EXHIBIT 3.1
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended,
the undersigned corporation executes the following Articles.
1. The present name of the corporation is Champion Enterprises, Inc.
2. The corporation identification number (CID) assigned by the Bureau is
419-343.
3. All former names of the corporation are: NONE
4. The date of filing the original Articles of Incorporation was March 9,
1987.
5. The Restated Articles of Incorporation of the corporation attached as
Exhibit A supersede the Articles of Incorporation as amended and shall be the
Articles of Incorporation for the corporation.
6. The Restated Articles of Incorporation of the corporation attached as
Exhibit A were duly adopted on the 26th day of June, 1987, in accordance with
the provisions of Section 642 of the Act, by the written consent of all the
shareholders entitled to vote in accordance with Section 407(3) of the Act.
Signed this 26th day of June, 1987
By: /s/ RODNEY A. KNIGHT
Rodney A. Knight, Vice President
EXHIBIT A
Restated Articles of Incorporation
of
CHAMPION ENTERPRISES, INC.
ARTICLE I
The name of the corporation is Champion Enterprises, Inc.
ARTICLE II
The purpose or purposes for which the corporation is
organized is to engage in any activity within the purposes for which
corporations may be organized under the Business Corporation Act of Michigan.
ARTICLE III
The total number of shares of stock which the corporation shall have
the authority to issue is 20,000,000 shares, of which 15,000,000 shares shall be
Common Stock of the par value of $1.00 each ("Common Stock") and 5,000,000
shares shall be Preferred Stock of no par value ("Preferred Stock").
Preferred Stock
The Board of Directors is authorized at any time and from time to time
to provide for the issuance of shares of Preferred Stock in one or more series
with such voting powers, full or limited, or without voting powers, and with
such designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof as shall
be expressed in the resolution or resolutions establishing such series and
providing for the issuance thereof adopted by the Board of Directors and as are
not expressed in these Articles of Incorporation as hereafter amended,
including, without limiting the generality of the foregoing, the following:
(1) the designation and number of shares of such series;
(2) the dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the preference or
relation of such dividends to dividends payable on any other
class or classes of capital stock of the corporation, and
whether such dividends shall be cumulative or noncumulative;
(3) whether the shares of such series shall be subject to
redemption by the corporation, and, if made subject to such
redemption, the times, prices, rates, adjustments and other
terms and conditions of such redemption;
(4) The terms and amount of any sinking or similar fund provided
for the purchase or redemption of the shares of such series;
(5) whether the shares of such series shall be convertible into or
exchangeable for shares of capital stock or other securities
of the corporation or of any other corporation, and, if
provision be made for conversion or exchange, the times,
prices, rates, adjustments and other terms and conditions of
such conversion or exchange;
(6) the extent, if any, to which the holders of the shares of such
series shall be entitled to vote as a class or otherwise with
respect to the election of directors or otherwise;
(7) the restrictions and conditions, if any, upon the issue or
reissue of any additional Preferred Stock ranking on a parity
with or prior to such shares as to dividends or upon
dissolution;
(8) the rights of the holders of the shares of such series upon
the dissolution of, or upon the distribution of assets of, the
corporation, which rights may be different in the case of
voluntary dissolution than the case of involuntary
dissolution; and
(9) any other relative rights, preferences or limitations of
shares of such series consistent with this Article and
applicable law.
The powers, preferences and relative participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be cumulative. The
terms of any series of Preferred Stock may be amended without consent of the
holders of any other series of Preferred Stock or of the Common Stock, provided
such amendment does not adversely affect the holders of such other series of
Preferred Stock or the Common Stock.
Shares of any series of Preferred Stock which have been issued and
reacquired in any manner and are not held as treasury shares, including shares
redeemed by purchase (whether through the operation of a retirement or sinking
fund or otherwise), will have the status of authorized and unissued Preferred
Stock and may be reissued as a part of the series of which they were originally
a part or may be reclassified into and reissued as part of a new series.
Common Stock
Each holder of Common Stock shall be entitled to one vote for each
share of Common Stock held of record on all matters on which shareholders
generally are entitled to vote. Subject to the provisions of law and the rights
of the Preferred Stock and any other class or series of stock having a
preference as to dividends over the Common Stock then outstanding, dividends may
be paid on the Common Stock at such times and in such amounts as the Board of
Directors shall determine. Upon the dissolution, liquidation or winding up of
the corporation, after any preferential amounts to be distributed to the holders
of the Preferred Stock and any other class or series of stock having a
preference over the Common Stock then outstanding have been paid or declared and
set apart for payment, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the corporation available for distribution
to its shareholders ratably in proportion to the number of shares held by them,
respectively.
ARTICLE IV
The address of the registered office is:
615 Griswold Street
Detroit, Michigan 48226
The mailing address of the registered office is:
615 Griswold Street
Detroit, Michigan 48226
The name of the resident agent at the registered office is The
Corporation Company.
ARTICLE V
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, provided that the foregoing shall not eliminate or limit the
liability of a director for any of the following: (i) a breach of the director's
duty of loyalty to the corporation or its shareholders; (ii) acts or omissions
not in good faith or that involve intentional misconduct or knowing violation of
law; (iii) a violation of Section 551(1) of the Michigan Business Corporation
Act; (iv) a transaction from which the director derived an improper personal
benefit; or (v) an act or omission occurring before March 1, 1987. If the
Michigan Business Corporation Act hereafter is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the corporation, in addition to the limitation on personal liability
contained herein, shall be limited to the fullest extent permitted by the
amended Michigan Business Corporation Act. No amendment or repeal of this
Article V shall apply to or have any effect on the liability or alleged
liability of any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to any such amendment or repeal.
ARTICLE VI
When a compromise or arrangement or a plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them or between this corporation and its shareholders or any class of them, a
court of equity jurisdiction within the state, on application of a receiver
appointed for the corporation, may order a meeting of the creditors or class of
creditors or of the shareholders or class of shareholders to be affected by the
proposed compromise or arrangement or reorganization, to be summoned in such
manner as the court directs. If a majority in number representing 3/4 in value
of the creditors or class of creditors, or of the shareholders or class of
shareholders, to be affected by the proposed compromise or arrangement or a
reorganization, agree to a compromise or arrangement or a reorganization of this
corporation as a consequence of the compromise or arrangement, the compromise or
arrangement and the reorganization, if sanctioned by the court to which the
application has been made, shall be binding on all the creditors or class of
creditors, or on all the shareholders or class of shareholders, and also on this
corporation.
ELECTION PURSUANT TO SECTION 2
OF ACT NO. 58 OF THE
PUBLIC ACTS OF 1988
1. The present name of the corporation is Champion Enterprises, Inc.
2. The corporation identification number (CID) assigned by the Bureau is
419-343.
3. The location of its registered office is: 615 Griswold Street, Detroit,
Michigan 48226.
Champion Enterprises, Inc., hereby files with the Department of
Commerce, pursuant to Section 2 of Act No. 58 of the Public Acts of 1988, the
following resolution adopted by the Board of Directors of the Corporation on May
26, 1988:
RESOLVED, that the Board of Directors of Champion Enterprises,
Inc., a Michigan corporation that is an "issuing public corporation" as
defined in Section 793 of the Michigan Business Corporation Act, hereby
elects, pursuant to Section 2 of Act No. 58 of the Public Acts of 1988,
to have such Act apply to the Company effective as of May 31, 1988.
CHAMPION ENTERPRISES, INC.
By: /S/ JOSEPH J. MORRIS
Joseph J. Morris, President
(Title and Name)
CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NY 10019
212 246 5070
May 5, 1993
Thomas Pierson, Deputy Director
Michigan Department of Commerce
Corporation & Security Bureau
6546 Mercantile Way
Lansing, Michigan 48909
RE: CHANGE OF REGISTERED OFFICE ADDRESS
Dear Mr. Pierson,
This letter is to certify that The Corporation Company has changed its address
from: 615 Griswold Street, Detroit, Michigan 48226 to: 30600 Telegraph Road,
Bingham Farms, Michigan 48025. We will notify all active corporations for which
The Corporation Company is the resident agent of this change of address.
Enclosed is our check for $52,000.00 to cover the filing fee for the 10,294
active profit and non-profit corporations for which your records indicate The
Corporation Company is agent. This payment will include the fee for providing us
with an alphabetical listing of the names of all the corporations for which the
registered office has been changed. Also included in this payment is the fee for
a clean-up list which we will request within 30 days of the filing.
Please confirm in writing the date that this change was effectuated on your
records.
Thank you in advance for your cooperation in this matter.
Very truly yours,
/s/ KENNETH J. UVA
Kenneth J. Uva
Vice President
KJU:mh
encl.
Sworn before me this 5th day of May, 1993.
/s/ Theresa Alfieri
Theresa Alfieri
Notary Public, State of New York
No. 4703698
Qualified in Kings County
Certificate Filed In New York County
Commission Expires Dec. 31, 1993
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
1. The present name of the corporation is Champion Enterprises, Inc.
2. The corporation identification number (CID) assigned by the Bureau is
419-343.
3. The location of its registered office is: 30600 Telegraph Road, Bingham
Farms, Michigan 48025.
4. Article III of the Articles of Incorporation is hereby amended to read
as follows:
As set forth on Exhibit A
5. b. The foregoing amendment to the Articles of Incorporation was
duly adopted on the 1st day of May, 1995. The amendment:
was duly adopted in accordance with Section 611(2) of the Act
by the vote of the shareholders if a profit corporation, or by
the vote of the shareholders or members if a nonprofit
corporation, or by the vote of the directors if a nonprofit
corporation organized on a nonstock directorship basis. The
necessary votes were cast in favor of the amendment.
Signed this 3rd day of May, 1995.
By: /S/ LOUIS M. BALIUS
Louis M. Balius
Vice President-Secretary and
General Counsel
EXHIBIT A
ARTICLE III
The total number of shares of stock which the corporation shall have
authority to issue is 35,000,000 shares, of which 30,000,000 shares shall be
Common Stock of the par value of $1.00 each ("Common Stock"), and 5,000,000
shares shall be Preferred Stock of no par value ("Preferred Stock").
Preferred Stock
The Board of Directors is authorized at any time and from time to time
to provide for the issuance of shares of Preferred Stock in one or more series
with such voting powers, full or
limited, or without voting powers, and with such designations, preferences and
relative participating, optional or other special rights, and qualifications,
limitations or restrictions thereof as shall be expressed in the resolution or
resolutions establishing such series and providing for the issuance thereof
adopted by the Board of Directors and as are not expressed in these Articles of
Incorporation as hereafter amended, including, without limiting the generality
of the foregoing, the following:
(1) the designation and number of shares of such series;
(2) the dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the preference or
relation of such dividends to dividends payable on any other
class or classes of capital stock of the corporation, and
whether such dividends shall be cumulative or noncumulative;
(3) whether the shares of such series shall be subject to
redemption by the corporation, and, if made subject to such
redemption, the times, prices, rates, adjustments and other
terms and conditions of such redemption;
(4) the terms and amount of any sinking or similar fund provided
for the purchase or redemption of the shares of such series;
(5) whether the shares of such series shall be convertible into or
exchangeable for shares of capital stock or other securities
of the corporation or of any other corporation, and, if
provision be made for conversion or exchange, the times,
prices, rates, adjustments and other terms and conditions of
such conversion or exchange;
(6) the extent, if any, to which the holders of the shares of such
series shall be entitled to vote as a class or otherwise with
respect to the election of directors or otherwise;
(7) the restrictions and conditions, if any, upon the issue or
reissue of any additional Preferred Stock ranking on a parity
with or prior to such shares as to dividends or upon
dissolution;
(8) the rights of the holders of the shares of such series upon
the dissolution of, or upon the distribution of assets of, the
corporation, which rights may be different in the case of
voluntary dissolution than the case of involuntary
dissolution; and
(9) any other relative rights, preferences or limitations of
shares of such series consistent with this Article and
applicable law.
The powers, preferences and relative participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock
shall be identical in all respects with all other shares of such series, except
that shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative. The terms of any series
of Preferred Stock may be amended without consent of the holders of any other
series of Preferred Stock or of the Common Stock, provided such amendment does
not adversely affect the holders of such other series of Preferred Stock or the
Common Stock.
Shares of any series of Preferred Stock which have been issued and
reacquired in any manner and are not held as treasury shares, including shares
redeemed by purchase (whether through the operation of a retirement or sinking
fund or otherwise), will have the status of authorized and unissued Preferred
Stock and may be reissued as a part of the series of which they were originally
a part or may be reclassified into and reissued as a part of a new series.
Common Stock
Each holder of Common Stock shall be entitled to one vote for each
share of Common Stock held of record on all matters on which shareholders
generally are entitled to vote. Subject to the provisions of law and the rights
of the Preferred Stock and any other class or series of stock having a
preference as to dividends over the Common Stock then outstanding, dividends may
be paid on the Common Stock at such times and in such amounts as the Board of
Directors shall determine. Upon the dissolution, liquidation or winding up of
the corporation, after any preferential amounts to be distributed to the holders
of the Preferred Stock and any other class or series of stock having a
preference over the Common Stock then outstanding have been paid or declared and
set apart for payment, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the corporation available for distribution
to its shareholders ratably in proportion to the number of shares held by them,
respectively.
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION DETERMINING
THE TERMS OF THE SERIES A PREFERRED STOCK
of
CHAMPION ENTERPRISES, INC.
Pursuant to the provisions of Act 284, Public Acts of 1972, the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is Champion Enterprises,
Inc. (the "Corporation").
2. The Corporation Identification Number (CID) assigned by the
Bureau is 419-343.
3. The location of the registered office is Suite 3275, 30600
Telegraph Road, Bigham Farms, Michigan 48025.
4. Article III of the Amended and Restated Articles of
Incorporation of the Corporation is hereby amended by adding the following:
Series A Preferred Stock, No Par Value
A. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock, no par value," and the number of shares
constituting such series shall be 300,000.
B. Dividends and Distributions.
(1) Subject to any prior and superior rights of the holders of
any series of Preferred Stock ranking prior and superior to the shares of Series
A Preferred Stock with respect to dividends that may be authorized by the
Articles of Incorporation, the holders of shares of Series A Preferred Stock
shall be entitled prior to the payment of any dividends on shares ranking junior
to the Series A Preferred Stock to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value $1.00
per share, of the Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after February 5, 1996 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (1) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
(4) Dividends in full shall not be declared or paid or set
apart for payment on the Series A Preferred Stock for a
dividend period terminating on the Quarterly Dividend Payment Date unless
dividends in full have been declared or paid or set apart for payment on the
Preferred Stock of all series (other than series with respect to which dividends
are not cumulative from a date prior to such dividend date) for the respective
dividend periods terminating on such dividend date. When the dividends are not
paid in full on all series of the Preferred Stock, the shares of all series
shall share ratably in the payment of dividends, including accumulations, if
any, in accordance with the sums which would be payable on said shares if all
dividends were declared and paid in full.
C. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters voted on at a meeting of the
shareholders of the Corporation. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, or (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one voting group on all matters
voted on at a meeting of shareholders of the Corporation.
(3) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
D. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section B.
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(a) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(b) declare or pay dividends on or make any other
distributions on any shares or stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series
A Preferred Stock;
(d) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(2) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 5, purchase or otherwise acquire such shares at such time and in
such manner.
E. Liquidation, Dissolution or Winding Up.
(1) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $100.00 per share,
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (3) below to reflect such events as stocks splits, stock dividends
and recapitalizations with respect to the Common Stock (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series A Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed.
(2) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(3) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
F. Merger, Consolidation. etc. In case the Corporation shall
enter into any merger, consolidation, combination or other transaction in which
the shares of Common Stock are exchanged or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
G. Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
H. Ranking. The Series A Preferred Stock shall rank on a parity
with all other series of the Corporation's Preferred
Stock as to the payment of dividends and other distribution of assets, unless,
in accordance with authorization in the Articles of Incorporation, the terms of
any such series shall provide otherwise.
I. Amendment. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of a
majority of the outstanding shares of Series A Preferred Stock, voting
separately as one voting group.
J. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
5. The foregoing Amendment to the Amended and Restated Articles
of Incorporation of the Corporation was adopted on January 9, 1996. The
Amendment to the Amended and Restated Articles of Incorporation of the
Corporation was duly adopted by the Board of Directors of the Corporation,
without shareholder action, pursuant to Sections 302(3) and 523 of the Act and
Article III of the Amended and Restated Articles of Incorporation of the
Corporation.
Signed this 8th day of February, 1996.
CHAMPION ENTERPRISES, INC.
By: /s/ A. JACQUELINE DOUT
A. Jacqueline Dout
Executive Vice President and
Chief Financial Officer
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
1. The present name of the corporation is: Champion Enterprises, Inc.
2. The identification number assigned by the Bureau is: 419-343
3. The location of the registered office is: 30600 Telegraph Road, Bingham
Farms, Michigan 48025
4. Article III of the Articles of Incorporation is hereby amended to read
as follows:
As set forth on Exhibit A
6. The forgoing amendment to the Articles of Incorporation was duly
adopted on the 29th day of April, 1997 by the shareholders if a profit
corporation, or by the shareholders or members if a nonprofit
corporation, at a meeting. The necessary votes were cast in favor of
the amendment.
Signed this 2nd day of May, 1997
By: /s/ JOHN J. COLLINS, JR.
John J. Collins, Jr.
Vice President, General Counsel and Secretary
EXHIBIT A
ARTICLE III
The total number of shares of stock which the corporation shall have
authority to issue is 125,000,000 shares, of which 120,000,000 shares shall be
Common Stock of the par value of $1.00 each ("Common Stock"), and 5,000,000
shares shall be Preferred Stock of no par value ("Preferred Stock").
Preferred Stock
The Board of Directors is authorized at any time and from time to time
to provide for the issuance of shares of Preferred Stock in one or more series
with such voting powers, full or limited, or without voting powers, and with
such designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof as shall
be expressed in the resolution or resolutions establishing such series and
providing for the issuance thereof adopted by the Board of Directors and as are
not expressed in these Articles of Incorporation as hereafter amended,
including, without limiting the generality of the foregoing, the following:
(1) the designation and number of shares of such series;
(2) the dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the preference or
relation of such dividends to dividends payable on any other
class or classes of capital stock of the corporation, and
whether such dividends shall be cumulative or noncumulative;
(3) whether the shares of such series shall be subject to
redemption by the corporation, and, if made subject to such
redemption, the times, prices, rates, adjustments and other
terms and conditions of such redemption;
(4) the terms and amount of any sinking or similar fund provided
for the purchase or redemption of the shares of such series;
(5) whether the shares of such series shall be convertible into or
exchangeable for shares of capital stock or other securities
of the corporation or of any other corporation, and, if
provision be made for conversion or exchange, the times,
prices, rates, adjustments and other terms and conditions of
such conversion or exchange;
(6) the extent, if any, to which the holders of the shares of such
series shall be entitled to vote as a class or otherwise with
respect to the election of directors or otherwise;
(7) the restrictions and conditions, if any, upon the issue or
reissue of any additional Preferred Stock ranking on a parity
with or prior to such shares as to dividends or upon
dissolution;
(8) the rights of the holders of the shares of such series upon
the dissolution of, or upon the distribution of assets of, the
corporation, which rights may be different in the case of
voluntary dissolution than the case of involuntary
dissolution; and
(9) any other relative rights, preferences or limitations of
shares of such series consistent with this Article and
applicable law.
The powers, preferences and relative participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends
thereon shall be cumulative. The terms of any series of Preferred Stock may be
amended without consent of the holders of any other series of Preferred Stock or
of the Common Stock, provided such amendment does not adversely affect the
holders of such other series of Preferred Stock or the Common Stock.
Shares of any series of Preferred Stock which have been issued and
reacquired in any manner and are not held as treasury shares, including shares
redeemed by purchase (whether through the operation of a retirement or sinking
fund or otherwise), will have the status of authorized and unissued Preferred
Stock and may be reissued as a part of the series of which they were originally
a part or may be reclassified into and reissued as a part of a new series.
Series A Preferred Stock, No Par Value
A. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock, no par value," and the number of shares
constituting such series shall be 300,000.
B. Dividends and Distributions.
(1) Subject to any prior and superior rights of the holders of
any series of Preferred Stock ranking prior and superior to the shares of Series
A Preferred Stock with respect to dividends that may be authorized by the
Articles of Incorporation, the holders of shares of Series A Preferred Stock
shall be entitled prior to the payment of any dividends on shares ranking junior
to the Series A Preferred Stock to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time after February
5, 1996 (the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(2) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (1) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
(4) Dividends in full shall not be declared or paid or set
apart for payment on the Series A Preferred Stock for a dividend period
terminating on the Quarterly Dividend Payment Date unless dividends in full have
been declared or paid or set apart for payment on the Preferred Stock of all
series (other than series with respect to which dividends are not cumulative
from a date prior to such dividend date) for the respective dividend periods
terminating on such dividend date. When the dividends are not paid in full on
all series of the Preferred Stock, the shares of all series shall share ratably
in the payment of dividends, including accumulations, if any, in accordance with
the sums which would be payable on said shares if all dividends were declared
and paid in full.
C. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters voted on at a meeting of the
shareholders of the Corporation. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, or (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock shall vote together as one voting group on all matters
voted on at a meeting of shareholders of the Corporation.
(3) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
D. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section B.
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid
in full, the Corporation shall not:
(a) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(b) declare or pay dividends on or make any other
distributions on any shares or stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series
A Preferred Stock;
(d) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(2) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 5, purchase or otherwise acquire such shares at such time and in
such manner.
E. Liquidation, Dissolution or Winding Up.
(1) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $100.00 per share,
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (3) below to reflect such events as stocks splits, stock dividends
and recapitalizations with respect to the Common Stock (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series A Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed.
(2) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity
with the Series A Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(3) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
F. Merger, Consolidation. etc. In case the Corporation shall enter into
any merger, consolidation, combination or other transaction in which the shares
of Common Stock are exchanged or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
G. Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
H. Ranking. The Series A Preferred Stock shall rank on a parity with
all other series of the Corporation's Preferred Stock as to the payment of
dividends and other distribution of assets, unless, in accordance with
authorization in the Articles of Incorporation, the terms of any such series
shall provide otherwise.
