten public offering of Common Shares, unless
     such underwriter shall be reasonably satisfactory to Champion.

               (c) Neither Fletcher, nor any of its affiliates, shall engage in
     short sales of Champion's securities.

          13. Legend. Subject to Section 5, Fletcher understands that the
certificates or other instruments representing the Investment Securities shall
bear a restrictive legend in the following form (and a stop transfer order may
be placed against transfer of such certificates or other instruments):

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
     APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
     INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
     UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
     COVERING SUCH SECURITIES, OR (2) THE SALE IS MADE IN ACCORDANCE WITH RULE
     144 OR (3) THE SALE IS MADE IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION
     UNDER THE SECURITIES ACT AND THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR
     THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
     STATING THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM THE
     REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

          The legend set forth above shall be removed and Champion shall issue a
certificate without such legend to any holder of Investment Securities if,
unless otherwise required by state securities laws, (a) such shares are sold
pursuant to Rule 144 or an effective Registration Statement under the Securities
Act, or (b) such holder provides Champion with an opinion of counsel reasonably
satisfactory to Champion that such shares may be publicly sold pursuant to an
exemption from such registration requirements without restriction.

          14. Conditions Precedent to Fletcher's Obligations. The obligations of
Fletcher hereunder are subject to the performance by Champion of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent, unless expressly waived in writing by Fletcher:

               (a) On each Closing Date, (i) the representations and warranties
     made by Champion in this Agreement shall be true and correct, except those
     representations and warranties which address matters only as of a
     particular date, which shall be true and correct as of such date; (ii)
     Champion shall have complied fully with all of the covenants

                                       20
<PAGE>   21

     and agreements in this Agreement; and (iii) Fletcher shall have received
     (A) on the Initial Closing Date a certificate of the Chief Financial
     Officer of Champion dated such date and to such effect and (B) on each
     Subsequent Closing Date a certificate of the Chief Executive Officer and
     the Chief Financial Officer of Champion dated such date and to such effect.

               (b) On each Closing Date, Champion shall have delivered to
     Fletcher an opinion of Dykema Gossett PLLC reasonably satisfactory to
     Fletcher, 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 hereof and to the effect that the offer and sale of the
     Investment Securities to Fletcher hereunder do not require registration
     under the Securities Act.

               (c) On the Initial Closing Date, Fletcher shall have received a
     letter from PricewaterhouseCoopers LLP to the effect that, as of such date,
     it consents to the inclusion in this Agreement of the Auditor Report. On
     each Subsequent Closing Date, Fletcher shall receive a report of
     PricewaterhouseCoopers LLP, together with the accompanying consolidated
     financial statement and schedules of Champion and results of Champion's
     operations and cash flows, as such report appears in the most recent Form
     10-K filed by Champion with the SEC.

               (d) On or prior to each Subsequent Closing Date, Champion shall
     have filed with the Michigan Secretary of State a Subsequent Certificate of
     Rights and Preferences, with terms and conditions of the applicable series
     of Additional Preferred Shares as required by this Agreement.

          15. Conditions Precedent to Champion's Obligations. The obligations of
Champion hereunder are subject to the performance by Fletcher of its obligations
hereunder and to the satisfaction (unless expressly waived in writing by
Champion) of the additional conditions precedent that, on each Closing Date: (i)
the representations and warranties made by Fletcher in this Agreement shall be
true and correct; (ii) Fletcher shall have complied fully with all the covenants
and agreements in this Agreement; and (iii) Champion shall have received on each
such date a certificate of an appropriate officer of Fletcher dated such date
and to such effect.

          16. Fees and Expenses. Each of Fletcher and Champion agrees to pay its
own expenses incident to the performance of its obligations hereunder,
including, but not limited to the fees, expenses and disbursements of such
party's counsel, except as is otherwise expressly provided in this Agreement.

          17. Non-Performance.

               (a) If Champion, at any time, shall fail to deliver the
     Investment Securities to Fletcher required to be delivered pursuant to this
     Agreement, in accordance with the terms and conditions of this Agreement,
     for any reason other than the failure of any condition precedent to
     Champion's obligations hereunder or the failure by Fletcher to comply with
     its obligations hereunder, then Champion shall:

                                       21
<PAGE>   22

                    (i) indemnify and hold Fletcher harmless against any loss,
          claim or damage (including without limitation, incidental and
          consequential damages) arising from or as a result of such failure by
          Champion; and

                    (ii) reimburse Fletcher for all of its reasonable
          out-of-pocket expenses, including fees and disbursements of its
          counsel, incurred by Fletcher in connection with this Agreement and
          the transactions contemplated herein and therein.

               (b) If Fletcher, at any time, shall fail to make the payments to
     Champion required to be delivered pursuant to this Agreement, in accordance
     with the terms and conditions of this Agreement, for any reason other than
     the failure of any condition precedent to Fletcher's obligations hereunder
     or the failure by Champion to comply with its obligations hereunder, then
     Fletcher shall:

                    (i) indemnify and hold Champion harmless against any loss,
          claim or damage (including without limitation, incidental and
          consequential damages) arising from or as a result of such failure by
          Fletcher; and

                    (ii) reimburse Champion for all of its reasonable
          out-of-pocket expenses, including fees and disbursements of its
          counsel, incurred by Champion in connection with this Agreement and
          the transactions contemplated herein and therein.

