1
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.
2
"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),
2
3
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.
3
4
"Main Agreement" means the Agreement dated as of June 29, 2001, between
the Company and Fletcher pursuant to which twenty thousand (20,000) shares of
Series B-1 Preferred Stock are to be issued by the Company, including all
schedules and exhibits thereto.
"Majority of the Series B-1 Preferred Stock" means more than fifty
percent (50%) of the then outstanding shares of Series B-1 Preferred Stock.
"NYSE" shall have the meaning set forth in the Main Agreement.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holders of the Series
B-1 Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series B-1 Preferred Stock in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities.
"Parent" means, as to any Acquiring Person, any corporation that (i)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (ii) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K (if the Parent is required to file such a report) and (iii) is not
itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).
"Parity Securities" means any class or series of Capital Stock that,
with respect to dividends or distributions upon Liquidation, is pari passu with
the Series B-1 Preferred Stock.
"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.
4
5
"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.
5
6
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
6
7
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.
7
8
(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:
8
9
(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.
9
10
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
10
11
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
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
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
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
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
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
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
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
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
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