I. Amendment. The Articles of Incorporation of the Corporation shall
not be further amended in any manner which would alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as one voting
group.
J. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
Common Stock
Each holder of Common Stock shall be entitled to one vote for each
share of Common Stock held of record on all matters on which shareholders
generally are entitled to vote. Subject to the provisions of law and the rights
of the Preferred Stock and any other class or series of stock having a
preference as to dividends over the Common Stock then outstanding, dividends may
be paid on the Common Stock at such times and in such amounts as the Board of
Directors shall determine. Upon the dissolution, liquidation or winding up of
the corporation, after any preferential
amounts to be distributed to the holders of the Preferred Stock and any other
class or series of stock having a preference over the Common Stock then
outstanding have been paid or declared and set apart for payment, the holders of
the Common Stock shall be entitled to receive all the remaining assets of the
corporation available for distribution to its shareholders ratably in proportion
to the number of shares held by them, respectively.
Champion Enterprises, Inc.
Computation of Earnings Per Share
(in 000's, except per share amounts)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
EARNINGS
Net Income $18,200 $19,146 $32,039 $32,888
======= ======= ======= =======
SHARES USED FOR CALCULATING
EARNINGS PER SHARE
Average Shares Outstanding 48,252 47,428 48,155 47,518
Additional Shares Resulting
from Assumed Exercise
of Stock Options 1,235 1,980 1,425 1,807
------ ------ ------ ------
Total 49,487 49,408 49,580 49,325
====== ====== ====== ======
PER SHARE AMOUNTS
Net Income $0.37 $0.39 $0.65 $0.67
===== ===== ===== =====
NOTE: This calculation is submitted in accordance with Securities and Exchange
Act of 1934 Release No. 9083.
EXHIBIT 3.3
CERTIFICATE OF CORRECTION TO ARTICLES OF INCORPORATION
CERTIFICATE OF CORRECTION
1. The name of the corporation or limited liability company is CHAMPION
ENTERPRISES, INC.
2. The identification number assigned by the Bureau is: 419-343
3. The corporation or limited liability company is formed under the laws
of the State of Michigan.
4. That a Certificate of Amendment to the Articles of Incorporation was
filed by the Bureau on May 7, 1996 and that said document requires
correction.
5. Describe the inaccuracy or defect contained in the above named
document:
The number of shares of Series A Preferred Stock, No Par
Value, was incorrectly stated to be 300,000 shares rather than
750,000 shares.
6. The document is corrected as follows:
Replace Article III, Series A Preferred Stock No Par Value,
Paragraph A with the following:
AA. Designation and Amount. The shares of such series
shall be designated "Series A Preferred Stock, no par
value, and the number of shares constituting such
series shall be 750,000."
7. This document is hereby executed in the same manner as the Act requires
the document being corrected to be executed.
Signed this 12th day of February, 1999
/s/ JOHN J. COLLINS, JR.
John J. Collins, Jr., Vice
President, General Counsel and Secretary
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
- ------------------------------------------------------------------------------------------
Date Received
(For Bureau Use Only)
- ------------------------------------------------------------------------------------------
[Ld 4A]
- ------------------------------------------------------------------------------------------
NAME Valerie A. Dormady
- ------------------------------------------------------------------------------------------
ADDRESS Dykema Gossett PLLC
800 Michigan National Tower
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CITY Lansing STATE Michigan ZIP CODE 48933
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DOCUMENT WILL BE RETURNED TO NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
CHAMPION ENTERPRISES, INC.
Pursuant to the provision of Act 284, Public Acts of 1972, as amended,
the undersigned corporation executes the following certificate:
1. The present name of the Corporation is: Champion Enterprises, Inc.
2. The corporation identification number (CID) assigned by the Bureau is:
419-343.
3. Article III of the Articles of Incorporation is hereby amended to (1)
amend and restate the Certificate of Rights and Preferences of Series B-1
Cumulative Convertible Preferred Stock of Champion Enterprises, Inc. and to (2)
add a Certificate of Resolution setting forth the rights and preferences of
Series C Cumulative Convertible Preferred Stock of Champion Enterprises, Inc.
SEE ATTACHED FOR AMENDED AND RESTATED PROVISIONS AND ADDITIONAL
PROVISIONS TO ARTICLE III.
4. The foregoing amendment to the Articles of Incorporation was duly
adopted on the 29th day of March, 2002. The amendment was duly adopted by a
majority of the Board of Directors of the Corporation pursuant to and as
permitted by Article III of the Corporations's Articles of Incorporation.
Signed this 29th day of April, 2002.
By : /s/ Anthony S. Cleberg
----------------------------------------------------
Anthony S. Cleberg
Its: Executive Vice President and Chief Financial Officer
Name of person or organization Preparer's name and business telephone
remitting fees: number:
Champion Enterprises, Inc. Valerie A. Dormady
(517) 374-9144
FIRST AMENDED AND RESTATED
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
SERIES B-1 CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CHAMPION ENTERPRISES, INC.
CERTIFICATE OF RESOLUTION
Pursuant to Section 450.1302 of the Michigan Business Corporation Act,
CHAMPION ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of Michigan, hereby certifies that the following resolution was
duly adopted by the Board of Directors of the Company on June 29, 2001, as
amended and restated by a resolution duly adopted by the Board of Directors on
March 29, 2002, pursuant to authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of the Company, which authorizes the
issuance of up to Five Million (5,000,000) shares of preferred stock, no par
value.
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors of the Company and pursuant to the provisions of the
Articles of Incorporation, the Board of Directors hereby creates a series of
preferred stock, herein designated and authorized as the Series B-1 Cumulative
Convertible Preferred Stock, no par value, which shall consist of Twenty
Thousand (20,000) of the Five Million (5,000,000) shares of preferred stock
which the Company now has authority to issue, and the Board of Directors hereby
fixes the powers, designations and preferences and the relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations and restrictions thereof as follows:
1. Number. The number of shares constituting the Series B-1 Cumulative
Convertible Preferred Stock shall be Twenty Thousand (20,000).
2. Definitions. Unless the context otherwise requires, when used herein
the following terms shall have the meaning indicated.
"Acquiring Person" means, in connection with any Business Combination,
the continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of all or substantially all
of the properties or assets of the Company, the corporation consolidating with
or merging into the Company in a consolidation or merger in connection with
which the Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, the entity or
group acting in concert acquiring or possessing the power to cast the majority
of the eligible votes at a meeting of the Company's shareholders at which
directors are elected, or, in the case of a capital reorganization or
reclassification, the Company.
"Acquisition Price" means (i) the Daily Market Price of the Common
Stock on the date immediately preceding the date on which a Business Combination
is consummated, or (ii) if a purchase, tender or exchange offer is made by the
Acquiring Person (or by any of its affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than fifty
1
percent (50%) of the outstanding shares of Common Stock, the greater of (x) the
price determined in accordance with the provisions of the foregoing clause (i)
of this sentence and (y) the Daily Market Price on the date immediately
preceding the acceptance of such offer by the holders of more than fifty percent
(50%) of the outstanding shares of Common Stock.
"Articles" means the Restated Articles of Incorporation of the Company,
as amended.
"Average Market Price" means, with respect to any reference date, the
average of the Daily Market Prices of the Common Stock for the thirty (30)
Business Days ending on and including the third Business Day before such
reference date, but not greater than the average of the Daily Market Prices of
the Common Stock for the five (5) Business Days ending on and including the
twenty-eighth Business Day before such reference date.
"Board" means the Board of Directors of the Company.
"Business Combination" is defined in Section 6(F)(i).
"Business Day" means any day on which the Common Stock may be traded on
the NYSE, or if not admitted for trading on the NYSE, on any day other than a
Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
limited partnership, limited liability company or other equity interests of such
Person.
"Cash Redemption Closing Date" is defined in Section 6(B)(ii).
"Certificate of Rights and Preferences" means this Certificate of
Rights and Preferences of the Series B-1 Preferred Stock.
"Common Stock" means the Company's common stock, par value one dollar
($1.00) per share, and any Capital Stock for or into which such Common Stock
hereafter is exchanged, converted, reclassified or recapitalized by the Company
or pursuant to a Business Combination to which the Company is a party.
"Company" means Champion Enterprises, Inc., a Michigan corporation.
"Conversion Closing Date" is defined in Section 6(A)(i).
"Conversion Notice" is defined in Section 6(A)(i).
"Conversion Price" means (i) until and excluding December 29, 2001,
$15.93, and (ii) on and after December 29, 2001, one hundred and twenty percent
(120%) of the Average Market Price calculated as of December 29, 2001; provided
that the Conversion Price shall not be greater than $15.93 or less than seven
dollars and fifty cents ($7.50), in each case subject to adjustment for stock
splits, recombinations, stock dividends and the like.
2
"Conversion Rate" means (i) the Stated Value of one share of Series B-1
Preferred Stock plus accrued and unpaid dividends divided by (ii) the Conversion
Price.
"Daily Market Price" means, on any date, the amount per share of the
Common Stock (or, for purposes of determining the Daily Market Price of the
common stock of an Acquiring Person or its Parent under Section 6(F), the common
stock of such Acquiring Person or such Parent), equal to (i) the daily
volume-weighted average price on the NYSE or, if no such sale takes place on
such date, the average of the closing bid and asked prices on the NYSE thereof
on such date, in each case as reported by Bloomberg, L.P. (or by such other
Person as the Holder and the Company may agree), or (ii) if such Common Stock or
common stock of an Acquiring Person or its Parent is not then listed or admitted
to trading on the NYSE, the higher of (x) the book value per share thereof as
determined by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company as of the last day of any
month ending within sixty (60) days preceding the date as of which the
determination is to be made or (y) the fair value per share thereof determined
in good faith by the Board of Directors of the Company as of a date which is no
more than ten (10) Business Days before and excluding the date as of which the
determination is to be made.
"Dividend Payment Date" is defined in Section 3(A).
"Dividend Period" is defined in Section 3(A).
"Dividend Rate" means a rate equal to five percent (5%) per annum times
the Stated Value subject to Sections 3(E) and 3(F).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fletcher" means Fletcher International, Ltd. a company organized under
the laws of Bermuda, together with its successors.
"Holder" shall mean a holder of Series B-1 Preferred Stock.
"Issue Date" means with respect to any shares of Series B-1 Preferred
Stock the original date of issuance of such shares of Series B-1 Preferred
Stock.
"Junior Securities" means Capital Stock that, with respect to dividends
and distributions upon Liquidation, ranks junior to the Series B Preferred
Shares (as defined in the Main Agreement), including but not limited to Common
Stock, Series A Preferred Stock, and any other class or series of Capital Stock
issued by the Company or any Subsidiary of the Company on or after the date of
the Main Agreement, but excluding any Parity Securities and Senior Securities
issued (i) to Fletcher or its authorized assignees under the Main Agreement,
(ii) with the approval of the Holders of a Majority of the Series B-1 Preferred
Stock or (iii) upon the conversion, redemption or exercise of securities
described in clause (i) or (ii).
"Liquidation" means the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided, however, that a
consolidation, merger or share exchange shall not be deemed a Liquidation, nor
shall a sale, assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets, which does not involve a
3
distribution by the Company of cash or other property to the holders of Common
Stock, be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 4.
"Main Agreement" means the Agreement dated as of June 29, 2001, between
the Company and Fletcher pursuant to which twenty thousand (20,000) shares of
Series B-1 Preferred Stock are to be issued by the Company, including all
schedules and exhibits thereto.
"Majority of the Series B-1 Preferred Stock" means more than fifty
percent (50%) of the then outstanding shares of Series B-1 Preferred Stock.
"NYSE" shall have the meaning set forth in the Main Agreement.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holders of the Series
B-1 Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series B-1 Preferred Stock in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities.
"Parent" means, as to any Acquiring Person, any corporation that (i)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (ii) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K (if the Parent is required to file such a report) and (iii) is not
itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).
"Parity Securities" means any class or series of Capital Stock that,
with respect to dividends or distributions upon Liquidation, is pari passu with
the Series B-1 Preferred Stock including the Series C Preferred Stock and the
Series B Preferred Shares (as defined in the Main Agreement).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock" means the Company's preferred stock authorized
pursuant to the provisions of the Articles.
"Record Date" is defined in Section 3(A).
"Redemption Amount" means a dollar amount for each share of the
then-outstanding Series B-1 Preferred Stock redeemed by such Holder equal to the
Stated Value per share plus an amount equal to all accrued but unpaid dividends
thereon, whether or not earnings are available in respect of such dividends or
such dividends have been declared, to and including the date full payment is
tendered to the Holders with respect to such redemption.
4
"Redemption Notice" is defined in Section 6(B)(i).
"Redemption Notice Date" is defined in Section 6(B)(i).
"Registered Common Stock" means Common Stock that has been registered
under the Securities Act and is freely tradable.
"Restatement" means that Champion adversely restates net income or
shareholders' equity, in any material respect, in any portion of its financial
statements as included in a Form 10-K or Form 10-Q filed with the Securities and
Exchange Commission in the form of an amendment thereto, press release, Form 8-K
or any other method except as is required as a result of a change occurring
after the date of the Main Agreement in (i) applicable law or (ii) generally
accepted accounting principles promulgated by the Financial Accounting Standards
Board or the Securities and Exchange Commission, which change is implemented by
the Company in the manner and at the time prescribed by such law or such
generally accepted accounting principle.
"Restatement Conversion Price" means one hundred twenty percent (120%)
of the Average Market Price calculated on the date ninety (90) days after and
excluding the Restatement Date.
"Restatement Date" means the most recent date on which a Restatement
occurs.
"Restatement Notice" means a written notice from Champion to Fletcher,
(i) stating the Restatement Date and (ii) including the documents in which the
Restatement was publicly disclosed.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"Senior Securities" means any class or series of Capital Stock that,
with respect to dividends or distributions upon Liquidation, ranks senior to the
Series B-1 Preferred Stock.
"Series A Preferred Stock" means the Series A Preferred Stock of the
Company, the powers, designations, preferences and relative, participating,
optional and other special rights of which are specified in the Articles.
"Series B-1 Preferred Stock" means the Series B-1 Cumulative
Convertible Preferred Stock of the Company or successor as contemplated by
Section 6(F)(ii).
"Series C Preferred Stock" means the Series C Cumulative Convertible
Preferred Stock of the Company or successor.
"Series C Preferred Stock Agreement" means the Agreement by and between
the Company and Fletcher International, Ltd. dated as of March 29, 2002 relating
to the sale of Series C Preferred Stock and a warrant.
"Stated Value" is an amount equal to one thousand dollars ($1,000) per
share of Series B-1 Preferred Stock.
5
"Stock Redemption Closing Date" is defined in Section 6(B)(iii).
"Subsidiary" of a Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is at
the time of determination, directly or indirectly, owned by such Person or by
one or more Subsidiaries of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has a least a
majority ownership interest.
The foregoing definitions will be equally applicable to both the
singular and plural forms of the defined terms.
3. Dividends and Distributions.
(A) Holders shall be entitled to receive out of the assets of
the Company legally available for that purpose, dividends at the
Dividend Rate to be paid in accordance with the terms of this Section
3. Such dividends shall be fully cumulative from the Issue Date, shall
accumulate regardless of whether the Company earns a profit and shall
be payable in arrears, when and as declared by the Board, on March 31,
June 30, September 30 and December 31 of each year (each such date
being herein referred to as a "Dividend Payment Date"), commencing on
September 30, 2001. The period from the Issue Date to September 30,
2001, and each quarterly period between consecutive Dividend Payment
Dates shall hereinafter be referred to as a "Dividend Period." The
dividend for any Dividend Period for any share of Series B-1 Preferred
Stock that is not outstanding on every day of the Dividend Period shall
be prorated based on the number of days such share was outstanding
during the period. Each such dividend shall be paid to the Holders of
record as their names appear on the share register of the Company on
the corresponding Record Date. As used above, the term "Record Date"
means, with respect to the dividend payable on March 31, June 30,
September 30 and December 31, respectively, of each year, the preceding
March 15, June 15, September 15 and December 15, or such other record
date designated by the Board with respect to the dividend payable on
such respective Dividend Payment Date not exceeding thirty (30) days
preceding such Dividend Payment Date. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of record on
a date designated by the Board, not exceeding thirty (30) days
preceding the payment date thereof, as may be fixed by the Board. For
purposes of determining the amount of dividends accrued as of the first
Dividend Payment Date and as of any date that is not a Dividend Payment
Date, such amount shall be calculated on the basis of the Dividend Rate
for the actual number of days elapsed from and including the Issue Date
(in case of the first Dividend Payment Date and any date prior to the
first Dividend Payment Date) or the last preceding Dividend Payment
Date (in case of any other date) to the date as of which such
determination is to be made, based on a three hundred sixty (360) day
year.
(B) Dividends payable on the Series B-1 Preferred Stock may be
paid, at the option of the Company, either in cash or by the issuance
of Registered Common Stock, provided, however, that the Company's right
to pay dividends on any Dividend Payment
6
Date by the issuance of Registered Common Stock shall continue only so
long as the number of shares of Common Stock issued and issuable under
the Main Agreement (including one year of dividends from such Dividend
Payment Date, assuming that all such dividends will be paid in shares
of Common Stock as they accrue) and all previously issued and issuable
shares of Common Stock and all issued and issuable but unconverted
Series B Preferred Shares (as defined in the Main Agreement) (on an
as-converted basis as of that date) does not exceed seventeen and
one-half percent (17.5%) of the Original Number (as defined in the Main
Agreement), or, if such number of shares exceeds seventeen and one-half
percent (17.5%) of the Original Number and does not exceed nineteen and
ninety-nine one-hundredths percent (19.99%) of the Original Number, the
Company has notified its shareholders of a shareholder's meeting for
the purpose of voting on a Required Consent (as defined in the Main
Agreement) in accordance with the Main Agreement and has used and is
using its best efforts to obtain the Required Consent. Although it is
the intent and view of the Company that the issuance of Common Stock
with respect to Series B Preferred Shares (as defined in the Main
Agreement) is to be treated as independent of any issuance of Common
Stock with respect to Series C Preferred Stock, in the event any such
issuances of Common Stock are deemed to be related pursuant to the
listing requirements and rules of the NYSE by the NYSE, the provisions
of this Section 3(B) (including, but not limited to, the obligation to
obtain the Required Consent) shall be deemed to apply to the number of
shares of Common Stock in the aggregate issued and issuable with
respect to both the Series B Preferred Shares (as defined in the Main
Agreement) and the Series C Preferred Stock. Subject to the foregoing,
payments on any Dividend Payment Date shall be made in Registered
Common Stock unless the Company notifies the Holders in writing of its
intention to pay cash on or before, but no more than fifteen (15) days
before, and including, the immediately preceding Dividend Payment Date.
The number of shares of Registered Common Stock to be issued shall be
determined by dividing the cash amount of the dividend otherwise
payable by the Average Market Price calculated as of such Dividend
Payment Date; provided, however, if the Company shall combine,
subdivide or reclassify its Common Stock, or shall declare any dividend
payable in shares of its Common Stock, or shall take any other action
of a similar nature affecting such shares, the number of shares of
Registered Common Stock to be issued shall be adjusted to the extent
appropriate to reflect such event, including appropriate adjustments to
account for any such event that occurs during the period used for
calculating such Average Market Price. The number of shares of
Registered Common Stock to be issued as a dividend shall be rounded up
to the nearest whole share after aggregating all shares of Series B-1
Preferred Stock owned by a Holder.
(C) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on
such date are paid, such dividends shall cumulate and shall accrue
additional dividends to and including the date of payment thereof at
the Dividend Rate then in effect, compounded quarterly on each
subsequent Dividend Payment Date. Unpaid dividends for any period less
than a full Dividend Period shall cumulate on a day to day basis and
shall be computed on the basis of a three hundred sixty (360) day year.
7
(D) So long as any shares of the Series B-1 Preferred Stock
shall be outstanding, (i) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Junior
Securities, (ii) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Parity
Securities, except for dividends paid to the Company or any of its
wholly-owned Subsidiaries and dividends paid on the Series B Preferred
Shares (as defined in the Main Agreement) and the dividends paid on the
Series C Preferred Stock and (iii) the Company shall not and shall not
allow its Subsidiaries to repurchase, redeem or otherwise acquire for
value or set aside any cash or property for the repurchase or
redemption of any Junior Securities or Parity Securities, unless in
each such case (x) all dividends to which the Holders of the Series B-1
Preferred Stock shall have been entitled to receive for all previous
Dividend Periods shall have been paid and dividends for the subsequent
four Dividend Periods shall have been designated and set aside and (y)
a dividend (including the amount of any dividends paid pursuant to the
provisions of Section 3(A)) is paid with respect to all outstanding
shares of Series B-1 Preferred Stock in an amount for each such share
of Series B-1 Preferred Stock equal to the aggregate amount of such
dividend for the number of shares of Common Stock equal to (i) the
Stated Value plus any accrued but unpaid dividends as of the record
date of such dividend divided by (ii) the Conversion Price (or in the
event of a Restatement, the Restatement Conversion Price, if the
Restatement Conversion Price is lower than the then-current Conversion
Price) on such record date (or, if such record date is not a Business
Day, the last Business Day preceding such record date).
(E) Whenever, at any time or times, dividends payable on any
Series B Preferred Share (as defined in the Main Agreement) or any
share of Series C Preferred Stock shall be in arrears in an aggregate
amount greater than two (2) quarterly dividends, the Dividend Rate
shall mean a rate equal to fifteen percent (15%) per annum times the
Stated Value until such date that all accrued and unpaid dividends
shall have been declared and paid in full.