          18. Indemnification.

               (a) Indemnification of Fletcher. Champion hereby agrees to
     indemnify Fletcher and each of its officers, directors, employees, agents
     and affiliates and each person that controls (within the meaning of Section
     20 of the Exchange Act) any of the foregoing persons (each a "Fletcher
     Indemnified Party") against any claim, demand, action, liability, damages,
     loss, cost or expense (including, without limitation, reasonable legal fees
     and expenses) (a "Proceeding"), that it may incur in connection with any of
     the transactions contemplated hereby arising out of or based upon:

                    (i) any untrue or alleged untrue statement of a material
          fact in a SEC Filing by Champion or any of its affiliates or any
          person acting on its or their behalf or omission or alleged omission
          to state therein any material fact necessary in order to make the
          statements, in the light of the circumstances under which they were
          made, not misleading by Champion or any of its affiliates or any
          person acting on its or their behalf;

                    (ii) any of the representations or warranties made by
          Champion herein being untrue or incorrect at the time such
          representation or warranty was made; and

                    (iii) any breach or non-performance by Champion of any of
          its covenants, agreements or obligations under this Agreement, the
          Certificate of Rights and Preferences and Subsequent Certificates of
          Rights and Preferences;

                                       22
<PAGE>   23

and Champion hereby agrees to reimburse each Fletcher Indemnified Party for any
reasonable legal or other expenses incurred by such Fletcher Indemnified Party
in investigating or defending any such Proceeding; provided, however, that the
foregoing indemnity shall not apply to any Proceeding to the extent that it
arises out of, or is based upon, the gross negligence or willful misconduct of
Fletcher in connection therewith. Furthermore, the foregoing indemnity rights
will not take effect unless and until the total amount of the indemnification in
the aggregate is ten thousand dollars ($10,000) or greater.

               (b) Indemnification of Champion. Fletcher hereby agrees to
     indemnify Champion and each of its officers, directors, employees, agents
     and affiliates and each person that controls (within the meaning of Section
     20 of the Exchange Act) any of the foregoing persons (each a "Champion
     Indemnified Party") against any Proceeding, that it may incur in connection
     with any of the transactions contemplated hereby arising out of or based
     upon:

                    (i) any untrue or alleged untrue statement of a material
          fact included in an SEC filing by Champion with the express written
          consent of Fletcher therefor by Fletcher or any of its affiliates or
          any person acting on its or their behalf or omission or alleged
          omission to state any such material fact necessary in order to make
          the statements, in the light of the circumstances under which they
          were made, not misleading by Fletcher or any of its affiliates or any
          person acting on its or their behalf;

                    (ii) any of the representations or warranties made by
          Fletcher herein being untrue or incorrect at the time such
          representation or warranty was made; and

                    (iii) any breach or non-performance by Fletcher of any of
          its covenants, agreements or obligations under this Agreement;

and Fletcher hereby agrees to reimburse each Champion Indemnified Party for any
reasonable legal or other expenses incurred by such Champion Indemnified Party
in investigating or defending any such Proceeding; provided, however, that the
foregoing indemnity shall not apply to any Proceeding to the extent that it
arises out of, or is based upon, the gross negligence or willful misconduct of
Champion in connection therewith. Furthermore, the foregoing indemnity rights
will not take effect unless and until the total amount of the indemnification in
the aggregate is ten thousand dollars ($10,000) or greater.

               (c) Conduct of Claims.

                    (i) Whenever a claim for indemnification shall arise under
          this Section 18, the party seeking indemnification (the "Indemnified
          Party"), shall notify the party from whom such indemnification is
          sought (the "Indemnifying Party") in writing of the Proceeding and the
          facts constituting the basis for such claim in reasonable detail;

                                       23
<PAGE>   24

                    (ii) Such Indemnifying Party shall have the right to retain
          the counsel of its choice in connection with such Proceeding and to
          participate at its own expense in the defense of any such Proceeding;
          provided, however, that counsel to the Indemnifying Party shall not
          (except with the consent of the relevant Indemnified Party) also be
          counsel to such Indemnified Party. In no event shall the Indemnifying
          Party be liable for fees and expenses of more than one counsel (in
          addition to any local counsel) separate from its own counsel for all
          Indemnified Parties in connection with any one action or separate but
          similar or related actions in the same jurisdiction arising out of the
          same general allegations or circumstances; and

                    (iii) No Indemnifying Party shall, without the prior written
          consent of the Indemnified Parties (which consent shall not be
          unreasonably withheld), settle or compromise or consent to the entry
          of any judgment with respect to any litigation, or any investigation
          or proceeding by any governmental agency or body, commenced or
          threatened, or any claim whatsoever in respect of which
          indemnification could be sought under this Section unless such
          settlement, compromise or consent (A) includes an unconditional
          release of each Indemnified Party from all liability arising out of
          such litigation, investigation, proceeding or claim and (B) does not
          include a statement as to or an admission of fault, culpability or a
          failure to act by or on behalf of any Indemnified Party.

          19. Survival of the Representations, Warranties, etc. The respective
representations, warranties, and agreements made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of and payment for any Investment
Securities issuable hereunder.

          20. Notices. All communications hereunder shall be in writing and
delivered as set forth below.

               (a) If sent to Fletcher, all communications shall be delivered by
     hand, sent by reputable overnight courier or transmitted and confirmed by
     facsimile to Fletcher, unless otherwise notified in writing of a substitute
     address, at:

                    Fletcher International, Ltd.
                    C/o A. S. & K. Services Ltd.
                    Cedar House, 41 Cedar Avenue
                    Hamilton HM EX
                    Bermuda
                    Attention:  Felicity Holmes, Corporate Administrator
                    Telephone:       441-295-2244
                    Facsimile:       441-292-8666

                    with a copy to:

                                       24
<PAGE>   25

                    Fletcher Asset Management, Inc.
                    22 East 67th Street
                    New York, NY  10021
                    Attention:       Peter Zayfert
                    Telephone:       (212) 284-4800
                    Facsimile:       (212) 284-4801

                    with a copy to:

                    Skadden, Arps, Slate, Meagher & Flom LLP
                    1440 New York Avenue, N.W.
                    Washington, D.C. 20005
                    Attention:  Stephen W. Hamilton, Esq.
                    Telephone:       (202) 371-7010
                    Facsimile:       (202) 393-5760

               (b) If sent to Champion, all communications shall be delivered by
     hand, sent by reputable overnight courier or transmitted and confirmed by
     facsimile to Champion, unless otherwise notified in writing of a substitute
     address, at:

                    Champion Enterprises, Inc.
                    2701 Cambridge Court
                    Suite 300
                    Auburn Hills, MI  48326
                    Attention:       Walter R. Young
                    Telephone:       (248) 340-9090
                    Facsimile:       (248) 340-9345

                    with a copy to:

                    Dykema Gossett PLLC
                    39577 North Woodward Avenue
                    Bloomfield Hills, MI  48304
                    Attention:       D. Richard McDonald
                    Telephone:       (248) 203-0859
                    Facsimile:       (248) 203-0763

To the extent that any funds shall be delivered to Champion by wire transfer,
unless otherwise instructed by Champion, such funds should be delivered in
accordance with the following wire instructions:

                    Champion Enterprises, Inc.
                    Account Number: 1076-118940
                    ABA Number: 072000096
                    Bank:  Comerica Bank
                    Account Name: Champion Enterprises, Inc.

                                       25
<PAGE>   26

          21. Miscellaneous.

               (a) The parties may execute and deliver this Agreement as a
     single document or in any number of counterparts, manually, by facsimile or
     by other electronic means, including contemporaneous xerographic or
     electronic reproduction by each party's respective attorneys. Each
     counterpart shall be an original, but a single document or all counterparts
     together shall constitute one instrument that shall be the agreement. This
     Agreement shall become effective when each party executes and delivers this
     Agreement to the other party.

               (b) This Agreement shall inure to the benefit of and be binding
     upon the parties hereto, their respective successors and assigns and, with
     respect to Section 18 hereof, shall inure to the benefit of their
     respective officers, directors, employees, agents, affiliates and
     controlling persons, and no other person shall have any right or obligation
     hereunder. Champion may not assign this Agreement. Notwithstanding anything
     to the contrary in this Agreement, Fletcher may assign, pledge, hypothecate
     or transfer any of the rights and associated obligations contemplated by
     this Agreement (including, but not limited to, the Series B Preferred
     Shares and the Common Shares), in whole or in part, at its sole discretion
     (including, but not limited to, assignments, pledges, hypothecations and
     transfers in connection with financing or hedging transactions with respect
     to this Agreement, the Series B Preferred Shares and the Common Shares),
     provided that any such assignment, pledge, hypothecation or transfer must
     comply with applicable federal and state securities laws, and provided
     further that the rights contained in Section 9 hereof may not be assigned,
     pledged, hypothecated or transferred. No person acquiring Common Stock from
     Fletcher pursuant to a public market purchase shall thereby obtain any of
     the rights contained in this Agreement. This Agreement constitutes the
     entire agreement and supersedes all prior agreements and understandings,
     both written and oral, between the parties hereto with respect to the
     subject matter of this Agreement. Except as provided in this Section 21(b),
     this Agreement is not intended to confer upon any person other than the
     parties hereto any rights or remedies hereunder. Notwithstanding the
     provisions of this Section 21(b) set forth above, Fletcher shall not
     assign, pledge, hypothecate or transfer any of the rights or associated
     obligations contemplated by this Agreement (including, but not limited to,
     the Series B Preferred Shares and the Common Shares), in whole or in part,
     to any entity set forth on Schedule 21(b) hereto; provided that this
     restriction shall not apply to (i) any such assignment, pledge,
     hypothecation or transfer in connection with a Business Combination (as
     defined in the Certificate of Rights and Preferences or any Subsequent
     Certificate of Rights and Preferences) that is approved at any time by the
     requisite vote of the Company's shareholders or Board of Directors or (ii)
     the tender of Common Stock in any publicly announced tender offer.