(F) Whenever, at any time or times (i) an Issuance Blockage
(as defined in the Main Agreement or in the Series C Preferred Stock
Agreement) shall exist at any time ninety (90) calendar days after and
excluding the date of the first Excess Rights Notice (as defined in the
Main Agreement or in the Series C Preferred Stock Agreement) or (ii)
the Company shall fail to redeem any Series B Preferred Shares (as
defined in the Main Agreement) or any shares of Series C Preferred
Stock for cash by the date it is obligated to do so under Section 6(B)
hereof or under Section 6(B) of any Subsequent Certificates of Rights
and Preferences (as defined in the Main Agreement) or the Certificate
of Rights and Preferences of the Series C Preferred and such failure to
pay cash is ongoing, then (x) the Dividend Rate shall mean a rate equal
to fifteen percent (15%) per annum times the Stated Value until such
date as the circumstances described in clause (i) and (ii) no longer
exist and (y) all dividends payable with respect to such periods shall
be paid in additional shares of Series B-1 Preferred Stock.
8
4. Liquidation Preference. In the event of any Liquidation, after
payment or provision for payment by the Company of the debts and other
liabilities of the Company and the liquidation preference of any Senior
Securities that rank senior to the Series B-1 Preferred Stock with respect to
distributions upon Liquidation, each Holder shall be entitled to receive an
amount in cash for each share of the then outstanding Series B-1 Preferred Stock
held by such Holder equal to the greater of (a) the Stated Value per share plus
an amount equal to all accrued but unpaid dividends thereon, whether or not
earnings are available in respect of such dividends or such dividends have been
declared, to and including the date full payment is tendered to the Holders with
respect to such Liquidation and no more and (b) the amount the Holders would
have received if the Holders had converted all outstanding shares of Series B-1
Preferred Stock into Common Stock in accordance with the provisions of Section
6(A) hereof as of the Business Day immediately preceding the date of such
Liquidation (such greater amount being referred to herein as the "Liquidation
Preference"), before any distribution shall be made to the holders of any Junior
Securities (and any Senior Securities or Parity Securities that, with respect to
distributions upon Liquidation, rank junior to the Series B-1 Preferred Stock)
upon the Liquidation of the Company. In case the assets of the Company available
for payment to the Holders are insufficient to pay the full Liquidation
Preference on all outstanding shares of the Series B-1 Preferred Stock and all
outstanding shares of Parity Securities and Senior Securities that, with respect
to distributions upon Liquidation, are pari passu with the Series B-1 Preferred
Stock in the amounts to which the holders of such shares are entitled, then the
entire assets of the Company available for payment to the Holders and to the
holders of such Parity Securities and Senior Securities shall be distributed
ratably among the Holders of the Series B-1 Preferred Stock and the holders of
such Parity Securities and Senior Securities, based upon the aggregate amount
due on such shares upon Liquidation. Written notice of any Liquidation of the
Company, stating a payment date and the place where the distributable amounts
shall be payable, shall be given by facsimile and overnight delivery not less
than ten (10) days prior to the payment date stated therein, to the Holders of
record of the Series B-1 Preferred Stock, if any, at their respective addresses
as the same shall appear on the books of the Company.
5. Voting Rights. The Holders shall have the following voting rights
with respect to the Series B-1 Preferred Stock:
(A) Each share of Series B-1 Preferred Stock shall entitle the
holder thereof to the voting rights specified in Section 5(B) and no
other voting rights except as required by law.
(B) The consent of the Holders of at least a Majority of the
Series B-1 Preferred Stock, voting separately as a single class with
one vote per share, in person or by proxy, either in writing without a
meeting or at an annual or a special meeting of such Holders called for
the purpose, shall be necessary to:
(i) amend, alter or repeal any of the provisions of
the Articles, including the Certificate of Rights and
Preferences, or Bylaws of the Company so as to:
9
A. change any of the rights, preferences or
privileges of Holders. Without limiting the
generality of the preceding sentence, such change
includes any action that would:
1. Reduce the Dividend Rate on the
Series B-1 Preferred Stock, or make such
dividends non-cumulative, or defer the date
from which dividends will accrue, or cancel
accrued and unpaid dividends, or change the
relative seniority rights of the holders of
Series B-1 Preferred Stock as to the payment
of dividends in relation to the holders of
any other capital stock of the Company;
2. Reduce the amount payable to the
holders of the Series B-1 Preferred Stock
upon the voluntary or involuntary
liquidation, dissolution, or winding up of
the Company, or change the relative
seniority of the liquidation preferences of
the holders of the Series B-1 Preferred
Stock to the rights upon liquidation of the
holders of any other capital stock of the
Company;
3. Make the Series B-1 Preferred
Stock redeemable at the option of the
Company, except as provided in Section 6
hereof.
B. authorize, create or issue any shares of
Parity Securities or Senior Securities (or amend the
provisions of any existing class of Capital Stock to
make such class of Capital Stock a class of Parity
Securities or Senior Securities) on any date before
and excluding January 4, 2003, when there shall be
issued and outstanding Series B Preferred Shares (as
defined in the Main Agreement) with an aggregate
Redemption Amount of at least twenty million dollars
($20,000,000).
(ii) permit any Subsidiary of the Company to issue or
sell, or obligate itself to issue or sell, except to the
Company or any wholly owned Subsidiary, any Capital Stock of
such Subsidiary; or
(iii) increase or decrease (other than by redemption
or conversion) the total number of authorized shares of
Preferred Stock or amend any provisions of any Parity
Securities or Senior Securities so as to make such Parity
Securities or Senior Securities redeemable by the Company.
(iv) Notwithstanding the foregoing, so long as the
Company complies with the requirements of Section 6(F) of this
Certificate of Rights and Preferences and Section 11 of the
Main Agreement, with respect to a Business Combination, such
Business Combination shall not be deemed to alter or change
the powers, preferences or rights of the Series B-1 Preferred
Stock in any manner.
6. Conversion and Redemption.
(A) Procedure for Conversion.
(i) Shares of Series B-1 Preferred Stock are
convertible into Registered Common Stock (or, at the sole
option of the Holder, unregistered Common Stock) at the
Conversion Rate per share (in the event of a Restatement, for
purposes of calculating the Conversion Rate, the Conversion
Price shall equal the Restatement Conversion Price, if the
Restatement Conversion Price is lower than the then-current
Conversion Price) at the option of the Holder thereof at any
time, from time to time, in whole or in part. The conversion
of shares of Series B-1 Preferred Stock at the option of the
Holder may be effected by delivering a duly executed written
Preferred Stock Conversion Notice, in form and substance as
attached to the Main Agreement as Annex G (the "Conversion
Notice"), by facsimile, mail or overnight courier delivery, to
the Company's address set forth in Section 20 of the Main
Agreement. The closing of such exercise shall take place (a)
on the second Business Day following and excluding the date
the Conversion Notice is delivered, (b) such later date as the
conditions set forth in Section 6(A)(ii) have been waived or
satisfied or (c) any other date upon which the exercising
Holder and the Company mutually agree (the "Conversion Closing
Date").
(ii) It shall be a condition of the converting
Holder's obligation to close that each of the following are
satisfied, unless waived by such Holder:
A. (1) the representations and warranties
made by the Company in the Main Agreement shall be
true and correct as of the Conversion Closing Date,
except those representations and warranties that
address matters only as of a particular date, which
shall be true and correct as of such date; (2) the
Company shall have complied fully with all of the
covenants and agreements in the Main Agreement; (3)
all shares to be issued upon such conversion shall be
registered under the Securities Act, shall be freely
tradable and shall be duly listed and admitted to
trading on the New York Stock Exchange, Nasdaq
National Market or American Stock Exchange (unless,
with respect to clause (3) only, the Holder expressly
consents in writing to the issuance of unregistered
Common Stock); and such Holder shall have received a
certificate of the Chief Executive Officer or the
Chief Financial Officer of the Company dated such
date and to the effect of clauses (1), (2) and (3).
B. On the Conversion Closing Date, the
Company shall have delivered to the Holder an opinion
of Dykema Gossett PLLC (or such other counsel
reasonably satisfactory to such Holder) reasonably
satisfactory to such Holder, dated the date of
delivery, confirming in substance the matters covered
in paragraphs (a), (b), (c), (d), (e), (f) and
subsection (i) of (g) of Section 4 of the Main
Agreement and to the effect that the offer and sale
of such Registered Common Stock to such Holder
hereunder do not require registration under the
Securities Act.
C. As of the Conversion Closing Date, the
Company shall have delivered to the Holder all
Restatement Notices required to be delivered
following a Restatement.
The Company shall use its commercially reasonable efforts to cause each
of the foregoing conditions to be satisfied at the earliest possible date. If
such conditions are not satisfied or waived prior to the third Business Day
following and excluding the date the Conversion Notice is delivered, then the
Holder may, at its sole option, and at any time, withdraw the Conversion Notice
by written notice to the Company regardless of whether such conditions have been
satisfied or waived as of the withdrawal date and, after such withdrawal, shall
have no further obligations with respect to such Conversion Notice and may
submit a Conversion Notice with respect to the shares referenced in the
withdrawn Conversion Notice at any time.
(iii) Each conversion of Series B-1 Preferred Stock
shall be deemed to have been effected immediately prior to the
close of business on the Business Day on which the Conversion
Notice is delivered as provided in Section 6(A)(i), and at
such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or
Other Securities) shall be issuable upon such conversion as
provided in Section 6(A)(iv) shall be deemed to have become
the holder or holders of record thereof. The foregoing
notwithstanding, such conversion shall not be deemed effective
if and as of the date that the Holder delivers written notice
of withdrawal to the Company as set forth in Section 6(A)(ii)
above.
(iv) On the Conversion Closing Date, the Holder shall
surrender the certificate representing the shares of Series
B-1 Preferred Stock to be converted to the Company at the
address set forth for notices to the Company in Section 20 of
the Main Agreement, and such Holder shall thereupon be
entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Registered
Common Stock (or Other Securities or, if appropriate,
unregistered Common Stock) to which such Holder is entitled
upon such conversion.
(v) On the Conversion Closing Date, the Company at
its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and
delivered to the Holder whose Series B-1 Preferred Stock is
being converted via book-entry transfer (if available to the
Company), or if such Holder shall direct, at such address
specified by the Holder via reputable overnight courier, one
or more certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of
Registered Common Stock (or Other Securities or, if
appropriate, unregistered Common Stock) to which such Holder
shall be entitled upon such conversion, plus, in lieu of any
fractional share to which such Holder would otherwise be
entitled, cash in an amount equal to the same fraction of the
Daily Market Price per share on the Business Day immediately
preceding the date of such conversion, and, in case such
conversion is for only part of the shares represented by the
certificate surrendered, at such address specified by the
Holder via reputable overnight courier, a new Preferred
Stock certificate of like tenor, calling in the aggregate on
the face or faces thereof for the number of shares of Series
B-1 Preferred Stock which have not been converted into
Registered Common Stock (or Other Securities or, if
appropriate, unregistered Common Stock) upon such conversion.
(vi) The Company shall deliver a Restatement Notice
to the Holder no later than two (2) days after and excluding
each Restatement Date.
(B) Procedure for Redemption.
(i) Redemption of the Series B-1 Preferred Stock shall
occur under any of the following circumstances:
A. At any time on or after the Initial Closing Date
(as defined in the Series C Preferred Stock Agreement), a
Holder of Series B-1 Preferred Stock may require the Company
to redeem any or all shares of Series B-1 Preferred Stock held
by such Holder by delivering an optional redemption notice to
the Company substantially in the form attached as Annex C to
the Main Agreement (a "Redemption Notice"). The date such
Redemption Notice is delivered shall be the "Redemption Notice
Date". All such redemptions shall be made for shares of
Registered Common Stock (unless the Holder expressly consents
in writing to the issuance of unregistered Common Stock)
pursuant to Section 6(B)(iii). The Holder may not redeem
Series B Preferred Shares (as defined in the Main Agreement)
and Series C Preferred Stock with an aggregate Redemption
Amount greater than thirty million dollars ($30 million) in
any twelve-month period. In the event that the aggregate value
of the Common Stock to be received by a Holder pursuant to
this Section 6(B)(i)(A) is less than the amount such Holder
would have received upon redemption if such Holder had
converted the Series B-1 Preferred Stock subject to the
Redemption Notice into Common Stock in accordance with the
provisions of Section 6(A) hereof as of the Business Day
immediately preceding the Redemption Notice Date (as if the
Conversion Notice had been delivered on such date and the
Conversion Closing Date had occurred on such date), then such
Holder shall receive Common Stock with an aggregate value
equivalent to such amount in lieu of the amount of Common
Stock that would otherwise be issuable pursuant to this
Section 6(B)(i)(A).
B. On March 29, 2004, the Company shall redeem all of
the Series B-1 Preferred Stock held by all Holders. All such
redemptions shall be made for shares of Registered Common
Stock (unless the Holder expressly consents in writing to the
issuance of unregistered Common Stock) pursuant to Section
6(B)(iii), unless the Company satisfies the conditions for
cash redemption set forth in Section 6(B)(ii) and elects to
redeem such shares for cash. In the event that the aggregate
value of the Common Stock and cash, if any, to be received by
a Holder pursuant to this Section 6(B)(i)(B) is less than the
amount such Holder would have
13
received upon redemption if such Holder had converted all of
such Holder's Series B-1 Preferred Stock into Common Stock in
accordance with the provisions of Section 6(A) hereof as of
the Business Day immediately preceding March 29, 2004 (as if
the Conversion Notice had been delivered on such date and the
Conversion Closing Date had occurred on such date), then such
Holder shall receive Common Stock and cash, if any, pursuant
to Section 6(B)(ii) or Section 6(B)(iii), as the case may be,
with an aggregate value equivalent to such amount in lieu of
the amount of Common Stock and cash, if any, that would
otherwise be issuable pursuant to this Section 6(B)(i)(B).
(ii) In connection with a redemption under Section 6(B)(i)(B),
if the Company is permitted under the terms of its then outstanding
credit facilities and elects in a writing substantially in the form
attached as Annex D to the Main Agreement delivered to the redeeming
Holder on or before February 23, 2004 (the "Redemption Reference Date")
to redeem such shares for cash, then (a) such shares shall be redeemed
for cash, (b) the closing of such redemption shall take place on the
second Business Day after and excluding the end of the calendar quarter
in which the Redemption Reference Date occurs, provided that if the
Redemption Reference Date is less than thirty (30) days before and
excluding the end of such calendar quarter, then such closing shall
occur on the thirtieth (30th) day after and excluding the Redemption
Reference Date, unless otherwise agreed in writing by the Company and
the redeeming Holder (or, in the case of a cash redemption pursuant to
Section 6(B)(i)(B), by March 29, 2004) (each such date, a "Cash
Redemption Closing Date") and (c) unless otherwise agreed in writing by
the Holder and the Company, all future redemptions of Series B-1
Preferred Stock shall be for cash. At such closing, the Holder shall
surrender the certificate representing the shares of Series B-1
Preferred Stock to be redeemed to the Company at the address set forth
for notices to the Company in Section 20 of the Main Agreement, and the
Company shall deliver to the Holder via wire transfer of immediately
available U.S. funds cash equal to the aggregate Redemption Amount of
such shares calculated as of the Cash Redemption Closing Date. In the
case of a cash redemption pursuant to Section 6(B)(i)(B), if the
Company acting in good faith is unable to tender cash as provided in
this Section 6(B)(ii) on or before the Cash Redemption Closing Date and
certifies such circumstance in a writing signed by the Chief Executive
Officer and the Chief Financial Officer of the Company that is
delivered to the Holder before the Cash Redemption Closing Date, then
(x) (without limiting any other available remedies, including without
limitation under Section 3(F) or at law or in equity) the Company may
redeem such shares for Registered Common Stock as set forth in Section
6(B)(iii), (y) the Stock Redemption Closing Date shall be the
thirty-fifth (35th) calendar day after and excluding the date on which
the Holder receives such notice (provided that the Holder may, by
written notice to the Company, accelerate this date to the second (2nd)
Business Day after and excluding the date the Company receives notice
from such Holder), and (z) the rights of the Holder under this
Certificate of Rights and Preferences (other than the accrual of
dividends under Section 3 and the right to receive consideration for
redemption as set forth herein) shall cease as
14
of March 29, 2004 (provided that if the Company fails to redeem such
shares on the Stock Redemption Closing Date provided above, then all
such rights shall be reinstated in full). In the case of redemptions
pursuant to Section 6(B)(i)(A) only, if the Company fails to tender
cash as provided in this Section 6(B)(ii) on or before the Cash
Redemption Closing Date, then the Holder may, at its sole option (and
without limiting any other available remedies, including without
limitation under Section 3(F) or at law or in equity) elect to (1)
withdraw the Redemption Notice by written notice to the Company and,
after such withdrawal, shall have no further obligations with respect
to such Redemption Notice and may submit a Redemption Notice with
respect to the shares referenced in the withdrawn Redemption Notice at
any time or (2) receive shares of Registered Common Stock as set forth
in Section 6(B)(iii), in which case the Stock Redemption Closing Date
shall be the second Business Day after and excluding the date on which
the Holder notifies the Company in writing of such election. In the
case of redemptions pursuant to Section 6(B)(i)(B) only, if the Company
fails to tender cash as provided in this Section 6(B)(ii) on or before
the Cash Redemption Closing Date, then the Holder may, at its sole
option (and without limiting any other available remedies, including
without limitation under Section 3(F) or at law or in equity) elect to
receive shares of Registered Common Stock as set forth in Section
6(B)(iii), in which case the Stock Redemption Closing Date shall be the
second Business Day after and excluding the date on which the Holder
notifies the Company in writing of such election. If such redemption is
for only part of the shares represented by the certificate surrendered,
the Company shall send a new Preferred Stock certificate of like tenor,
calling in the aggregate on the face or faces thereof for the number of
shares of Series B-1 Preferred Stock which have not been redeemed via
reputable overnight courier to such address specified by the Holder.
(iii) If the Holder elects to redeem pursuant to Section
6(B)(i)(A) hereof or if the Company fails to timely elect cash
redemption as set forth in Section 6(B)(ii), then (a) all such shares
shall be redeemed for Registered Common Stock (unless the Holder
expressly consents in writing to the issuance of unregistered Common
Stock), and (b) the closing of such redemption shall take place on, in
the case of a redemption pursuant to Section 6(B)(i)(A), the seventh
Business Day after and excluding the Redemption Notice Date, or, in the
case of a redemption pursuant to Section 6(B)(i)(B), on March 29, 2004,
or in either case on such other date as the Company and such Holder
agree in writing (the "Stock Redemption Closing Date"). At such
closing, the Holder shall surrender the certificate representing the
shares of Series B-1 Preferred Stock to be redeemed to the Company at
the address set forth for notices to the Company in Section 20 of the
Main Agreement and the Company at its expense (including the payment by
it of any applicable issue taxes) shall cause to be issued in the name
of and delivered to the Holder whose Series B-1 Preferred Stock is
being redeemed via book-entry transfer (if available to the Company),
the number of duly authorized, validly issued, fully paid and
nonassessable shares of Registered Common Stock (unless the Holder
expressly consents in writing to the issuance of unregistered Common
Stock in which case all references to Registered Common Stock in this
15
Section 6(B)(iii) shall be to unregistered Common Stock, but only with
respect to the shares of Common Stock subject to such Redemption
Notice) to which such Holder shall be entitled upon such redemption,
plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash in an amount equal to the same fraction of
the Daily Market Price per share on the Business Day immediately
preceding the Stock Redemption Closing Date, and, in case such
redemption is for only part of the shares represented by the
certificate surrendered, at such address specified by the Holder via
reputable overnight courier, a new Preferred Stock certificate of like
tenor, calling in the aggregate on the face thereof for the number of
shares of Series B-1 Preferred Stock which have not been redeemed. The
number of shares of Registered Common Stock to be delivered at such
closing shall equal the quotient of (x) the aggregate Redemption Amount
of the shares of Series B-1 Preferred Stock being redeemed (calculated
as of the Stock Redemption Closing Date) divided by (y) the greater of
(1) the lesser of (A) the Average Market Price calculated as of the
Redemption Notice Date or the Redemption Reference Date, as applicable,
(B) in the case of elections pursuant to Section 6(B)(i)(B) only (and
not in the case of elections pursuant to Section 6(B)(i)(A)), if the
Company fails to deliver an election to redeem such shares for cash by
the Redemption Reference Date, the Daily Market Price on the fifth
(5th) Business Day immediately preceding the Stock Redemption Closing
Date and (2) in the case of redemptions pursuant to Section 6(B)(i)(A)
only (and not in case of redemption pursuant to Section 6(B)(i)(B)), an
amount equal to the product of (a) the quotient of six dollars divided
by eight dollars and fifty cents ($6.00/$8.50) times (b) the Main
Agreement Date Price (as defined in the Certificate of Rights and
Preferences of Series C Cumulative Convertible Preferred Stock). It
shall be a condition of the redeeming Holder's obligation to close that
each of the following are satisfied, unless waived by such Holder:
A. (1) the representations and warranties made by the
Company in the Main Agreement shall be true and correct as of
the Stock Redemption Closing Date, except that those
representations and warranties which only address matters on a
particular date shall only be true and correct as of such
date; (2) the Company shall have complied fully with all of
the covenants and agreements in the Main Agreement; (3) all
shares to be issued upon such redemption shall be registered
under the Securities Act, shall be freely tradable and shall
be duly listed and admitted to trading on the New York Stock
Exchange, Nasdaq National Market or American Stock Exchange
(unless, with respect to clause (3) only, the Holder expressly
consents in writing to the issuance of unregistered Common
Stock); and such Holder shall have received a certificate of
the Chief Executive Officer or the Chief Financial Officer of
the Company dated such date and to the effect of clauses (1),
(2) and (3).
B. On the Stock Redemption Closing Date, the Company
shall have delivered to the Holder an opinion of Dykema
Gossett PLLC (or such other counsel reasonably satisfactory to
such Holder) reasonably satisfactory to such Holder, dated the
date of delivery, confirming in
16
substance the matters covered in paragraphs (a), (b), (c),
(d), (e), (f) and subsection (i) of (g) of Section 4 of the
Main Agreement and to the effect that the offer and sale of
such Registered Common Stock to such Holder hereunder do not
require registration under the Securities Act.
C. There shall not exist an Issuance Blockage (as
defined in the Main Agreement) and the issuance of Common
Stock shall not cause the Company to exceed the Maximum Number
(as defined in the Main Agreement).