               (c) This Agreement shall be governed by, and construed in
     accordance with, the internal laws of the State of New York, and each of
     the parties hereto hereby submits to the non-exclusive jurisdiction of any
     state or federal court in the State of New York and any court hearing any
     appeal therefrom, over any suit, action or proceeding against it arising
     out of or based upon this Agreement (a "Related Proceeding"). Each of the
     parties hereto hereby waives any objection to any Related Proceeding in
     such courts

                                       26
<PAGE>   27

     whether on the grounds of venue, residence or domicile or on the ground
     that the Related Proceeding has been brought in an inconvenient forum.

               (d) Each party represents and acknowledges that, in the
     negotiation and drafting of this Agreement and the other instruments and
     documents required or contemplated hereby, it has been represented by and
     relied upon the advice of counsel of its choice. Each party hereby affirms
     that its counsel has had a substantial role in the drafting and negotiation
     of this Agreement and such other instruments and documents. Therefore, each
     party agrees that no rule of construction to the effect that any
     ambiguities are to be resolved against the drafter shall be employed in the
     interpretation of this Agreement and such other instruments and documents.

               (e) Without prejudice to other rights or remedies hereunder
     (including any specified interest rate), and except as otherwise expressly
     set forth herein, interest shall be due on any amount that is due pursuant
     to this Agreement and has not been paid when due, calculated for the period
     from and including the due date to but excluding the date on which such
     amount is paid at the prime rate of U.S. money center banks as published in
     The Wall Street Journal (or if The Wall Street Journal does not exist or
     publish such information, then the average of the prime rates of three U.S.
     money center banks agreed to by the parties) plus two percent (2%).

               (f) Fletcher and Champion stipulate that the remedies at law of
     the parties hereto in the event of any default or threatened default by
     either party in the performance of or compliance with any of the terms of
     this Agreement, the Certificate of Rights and Preferences and the
     Subsequent Certificates of Rights and Preferences are not and will not be
     adequate and that, to the fullest extent permitted by law, such terms may
     be specifically enforced by a decree for the specific performance of any
     agreement contained herein or by an injunction against a violation of any
     of the terms hereof or otherwise.

               (g) Any and all remedies set forth in this Agreement, the
     Certificate of Rights and Preferences and Subsequent Certificates of Rights
     and Preferences: (i) shall be in addition to any and all other remedies
     Fletcher or Champion may have at law or in equity, (ii) shall be
     cumulative, and (iii) may be pursued successively or concurrently as each
     of Fletcher and Champion may elect. The exercise of any remedy by Fletcher
     or Champion shall not be deemed an election of remedies or preclude
     Fletcher or Champion, respectively, from exercising any other remedies in
     the future.

               (h) Champion agrees that the parties have negotiated in good
     faith and at arms' length concerning the transactions contemplated herein,
     and that Fletcher would not have agreed to the terms of this Agreement
     without each and every of the terms, conditions, protections and remedies
     provided herein and the Certificate of Rights and Preferences. Except as
     specifically provided otherwise in this Agreement, the Certificate of
     Rights and Preferences and the Subsequent Certificates of Rights and
     Preferences, Champion's obligations to indemnify and hold Fletcher harmless
     in accordance with Section 18 of this Agreement are obligations of Champion
     that Champion promises to pay to Fletcher when and if they become due.
     Champion shall record any such

                                       27
<PAGE>   28

     obligations on its books and records in accordance with U.S. generally
     accepted accounting principles. Except as specifically provided otherwise
     in this Agreement, the Certificate of Rights and Preferences and the
     Subsequent Certificates of Rights and Preferences, Fletcher's obligations
     to indemnify and hold Champion harmless in accordance with Section 18 of
     this Agreement are obligations of Fletcher that Fletcher promises to pay to
     Champion when and if they become due. Fletcher shall record any such
     obligations on its books and records in accordance with U.S. generally
     accepted accounting principles.

               (i) This Agreement may be amended, modified or supplemented in
     any and all respects, but only by a written instrument signed by Fletcher
     and Champion expressly stating that such instrument is intended to amend,
     modify or supplement this Agreement.

               (j) Each of the parties will cooperate with the others and use
     its best efforts to prepare all necessary documentation, to effect all
     necessary filings, and to obtain all necessary permits, consents, approvals
     and authorizations of all governmental bodies and other third-parties
     necessary to consummate the transactions contemplated by this Agreement.

               (k) For purposes of this Agreement, except as otherwise expressly
     provided or unless the context otherwise requires: (i) the terms defined in
     this Agreement have the meanings assigned to them in this Agreement and
     include the plural as well as the singular, and the use of any gender
     herein shall be deemed to include the other gender and neuter gender of
     such term; (ii) accounting terms not otherwise defined herein have the
     meanings assigned to them in accordance with U.S. generally accepted
     accounting principles; (iii) references herein to "Articles", "Sections",
     "Subsections", "Paragraphs" and other subdivisions without reference to a
     document are to designated Articles, Sections, Subsections, Paragraphs and
     other subdivisions of this Agreement, unless the context shall otherwise
     require; (iv) a reference to a Subsection without further reference to a
     Section is a reference to such Subsection as contained in the same Section
     in which the reference appears, and this rule shall also apply to
     Paragraphs and other subdivisions; (v) the words "herein", "hereof",
     "hereunder" and other words of similar import refer to this Agreement as a
     whole and not to any particular provision; (vi) the term "include" or
     "including" shall mean without limitation; (vii) the table of contents to
     this Agreement and all section titles or captions contained in this
     Agreement or in any Schedule or Exhibit annexed hereto or referred to
     herein are for convenience only and shall not be deemed a part of this
     Agreement and shall not affect the meaning or interpretation of this
     Agreement; (viii) any agreement, instrument or statute defined or referred
     to herein means such agreement, instrument or statute as from time to time
     amended, modified or supplemented, including (in the case of agreements or
     instruments) by waiver or consent and (in the case of statutes) by
     succession of comparable successor statues and references to all
     attachments thereto and instruments incorporated therein; and (ix)
     references to a person are also to its permitted successors and assigns
     and, in the case of an individual, to his or her heirs and estate, as
     applicable.

                                       28
<PAGE>   29

               (l) If any term or other provision of this Agreement is invalid,
     illegal or incapable of being enforced by any rule of law or public policy
     all other conditions and provisions of this Agreement shall nevertheless
     remain in full force and effect. If the final judgment of a court of
     competent jurisdiction or other authority declares that any term or
     provision hereof is invalid, void or unenforceable, the parties agree that
     the court making such determination shall have the power to reduce the
     scope, duration, area or applicability of the term or provision, to delete
     specific words or phrases, or to replace any invalid, void or unenforceable
     term or provision with a term or provision that is valid and enforceable
     and that comes closest to expressing the intention of the invalid or
     unenforceable term or provision. Upon such determination that any term or
     other provision is invalid, illegal or incapable of being enforced, the
     parties hereto shall negotiate in good faith to modify this Agreement so as
     to effect the original intent of the parties as closely as possible in a
     mutually acceptable manner in order that the transactions contemplated
     hereby be consummated as originally contemplated to the fullest extent
     possible.

               (m) Time shall be of the essence in this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       29
<PAGE>   30

          IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.

                                     CHAMPION ENTERPRISES, INC.

                                     By:  /s/ Anthony S. Cleberg
                                          --------------------------------------
                                     Name:   Anthony S. Cleberg
                                            ------------------------------------
                                     Title:  EVP & CFO
                                             -----------------------------------

                                     FLETCHER INTERNATIONAL, LTD., by its duly
                                     authorized investment advisor,
                                     FLETCHER ASSET MANAGEMENT, INC.

                                     By:  /s/ Denis J. Kiely
                                          --------------------------------------
                                     Name:   Denis J. Kiely
                                            ------------------------------------
                                     Title:  Deputy CEO
                                             -----------------------------------

                                     By:  /s/ Peter Zayfert
                                          --------------------------------------
                                     Name:  Peter Zayfert
                                            ------------------------------------
                                     Title:  Executive Vice President
                                             -----------------------------------

                                       30
<PAGE>   31

                                                                         ANNEX A

                [FORM OF CERTIFICATE OF RIGHTS AND PREFERENCES OF
               CLASS B-1 CUMULATIVE CONVERTIBLE PREFERRED STOCK OF
                           CHAMPION ENTERPRISES, INC.]

                                      A-1

<PAGE>   32

                                                                         ANNEX B

                            [FORM OF FLETCHER NOTICE]

                                          -------------, --

Champion Enterprises, Inc.
2701 Cambridge Court
Suite 300
Auburn Hills, Michigan  48326
Attention:

Ladies and Gentlemen:

          Fletcher International, Ltd. ("Fletcher") hereby elects to exercise
the Fletcher Rights (as defined in the Agreement (the "Agreement") dated as of
June 29, 2001 by and between Fletcher and Champion Enterprises, Inc. Capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Agreement.

          In accordance with the terms of Section 3 of the Agreement, the
Additional Issuance Price shall be                        and the Subsequent
Closing Date shall be           .

                                     FLETCHER INTERNATIONAL, LTD., by its
                                     duly authorized investment advisor,
                                     FLETCHER ASSET MANAGEMENT, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       B-1

<PAGE>   33

AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.

By:
     ------------------------------------------
Name:
       ----------------------------------------
Title:
        --------------------------------------

                                       B-2

<PAGE>   34

                                                                         ANNEX C

                           [FORM OF REDEMPTION NOTICE]

                                                 -------------, --

Champion Enterprises, Inc.
2701 Cambridge Court
Suite 300
Auburn Hills, Michigan  48326
Attention:

Ladies and Gentlemen:

          Fletcher International, Ltd. ("Fletcher") hereby elects to exercise
the Redemption Rights (as defined in the Agreement (the "Agreement") dated as of
June 29, 2001 by and between Fletcher and Champion Enterprises, Inc. as to
           shares of the Series B-[1] Cumulative Convertible Preferred Stock of
Champion Enterprises, Inc. Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.

                                     FLETCHER INTERNATIONAL, LTD., by its
                                     duly authorized investment advisor,
                                     FLETCHER ASSET MANAGEMENT, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       C-1

<PAGE>   35

AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.