The Company shall use its best efforts to cause each of the foregoing
conditions to be satisfied at the earliest possible date. If such
conditions are not satisfied or waived on or before the Stock
Redemption Closing Date, then the Holder may, at its sole option, and
at any time, (1) withdraw the Redemption Notice by written notice to
the Company regardless of whether such conditions have been satisfied
or waived as of the withdrawal date and, after such withdrawal, shall
have no further obligations with respect to such Redemption Notice and
may submit a Redemption Notice with respect to the shares referenced in
the withdrawn Redemption Notice at any time or (2) elect cash
redemption as set forth in Section 6(B)(ii), in which case, the Cash
Redemption Closing Date shall be the second Business Day after and
excluding the date on which the Holder notifies the Company in writing
of its election for cash redemption to the extent permitted under the
terms of the Company's credit facilities set forth in Champion's SEC
Filings (as defined in the Main Agreement) made on or before the date
of the Main Agreement and excluding any subsequent amendments or
extensions thereto.
(C) The Company shall at all times reserve for issuance such
number of its shares of Common Stock as shall be required under the Main
Agreement.
(D) The Company will procure, at its sole expense, the listing of the
Common Stock issuable upon conversion or redemption of the Series B-1 Preferred
Stock and shares issuable as dividends hereunder, subject to issuance or notice
of issuance, on all stock exchanges and quotation systems on which the Common
Stock is then listed or quoted, no later than the date on which such Series B-1
Preferred Stock is issued to the Holder and thereafter shall use its best
efforts to prevent delisting or removal from quotation of such shares. The
Company will pay any and all documentary stamp or similar issue or transfer
taxes that may be payable in respect of the issuance or delivery of shares of
Common Stock on conversion or redemption of shares of the Series B-1 Preferred
Stock. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involving the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series B-1
Preferred Stock so converted or redeemed were registered, and no such issue and
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has established, to the
reasonable satisfaction of the Company, that such tax has been paid.
17
(E) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion or redemption of the Series B-1 Preferred
Stock. If any such conversion or redemption would otherwise require the issuance
of a fractional share of Common Stock, an amount equal to such fraction
multiplied by the current Daily Market Price per share of Common Stock on the
date of conversion or redemption shall be paid to the Holder in cash by the
Company. If more than one share of Series B-1 Preferred Stock shall be
surrendered for conversion or redemption at one time by or for the same Holder,
the number of full shares of Common Stock issuable upon conversion or redemption
thereof shall be computed on the basis of the aggregate number of shares of
Series B-1 Preferred Stock so surrendered.
(F) Business Combinations.
(i) In case the Company after the date of the Main
Agreement is party to (a) any acquisition of the Company by means of
merger or other form of corporate reorganization in which outstanding
shares of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the Acquiring Person
or its Parent, Subsidiary or affiliate, (b) a sale of all or
substantially all of the assets of the Company (on a consolidated
basis) in a single transaction or series of related transactions, (c)
any other transaction or series of related transactions by the Company
in which the power to cast the majority of the eligible votes at a
meeting of the Company's shareholders at which directors are elected is
transferred to a single entity or group acting in concert, or (d) a
capital reorganization or reclassification of the Common Stock or Other
Securities (other than a reorganization or reclassification in which
the Common Stock or Other Securities are not converted into or
exchanged for cash or other property, and, immediately after
consummation of such transaction, the shareholders of the Company
immediately prior to such transaction own the Common Stock, Other
Securities or other voting stock of the Company in substantially the
same proportions relative to each other as such shareholders owned
immediately prior to such transaction), then, and in the case of each
such transaction (each of which is referred to herein as "Business
Combination"), proper provision shall be made so that, upon the basis
and the terms and in the manner provided herein, the Holder of each
unconverted and unredeemed share of Series B-1 Preferred Stock, upon
conversion or redemption hereof at any time after the consummation of
such Business Combination, shall be entitled to receive upon such
conversion or redemption, in lieu of the cash, Common Stock or Other
Securities issuable upon such conversion or redemption prior to such
consummation, any of the following, as shall be elected, in whole or in
part, from time to time, by such Holder:
A. the stock and other securities, cash and property
to which such Holder would have been entitled upon such
consummation if such Holder had converted such Series B-1
Preferred Stock immediately prior thereto;
B. the stock and other securities, cash and property
to which such Holder would have been entitled upon such
consummation if (i) such Holder had elected redemption of such
Series B-1 Preferred Stock, with
18
the Redemption Notice Date occurring immediately prior thereto
(notwithstanding any restrictions on redemption existing on
such Redemption Notice Date) and (ii) the Company had elected
to redeem such shares for Registered Common Stock immediately
prior thereto
C. the number of shares of common stock of the
Acquiring Person or its Parent, at the election of the Holder,
determined by dividing (A) the amount equal to the product
obtained by multiplying (1) the number of shares of the
Company's Common Stock (or Other Securities) to which such
Holder would have been entitled had such holder converted such
Series B-1 Preferred Stock immediately prior to such
consummation, times (2) the greater of the Acquisition Price
and the Conversion Price in effect on the Business Day
immediately preceding the date of such consummation, by (B)
the Daily Market Price per share of the common stock of the
Acquiring Person or its Parent, as the case may be, on the
Business Day immediately preceding the date of such
consummation;
D. the number of shares of common stock of the
Acquiring Person or its Parent, at the election of the Holder,
determined by dividing (A) the aggregate Redemption Amount of
such shares of Series B-1 Preferred Stock by (B) the lesser of
(1) the Average Market Price of the common stock of the
Acquiring Person or its Parent, as the case may be, calculated
as of the date the Business Combination is consummated, and
(2) the quotient of (a) the product of (i) the Conversion
Price (but if before such consummation the Company shall
combine, subdivide or reclassify its Common Stock, shall
declare any dividend payable in shares of Common Stock, or
shall take any other action of a similar nature affecting such
shares, this amount shall be adjusted to the extent
appropriate to reflect such event or events) and (ii) the
Daily Market Price per share of the common stock of the
Acquiring Person or its Parent, as the case may be, on the
Business Day immediately preceding the date of such
consummation divided by (b) the Daily Market Price per share
of the Company's Common Stock on the Business Day immediately
preceding the date of such consummation. The foregoing
notwithstanding, if the Acquiring Person or its Parent, as the
case may be, shall combine, subdivide or reclassify its Common
Stock, or shall declare any dividend payable in shares of its
Common Stock, or shall take any other action of a similar
nature affecting such shares, the conversion or redemption
price in this clause (D) shall be adjusted to the extent
appropriate to reflect such event, including appropriate
adjustments to account for any such event that occurs during
any of the measurement periods set forth in the previous
sentence; or
E. cash in an amount equal to one hundred
thirty-three percent (133%) of the aggregate Redemption Amount
of such shares of Series B-1 Preferred Stock;
19
provided, that if the Company delivers to such Holder a
written notice in the form of Annex K to the Main Agreement (a
"Business Combination Restriction Notice") no later than the
fifteenth (15th) calendar day after and excluding the date on
which the proposed Business Combination is first publicly
disclosed and no later than the fifteenth (15th) calendar day
before and excluding the closing date of such Business
Combination, then in lieu of clauses (A), (B), (C), (D) and
(E) above and all other rights and preferences under this
Certificate of Rights and Preferences, the Holder shall
receive, on such closing date, in exchange for the shares of
Series B-1 Preferred Stock then held by such Holder, (1) the
stock and other securities, cash and property to which such
Holder would have been entitled upon such closing date if such
Holder had, (a) converted such Series B-1 Preferred Stock
immediately prior to such closing date or (b) redeemed
(notwithstanding any restrictions on redemption existing on
such Redemption Notice Date) such Series B-1 Preferred Stock
effective upon such closing date, calculated as if the
Redemption Notice Date occurred immediately prior to such
closing date and the Company had elected to redeem such shares
for Registered Common Stock immediately prior thereto (the
selection of (a) or (b) shall be made by such Holder in its
sole discretion by written notice delivered to the Company no
later than the third (3rd) Business Day before and including
such closing date; provided that such Holder may change such
election at any time if any material change shall occur in (i)
the closing date, (ii) the consideration deliverable to Common
Stock holders in such Business Combination, (iii) the
Acquisition Price, or (iv) any material term or condition of
such Business Combination) and (2) in addition to all
consideration received by such Holder under clause (1) above,
cash equal to the product of (x) the aggregate Redemption
Amount of such shares of Series B-1 Preferred Stock multiplied
by (y) the Merger Adjustment Percentage and provided further,
that if such Holder converts or redeems shares of Series B-1
Preferred Stock on or after the date of delivery of the
Business Combination Restriction Notice and before the date of
closing of such Business Combination, then in addition to the
stock and other securities, cash and property that such Holder
has received, or is entitled to receive, upon the conversion
or redemption of such shares, such Holder shall be entitled to
receive upon the date of closing of such Business Combination
the cash amount described in clause (2) above (but not the
stock and other securities, cash and property described in
clause (1) above) with respect to all such previously
converted or redeemed shares. The "Merger Adjustment
Percentage" shall equal the product of the Merger Payment
Percentage multiplied by a fraction the numerator of which
shall be the number of days remaining until the seventh (7th)
anniversary of the Issue Date and the denominator of which
shall be two thousand five hundred and twenty (2,520);
provided that the Merger Adjustment Percentage shall not be
less than zero percent (0%). The "Merger Payment Percentage"
shall equal (A) fifty percent (50%) minus (B) the product of
(1) ten percent (10%) multiplied by (2) the quotient (which
shall not be less than zero percent (0%)) of (x) the
Acquisition Price in effect on the Business Day immediately
preceding the date of such consummation minus the Conversion
Price in effect on the Business Day immediately preceding the
date of such consummation divided by (y) the
20
Conversion Price in effect on the Business Day immediately
preceding the date of such consummation.
(ii) Notwithstanding anything contained herein or in
the Main Agreement to the contrary, the Company will not
effect any Business Combination unless the requirements of
Section 11 of the Main Agreement have been met and unless,
prior to the consummation thereof, each Person (other than the
Company) that may be required to deliver any stock,
securities, cash or property upon conversion of Series B-1
Preferred Stock as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the
Holders of a Majority of the Series B-1 Preferred Stock, (A)
the obligations of the Company under this Certificate of
Rights and Preferences (and if the Company shall survive the
consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any
continuing obligations of the Company under this Certificate
of Rights and Preferences) and (B) the obligation to deliver
to the Holders of Series B-1 Preferred Stock such shares of
stock, securities, cash or property as, in accordance with the
foregoing provisions of this Section 6(F), such Holders may be
entitled to receive, and such Person shall have similarly
delivered to such Holders an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to
Holders of a Majority of the Series B-1 Preferred Stock,
stating that the rights of such Holders under this Certificate
of Rights and Preferences shall thereafter continue in full
force and effect and the terms hereof, including, without
limitation, all of the provisions of this Section 6(F) shall
be applicable to the stock, securities, cash or property which
such Person may be required to deliver upon any conversion of
Preferred Stock or exercise of any rights pursuant hereto.
7. Status of Converted and Redeemed Shares; Limitations on Series B-1
Preferred Stock. The Company shall return to the status of unauthorized and
undesignated shares of Preferred Stock each share of Series B-1 Preferred Stock
which shall be converted, redeemed or for any other reason acquired by the
Company, and such shares thereafter may have such characteristics and
designations as the Board may determine (subject to Section 5), provided,
however, no share of Series B-1 Preferred Stock which shall be converted,
redeemed or otherwise acquired by the Company shall thereafter be reissued, sold
or transferred by the Company as Series B-1 Preferred Stock. The Company will
not issue any further shares of Series B-1 Preferred Stock. Except for
redemptions pursuant to Section 6(B), the Company shall have no right to redeem
the shares of Series B-1 Preferred Stock without the consent of a Majority of
the Holders.
21
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CHAMPION ENTERPRISES, INC.
CERTIFICATE OF RESOLUTION
Pursuant to Section 450.1302 of the Michigan Business Corporation Act,
CHAMPION ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of Michigan, hereby certifies that the following resolution was
duly adopted by the Board of Directors of the Company on March 29, 2002 pursuant
to authority conferred upon the Board of Directors by the Restated Articles of
Incorporation of the Company, which authorizes the issuance of up to Five
Million (5,000,000) shares of preferred stock, no par value.
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors of the Company and pursuant to the provisions of the
Articles of Incorporation, the Board of Directors hereby creates a series of
preferred stock, herein designated and authorized as the Series C Cumulative
Convertible Preferred Stock, no par value, which shall consist of Thirty-Five
Thousand (35,000) 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 C Cumulative
Convertible Preferred Stock shall be Thirty-Five Thousand (35,000).
2. Definitions. Unless the context otherwise requires, when used herein
the following terms shall have the meaning indicated.
"Acquiring Person" means, in connection with any Business Combination,
the continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of all or substantially all
of the properties or assets of the Company, the corporation consolidating with
or merging into the Company in a consolidation or merger in connection with
which the Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, the entity or
group acting in concert acquiring or possessing the power to cast the majority
of the eligible votes at a meeting of the Company's shareholders at which
directors are elected, or, in the case of a capital reorganization or
reclassification, the Company.
"Acquisition Price" means (i) the Daily Market Price of the Common
Stock on the date immediately preceding the date on which a Business Combination
is consummated, or (ii) if a purchase, tender or exchange offer is made by the
Acquiring Person (or by any of its affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than fifty percent (50%)
of the outstanding shares of Common Stock, the greater of (x) the price
determined in accordance with the provisions of the foregoing clause (i) of this
sentence and (y)
1
the Daily Market Price on the date immediately preceding the acceptance of such
offer by the holders of more than fifty percent (50%) of the outstanding shares
of Common Stock.
"Articles" means the Restated Articles of Incorporation of the Company,
as amended.
"Average Market Price" means, with respect to any reference date, the
average of the Daily Market Prices of the Common Stock for the thirty (30)
Business Days ending on and including the third Business Day before such
reference date, but not greater than the average of the Daily Market Prices of
the Common Stock for the five (5) Business Days ending on and including the
twenty-eighth Business Day before such reference date.
"Board" means the Board of Directors of the Company.
"Business Combination" is defined in Section 6(F)(i).
"Business Day" means any day on which the Common Stock may be traded on
the NYSE, or if not admitted for trading on the NYSE, on any day other than a
Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
limited partnership, limited liability company or other equity interests of such
Person.
"Cash Redemption Closing Date" is defined in Section 6(B)(ii).
"Certificate of Rights and Preferences" means this Certificate of
Rights and Preferences of the Series C 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 June 29, 2003,
$9.6295, and (ii) on and after June 29, 2003, one hundred fifteen percent (115%)
of the Average Market Price calculated as of June 29, 2003; provided that the
Conversion Price shall not be greater than $10.8332 or less than an amount equal
to the product of (a) the quotient of six dollars divided by eight dollars and
fifty cents ($6.00/$8.50) times (b) the Main Agreement Date Price, in each case
subject to adjustment for stock splits, recombinations, stock dividends and the
like.
2
"Conversion Rate" means (i) the Stated Value of one share of Series C
Preferred Stock plus accrued and unpaid dividends divided by (ii) the Conversion
Price.
"Daily Market Price" means, on any date, the amount per share of the
Common Stock (or, for purposes of determining the Daily Market Price of the
common stock of an Acquiring Person or its Parent under Section 6(F), the common
stock of such Acquiring Person or such Parent), equal to (i) the daily
volume-weighted average price on the NYSE or, if no such sale takes place on
such date, the average of the closing bid and asked prices on the NYSE thereof
on such date, in each case as reported by Bloomberg, L.P. (or by such other
Person as the Holder and the Company may agree), or (ii) if such Common Stock or
common stock of an Acquiring Person or its Parent is not then listed or admitted
to trading on the NYSE, the higher of (x) the book value per share thereof as
determined by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company as of the last day of any
month ending within sixty (60) days preceding the date as of which the
determination is to be made or (y) the fair value per share thereof determined
in good faith by the Board of Directors of the Company as of a date which is no
more than ten (10) Business Days before and excluding the date as of which the
determination is to be made.
"Dividend Payment Date" is defined in Section 3(A).
"Dividend Period" is defined in Section 3(A).
"Dividend Rate" means a rate equal to five percent (5%) per annum times
the Stated Value subject to Sections 3(E) and 3(F).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fletcher" means Fletcher International, Ltd. a company organized under
the laws of Bermuda, together with its successors.
"Holder" shall mean a holder of Series C Preferred Stock.
"Issue Date" means with respect to any shares of Series C Preferred
Stock the original date of issuance of such shares of Series C Preferred Stock.
"Junior Securities" means Capital Stock that, with respect to dividends
and distributions upon Liquidation, ranks junior to the Series C Preferred
Stock, 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 and the Prior Agreement, (ii)
with the approval of the Holders of a Majority of the Series C 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
3
distribution by the Company of cash or other property to the holders of Common
Stock, be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 4.
"Main Agreement" means the Agreement dated as of March 29, 2002 between
the Company and Fletcher pursuant to which up to thirty-five thousand (35,000)
shares of Series C Preferred Stock and a warrant are to be issued by the
Company, including all Schedules and Exhibits thereto.
"Main Agreement Date Price" means $8.0246.
"Majority of the Series C Preferred Stock" means more than fifty
percent (50%) of the then outstanding shares of Series C 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 C
Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series C 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 C Preferred Stock, including the Series B Preferred Shares (as
defined in the Prior Agreement).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock" means the Company's preferred stock authorized
pursuant to the provisions of the Articles.
"Prior 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 and the right to purchase up to an
additional twelve thousand (12,000) shares of Series B Preferred Stock have been
issued by the Company, including all Schedules and Exhibits thereto.
4
"Record Date" is defined in Section 3(A).
"Redemption Amount" means a dollar amount for each share of the
then-outstanding Series C Preferred Stock redeemed by such Holder equal to the
Stated Value per share plus an amount equal to all accrued but unpaid dividends
thereon, whether or not earnings are available in respect of such dividends or
such dividends have been declared, to and including the date full payment is
tendered to the Holders with respect to such redemption.
"Redemption Notice" is defined in Section 6(B)(i).
"Redemption Notice Date" is defined in Section 6(B)(i).
"Registered Common Stock" means Common Stock that has been registered
under the Securities Act and is freely tradable.
"Restatement" means that Champion adversely restates net income or
shareholders' equity, in any material respect, in any portion of its financial
statements as included in a Form 10-K or Form 10-Q filed with the Securities and
Exchange Commission in the form of an amendment thereto, press release, Form 8-K
or any other method except as is required as a result of a change occurring
after the date of the Main Agreement in (i) applicable law or (ii) generally
accepted accounting principles promulgated by the Financial Accounting Standards
Board or the Securities and Exchange Commission, which change is implemented by
the Company in the manner and at the time prescribed by such law or such
generally accepted accounting principle.
"Restatement Conversion Price" means one hundred fifteen percent (115%)
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 C 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. The powers, designations,
preferences and relative, participating, optional and other special rights are
specified in the First Amended and Restated Certificate of Rights and
Preferences of Series B-1 Cumulative Convertible Preferred Stock.
5
"Series C Preferred Stock" means the Series C 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 C 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 at least a
majority ownership interest.
The foregoing definitions will be equally applicable to both the
singular and plural forms of the defined terms.
3. Dividends and Distributions.
(A) Holders shall be entitled to receive out of the assets of
the Company legally available for that purpose, dividends at the
Dividend Rate to be paid in accordance with the terms of this Section
3. Such dividends shall be fully cumulative from the Issue Date, shall
accumulate regardless of whether the Company earns a profit and shall
be payable in arrears, when and as declared by the Board, on March 31,
June 30, September 30 and December 31 of each year (each such date
being herein referred to as a "Dividend Payment Date"), commencing on
June 30, 2002. The period from the Issue Date to June 30, 2002, 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 C 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
6
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 C 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 (including shares issued or issuable following exercise of the
warrant issued pursuant to the Main Agreement), all issued and issuable
but unconverted Series C Preferred Stock (on an as-converted basis as
of that date) does not exceed seventeen and one-half percent (17.5%) of
the Original Number (as defined in the Main Agreement), or, if such
number of shares exceeds seventeen and one-half percent (17.5%) of the
Original Number and does not exceed nineteen and ninety-nine
one-hundredths percent (19.99%) of the Original Number, the Company has
notified its shareholders of a shareholder's meeting for the purpose of
voting on a Required Consent (as defined in the Main Agreement) in
accordance with the Main Agreement and has used and is using its best
efforts to obtain the Required Consent. Although it is the intent and
view of the Company that the issuance of Common Stock with respect to
the Series C Preferred Stock is to be treated as independent of any
issuance of Common Stock with respect to the Series B Preferred Shares
(as defined in the Main Agreement), in the event any such issuances of
Common Stock are deemed to be related pursuant to the listing
requirements and rules of the NYSE by the NYSE, the provisions of this
Section 3(B) (including, but not limited to, the obligation to obtain
the Required Consent) shall be deemed to apply to the number of shares
of Common Stock in the aggregate issued and issuable with respect to
both the Series C Preferred Stock and the Series B Preferred Shares (as
defined in the Prior Agreement). 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 C 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
7
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 C Preferred Stock shall
be outstanding, (i) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Junior
Securities, (ii) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Parity
Securities, except for dividends paid to the Company or any of its
wholly-owned Subsidiaries and dividends paid on the Series B Preferred
Shares (as defined in the Prior Agreement)) (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, with the
exception of the Series B Preferred Shares (as defined in the Prior
Agreement), unless in each such case (x) all dividends to which the
Holders of the Series C Preferred Stock shall have been entitled to
receive for all previous Dividend Periods shall have been paid and
dividends for the subsequent four Dividend Periods shall have been
designated and set aside and (y) a dividend (including the amount of
any dividends paid pursuant to the provisions of Section 3(A)) is paid
with respect to all outstanding shares of Series C Preferred Stock in
an amount for each such share of Series C Preferred Stock equal to the
aggregate amount of such dividend for the number of shares of Common
Stock equal to (i) the Stated Value plus any accrued but unpaid
dividends as of the record date of such dividend divided by (ii) the
Conversion Price (or in the event of a Restatement, the Restatement
Conversion Price, if the Restatement Conversion Price is lower than the
then-current Conversion Price) on such record date (or, if such record
date is not a Business Day, the last Business Day preceding such record
date).
(E) Whenever, at any time or times, dividends payable on any
Series B Preferred Share (as defined in the Prior Agreement) or any
share of Series C Preferred Stock shall be in arrears in an aggregate
amount greater than two (2) quarterly dividends, the Dividend Rate
shall mean a rate equal to fifteen percent (15%) per annum times the
Stated Value until such date that all accrued and unpaid dividends
shall have been declared and paid in full.
(F) Whenever, at any time or times (i) an Issuance Blockage (as
defined in the Main Agreement or the Prior 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 the
Prior Agreement) or (ii) the Company shall fail to redeem any shares of
Series C Preferred Stock or any Series B Preferred Shares (as defined
in the Prior Agreement) for cash by the date it is obligated to do so
under Section 6(B) hereof or of the First Amended and Restated
Certificate of Rights and Preferences of Series B-1 Cumulative
Convertible Preferred Stock or any Subsequent Certificates of Rights
and
8
Preferences (as defined in the Prior Agreement) 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 C 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 C 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 C Preferred Stock
held by such Holder equal to the greater of (a) the Stated Value per share plus
an amount equal to all accrued but unpaid dividends thereon, whether or not
earnings are available in respect of such dividends or such dividends have been
declared, to and including the date full payment is tendered to the Holders with
respect to such Liquidation and no more and (b) the amount the Holders would
have received if the Holders had converted all outstanding shares of Series C
Preferred Stock into Common Stock in accordance with the provisions of Section
6(A) hereof as of the Business Day immediately preceding the date of such
Liquidation (as if the Conversion Notice had been delivered on such date and the
Conversion Closing Date had occurred on such date) (such greater amount being
referred to herein as the "Liquidation Preference"), before any distribution
shall be made to the holders of any Junior Securities (and any Senior Securities
or Parity Securities that, with respect to distributions upon Liquidation, rank
junior to the Series C 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 C 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 C 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 C
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 C 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 C Preferred Stock:
(A) Each share of Series C 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 C 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:
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 C
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 C
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 C 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 C
Preferred Stock to the rights upon liquidation of the
holders of any other capital stock of the Company;
3. Make the Series C 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 September 29,
2003, when there shall be issued and outstanding Series C
Preferred Stock (as defined in the Main Agreement) with an
aggregate Redemption Amount of at least twenty-five million
dollars ($25,000,000).
(ii) permit any Subsidiary of the Company to issue or sell, or
obligate itself to issue or sell, except to the Company or any wholly
owned Subsidiary, any Capital Stock of such Subsidiary; or
(iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred Stock or
amend any provisions of any Parity Securities or Senior Securities so
as to make such Parity Securities or Senior Securities redeemable by
the Company.
(iv) Notwithstanding the foregoing, so long as the Company
complies with the requirements of Section 6(F) of this Certificate of
Rights and Preferences and Section 11 of the Main Agreement, with
respect to a Business Combination, such Business Combination shall not
be deemed to alter or change the powers, preferences or rights of the
Series C Preferred Stock in any manner.
10
6. Conversion and Redemption.
(A) Procedure for Conversion.
(i) Shares of Series C 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
March 29, 2004 for all but not less than all of the shares of
Series C Preferred Stock if (x) the Average Market Price exceeds
the Ceiling Percentage multiplied by the Conversion Price on at
least 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 "Ceiling
Percentage" shall initially be two hundred percent (200%) and
shall decline by five percent (5%) (i.e., to 195%, 190%, etc.) for
each three-month-period that passes after March 29, 2004. The
conversion of shares of Series C 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 C 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 "Two 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 Two 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 C 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;
11
(2) the Company shall have complied fully with all of the
covenants and agreements in the Main Agreement; (3) all
shares to be issued upon such conversion shall be
registered under the Securities Act, shall be freely
tradable and shall be duly listed and admitted to trading
on the New York Stock Exchange, Nasdaq National Market or
American Stock Exchange (unless, with respect to clause (3)
only, the Holder expressly consents in writing to the
issuance of unregistered Common Stock); and such Holder
shall have received a certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company dated
such date and to the effect of clauses (1), (2) and (3).
B. On the Conversion Closing Date, the Company
shall have delivered to the Holder an opinion of Dykema
Gossett PLLC (or such other counsel reasonably satisfactory
to such Holder) reasonably satisfactory to such Holder,
dated the date of delivery, confirming in substance the
matters covered in paragraphs (a), (b), (c), (d), (e), (f)
and subsection (i) of (g) of Section 4 of the Main
Agreement and to the effect that the offer and sale of such
Registered Common Stock to such Holder hereunder do not
require registration under the Securities Act.
C. As of the Conversion Closing Date, the Company
shall have delivered to the Holder all Restatement Notices
required to be delivered following a Restatement.
The Company shall use its commercially reasonable efforts to cause each
of the foregoing conditions to be satisfied at the earliest possible date. If
such conditions are not satisfied or waived prior to the third Business Day
following and excluding the date the Conversion Notice is delivered, then the
Holder may, at its sole option, and at any time, withdraw the Conversion Notice
by written notice to the Company regardless of whether such conditions have been
satisfied or waived as of the withdrawal date and, after such withdrawal, shall
have no further obligations with respect to such Conversion Notice and may
submit a Conversion Notice with respect to the shares referenced in the
withdrawn Conversion Notice at any time.
(iii) Each conversion of Series C 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) (or, in the case of the
Two Year Conversion Notice the related Conversion Closing Date),
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.
12
(iv) On the Conversion Closing Date, the Holder shall
surrender the certificate representing the shares of Series C
Preferred Stock to be converted to the Company at the address set
forth for notices to the Company in Section 20 of the Main
Agreement, and such Holder shall thereupon be entitled to receive
the number of duly authorized, validly issued, fully paid and
nonassessable shares of Registered Common Stock (or Other
Securities or, if appropriate, unregistered Common Stock) to which
such Holder is entitled upon such conversion.
(v) On the Conversion Closing Date, the Company at its expense
(including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder
whose Series C 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
Series C Preferred Stock certificate of like tenor, calling in the
aggregate on the face or faces thereof for the number of shares of
Series C 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 C Preferred Stock shall occur
under any of the following circumstances:
A. At any time on or after March 29, 2004, a Holder of
Series C Preferred Stock may require the Company to redeem any
or all shares of Series C 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); provided, that, if the Company satisfies the
conditions for cash redemption set forth in Section 6(B)(ii)
and elects in writing within five (5) Business Days of the
first Redemption Notice Date hereunder to redeem Series C
Preferred
13
Stock for cash, the Company shall deliver (x) the number of
shares of Registered Common Stock (unless the Holder expressly
consents in writing to the issuance of unregistered Common
Stock) that would have been issuable to such Holder had such
Holder elected on the Redemption Notice Date to convert such
shares of Series C Preferred Stock pursuant to Section
6(A)(i), in the manner provided in Section 6(B)(iii) and (y)
cash in the manner provided in Section 6(B)(ii) equal to the
product of (a) the Daily Market Price as of the Redemption
Notice Date times (b) the amount, if any, by which (i) the
number of shares of Common Stock to which such Holder would
otherwise be entitled to receive on the date the Company
elected cash redemption pursuant to Section 6(B)(ii) as if the
Company had elected Common Stock redemption pursuant to
Section 6(B)(iii) on such date exceeds (ii) the number of
shares of Common Stock deliverable pursuant to clause (x)
(such difference, the "Additional Redemption Shares"). The
Holder may not redeem Series B Preferred Shares (as defined in
the Prior Agreement) and Series C Preferred Stock with an
aggregate Redemption Amount greater than thirty million
dollars ($30 million) in any twelve-month period, provided
that any redemption pursuant to Section 6(B)(i)(B) of the
First Amended and Restated Certificate of Rights and
Preferences of Series B-1 Cumulative Convertible Preferred
Stock shall not be included for purposes of calculating such
aggregate Redemption Amount. In the event that the aggregate
value of the Common Stock and cash, if any, to be received by
a Holder pursuant to this Section 6(B)(i)(A) is less than the
amount such Holder would have received upon redemption if such
Holder had converted the Series C Preferred Stock subject to
the Redemption Notice into Common Stock in accordance with the
provisions of Section 6(A) hereof as of the Business Day
immediately preceding the Redemption Notice Date (as if the
Conversion Notice had been delivered on such date and the
Conversion Closing Date had occurred on such date), then such
Holder shall receive Common Stock and cash, if any, pursuant
to Section 6(B)(ii) or Section 6(B)(iii), as the case may be,
with an aggregate value equivalent to such amount in lieu of
the amount of Common Stock and cash, if any, that would
otherwise be issuable pursuant to this Section 6(B)(i)(A).
B. On April 2, 2009, the Company shall redeem all of
the Series C Preferred Stock held by all Holders. All such
redemptions shall be made for shares of Registered Common
Stock (unless the Holder expressly consents in writing to the
issuance of unregistered Common Stock) pursuant to Section
6(B)(iii), unless the Company satisfies the conditions for
cash redemption set forth in Section 6(B)(ii) and elects to
redeem such shares for cash. In the event that the aggregate
value of the Common Stock and cash, if any, to be received by
a Holder pursuant to this Section 6(B)(i)(B) is less than the
amount such Holder would have received upon redemption if such
Holder had converted all of such Holder's Series C Preferred
Stock into Common Stock in accordance with the provisions of
14
Section 6(A) hereof as of the Business Day immediately
preceding April 2, 2009 (as if the Conversion Notice had been
delivered on such date and the Conversion Closing Date had
occurred on such date), then such Holder shall receive Common
Stock and cash, if any, pursuant to Section 6(B)(ii) or
Section 6(B)(iii), as the case may be, with an aggregate value
equivalent to such amount in lieu of the amount of Common
Stock and cash, if any, that would otherwise be issuable
pursuant to this Section 6(B)(i)(B).
(ii) If the Company is permitted under the terms of its then
outstanding credit facilities and elects in a writing substantially in
the form attached as Annex D to the Main Agreement delivered to the
redeeming Holder on or before the fifth Business Day following and
excluding the date of the first Redemption Notice (or in the case of
redemption pursuant to Section 6(B)(i)(B) by February 27, 2009 (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 to the extent provided in Section 6(B)(i)(A)
or 6(B)(i)(B), as applicable, (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 April 2, 2009 (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
C Preferred Stock under Section 6(B)(i)(A) shall be for cash to the
extent provided in Section 6(B)(i)(A). At such closing, the Holder
shall surrender the certificate representing the shares of Series C
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
15
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 April 2, 2009 (provided that if the
Company fails to redeem such shares on the Stock Redemption Closing
Date provided above, then all such rights shall be reinstated in full).
In the case of redemptions pursuant to Section 6(B)(i)(A) only, if the
Company fails to tender cash as provided in this Section 6(B)(ii) on or
before the Cash Redemption Closing Date, then the Holder may, at its
sole option (and without limiting any other available remedies,
including without limitation under Section 3(F) or at law or in equity)
elect to (1) withdraw the Redemption Notice by written notice to the
Company and, after such withdrawal, shall have no further obligations
with respect to such Redemption Notice and may submit a Redemption
Notice with respect to the shares referenced in the withdrawn
Redemption Notice at any time or (2) receive shares of Registered
Common Stock as set forth in Section 6(B)(iii), in which case the Stock
Redemption Closing Date shall be the second Business Day after and
excluding the date on which the Holder notifies the Company in writing
of such election. In the case of redemptions pursuant to Section
6(B)(i)(B) only, if the Company fails to tender cash as provided in
this Section 6(B)(ii) on or before the Cash Redemption Closing Date,
then the Holder may, at its sole option (and without limiting any other
available remedies, including without limitation under Section 3(F) or
at law or in equity) elect to receive shares of Registered Common Stock
as set forth in Section 6(B)(iii), in which case the Stock Redemption
Closing Date shall be the second Business Day after and excluding the
date on which the Holder notifies the Company in writing of such
election. If such redemption is for only part of the shares represented
by the certificate surrendered, the Company shall send a new Preferred
Stock certificate of like tenor, calling in the aggregate on the face
or faces thereof for the number of shares of Series C 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 Additional
Redemption Shares of Series C Preferred Stock for shares of Registered
Common Stock (or, in the case of redemptions pursuant to Section
6(B)(i)(B), by the Redemption Reference Date), 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, in the case of redemptions pursuant to Section 6(B)(i)(B), by
April 2, 2009) 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 C Preferred Stock shall be for Registered Common
Stock. At such closing, the
16
Holder shall surrender the certificate representing the shares of
Series C 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 C Preferred Stock is being
redeemed via book-entry transfer (if available to the Company), the
number of duly authorized, validly issued, fully paid and nonassessable
shares of Registered Common Stock (unless the Holder expressly consents
in writing to the issuance of unregistered Common Stock in which case
all references to Registered Common Stock in this Section 6(B)(iii)
shall be to unregistered Common Stock, but only with respect to the
shares of Common Stock subject to such Redemption Notice) to which such
Holder shall be entitled upon such redemption, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash
in an amount equal to the same fraction of the Daily Market Price per
share on the Business Day immediately preceding the Stock Redemption
Closing Date, and, in case such redemption is for only part of the
shares represented by the certificate surrendered, at such address
specified by the Holder via reputable overnight courier, a new
Preferred Stock certificate of like tenor, calling in the aggregate on
the face thereof for the number of shares of Series C 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 C Preferred
Stock being redeemed (calculated as of the Stock Redemption Closing
Date) divided by (y) the greater of (1) the lesser of (A) the Average
Market Price calculated as of the Redemption Notice Date or the
Redemption Reference Date, as applicable, (B) the Daily Market Price on
the date the Company delivers its election to redeem such shares for
Registered Common Stock and (C) if the Company fails to deliver an
election to redeem such shares for Registered Common Stock by the fifth
Business Day following and excluding the Redemption Notice Date or by
the Redemption Reference Date, as applicable, the Daily Market Price on
the fifth Business Day following and excluding the Redemption Notice
Date or the fifth (5th) Business Day immediately preceding the Stock
Redemption Closing Date, as applicable, and (2) in the case of
redemptions pursuant to Section 6(B)(i)(A) only (and not in the case of
redemption pursuant to Section 6(B)(i)(B)), an amount equal to product
of (a) the quotient of six dollars divided by eight dollars and fifty
cents ($6.00/$8.50) times (b) the Main Agreement Date Price. 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,
17
shall be freely tradable and shall be duly listed and admitted to
trading on the New York Stock Exchange, Nasdaq National Market or
American Stock Exchange (unless, with respect to clause (3) only,
the Holder expressly consents in writing to the issuance of
unregistered Common Stock); and such Holder shall have received a
certificate of the Chief Executive Officer or the Chief Financial
Officer of the Company dated such date and to the effect of
clauses (1), (2) and (3).
B. On the Stock Redemption Closing Date, the Company shall
have delivered to the Holder an opinion of Dykema Gossett PLLC (or
such other counsel reasonably satisfactory to such Holder)
reasonably satisfactory to such Holder, dated the date of
delivery, confirming in substance the matters covered in
paragraphs (a), (b), (c), (d), (e), (f) and subsection (i) of (g)
of Section 4 of the Main Agreement and to the effect that the
offer and sale of such Registered Common Stock to such Holder
hereunder do not require registration under the Securities Act.
C. There shall not exist an Issuance Blockage (as defined
in the Main Agreement) and the issuance of Common Stock shall not
cause the Company to exceed the Maximum Number (as defined in the
Main Agreement).
The Company shall use its best efforts to cause each of the foregoing
conditions to be satisfied at the earliest possible date. If such
conditions are not satisfied or waived on or before the Stock
Redemption Closing Date, then the Holder may, at its sole option, and
at any time, (1) withdraw the Redemption Notice by written notice to
the Company regardless of whether such conditions have been satisfied
or waived as of the withdrawal date and, after such withdrawal, shall
have no further obligations with respect to such Redemption Notice and
may submit a Redemption Notice with respect to the shares referenced in
the withdrawn Redemption Notice at any time or (2) elect cash
redemption as set forth in Section 6(B)(ii), in which case, the Cash
Redemption Closing Date shall be the second Business Day after and
excluding the date on which the Holder notifies the Company in writing
of its election for cash redemption to the extent permitted under the
terms of the Company's credit facilities set forth in Champion's SEC
Filings (as defined in the Main Agreement) made on or before the date
of the Main Agreement and excluding any subsequent amendments or
extensions thereto.
(C) The Company shall at all times reserve for issuance such number of
its shares of Common Stock as shall be required under the Main Agreement.
(D) The Company will procure, at its sole expense, the listing of the
Common Stock issuable upon conversion or redemption of the Series C 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 C
Preferred Stock is issued to the Holder and
18
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 C 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 C 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 C 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 C Preferred Stock shall be surrendered for
conversion or redemption at one time by or for the same Holder, the number of
full shares of Common Stock issuable upon conversion or redemption thereof shall
be computed on the basis of the aggregate number of shares of Series C 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 C 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
19
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 C 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 C
Preferred Stock, with the Redemption Notice Date occurring
immediately prior thereto (notwithstanding any restrictions on
redemption existing on such Redemption Notice Date) and (ii) the
Company had elected to redeem such shares for Registered Common
Stock immediately prior thereto
C. the number of shares of common stock of the Acquiring
Person or its Parent, at the election of the Holder, determined
by dividing (A) the amount equal to the product obtained by
multiplying (1) the number of shares of the Company's Common
Stock (or Other Securities) to which such Holder would have been
entitled had such holder converted such Series C 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 C 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
20
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 C Preferred Stock;
provided, that if the Company delivers to such Holder a written notice
in the form of Annex K to the Main Agreement (a "Business Combination
Restriction Notice") no later than the fifteenth (15th) calendar day
after and excluding the date on which the proposed Business Combination
is first publicly disclosed and no later than the fifteenth (15th)
calendar day before and excluding the closing date of such Business
Combination, then in lieu of clauses (A), (B), (C), (D) and (E) above
and all other rights and preferences under this Certificate of Rights
and Preferences, the Holder shall receive, on such closing date, in
exchange for the shares of Series C 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 C Preferred Stock immediately
prior to such closing date or (b) redeemed (notwithstanding any
restrictions on redemption existing on such Redemption Notice Date)
such Series C 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 C Preferred
Stock multiplied by (y) the Merger Adjustment Percentage and provided
further, that if such Holder converts or redeems shares of Series C
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
21
by a fraction the numerator of which shall be the number of days
remaining until the seventh (7th) anniversary of the Issue Date and
the denominator of which shall be two thousand five hundred and
twenty (2,520); provided that the Merger Adjustment Percentage shall
not be less than zero percent (0%). The "Merger Payment Percentage"
shall equal (A) fifty percent (50%) minus (B) the product of (1) ten
percent (10%) multiplied by (2) the quotient (which shall not be less
than zero percent (0%)) of (x) the Acquisition Price in effect on the
Business Day immediately preceding the date of such consummation
minus the Conversion Price in effect on the Business Day immediately
preceding the date of such consummation divided by (y) the Conversion
Price in effect on the Business Day immediately preceding the date of
such consummation.
(ii) Notwithstanding anything contained herein or in the Main
Agreement to the contrary, the Company will not effect any Business
Combination unless the requirements of Section 11 of the Main
Agreement have been met and unless, prior to the consummation
thereof, each Person (other than the Company) that may be required to
deliver any stock, securities, cash or property upon conversion of
Series C Preferred Stock as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the Holders
of a Majority of the Series C 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 C 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 C 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 C
Preferred Stock. The Company shall return to the status of unauthorized and
undesignated shares of Preferred Stock each share of Series C 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 C 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 C Preferred Stock. Except as provided in
the Main Agreement, the Company will not issue any further shares of Series C
Preferred Stock. Except for redemptions pursuant to Section 6(B), the Company
shall have no right to redeem the shares of Series C Preferred Stock without the
consent of a Majority of the Holders.
22
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MICHIGAN DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
BUREAU OF COMMERCIAL SERVICES
- --------------------------------------------------------------------------------
Date Received
- --------------------------
- --------------------------------------------------------
Name Effective Date:
Douglas S. Parker c/o Dykema Gossett PLLC
- --------------------------------------------------------
Address
39577 Woodward Avenue, Suite 300
- --------------------------------------------------------
City State Zip Code
Bloomfield Hills MI 48304
- --------------------------------------------------------------------------------
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS ENTERED ABOVE.
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned
corporation executes the following Certificate:
1. The present name of the corporation is: Champion Enterprises, Inc.
2. The identification number assigned by the Bureau is: 419-343
3. Article III of the Articles of Incorporation is hereby amended to amend and
restate the Certificate of Rights and Preferences of Series C Cumulative
Convertible Preferred Stock of Champion Enterprises, Inc.
SEE ATTACHED FOR AMENDED AND RESTATED PROVISIONS TO ARTICLE III
4. This amendment was duly authorized on the 29th day of March, 2002 by a
majority of the Board of Directors of the Corporation pursuant to and as
permitted by Article III of the Corporation's Articles of Incorporation.
Signed this 31st day of January, 2003
By: /s/ John J. Collins
--------------------------------------------
John J. Collins, Jr.
Its: Senior Vice President, General Counsel
and Secretary
Name of person remitting fees:
Dykema Gossett PLLC
Preparer's name and business telephone number:
Douglas S. Parker
248-203-0703
FIRST AMENDED AND RESTATED
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CHAMPION ENTERPRISES, INC.
1. Number. The number of shares constituting the Series C
Cumulative Convertible Preferred Stock shall be Thirty-Five Thousand (35,000).
2. Definitions. Unless the context otherwise requires, when
used herein the following terms shall have the meaning indicated.