By:
     ------------------------------------------
Name:
       ----------------------------------------
Title:
        ---------------------------------------

                                       C-2

<PAGE>   36

                                                                         ANNEX D

                            [FORM OF CHAMPION NOTICE]

Fletcher International, Ltd.
C/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY  10021
Attn:  Peter Zayfert
Telephone:  (212) 284-4800
Facsimile:  (212) 284-4801

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher") and the Redemption Notice dated            .
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.

          Champion hereby elects to redeem            shares of Series B-[1]
Cumulative Convertible Preferred Stock pursuant to Sections 1.d of the Agreement
and Section 6(B) of the Certificate of Rights and Preferences with:

IF CASH ELECTION STATE AMOUNT OF CASH
                CASH
----------------

IF COMMON STOCK ELECTION STATE AMOUNT OF COMMON STOCK AND BASIS FOR CALCULATION

                REGISTERED COMMON STOCK
----------------

                UNREGISTERED COMMON STOCK
----------------

                                     CHAMPION ENTERPRISES, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                      D-1

<PAGE>   37

                                                                         ANNEX E

                            [FORM OF DELIVERY NOTICE]

                                     [date]

Fletcher International, Ltd.
C/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY  10021
Attn:  Peter Zayfert
Telephone: (212) 284-4800
Facsimile: (212) 284-4801

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.

          Attached are copies of the front and back of (i) the [  ] original
stock certificates, each representing [    ] shares of Series B-1 Preferred
Stock, purchased by Fletcher on the date hereof and, together with a copy of the
overnight courier air bill which will be used to ship such stock certificates.
We have the executed original stock certificates and other documents required to
be delivered in connection with the Initial Closing Date. Upon our confirmation
of the payment of the [$      ] aggregate purchase price therefor, we will send
the original stock certificates by overnight courier to the following address:

                   Ms. Ele Stathatos
                   c/o Lehman Brothers Inc.
                   Three World Financial Center
                   New York, NY 10285
                   Telephone:  (212) 526-6273

and we will send the other original documents by overnight courier to the
following address:

                   Fletcher International, Ltd.
                   C/o A.S.& K. Services Ltd.
                   Cedar House
                   41 Cedar Avenue
                   Hamilton HM EX
                   Bermuda
                   Attn:  Felicity Holmes, Corporate Administrator
                   Telephone:  441-295-2244

                                       E-1

<PAGE>   38

with a copy to:

                   Fletcher International Limited
                   c/o Fletcher Asset Management, Inc.
                   22 East 67th Street
                   New York, NY  10021-5805
                   Attn:  Peter Zayfert

          Attached hereto as Exhibit 1 is a true, correct and complete copy of
the most recent report of PricewaterhouseCoopers LLP to the Board of Directors
and Shareholders of Champion, together with the accompanying consolidated
financial statements and schedules of Champion, as such report appears in the
most recent Annual Report on Form 10-K filed by Champion with the SEC, as well
as all Quarterly Reports on Form 10-Q filed by Champion with the SEC since the
date of such Form 10-K, together with all amendments thereto.

                                     CHAMPION ENTERPRISES, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       E-2

<PAGE>   39

                                                                       Exhibit 1

                                 AUDITOR REPORT

                                 [see attached]

                                       1-1

<PAGE>   40

                                                                         ANNEX F

                                [AUDITOR REPORT]

                                   [see tab ]

                                       F-1

<PAGE>   41

                                                                         ANNEX G

                   [FORM OF PREFERRED STOCK CONVERSION NOTICE]

                                     [date]

Champion Enterprises, Inc.
2701 Cambridge Court
Suite 300
Auburn Hills, Michigan  48326
Attention:
Telephone:
Facsimile:

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.

          Fletcher hereby elects to convert           shares of Series B[  ]
Preferred Stock into          shares of Common Stock at a Conversion Price (as
defined in the Certificate of Rights and Preferences/Subsequent Certificate of
Rights and Preferences) of             . In accordance with Section 6 of the
Certificate of Rights and Preferences/Subsequent Certificate of Rights and
Preferences, such shares of Common Stock shall be delivered to Fletcher [in
uncertificated form by book-entry transfer][in certificated form at the address
specified below:]

                   [delivery address to be added, if applicable:
                   Lehman Brothers Inc.
                   Three World Financial Center
                   New York, NY 10285
                   Attn:  Ele Stathatos
                   Telephone:  (212) 526-6273]

                                       G-1

<PAGE>   42

                                     FLETCHER INTERNATIONAL, LTD., by its
                                     duly authorized investment advisor,
                                     FLETCHER ASSET MANAGEMENT, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.

By:
     -----------------------------
Name:
       ---------------------------
Title:
        --------------------------

                                       G-2

<PAGE>   43

                                                                         ANNEX H

              [FORM OF PREFERRED STOCK CONVERSION DELIVERY NOTICE]

                                     [date]

Fletcher International, Ltd.
C/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY  10021
Attn:  Peter Zayfert
Telephone:  (212) 284-4800
Facsimile:  (212) 284-4801

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.