"Acquiring Person" means, in connection with any Business
Combination, the continuing or surviving corporation of a consolidation or
merger with the Company (if other than the Company), the transferee of all or
substantially all of the properties or assets of the Company, the corporation
consolidating with or merging into the Company in a consolidation or merger in
connection with which the Common Stock is changed into or exchanged for stock or
other securities of any other Person or cash or any other property, the entity
or group acting in concert acquiring or possessing the power to cast the
majority of the eligible votes at a meeting of the Company's shareholders at
which directors are elected, or, in the case of a capital reorganization or
reclassification, the Company.
"Acquisition Price" means (i) the Daily Market Price of the
Common Stock on the date immediately preceding the date on which a Business
Combination is consummated, or (ii) if a purchase, tender or exchange offer is
made by the Acquiring Person (or by any of its affiliates) to the holders of the
Common Stock and such offer is accepted by the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock, the greater of (x) the
price determined in accordance with the provisions of the foregoing clause (i)
of this sentence and (y) the Daily Market Price on the date immediately
preceding the acceptance of such offer by the holders of more than fifty percent
(50%) of the outstanding shares of Common Stock.
"Articles" means the Restated Articles of Incorporation of the
Company, as amended.
"Average Market Price" means, with respect to any reference
date, the average of the Daily Market Prices of the Common Stock for the thirty
(30) Business Days ending on and including the third Business Day before such
reference date, but not greater than the average of the Daily Market Prices of
the Common Stock for the five (5) Business Days ending on and including the
twenty-eighth Business Day before such reference date.
"Board" means the Board of Directors of the Company.
"Business Combination" is defined in Section 6(F)(i).
"Business Day" means any day on which the Common Stock may be
traded on the NYSE, or if not admitted for trading on the NYSE, on any day other
than a
Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
limited partnership, limited liability company or other equity interests of such
Person.
"Cash Redemption Closing Date" is defined in Section 6(B)(ii).
"Certificate of Rights and Preferences" means this Certificate
of Rights and Preferences of the Series C 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" is $5.6644, subject to adjustment for stock
splits, recombinations, stock dividends and the like.
"Conversion Rate" means (i) the Stated Value of one share of
Series C Preferred Stock plus accrued and unpaid dividends divided by (ii) the
Conversion Price.
"Daily Market Price" means, on any date, the amount per share
of the Common Stock (or, for purposes of determining the Daily Market Price of
the common stock of an Acquiring Person or its Parent under Section 6(F), the
common stock of such Acquiring Person or such Parent), equal to (i) the daily
volume-weighted average price on the NYSE or, if no such sale takes place on
such date, the average of the closing bid and asked prices on the NYSE thereof
on such date, in each case as reported by Bloomberg, L.P. (or by such other
Person as the Holder and the Company may agree), or (ii) if such Common Stock or
common stock of an Acquiring Person or its Parent is not then listed or admitted
to trading on the NYSE, the higher of (x) the book value per share thereof as
determined by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company as of the last day of any
month ending within sixty (60) days preceding the date as of which the
determination is to be made or (y) the fair value per share thereof determined
in good faith by the Board of Directors of the Company as of a date which is no
more than ten (10) Business Days before and excluding the date as of which the
determination is to be made.
"Dividend Payment Date" is defined in Section 3(A).
2
"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 C Preferred Stock.
"Issue Date" means with respect to any shares of Series C
Preferred Stock the original date of issuance of such shares of Series C
Preferred Stock.
"Junior Securities" means Capital Stock that, with respect to
dividends and distributions upon Liquidation, ranks junior to the Series C
Preferred Stock, 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 and the Prior Agreement, (ii)
with the approval of the Holders of a Majority of the Series C Preferred Stock
or (iii) upon the conversion, redemption or exercise of securities described in
clause (i) or (ii).
"Liquidation" means the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided, however, that a
consolidation, merger or share exchange shall not be deemed a Liquidation, nor
shall a sale, assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets, which does not involve a
distribution by the Company of cash or other property to the holders of Common
Stock, be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 4.
"Main Agreement" means the Agreement dated as of March 29,
2002 between the Company and Fletcher pursuant to which up to thirty-five
thousand (35,000) shares of Series C Preferred Stock and a warrant are to be
issued by the Company, including all Schedules and Exhibits thereto.
"Main Agreement Date Price" means $8.0246.
"Majority of the Series C Preferred Stock" means more than
fifty percent (50%) of the then outstanding shares of Series C 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 C Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series C.
3
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 C Preferred Stock, including the Series B Preferred Shares (as
defined in the Prior Agreement).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited liability company,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Preferred Stock" means the Company's preferred stock
authorized pursuant to the provisions of the Articles.
"Prior 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 and the right to purchase up to an
additional twelve thousand (12,000) shares of Series B Preferred Stock have been
issued by the Company, including all Schedules and Exhibits thereto.
"Record Date" is defined in Section 3(A).
"Redemption Amount" means a dollar amount for each share of
the then-outstanding Series C Preferred Stock redeemed by such Holder equal to
the Stated Value per share plus an amount equal to all accrued but unpaid
dividends thereon, whether or not earnings are available in respect of such
dividends or such dividends have been declared, to and including the date full
payment is tendered to the Holders with respect to such redemption.
"Redemption Notice" is defined in Section 6(B)(i).
"Redemption Notice Date" is defined in Section 6(B)(i).
"Registered Common Stock" means Common Stock that has been
registered under the Securities Act and is freely tradable.
"Restatement" means that Champion adversely restates net
income or shareholders' equity, in any material respect, in any portion of its
financial statements as included in a Form 10-K or Form 10-Q filed with the
Securities and Exchange Commission in the form of an amendment thereto, press
release, Form 8-K or any other method except as is required as a result of a
change occurring after the date of the Main Agreement in (i) applicable law or
(ii) generally
4
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 fifteen
percent (115%) 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 C 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. The powers, designations,
preferences and relative, participating, optional and other special rights are
specified in the First Amended and Restated Certificate of Rights and
Preferences of Series B-1 Cumulative Convertible Preferred Stock.
"Series C Preferred Stock" means the Series C 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 C 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 at
least a majority ownership interest.
The foregoing definitions will be equally applicable to both
the singular and plural forms of the defined terms.
3. Dividends and Distributions.
5
(A) Holders shall be entitled to receive out
of the assets of 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 June 30, 2002.
The period from the Issue Date to June 30, 2002, and each
quarterly period between consecutive Dividend Payment Dates
shallhereinafter be referred to as a "Dividend Period." The
dividend for any Dividend Period for any share of Series C
Preferred Stock that is not outstanding on every day of the
Dividend Period shall be prorated 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 C
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 (including shares issued or issuable following
exercise of the warrant issued pursuant to the Main
Agreement), all issued and issuable but unconverted Series
C Preferred Stock (on an as-converted basis as of that
date) does not exceed seventeen and one-half percent
(17.5%) of the Original Number (as defined in the Main
Agreement), or, if such number of shares exceeds seventeen
and one-half percent (17.5%) of the Original Number and
does not exceed nineteen and ninety-nine one-hundredths
percent (19.99%) of the Original Number, the Company has
notified its shareholders of a shareholder's meeting for
the purpose of voting on a Required Consent (as defined in
the Main Agreement) in accordance with the Main Agreement
and has used and is using its best efforts to obtain the
Required Consent. Although it is the
6
intent and view of the Company that the issuance of Common
Stock with respect to the Series C Preferred Stock is to be
treated as independent of any issuance of Common Stock with
respect to the Series B Preferred Shares (as defined in the
Main Agreement), in the event any such issuances of Common
Stock are deemed to be related pursuant to the listing
requirements and rules of the NYSE by the NYSE, the
provisions of this Section 3(B) (including, but not limited
to, the obligation to obtain the Required Consent) shall be
deemed to apply to the number of shares of Common Stock in
the aggregate issued and issuable with respect to both the
Series C Preferred Stock and the Series B Preferred Shares
(as defined in the Prior Agreement). 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 C 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 C
Preferred Stock shall be outstanding, (i) the Company shall
not and shall not allow its Subsidiaries to declare or pay
any dividend whatsoever, whether in cash, property or
otherwise, set aside any cash or property for the payment of
dividends, or make any other distribution on any Junior
Securities, (ii) the Company shall not and shall not allow
its Subsidiaries to declare or pay any dividend whatsoever,
whether in cash, property or otherwise, set aside any cash or
property for the payment of dividends, or make any other
distribution on any Parity Securities, except for dividends
paid to the Company or any of its wholly-owned Subsidiaries
and dividends paid on the Series B Preferred Shares (as
defined in the Prior Agreement)) (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, with the exception of the Series B
Preferred Shares (as defined in the Prior Agreement), unless
in each such case (x) all dividends to which the Holders of
the Series C Preferred Stock shall have been entitled to
receive for all previous Dividend Periods shall have been
paid
7
and dividends for the subsequent four Dividend Periods shall
have been designated and set aside and (y) a dividend
(including the amount of any dividends paid pursuant to the
provisions of Section 3(A)) is paid with respect to all
outstanding shares of Series C Preferred Stock in an amount
for each such share of Series C Preferred Stock equal to the
aggregate amount of such dividend for the number of shares of
Common Stock equal to (i) the Stated Value plus any accrued
but unpaid dividends as of the record date of such dividend
divided by (ii) the Conversion Price (or in the event of a
Restatement, the Restatement Conversion Price, if the
Restatement Conversion Price is lower than the then-current
Conversion Price) on such record date (or, if such record
date is not a Business Day, the last Business Day preceding
such record date).
(E) Whenever, at any time or times, dividends
payable on any Series B Preferred Share (as defined in the
Prior Agreement) or any share of Series C Preferred Stock
shall be in arrears in an aggregate amount greater than two
(2) quarterly dividends, the Dividend Rate shall mean a rate
equal to fifteen percent (15%) per annum times the Stated
Value until such date that all accrued and unpaid dividends
shall have been declared and paid in full.
(F) Whenever, at any time or times (i) an
Issuance Blockage (as defined in the Main Agreement or the
Prior 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 the Prior
Agreement) or (ii) the Company shall fail to redeem any
shares of Series C Preferred Stock or any Series B Preferred
Shares (as defined in the Prior Agreement) for cash by the
date it is obligated to do so under Section 6(B) hereof or of
the First Amended and Restated Certificate of Rights and
Preferences of Series B-1 Cumulative Convertible Preferred
Stock or any Subsequent Certificates of Rights and
Preferences (as defined in the Prior Agreement) 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 C 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 C 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 C Preferred Stock
held by such Holder equal to the greater of (a) the Stated Value per share plus
an amount equal to all accrued but unpaid dividends thereon, whether or not
earnings are available in respect of such dividends or such dividends have been
declared, to and including the date full payment is tendered to the Holders with
respect to such Liquidation and no more and (b) the amount the Holders would
have received if the Holders had converted all outstanding shares of Series C
Preferred Stock into Common Stock in accordance with the provisions of Section
6(A) hereof as of the Business Day immediately preceding the date of such
Liquidation (as if the Conversion Notice had been delivered on such date and the
Conversion Closing Date had occurred on such date) (such greater amount being
referred to herein as the "Liquidation Preference"), before any distribution
shall be made to the holders of any Junior Securities (and any Senior Securities
or Parity Securities that,
8
with respect to distributions upon Liquidation, rank junior to the Series C
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 C 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 C
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 C 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 C 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 C Preferred Stock:
(A) Each share of Series C 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 C Preferred Stock, voting separately as a single
class with one vote per share, in person or by proxy, either
in writing without a meeting or at an annual or a special
meeting of such Holders called for the purpose, shall be
necessary to:
(i) amend, alter or repeal any of the
provisions of the Articles, including the Certificate
of Rights and Preferences, or Bylaws of the Company
so as to:
A. change any of the rights,
preferences or privileges of Holders.
Without limiting the generality of the
preceding sentence, such change includes any
action that would:
1. Reduce the Dividend Rate on the
Series C 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 C 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 C 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
9
C. Preferred Stock to the rights
upon liquidation of the holders of any other
capital stock of the Company;
3. Make the Series C 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 September 29, 2003,
when there shall be issued and outstanding
Series C Preferred Stock (as defined in the
Main Agreement) with an aggregate Redemption
Amount of at least twenty-five million
dollars ($25,000,000).
(ii) permit any Subsidiary of the Company to
issue or sell, or obligate itself to issue or sell,
except to the Company or any wholly owned Subsidiary, any
Capital Stock of such Subsidiary; or
(iii) increase or decrease (other than by
redemption or conversion) the total number of authorized
shares of Preferred Stock or amend any provisions of any
Parity Securities or Senior Securities so as to make such
Parity Securities or Senior Securities redeemable by the
Company.
(iv) Notwithstanding the foregoing, so long
as the Company complies with the requirements of Section
6(F) of this Certificate of Rights and Preferences and
Section 11 of the Main Agreement, with respect to a
Business Combination, such Business Combination shall not
be deemed to alter or change the powers, preferences or
rights of the Series C Preferred Stock in any manner.
6. Conversion and Redemption.
(A) Procedure for Conversion.
(i) Shares of Series C 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 March 29, 2004 for all but not less
than all of the shares of Series C Preferred Stock if (x)
the Average Market Price exceeds the Ceiling Percentage
multiplied by the Conversion Price on at least 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 "Ceiling Percentage" shall initially be two hundred
percent (200%) and shall decline by five percent (5%)
(i.e., to 195%, 190%, etc.) for each
10
three-month-period that passes after March 29, 2004. The
conversion of shares of Series C 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 C 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 "Two 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 Two 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 C Preferred Stock still
outstanding on such Conversion Closing Date.
(ii) It shall be a condition of the
converting Holder's obligation to close that each of the
following are satisfied, unless waived by such Holder:
A. (1) the representations
and warranties made by the Company in the
Main Agreement shall be true and correct as
of the Conversion Closing Date, except those
representations and warranties that address
matters only as of a particular date, which
shall be true and correct as of such date;
(2) the Company shall have complied fully
with all of the covenants and agreements in
the Main Agreement; (3) all shares to be
issued upon such conversion shall be
registered under the Securities Act, shall be
freely tradable and shall be duly listed and
admitted to trading on the New York Stock
Exchange, Nasdaq National Market or American
Stock Exchange (unless, with respect to
clause (3) only, the Holder expressly
consents in writing to the issuance of
unregistered Common Stock); and such Holder
shall have received a certificate of the
Chief Executive Officer or the Chief
Financial Officer of the Company dated such
date and to the effect of clauses (1), (2)
and (3).
B. On the Conversion Closing
Date, the Company shall have delivered to the
Holder an opinion of Dykema Gossett PLLC (or
such other counsel reasonably satisfactory to
such Holder) reasonably satisfactory to such
Holder, dated the date of delivery,
confirming in substance the matters covered
in paragraphs (a), (b), (c), (d), (e), (f)
and subsection (i) of (g) of Section 4 of the
Main Agreement and to the effect
11
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 C 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) (or, in the case of the Two Year
Conversion Notice the related Conversion
Closing Date), 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 C Preferred
Stock to be converted to the Company at the
address set forth for notices to the Company
in Section 20 of the Main Agreement, and such
Holder shall thereupon be entitled to receive
the number of duly authorized, validly
issued, fully paid and nonassessable shares
of Registered Common Stock (or Other
Securities or, if appropriate, unregistered
Common Stock) to which such Holder is
entitled upon such conversion.
(v) On the Conversion Closing Date, the
Company at its expense (including the payment
by it of any applicable issue taxes) will
cause to be issued in the name of and
delivered to the Holder whose Series C
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
12
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 Series C Preferred Stock
certificate of like tenor, calling in the aggregate on
the face or faces thereof for the number of shares of
Series C 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 C Preferred
Stock shall occur under any of the following circumstances:
A. At any time on or after
March 29, 2004, a Holder of Series C
Preferred Stock may require the Company to
redeem any or all shares of Series C
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); provided, that, if the
Company satisfies the conditions for cash
redemption set forth in Section 6(B)(ii) and
elects in writing within five (5) Business
Days of the first Redemption Notice Date
hereunder to redeem Series C Preferred Stock
for cash, the Company shall deliver (x) the
number of shares of Registered Common Stock
(unless the Holder expressly consents in
writing to the issuance of unregistered
Common Stock) that would have been issuable
to such Holder had such Holder elected on the
Redemption Notice Date to convert such shares
of Series C Preferred Stock pursuant to
Section 6(A)(i), in the manner provided in
Section 6(B)(iii) and (y) cash in the manner
provided in Section 6(B)(ii) equal to the
product of (a) the Daily Market Price as of
the Redemption Notice Date times (b) the
amount, if any, by which (i) the number of
shares of Common Stock to which such Holder
would otherwise be entitled to receive on the
date the Company elected cash redemption
pursuant to Section 6(B)(ii) as if the
Company had elected Common Stock redemption
pursuant to Section 6(B)(iii) on such date
exceeds (ii) the number of shares of Common
Stock deliverable pursuant to clause (x)
(such difference, the "Additional Redemption
Shares"). The Holder may not redeem Series B
Preferred Shares (as defined in the Prior
Agreement) and Series C Preferred Stock with
an aggregate Redemption Amount greater than
thirty million dollars ($30 million) in any
twelve-month period, provided that any
redemption
13
pursuant to Section 6(B)(i)(B) of the First
Amended and Restated Certificate of Rights
and Preferences of Series B-1 Cumulative
Convertible Preferred Stock shall not be
included for purposes of calculating such
aggregate Redemption Amount. In the event
that the aggregate value of the Common Stock
and cash, if any, to be received by a Holder
pursuant to this Section 6(B)(i)(A) is less
than the amount such Holder would have
received upon redemption if such Holder had
converted the Series C Preferred Stock
subject to the Redemption Notice into Common
Stock in accordance with the provisions of
Section 6(A) hereof as of the Business Day
immediately preceding the Redemption Notice
Date (as if the Conversion Notice had been
delivered on such date and the Conversion
Closing Date had occurred on such date), then
such Holder shall receive Common Stock and
cash, if any, pursuant to Section 6(B)(ii) or
Section 6(B)(iii), as the case may be, with
an aggregate value equivalent to such amount
in lieu of the amount of Common Stock and
cash, if any, that would otherwise be
issuable pursuant to this Section 6(B)(i)(A).
B. On April 2, 2009, the
Company shall redeem all of the Series C
Preferred Stock held by all Holders. All such
redemptions shall be made for shares of
Registered Common Stock (unless the Holder
expressly consents in writing to the issuance
of unregistered Common Stock) pursuant to
Section 6(B)(iii), unless the Company
satisfies the conditions for cash redemption
set forth in Section 6(B)(ii) and elects to
redeem such shares for cash. In the event
that the aggregate value of the Common Stock
and cash, if any, to be received by a Holder
pursuant to this Section 6(B)(i)(B) is less
than the amount such Holder would have
received upon redemption if such Holder had
converted all of such Holder's Series C
Preferred Stock into Common Stock in
accordance with the provisions of Section
6(A) hereof as of the Business Day
immediately preceding April 2, 2009 (as if
the Conversion Notice had been delivered on
such date and the Conversion Closing Date had
occurred on such date), then such Holder
shall receive Common Stock and cash, if any,
pursuant to Section 6(B)(ii) or Section
6(B)(iii), as the case may be, with an
aggregate value equivalent to such amount in
lieu of the amount of Common Stock and cash,
if any, that would otherwise be issuable
pursuant to this Section 6(B)(i)(B).
(ii) If the Company is permitted under the
terms of its then outstanding credit facilities and elects
in a writing substantially in the form attached as Annex D
to the Main Agreement delivered to the redeeming Holder on
or before the fifth Business Day following and excluding
the date of the first Redemption Notice (or in the case of
redemption pursuant to Section 6(B)(i)(B) by February 27,
2009 (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 to the extent provided in Section 6(B)(i)(A) or
6(B)(i)(B), as applicable, (b) the closing of such
redemption shall
14
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 April 2, 2009 (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 C Preferred Stock under Section
6(B)(i)(A) shall be for cash to the extent provided in
Section 6(B)(i)(A). At such closing, the Holder shall
surrender the certificate representing the shares of Series
C 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 April 2, 2009 (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
15
cash as provided in this Section 6(B)(ii) on or before the
Cash Redemption Closing Date, then the Holder may, at its
sole option (and without limiting any other available
remedies, including without limitation under Section 3(F)
or at law or in equity) elect to receive shares of
Registered Common Stock as set forth in Section 6(B)(iii),
in which case the Stock Redemption Closing Date shall be
the second Business Day after and excluding the date on
which the Holder notifies the Company in writing of such
election. If such redemption is for only part of the shares
represented by the certificate surrendered, the Company
shall send a new Preferred Stock certificate of like tenor,
calling in the aggregate on the face or faces thereof for
the number of shares of Series C 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 Additional Redemption
Shares of Series C Preferred Stock for shares of Registered
Common Stock (or, in the case of redemptions pursuant to
Section 6(B)(i)(B), by the Redemption Reference Date), 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, in the case
of redemptions pursuant to Section 6(B)(i)(B), by April 2,
2009) 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 C Preferred
Stock shall be for Registered Common Stock. At such
closing, the Holder shall surrender the certificate
representing the shares of Series C 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 C
Preferred Stock is being redeemed via book-entry transfer
(if available to the Company), the number of duly
authorized, validly issued, fully paid and nonassessable
shares of Registered Common Stock (unless the Holder
expressly consents in writing to the issuance of
unregistered Common Stock in which case all references to
Registered Common Stock in this Section 6(B)(iii) shall be
to unregistered Common Stock, but only with respect to the
shares of Common Stock subject to such Redemption Notice)
to which such Holder shall be entitled upon such
redemption, plus, in lieu of any fractional share to which
such Holder would otherwise be entitled, cash in an amount
equal to the same fraction of the Daily Market Price per
share on the Business Day immediately preceding the Stock
Redemption Closing Date, and, in case such redemption is
for only part of the shares represented by the certificate
surrendered, at such address specified by the
16
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 C
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 C Preferred Stock
being redeemed (calculated as of the Stock Redemption
Closing Date) divided by (y) the greater of (1) the lesser
of (A) the Average Market Price calculated as of the
Redemption Notice Date or the Redemption Reference Date, as
applicable, (B) the Daily Market Price on the date the
Company delivers its election to redeem such shares for
Registered Common Stock and (C) if the Company fails to
deliver an election to redeem such shares for Registered
Common Stock by the fifth Business Day following and
excluding the Redemption Notice Date or by the Redemption
Reference Date, as applicable, the Daily Market Price on
the fifth Business Day following and excluding the
Redemption Notice Date or the fifth (5th) Business Day
immediately preceding the Stock Redemption Closing Date, as
applicable, and (2) in the case of redemptions pursuant to
Section 6(B)(i)(A) only (and not in the case of redemption
pursuant to Section 6(B)(i)(B)), an amount equal to product
of (a) the quotient of six dollars divided by eight dollars
and fifty cents ($6.00/$8.50) times (b) the Main Agreement
Date Price. 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.