          This notice confirms that       shares of Series B[  ] Preferred Stock
have been converted by Fletcher into      shares of Common Stock at a Conversion
Price (as defined in the Certificate of Rights and Preferences/Subsequent
Certificate of Rights and Preferences) of             . [If the shares are being
delivered by book entry transfer, insert the following - Such shares of Common
Stock have been delivered to Fletcher in uncertificated form by book-entry
transfer.][If the shares are being delivered in physical form to the holder,
insert the following - Attached are copies of the front and back of the
original stock certificates, each representing        shares of Common Stock,
together with a copy of the overnight courier air bill which will be used to
ship such stock certificates. We will send the original stock certificates by
overnight courier to the following address:

                   Lehman Brothers Inc.
                   Three World Financial Center
                   New York, NY 10285
                   Attn:  Ele Stathatos
                   Telephone:  (212) 526-6273

                                       H-1

<PAGE>   44

with a copy to:

                   Fletcher International, Ltd.
                   C/o Fletcher Asset Management, Inc.
                   22 East 67th Street
                   New York, NY  10021-5805
                   Attn:  Peter Zayfert]

[If Preferred Stock certificates tendered by Fletcher are not being fully
converted, insert the following - Also attached are copies of the front and back
of the original stock certificate representing        shares of Series B[  ]
Preferred Stock, representing the unconverted portion of the tendered Series
B[  ] Preferred Stock certificates, together with a copy of the overnight
courier air bill which will be used to ship such stock certificate. We will send
the original stock certificate by overnight courier to Lehman Brothers Inc. at
the address set forth in the previous paragraph.]

                                     CHAMPION ENTERPRISES, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       H-2

<PAGE>   45

                                                                         ANNEX I

                         [FORM OF EXCESS RIGHTS NOTICE]

                                                   -------------, --

Champion Enterprises, Inc.
2701 Cambridge Court
Suite 300
Auburn Hills, Michigan  48326
Attention:

Ladies and Gentlemen:

          Fletcher International, Ltd. ("Fletcher") hereby elects to exercise
its right to convert/redeem some or all of its Series B Preferred Shares (as
defined in the Agreement (the "Agreement")) dated as of June 29, 2001 by and
between Champion Enterprises, Inc. ("Champion") and Fletcher and, in lieu of
receipt of          Common Shares upon [conversion][redemption] of
Series B Preferred Shares, hereby requests creation of Excess Rights with a
stated value of $         in accordance with the terms of the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.

                                     FLETCHER INTERNATIONAL, LTD., by its
                                     duly authorized investment advisor,
                                     FLETCHER ASSET MANAGEMENT, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       I-1

<PAGE>   46

AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.

By:
     ------------------------------------------
Name:
       ----------------------------------------
Title:
        ---------------------------------------

                                       I-2

<PAGE>   47

                                                                         ANNEX J

                      [FORM OF FIVE YEAR CONVERSION NOTICE]

                                     [date]

Fletcher International, Ltd.
C/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY  10021
Attn:  Peter Zayfert
Telephone:  (212) 284-4800
Facsimile:  (212) 284-4801

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher") and the [Certificate of Rights and Preference
of the Series B-[ ] Cumulative Convertible Preferred Stock (the "Certificate")].
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement and the Certificate.

          In compliance with Section 6(A)(i) of the Certificate, Champion hereby
elects to convert        shares of Series B-[ ] Cumulative Preferred Stock,
which represents, all but not less than all of the shares of Series B-[ ]
Cumulative Preferred Stock. In compliance with Section 6(A)(i) of the
Certificate, Champion hereby represents that the Company has sufficient
Registered Common Stock to deliver to the Holder or Holders upon the closing of
such conversion.

                                     CHAMPION ENTERPRISES, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                       J-1

<PAGE>   48

                                                                         ANNEX K

                [FORM OF BUSINESS COMBINATION RESTRICTION NOTICE]

                                     [date]

Fletcher International, Ltd.
C/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY  10021
Attn:  Peter Zayfert
Telephone:  (212) 284-4800
Facsimile:  (212) 284-4801

Ladies and Gentlemen:

          Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Fletcher
International, Ltd. ("Fletcher"), the Certificate of Rights and Preferences and
Subsequent Certificates of Rights and Preferences. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement and the Certificate.

          Champion hereby represents that public disclosure has been made of a
Business Combination. [It hereby elects, pursuant to Section 6(F) of the
Certificate of Rights and Preferences and all Subsequent Certificates of Rights
and Preferences to redeem all outstanding Series B Preferred Shares for cash in
the amount of $             .][It hereby [further] elects, pursuant to Section
11 of the Agreement to redeem all outstanding Fletcher Rights for cash in the
amount of $               .]

                                     CHAMPION ENTERPRISES, INC.