17
C. There shall not exist an
Issuance Blockage (as defined in the Main
Agreement) and the issuance of Common Stock
shall not cause the Company to exceed the
Maximum Number (as defined in the Main
Agreement).
The Company shall use its best efforts to cause
each of the foregoing conditions to be satisfied at the earliest
possible date. If such conditions are not satisfied or waived on
or before the Stock Redemption Closing Date, then the Holder
may, at its sole option, and at any time, (1) withdraw the
Redemption Notice by written notice to the Company regardless of
whether such conditions have been satisfied or waived as of the
withdrawal date and, after such withdrawal, shall have no
further obligations with respect to such Redemption Notice and
may submit a Redemption Notice with respect to the shares
referenced in the withdrawn Redemption Notice at any time or (2)
elect cash redemption as set forth in Section 6(B)(ii), in which
case, the Cash Redemption Closing Date shall be the second
Business Day after and excluding the date on which the Holder
notifies the Company in writing of its election for cash
redemption to the extent permitted under the terms of the
Company's credit facilities set forth in Champion's SEC Filings
(as defined in the Main Agreement) made on or before the date of
the Main Agreement and excluding any subsequent amendments or
extensions thereto.
(C) The Company shall at all times reserve for issuance such
number of its shares of Common Stock as shall be required under the
Main Agreement.
(D) The Company will procure, at its sole expense, the listing
of the Common Stock issuable upon conversion or redemption of the
Series C 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 C 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 C 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 C
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 C
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 C Preferred
18
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 C 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 C
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 C 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 C 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
19
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
C 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
C 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 C
Preferred Stock;
provided, that if the Company delivers to such Holder a written
notice in the form of Annex K to the Main Agreement (a "Business
Combination Restriction Notice") no later than the fifteenth
(15th) calendar day after and excluding the date on which the
proposed Business Combination is first publicly disclosed and no
later than the fifteenth (15th) calendar day before and
excluding the closing date of such Business Combination, then in
lieu of clauses (A), (B), (C), (D) and (E)
20
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 C
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 C Preferred Stock immediately prior to
such closing date or (b) redeemed (notwithstanding any
restrictions on redemption existing on such Redemption Notice
Date) such Series C 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 C Preferred Stock
multiplied by (y) the Merger Adjustment Percentage and provided
further, that if such Holder converts or redeems shares of
Series C Preferred Stock on or after the date of delivery of the
Business Combination Restriction Notice and before the date of
closing of such Business Combination, then in addition to the
stock and other securities, cash and property that such Holder
has received, or is entitled to receive, upon the conversion or
redemption of such shares, such Holder shall be entitled to
receive upon the date of closing of such Business Combination
the cash amount described in clause (2) above (but not the stock
and other securities, cash and property described in clause (1)
above) with respect to all such previously converted or redeemed
shares. The "Merger Adjustment Percentage" shall equal the
product of the Merger Payment Percentage multiplied by a
fraction the numerator of which shall be the number of days
remaining until the seventh (7th) anniversary of the Issue Date
and the denominator of which shall be two thousand five hundred
and twenty (2,520); provided that the Merger Adjustment
Percentage shall not be less than zero percent (0%). The "Merger
Payment Percentage" shall equal (A) fifty percent (50%) minus
(B) the product of (1) ten percent (10%) multiplied by (2) the
quotient (which shall not be less than zero percent (0%)) of (x)
the Acquisition Price in effect on the Business Day immediately
preceding the date of such consummation minus the Conversion
Price in effect on the Business Day immediately preceding the
date of such consummation divided by (y) the Conversion Price in
effect on the Business Day immediately preceding the date of
such consummation.
(ii) Notwithstanding anything contained herein or in
the Main Agreement to the contrary, the Company will not effect
any Business Combination unless the requirements of Section 11
of the Main Agreement have been met and unless, prior to the
consummation thereof, each Person (other than
21
the Company) that may be required to deliver any stock,
securities, cash or property upon conversion of Series C
Preferred Stock as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the
Holders of a Majority of the Series C 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 C 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 C
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 C
Preferred Stock. The Company shall return to the status of unauthorized and
undesignated shares of Preferred Stock each share of Series C 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 C 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 C Preferred Stock. Except as provided in
the Main Agreement, the Company will not issue any further shares of Series C
Preferred Stock. Except for redemptions pursuant to Section 6(B), the Company
shall have no right to redeem the shares of Series C Preferred Stock without the
consent of a Majority of the Holders.
22
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MICHIGAN DEPARTMENT OF LABOR AND ECONOMIC GROWTH
BUREAU OF COMMERCIAL SERVICES
- --------------------------------------------------------------------------------
Date Received
- -------------------------------------------------
Name Effective Date:
Douglas S. Parker c/o Dykema Gossett PLLC
- -------------------------------------------------
Address
39577 Woodward Avenue, Suite 300
- -------------------------------------------------
City State Zip Code
Bloomfield Hills MI 48304
- --------------------------------------------------------------------------------
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS ENTERED ABOVE.
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned
corporation executes the following Certificate:
1. The present name of the corporation is: Champion Enterprises, Inc.
2. The identification number assigned by the Bureau is: 419-343
3. Article III of the Articles of Incorporation is hereby amended to add a
Certificate of Resolution setting forth the rights and preferences of
Series B-2 Cumulative Convertible Preferred Stock of Champion Enterprises,
Inc.
SEE ATTACHED FOR AMENDED PROVISIONS TO ARTICLE III.
4. This amendment was duly authorized on the 1st day of March, 2004 by
unanimous consent of the Board of Directors of the Corporation pursuant to
and as permitted by Article III of the Corporation's Articles of
Incorporation as amended on May 7, 1997.
Signed this 1st day of March, 2004
By: /s/ John J. Collins, Jr.
--------------------------------------------
John J. Collins, Jr.
Its: Senior Vice President, General Counsel
and Secretary
Name of person remitting fees:
Dykema Gossett PLLC
Preparer's name and business telephone number:
Douglas S. Parker
248-203-0703
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
SERIES B-2 CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CHAMPION ENTERPRISES, INC.
CERTIFICATE OF RESOLUTION
Pursuant to Section 450.1302 of the Michigan Business Corporation Act,
CHAMPION ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of Michigan, hereby certifies that the following resolution was
duly adopted by the Board of Directors of the Company on March 1, 2004 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-2 Cumulative
Convertible Preferred Stock, no par value, which shall consist of Twelve
Thousand (12,000) 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-2 Cumulative
Convertible Preferred Stock shall be Twelve Thousand (12,000).
2. Definitions. Unless the context otherwise requires, when used herein
the following terms shall have the meaning indicated.
"Acquiring Person" means, in connection with any Business Combination,
the continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of all or substantially all
of the properties or assets of the Company, the corporation consolidating with
or merging into the Company in a consolidation or merger in connection with
which the Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, the entity or
group acting in concert acquiring or possessing the power to cast the majority
of the eligible votes at a meeting of the Company's shareholders at which
directors are elected, or, in the case of a capital reorganization or
reclassification, the Company.
"Acquisition Price" means (i) the Daily Market Price of the Common
Stock on the date immediately preceding the date on which a Business Combination
is consummated, or (ii) if a purchase, tender or exchange offer is made by the
Acquiring Person (or by any of its affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than fifty percent (50%)
of the outstanding shares of Common Stock, the greater of (x) the price
determined in accordance with the provisions of the foregoing clause (i) of this
sentence and (y)
the Daily Market Price on the date immediately preceding the acceptance of such
offer by the holders of more than fifty percent (50%) of the outstanding shares
of Common Stock.
"Articles" means the Restated Articles of Incorporation of the Company,
as amended.
"Average Market Price" means, with respect to any reference date, the
average of the Daily Market Prices of the Common Stock for the thirty (30)
Business Days ending on and including the third Business Day before such
reference date, but not greater than the average of the Daily Market Prices of
the Common Stock for the five (5) Business Days ending on and including the
twenty-eighth Business Day before such reference date.
"Board" means the Board of Directors of the Company.
"Business Combination" is defined in Section 6(F)(i).
"Business Day" means any day on which the Common Stock may be traded on
the NYSE, or if not admitted for trading on the NYSE, on any day other than a
Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
limited partnership, limited liability company or other equity interests of such
Person.
"Cash Redemption Closing Date" is defined in Section 6(B)(ii).
"Certificate of Rights and Preferences" means this Certificate of
Rights and Preferences of the Series B-2 Preferred Stock.
"Common Stock" means the Company's common stock, par value one dollar
($1.00) per share, and any Capital Stock for or into which such Common Stock
hereafter is exchanged, converted, reclassified or recapitalized by the Company
or pursuant to a Business Combination to which the Company is a party.
"Company" means Champion Enterprises, Inc., a Michigan corporation.
"Conversion Closing Date" is defined in Section 6(A)(i).
"Conversion Notice" is defined in Section 6(A)(i).
"Conversion Price" means the greater of (i) one hundred and twenty
percent (120%) of the Average Market Price calculated as of the Subsequent
Closing Date (as defined in the Main Agreement) and (ii) seven dollars and fifty
cents ($7.50), in each case subject to adjustment for stock splits,
recombinations, stock dividends and the like.
"Conversion Rate" means (i) the Stated Value of one share of Series B-2
Preferred Stock plus accrued and unpaid dividends divided by (ii) the Conversion
Price.
"Daily Market Price" means, on any date, the amount per share of the
Common Stock (or, for purposes of determining the Daily Market Price of the
common stock of an Acquiring Person or its Parent under Section 6(F), the common
stock of such Acquiring Person or such Parent), equal to (i) the daily
volume-weighted average price on the NYSE or, if no such sale takes place on
such date, the average of the closing bid and asked prices on the NYSE thereof
on such date, in each case as reported by Bloomberg, L.P. (or by such other
Person as the Holder and the Company may agree), or (ii) if such Common Stock or
common stock of an Acquiring Person or its Parent is not then listed or admitted
to trading on the NYSE, the higher of (x) the book value per share thereof as
determined by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company as of the last day of any
month ending within sixty (60) days preceding the date as of which the
determination is to be made or (y) the fair value per share thereof determined
in good faith by the Board of Directors of the Company as of a date which is no
more than ten (10) Business Days before and excluding the date as of which the
determination is to be made.
"Dividend Payment Date" is defined in Section 3(A).
"Dividend Period" is defined in Section 3(A).
"Dividend Rate" means a rate equal to five percent (5%) per annum times
the Stated Value subject to Sections 3(E) and 3(F).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fletcher" means Fletcher International, Ltd. a company organized under
the laws of Bermuda, together with its successors.
"Holder" shall mean a holder of Series B-2 Preferred Stock.
"Issue Date" means with respect to any shares of Series B-2 Preferred
Stock the original date of issuance of such shares of Series B-2 Preferred
Stock.
"Junior Securities" means Capital Stock that, with respect to dividends
and distributions upon Liquidation, ranks junior to the Series B Preferred
Shares (as defined in the Main Agreement), including but not limited to Common
Stock, Series A Preferred Stock, and any other class or series of Capital Stock
issued by the Company or any Subsidiary of the Company on or after the date of
the Main Agreement, but excluding any Parity Securities and Senior Securities
issued (i) to Fletcher or its authorized assignees under the Main Agreement,
(ii) with the approval of the Holders of a Majority of the Series B-2 Preferred
Stock or (iii) upon the conversion, redemption or exercise of securities
described in clause (i) or (ii).
"Liquidation" means the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided, however, that a
consolidation, merger or share exchange shall not be deemed a Liquidation, nor
shall a sale, assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets, which does not involve a
distribution by the Company of cash or other property to the holders of Common
Stock, be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 4.
"Main Agreement" means the Agreement dated as of June 29, 2001, between
the Company and Fletcher pursuant to which twenty thousand (20,000) shares of
Series B-1 Preferred Stock are to be issued by the Company, including all
schedules and exhibits thereto.
"Majority of the Series B-2 Preferred Stock" means more than fifty
percent (50%) of the then outstanding shares of Series B-2 Preferred Stock.
"NYSE" shall have the meaning set forth in the Main Agreement.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holders of the Series
B-2 Preferred Stock at any time shall be entitled to receive, or shall have
received, upon conversion or redemption of the Series B-2 Preferred Stock in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities.
"Parent" means, as to any Acquiring Person, any corporation that (i)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (ii) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K (if the Parent is required to file such a report) and (iii) is not
itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).
"Parity Securities" means any class or series of Capital Stock that,
with respect to dividends or distributions upon Liquidation, is pari passu with
the Series B-2 Preferred Stock including the Series C Preferred Stock and the
Series B Preferred Shares (as defined in the Main Agreement).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock" means the Company's preferred stock authorized
pursuant to the provisions of the Articles.
"Record Date" is defined in Section 3(A).
"Redemption Amount" means a dollar amount for each share of the
then-outstanding Series B-2 Preferred Stock redeemed by such Holder equal to the
Stated Value per share plus an amount equal to all accrued but unpaid dividends
thereon, whether or not earnings are available in respect of such dividends or
such dividends have been declared, to and including the date full payment is
tendered to the Holders with respect to such redemption.
"Redemption Notice" is defined in Section 6(B)(i).
"Redemption Notice Date" is defined in Section 6(B)(i).
"Registered Common Stock" means Common Stock that has been registered
under the Securities Act and is freely tradable.
"Restatement" means that Champion adversely restates net income or
shareholders' equity, in any material respect, in any portion of its financial
statements as included in a Form 10-K or Form 10-Q filed with the Securities and
Exchange Commission in the form of an amendment thereto, press release, Form 8-K
or any other method except as is required as a result of a change occurring
after the date of the Main Agreement in (i) applicable law or (ii) generally
accepted accounting principles promulgated by the Financial Accounting Standards
Board or the Securities and Exchange Commission, which change is implemented by
the Company in the manner and at the time prescribed by such law or such
generally accepted accounting principle.
"Restatement Conversion Price" means one hundred twenty percent (120%)
of the Average Market Price calculated on the date ninety (90) days after and
excluding the Restatement Date.
"Restatement Date" means the most recent date on which a Restatement
occurs.
"Restatement Notice" means a written notice from Champion to Fletcher,
(i) stating the Restatement Date and (ii) including the documents in which the
Restatement was publicly disclosed.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"Senior Securities" means any class or series of Capital Stock that,
with respect to dividends or distributions upon Liquidation, ranks senior to the
Series B-2 Preferred Stock.
"Series A Preferred Stock" means the Series A Preferred Stock of the
Company, the powers, designations, preferences and relative, participating,
optional and other special rights of which are specified in the Articles.
"Series B-1 Preferred Stock" means the Series B-1 Cumulative
Convertible Preferred Stock of the Company or successor as contemplated by
Section 6(F)(ii).
"Series B-2 Preferred Stock" means the Series B-2 Cumulative
Convertible Preferred Stock of the Company or successor as contemplated by
Section 6(F)(ii).
"Series C Preferred Stock" means the Series C Cumulative Convertible
Preferred Stock of the Company or successor.
"Series C Preferred Stock Agreement" means the Agreement by and between
the Company and Fletcher International, Ltd. dated as of March 29, 2002 relating
to the sale of Series C Preferred Stock and a warrant.
"Stated Value" is an amount equal to one thousand dollars ($1,000) per
share of Series B-2 Preferred Stock.
"Stock Redemption Closing Date" is defined in Section 6(B)(iii).
"Subsidiary" of a Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is at
the time of determination, directly or indirectly, owned by such Person or by
one or more Subsidiaries of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has a least a
majority ownership interest.
The foregoing definitions will be equally applicable to both the
singular and plural forms of the defined terms.
3. Dividends and Distributions.
(A) Holders shall be entitled to receive out of the assets of
the Company legally available for that purpose, dividends at the
Dividend Rate to be paid in accordance with the terms of this Section
3. Such dividends shall be fully cumulative from the Issue Date, shall
accumulate regardless of whether the Company earns a profit and shall
be payable in arrears, when and as declared by the Board, on March 31,
June 30, September 30 and December 31 of each year (each such date
being herein referred to as a "Dividend Payment Date"), commencing on
September 30, 2001. The period from the Issue Date to September 30,
2001, and each quarterly period between consecutive Dividend Payment
Dates shall hereinafter be referred to as a "Dividend Period." The
dividend for any Dividend Period for any share of Series B-2 Preferred
Stock that is not outstanding on every day of the Dividend Period shall
be prorated based on the number of days such share was outstanding
during the period. Each such dividend shall be paid to the Holders of
record as their names appear on the share register of the Company on
the corresponding Record Date. As used above, the term "Record Date"
means, with respect to the dividend payable on March 31, June 30,
September 30 and December 31, respectively, of each year, the preceding
March 15, June 15, September 15 and December 15, or such other record
date designated by the Board with respect to the dividend payable on
such respective Dividend Payment Date not exceeding thirty (30) days
preceding such Dividend Payment Date. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of record on
a date designated by the Board, not exceeding thirty (30) days
preceding the payment date thereof, as may be fixed by the Board. For
purposes of determining the amount of dividends accrued as of the first
Dividend Payment Date and as of any date that is not a Dividend Payment
Date, such amount shall be calculated on the basis of the Dividend Rate
for the actual number of days elapsed from and including the Issue Date
(in case of the first Dividend Payment Date and any date prior to the
first Dividend Payment Date) or the last preceding Dividend Payment
Date (in case of any other date) to the date as of which such
determination is to be made, based on a three hundred sixty (360) day
year.
(B) Dividends payable on the Series B-2 Preferred Stock may be
paid, at the option of the Company, either in cash or by the issuance
of Registered Common Stock, provided, however, that the Company's right
to pay dividends on any Dividend Payment
Date by the issuance of Registered Common Stock shall continue only so
long as the number of shares of Common Stock issued and issuable under
the Main Agreement (including one year of dividends from such Dividend
Payment Date, assuming that all such dividends will be paid in shares
of Common Stock as they accrue) and all previously issued and issuable
shares of Common Stock and all issued and issuable but unconverted
Series B Preferred Shares (as defined in the Main Agreement) (on an
as-converted basis as of that date) does not exceed seventeen and
one-half percent (17.5%) of the Original Number (as defined in the Main
Agreement), or, if such number of shares exceeds seventeen and one-half
percent (17.5%) of the Original Number and does not exceed nineteen and
ninety-nine one-hundredths percent (19.99%) of the Original Number, the
Company has notified its shareholders of a shareholder's meeting for
the purpose of voting on a Required Consent (as defined in the Main
Agreement) in accordance with the Main Agreement and has used and is
using its best efforts to obtain the Required Consent. Although it is
the intent and view of the Company that the issuance of Common Stock
with respect to Series B Preferred Shares (as defined in the Main
Agreement) is to be treated as independent of any issuance of Common
Stock with respect to Series C Preferred Stock, in the event any such
issuances of Common Stock are deemed to be related pursuant to the
listing requirements and rules of the NYSE by the NYSE, the provisions
of this Section 3(B) (including, but not limited to, the obligation to
obtain the Required Consent) shall be deemed to apply to the number of
shares of Common Stock in the aggregate issued and issuable with
respect to both the Series B Preferred Shares (as defined in the Main
Agreement) and the Series C Preferred Stock. Subject to the foregoing,
payments on any Dividend Payment Date shall be made in Registered
Common Stock unless the Company notifies the Holders in writing of its
intention to pay cash on or before, but no more than fifteen (15) days
before, and including, the immediately preceding Dividend Payment Date.
The number of shares of Registered Common Stock to be issued shall be
determined by dividing the cash amount of the dividend otherwise
payable by the Average Market Price calculated as of such Dividend
Payment Date; provided, however, if the Company shall combine,
subdivide or reclassify its Common Stock, or shall declare any dividend
payable in shares of its Common Stock, or shall take any other action
of a similar nature affecting such shares, the number of shares of
Registered Common Stock to be issued shall be adjusted to the extent
appropriate to reflect such event, including appropriate adjustments to
account for any such event that occurs during the period used for
calculating such Average Market Price. The number of shares of
Registered Common Stock to be issued as a dividend shall be rounded up
to the nearest whole share after aggregating all shares of Series B-2
Preferred Stock owned by a Holder.
(C) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on
such date are paid, such dividends shall cumulate and shall accrue
additional dividends to and including the date of payment thereof at
the Dividend Rate then in effect, compounded quarterly on each
subsequent Dividend Payment Date. Unpaid dividends for any period less
than a full Dividend Period shall cumulate on a day to day basis and
shall be computed on the basis of a three hundred sixty (360) day year.
(D) So long as any shares of the Series B-2 Preferred Stock
shall be outstanding, (i) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Junior
Securities, (ii) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Parity
Securities, except for dividends paid to the Company or any of its
wholly-owned Subsidiaries and dividends paid on the Series B Preferred
Shares (as defined in the Main Agreement) and the dividends paid on the
Series C Preferred Stock and (iii) the Company shall not and shall not
allow its Subsidiaries to repurchase, redeem or otherwise acquire for
value or set aside any cash or property for the repurchase or
redemption of any Junior Securities or Parity Securities, unless in
each such case (x) all dividends to which the Holders of the Series B-2
Preferred Stock shall have been entitled to receive for all previous
Dividend Periods shall have been paid and dividends for the subsequent
four Dividend Periods shall have been designated and set aside and (y)
a dividend (including the amount of any dividends paid pursuant to the
provisions of Section 3(A)) is paid with respect to all outstanding
shares of Series B-2 Preferred Stock in an amount for each such share
of Series B-2 Preferred Stock equal to the aggregate amount of such
dividend for the number of shares of Common Stock equal to (i) the
Stated Value plus any accrued but unpaid dividends as of the record
date of such dividend divided by (ii) the Conversion Price (or in the
event of a Restatement, the Restatement Conversion Price, if the
Restatement Conversion Price is lower than the then-current Conversion
Price) on such record date (or, if such record date is not a Business
Day, the last Business Day preceding such record date).