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                             -----------------------------------

                                      K-1

<PAGE>   49

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
1.    PURCHASE AND SALE...........................................................................................1

2.    INITIAL CLOSING.............................................................................................3

3.    SUBSEQUENT CLOSING..........................................................................................3

4.    REPRESENTATIONS AND WARRANTIES OF CHAMPION..................................................................4

5.    REGISTRATION PROVISIONS.....................................................................................9

6.    "MARKET STAND-OFF" AGREEMENT...............................................................................12

7.    CONVERSION AND REDEMPTION OF PREFERRED SHARES..............................................................12

8.    REPRESENTATIONS AND WARRANTIES OF FLETCHER.................................................................14

9.    RIGHT OF FIRST OFFER.......................................................................................15

10.      COVENANTS OF CHAMPION...................................................................................17

11.      CONSOLIDATION, MERGER, ETC..............................................................................18

12.      COVENANTS OF FLETCHER...................................................................................19

13.      LEGEND..................................................................................................20

14.      CONDITIONS PRECEDENT TO FLETCHER'S OBLIGATIONS..........................................................20

15.      CONDITIONS PRECEDENT TO CHAMPION'S OBLIGATIONS..........................................................21

16.      FEES AND EXPENSES.......................................................................................21

17.      NON-PERFORMANCE.........................................................................................21

18.      INDEMNIFICATION.........................................................................................22

19.      SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC........................................................24

20.      NOTICES.................................................................................................24

21.      MISCELLANEOUS...........................................................................................26
</TABLE>

ANNEXES

<TABLE>
<S>                                                                                                       <C>
FORM OF CERTIFICATE OF RIGHTS AND
PREFERENCES OF CLASS B-1 CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF CHAMPION ENTERPRISES, INC....................................................................A-1
FORM OF FLETCHER NOTICE.........................................................................................B-1
FORM OF REDEMPTION NOTICE ......................................................................................C-1
FORM OF CHAMPION NOTICE.........................................................................................D-1
FORM OF DELIVERY NOTICE....................................................................................E-1, E-2
AUDITOR REPORT..................................................................................................F-1
FORM OF PREFERRED STOCK CONVERSION NOTICE..................................................................G-1, G-2
FORM OF PREFERRED STOCK CONVERSION DELIVERY NOTICE.........................................................H-1, H-2
</TABLE>

<PAGE>   50

<TABLE>
<S>                                                                                                       <C>
FORM OF EXCESS RIGHTS NOTICE....................................................................................I-1
FORM OF FIVE YEAR CONVERSION NOTICE.............................................................................J-1
FORM OF BUSINESS COMBINATION RESTRICTION NOTICE.................................................................K-1
AUDITOR REPORT............................................................................................EXHIBIT 1
</TABLE>

                                       2

<PAGE>   51

                             INDEX OF DEFINED TERMS

<TABLE>
<S>                                                                                                              <C>
65 Day Notice....................................................................................................14
Additional Issuance Price.........................................................................................3
Additional Preferred Shares.......................................................................................1
Agreement.........................................................................................................1
Auditor Report....................................................................................................8
Average Price....................................................................................................13
Blackout Period..................................................................................................11
Business Day......................................................................................................2
Certificate of Rights and Preferences.............................................................................1
Champion..........................................................................................................1
Champion Indemnified Party.......................................................................................23
Closing Date......................................................................................................2
Common Shares.....................................................................................................2
Common Stock......................................................................................................1
Covered Security..................................................................................................9
Excess Rights....................................................................................................13
Excess Rights Notice.............................................................................................13
Exchange Act......................................................................................................2
Exercisable Number...............................................................................................14
First Offer Shareholders.........................................................................................15
Fletcher..........................................................................................................1
Fletcher Indemnified Party.......................................................................................22
Fletcher Notice...................................................................................................2
Fletcher Notice Date.............................................................................................13
Fletcher Rights...................................................................................................1
Fletcher Rights Period............................................................................................2
Increase Notice..................................................................................................18
Indemnified Party................................................................................................23
Indemnifying Party...............................................................................................23
Initial Closing...................................................................................................1
Initial Closing Date..............................................................................................1
Initial Preferred Shares..........................................................................................1
Investment Securities.............................................................................................2
Issuance Blockage................................................................................................13
Maximum Number...................................................................................................14
NASD..............................................................................................................3
Notice Period....................................................................................................14
NYSE..............................................................................................................2
</TABLE>

                                        i

<PAGE>   52

<TABLE>
<S>                                                                                                              <C>
Offer Notice.....................................................................................................15
Offered Shares...................................................................................................15
Original Number..................................................................................................13
Preferred Stock...................................................................................................7
Preferred Stock Conversion Delivery Notice.......................................................................12
Preferred Stock Conversion Notice................................................................................12
Proceeding.......................................................................................................22
Prospectus........................................................................................................9
Redemption Common Stock...........................................................................................2
Redemption Notice.................................................................................................2
Redemption Rights.................................................................................................2
Registrable Number................................................................................................9
Registration Period...............................................................................................9
Registration Requirement..........................................................................................9
Registration Statement............................................................................................9
Related Proceeding...............................................................................................26
Required Consent.................................................................................................13
Required Registration Date........................................................................................9
Rule 144..........................................................................................................9
Sales Contract...................................................................................................11
SEC...............................................................................................................6
Sec Filing........................................................................................................6
Securities Act....................................................................................................6
Series B Preferred Shares.........................................................................................1
Series B-1 Preferred Stock........................................................................................1
Subsequent Certificate of Rights and Preferences..................................................................1
Subsequent Certificates of Rights and Preferences.................................................................1
Subsequent Closing................................................................................................2
Subsequent Closing Date...........................................................................................2
</TABLE>

                                       ii

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