(E) Whenever, at any time or times, dividends payable on any
Series B Preferred Share (as defined in the Main Agreement) or any
share of Series C Preferred Stock shall be in arrears in an aggregate
amount greater than two (2) quarterly dividends, the Dividend Rate
shall mean a rate equal to fifteen percent (15%) per annum times the
Stated Value until such date that all accrued and unpaid dividends
shall have been declared and paid in full.
(F) Whenever, at any time or times (i) an Issuance Blockage
(as defined in the Main Agreement or in the Series C Preferred Stock
Agreement) shall exist at any time ninety (90) calendar days after and
excluding the date of the first Excess Rights Notice (as defined in the
Main Agreement or in the Series C Preferred Stock Agreement) or (ii)
the Company shall fail to redeem any Series B Preferred Shares (as
defined in the Main Agreement) or any shares of Series C Preferred
Stock for cash by the date it is obligated to do so under Section 6(B)
hereof or under Section 6(B) of any Subsequent Certificates of Rights
and Preferences (as defined in the Main Agreement) or the Certificate
of Rights and Preferences of the Series C Preferred and such failure to
pay cash is ongoing, then (x) the Dividend Rate shall mean a rate equal
to fifteen percent (15%) per annum times the Stated Value until such
date as the circumstances described in clause (i) and (ii) no longer
exist and (y) all dividends payable with respect to such periods shall
be paid in additional shares of Series B-2 Preferred Stock.
4. Liquidation Preference. In the event of any Liquidation,
after payment or provision for payment by the Company of the debts and
other liabilities of the Company and the liquidation preference of any
Senior Securities that rank senior to the Series B-2 Preferred Stock
with respect to distributions upon Liquidation, each Holder shall be
entitled to receive an amount in cash for each share of the then
outstanding Series B-2 Preferred Stock held by such Holder equal to the
greater of (a) the Stated Value per share plus an amount equal to all
accrued but unpaid dividends thereon, whether or not earnings are
available in respect of such dividends or such dividends have been
declared, to and including the date full payment is tendered to the
Holders with respect to such Liquidation and no more and (b) the amount
the Holders would have received if the Holders had converted all
outstanding shares of Series B-2 Preferred Stock into Common Stock in
accordance with the provisions of Section 6(A) hereof as of the
Business Day immediately preceding the date of such Liquidation (such
greater amount being referred to herein as the "Liquidation
Preference"), before any distribution shall be made to the holders of
any Junior Securities (and any Senior Securities or Parity Securities
that, with respect to distributions upon Liquidation, rank junior to
the Series B-2 Preferred Stock) upon the Liquidation of the Company. In
case the assets of the Company available for payment to the Holders are
insufficient to pay the full Liquidation Preference on all outstanding
shares of the Series B-2 Preferred Stock and all outstanding shares of
Parity Securities and Senior Securities that, with respect to
distributions upon Liquidation, are pari passu with the Series B-2
Preferred Stock in the amounts to which the holders of such shares are
entitled, then the entire assets of the Company available for payment
to the Holders and to the holders of such Parity Securities and Senior
Securities shall be distributed ratably among the Holders of the Series
B-2 Preferred Stock and the holders of such Parity Securities and
Senior Securities, based upon the aggregate amount due on such shares
upon Liquidation. Written notice of any Liquidation of the Company,
stating a payment date and the place where the distributable amounts
shall be payable, shall be given by facsimile and overnight delivery
not less than ten (10) days prior to the payment date stated therein,
to the Holders of record of the Series B-2 Preferred Stock, if any, at
their respective addresses as the same shall appear on the books of the
Company.
5. Voting Rights. The Holders shall have the following voting
rights with respect to the Series B-2 Preferred Stock:
(A) Each share of Series B-2 Preferred Stock shall
entitle the holder thereof to the voting rights specified in
Section 5(B) and no other voting rights except as required by
law.
(B) The consent of the Holders of at least a Majority
of the Series B-2 Preferred Stock, voting separately as a
single class with one vote per share, in person or by proxy,
either in writing without a meeting or at an annual or a
special meeting of such Holders called for the purpose, shall
be necessary to:
(i) amend, alter or repeal any of the
provisions of the Articles, including the Certificate
of Rights and Preferences, or Bylaws of the Company
so as to:
A. change any of the rights,
preferences or privileges of Holders.
Without limiting the generality of the
preceding sentence, such change includes any
action that would:
1. Reduce the Dividend
Rate on the Series B-2 Preferred
Stock, or make such dividends
non-cumulative, or defer the date
from which dividends will accrue,
or cancel accrued and unpaid
dividends, or change the relative
seniority rights of the holders of
Series B-2 Preferred Stock as to
the payment of dividends in
relation to the holders of any
other capital stock of the Company;
2. Reduce the amount
payable to the holders of the
Series B-2 Preferred Stock upon the
voluntary or involuntary
liquidation, dissolution, or
winding up of the Company, or
change the relative seniority of
the liquidation preferences of the
holders of the Series B-2 Preferred
Stock to the rights upon
liquidation of the holders of any
other capital stock of the Company;
3. Make the Series B-2
Preferred Stock redeemable at the
option of the Company, except as
provided in Section 6 hereof.
B. authorize, create or issue any
shares of Parity Securities or Senior
Securities (or amend the provisions of any
existing class of Capital Stock to make such
class of Capital Stock a class of Parity
Securities or Senior Securities) on any date
before and excluding January 4, 2003, when
there shall be issued and outstanding Series
B Preferred Shares (as defined in the Main
Agreement) with an aggregate Redemption
Amount of at least twenty million dollars
($20,000,000).
(ii) permit any Subsidiary of the Company to
issue or sell, or obligate itself to issue or sell,
except to the Company or any wholly owned Subsidiary,
any Capital Stock of such Subsidiary; or
(iii) increase or decrease (other than by
redemption or conversion) the total number of
authorized shares of Preferred Stock or amend any
provisions of any Parity Securities or Senior
Securities so as to make such Parity Securities or
Senior Securities redeemable by the Company.
(iv) Notwithstanding the foregoing, so long
as the Company complies with the requirements of
Section 6(F) of this Certificate of Rights and
Preferences and Section 11 of the Main Agreement,
with respect to a Business Combination, such Business
Combination shall not be deemed to alter or change
the powers, preferences or rights of the Series B-2
Preferred Stock in any manner.
6. Conversion and Redemption.
(A) Procedure for Conversion.
(i) Shares of Series B-2 Preferred Stock are
convertible into Registered Common Stock (or, at the
sole option of the Holder, unregistered Common Stock)
at the Conversion Rate per share (in the event of a
Restatement, for purposes of calculating the
Conversion Rate, the Conversion Price shall equal the
Restatement Conversion Price, if the Restatement
Conversion Price is lower than the then-current
Conversion Price) (i) at the option of the Holder
thereof at any time, from time to time, in whole or
in part, and (ii) at the option of the Company any
time on or after July 3, 2006, for all but not less
than all of the shares of Series B-2 Preferred Stock
if (x) the Daily Market Price exceeds two hundred
percent (200%) of the Conversion Price on at least
twenty-five (25) Business Days during a period of
thirty (30) consecutive Business Days and (y) the
Company has sufficient Registered Common Stock to
deliver to the Holder or Holders upon the closing of
such conversion. The Conversion of shares of Series
B-2 Preferred Stock at the option of the Holder may
be effected by delivering a duly executed written
Preferred Stock Conversion Notice, in form and
substance as attached to the Main Agreement as Annex
G (the "Conversion Notice"), by facsimile, mail or
overnight courier delivery, to the Company's address
set forth in Section 20 of the Main Agreement. The
closing of such exercise shall take place (a) on the
second Business Day following and excluding the date
the Conversion Notice is delivered, (b) such later
date as the conditions set forth in Section 6(A)(ii)
have been waived or satisfied or (c) any other date
upon which the exercising Holder and the Company
mutually agree (the "Conversion Closing Date").
Conversion of shares of Series B-2 Preferred Stock at
the option of the Company may be effected by
delivering a duly executed written notice to all
Holders substantially in the form attached as Annex J
to the Main Agreement (the "Five Year Conversion
Notice"), by facsimile, mail or overnight courier
delivery, to the Holder's address set forth in
Section 20 of the Main Agreement; the Conversion
Closing Date shall be (a) the twenty-fifth Business
Day after and excluding the date the Five Year
Conversion Notice is delivered to the Holders, (b)
such later date as the conditions set forth in
Section 6(A)(ii) have been waived or satisfied or (c)
any other date upon which the Company and the Holders
mutually agree; such conversion shall apply to only
those shares of Series B-2 Preferred Stock still
outstanding on such Conversion Closing Date.
(ii) It shall be a condition of the
converting Holder's obligation to close that each of
the following are satisfied, unless waived by such
Holder:
A. (1) the representations and
warranties made by the Company in the Main
Agreement shall be true and correct as of
the Conversion Closing Date, except those
representations and warranties that address
matters only as of a particular date, which
shall be true and correct as of such date;
(2) the Company shall have complied fully
with all of the covenants and agreements in
the Main Agreement; (3) all shares to be
issued upon such conversion shall be
registered under the Securities Act, shall
be freely tradable and shall be duly listed
and admitted to trading on the New York
Stock Exchange, Nasdaq National Market or
American Stock Exchange (unless, with
respect to clause (3) only, the Holder
expressly consents in
writing to the issuance of unregistered
Common Stock); and such Holder shall have
received a certificate of the Chief
Executive Officer or the Chief Financial
Officer of the Company dated such date and
to the effect of clauses (1), (2) and (3).
B. On the Conversion Closing Date,
the Company shall have delivered to the
Holder an opinion of Dykema Gossett PLLC (or
such other counsel reasonably satisfactory
to such Holder) reasonably satisfactory to
such Holder, dated the date of delivery,
confirming in substance the matters covered
in paragraphs (a), (b), (c), (d), (e), (f)
and subsection (i) of (g) of Section 4 of
the Main Agreement and to the effect that
the offer and sale of such Registered Common
Stock to such Holder hereunder do not
require registration under the Securities
Act.
C. As of the Conversion Closing
Date, the Company shall have delivered to
the Holder all Restatement Notices required
to be delivered following a Restatement.
The Company shall use its commercially reasonable efforts to cause each
of the foregoing conditions to be satisfied at the earliest possible date. If
such conditions are not satisfied or waived prior to the third Business Day
following and excluding the date the Conversion Notice is delivered, then the
Holder may, at its sole option, and at any time, withdraw the Conversion Notice
by written notice to the Company regardless of whether such conditions have been
satisfied or waived as of the withdrawal date and, after such withdrawal, shall
have no further obligations with respect to such Conversion Notice and may
submit a Conversion Notice with respect to the shares referenced in the
withdrawn Conversion Notice at any time.
(iii) Each conversion of Series B-2
Preferred Stock shall be deemed to have been effected
immediately prior to the close of business on the
Business Day on which the Conversion Notice is
delivered as provided in Section 6(A)(i), and at such
time the Person or Persons in whose name or names any
certificate or certificates for shares of Common
Stock (or Other Securities) shall be issuable upon
such conversion as provided in Section 6(A)(iv) shall
be deemed to have become the holder or holders of
record thereof. The foregoing notwithstanding, such
conversion shall not be deemed effective if and as of
the date that the Holder delivers written notice of
withdrawal to the Company as set forth in Section
6(A)(ii) above.
(iv) On the Conversion Closing Date, the
Holder shall surrender the certificate representing
the shares of Series B-2 Preferred Stock to be
converted to the Company at the address set forth for
notices to the Company in Section 20 of the Main
Agreement, and such Holder shall thereupon be
entitled to receive the number of duly authorized,
validly issued, fully paid and nonassessable shares
of Registered Common Stock (or Other Securities or,
if appropriate, unregistered Common Stock) to which
such Holder is entitled upon such conversion.
(v) On the Conversion Closing Date, the
Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder
whose Series B-2 Preferred Stock is being converted
via book-entry transfer (if available to the
Company), or if such Holder shall direct, at such
address specified by the Holder via reputable
overnight courier, one or more certificates for the
number of duly authorized, validly issued, fully paid
and nonassessable shares of Registered Common Stock
(or Other Securities or, if appropriate, unregistered
Common Stock) to which such Holder shall be entitled
upon such conversion, plus, in lieu of any fractional
share to which such Holder would otherwise be
entitled, cash in an amount equal to the same
fraction of the Daily Market Price per share on the
Business Day immediately preceding the date of such
conversion, and, in case such conversion is for only
part of the shares represented by the certificate
surrendered, at such address specified by the Holder
via reputable overnight courier, a new Preferred
Stock certificate of like tenor, calling in the
aggregate on the face or faces thereof for the number
of shares of Series B-2 Preferred Stock which have
not been converted into Registered Common Stock (or
Other Securities or, if appropriate, unregistered
Common Stock) upon such conversion.
(vi) The Company shall deliver a Restatement
Notice to the Holder no later than two (2) days after
and excluding each Restatement Date.
(B) Procedure for Redemption.
(i) Redemption of the Series B-2 Preferred
Stock shall occur under any of the following
circumstances:
A. At any time on or after July 3,
2003, a Holder of Series B-2 Preferred Stock
may require the Company to redeem any or all
shares of Series B-2 Preferred Stock held by
such Holder by delivering an optional
redemption notice to the Company
substantially in the form attached as Annex
C to the Main Agreement (a "Redemption
Notice"). The date such Redemption Notice is
delivered shall be the "Redemption Notice
Date". All such redemptions shall be made
for shares of Registered Common Stock
(unless the Holder expressly consents in
writing to the issuance of unregistered
Common Stock) pursuant to Section 6(B)(iii),
unless the Company satisfies the conditions
for cash redemption set forth in Section
6(B)(ii) and elects to redeem such shares
for cash. The Holder may not redeem Series B
Preferred Shares (as defined in the Main
Agreement) and Series C Preferred Stock with
an aggregate Redemption Amount greater than
thirty million dollars ($30 million) in any
twelve-month period. In the event that the
aggregate value of the Common Stock to be
received by a Holder pursuant to this
Section 6(B)(i)(A) is less than the amount
such Holder would have received upon
redemption if such Holder had converted the
Series B-2 Preferred Stock subject to the
Redemption Notice into Common Stock in
accordance with the provisions of Section
6(A) hereof as of the Business Day
immediately preceding the Redemption
Notice Date (as if the Conversion Notice had
been delivered on such date and the
Conversion Closing Date had occurred on such
date), then such Holder shall receive Common
Stock with an aggregate value equivalent to
such amount in lieu of the amount of Common
Stock that would otherwise be issuable
pursuant to this Section 6(B)(i)(A).
B. On July 3, 2008, the Company
shall redeem all of the Series B-2 Preferred
Stock held by all Holders. All such
redemptions shall be made for shares of
Registered Common Stock (unless the Holder
expressly consents in writing to the
issuance of unregistered Common Stock)
pursuant to Section 6(B)(iii), unless the
Company satisfies the conditions for cash
redemption set forth in Section 6(B)(ii) and
elects to redeem such shares for cash. In
the event that the aggregate value of the
Common Stock and cash, if any, to be
received by a Holder pursuant to this
Section 6(B)(i)(B) is less than the amount
such Holder would have received upon
redemption if such Holder had converted all
of such Holder's Series B-2 Preferred Stock
into Common Stock in accordance with the
provisions of Section 6(A) hereof as of the
Business Day immediately preceding July 3,
2008 (as if the Conversion Notice had been
delivered on such date and the Conversion
Closing Date had occurred on such date),
then such Holder shall receive Common Stock
and cash, if any, pursuant to Section
6(B)(ii) or Section 6(B)(iii), as the case
may be, with an aggregate value equivalent
to such amount in lieu of the amount of
Common Stock and cash, if any, that would
otherwise be issuable pursuant to this
Section 6(B)(i)(B).
(ii) If the Company is permitted under the
terms of its then outstanding credit facilities and
elects in a writing substantially in the form
attached as Annex D to the Main Agreement delivered
to the redeeming Holder on or before the fifth
Business Day following and excluding the date of the
Redemption Notice (or, in the case of redemption
pursuant to Section 6(B)(i)(B), by May 29, 2008 (the
"Seven Year Redemption Reference Date")) (each such
date, a "Redemption Reference Date") to redeem such
shares for cash, then (a) such shares shall be
redeemed for cash, (b) the closing of such redemption
shall take place on the second Business Day after and
excluding the end of the calendar quarter in which
the Redemption Reference Date occurs, provided that
if the Redemption Reference Date is less than thirty
(30) days before and excluding the end of such
calendar quarter, then such closing shall occur on
the thirtieth (30th) day after and excluding the
Redemption Reference Date, unless otherwise agreed in
writing by the Company and the redeeming Holder (or,
in the case of a cash redemption pursuant to Section
6(B)(i)(B), by July 3, 2008) (each such date, a "Cash
Redemption Closing Date") and (c) unless otherwise
agreed in writing by the Holder and the Company, all
future redemptions of Series B-2 Preferred Stock
shall be for cash. At such closing, the Holder shall
surrender the certificate representing the shares of
Series B-2 Preferred Stock to be redeemed to the
Company at the address set forth for notices to the
Company in Section 20 of the Main Agreement, and the
Company shall deliver to the Holder via wire transfer
of
immediately available U.S. funds cash equal to the
aggregate Redemption Amount of such shares calculated
as of the Cash Redemption Closing Date. In the case
of a cash redemption pursuant to Section 6(B)(i)(B),
if the Company acting in good faith is unable to
tender cash as provided in this Section 6(B)(ii) on
or before the Cash Redemption Closing Date and
certifies such circumstance in a writing signed by
the Chief Executive Officer and the Chief Financial
Officer of the Company that is delivered to the
Holder before the Cash Redemption Closing Date, then
(x) (without limiting any other available remedies,
including without limitation under Section 3(F) or at
law or in equity) the Company may redeem such shares
for Registered Common Stock as set forth in Section
6(B)(iii), (y) the Stock Redemption Closing Date
shall be the thirty-fifth (35th) calendar day after
and excluding the date on which the Holder receives
such notice (provided that the Holder may, by written
notice to the Company, accelerate this date to the
second (2nd) Business Day after and excluding the
date the Company receives notice from such Holder),
and (z) the rights of the Holder under this
Certificate of Rights and Preferences (other than the
accrual of dividends under Section 3 and the right to
receive consideration for redemption as set forth
herein) shall cease as of July 3, 2008 (provided that
if the Company fails to redeem such shares on the
Stock Redemption Closing Date provided above, then
all such rights shall be reinstated in full). In the
case of redemptions pursuant to Section 6(B)(i)(A)
only, if the Company fails to tender cash as provided
in this Section 6(B)(ii) on or before the Cash
Redemption Closing Date, then the Holder may, at its
sole option (and without limiting any other available
remedies, including without limitation under Section
3(F) or at law or in equity) elect to (1) withdraw
the Redemption Notice by written notice to the
Company and, after such withdrawal, shall have no
further obligations with respect to such Redemption
Notice and may submit a Redemption Notice with
respect to the shares referenced in the withdrawn
Redemption Notice at any time or (2) receive shares
of Registered Common Stock as set forth in Section
6(B)(iii), in which case the Stock Redemption Closing
Date shall be the second Business Day after and
excluding the date on which the Holder notifies the
Company in writing of such election. In the case of
redemptions pursuant to Section 6(B)(i)(B) only, if
the Company fails to tender cash as provided in this
Section 6(B)(ii) on or before the Cash Redemption
Closing Date, then the Holder may, at its sole option
(and without limiting any other available remedies,
including without limitation under Section 3(F) or at
law or in equity) elect to receive shares of
Registered Common Stock as set forth in Section
6(B)(iii), in which case the Stock Redemption Closing
Date shall be the second Business Day after and
excluding the date on which the Holder notifies the
Company in writing of such election. If such
redemption is for only part of the shares represented
by the certificate surrendered, the Company shall
send a new Preferred Stock certificate of like tenor,
calling in the aggregate on the face or faces thereof
for the number of shares of Series B-2 Preferred
Stock which have not been redeemed via reputable
overnight courier to such address specified by the
Holder.
(iii) If the Company elects in a writing
substantially in the form attached as Annex D to the
Main Agreement delivered to the redeeming Holder
on or before the fifth Business Day following and
excluding the Redemption Notice Date to redeem such
shares of Series B-2 Preferred Stock for shares of
Registered Common Stock, or if the Company fails to
timely elect cash redemption as set forth in Section
6(B)(ii), then (a) all such shares shall be redeemed
for Registered Common Stock (unless the Holder
expressly consents in writing to the issuance of
unregistered Common Stock), and (b) the closing of
such redemption shall take place on the earlier of
(1) the second Business Day after and excluding the
delivery of the Company's election and (2) the
seventh Business Day after and excluding the
Redemption Notice Date, or on such other date as the
Company and such Holder agree in writing (the "Stock
Redemption Closing Date") and (c) unless otherwise
agreed in writing by the Holder and the Company, all
future redemptions of Series B-2 Preferred Stock
shall be for Registered Common Stock. At such
closing, the Holder shall surrender the certificate
representing the shares of Series B-2 Preferred Stock
to be redeemed to the Company at the address set
forth for notices to the Company in Section 20 of the
Main Agreement and the Company at its expense
(including the payment by it of any applicable issue
taxes) shall cause to be issued in the name of and
delivered to the Holder whose Series B-2 Preferred
Stock is being redeemed via book-entry transfer (if
available to the Company), the number of duly
authorized, validly issued, fully paid and
nonassessable shares of Registered Common Stock
(unless the Holder expressly consents in writing to
the issuance of unregistered Common Stock in which
case all references to Registered Common Stock in
this Section 6(B)(iii) shall be to unregistered
Common Stock, but only with respect to the shares of
Common Stock subject to such Redemption Notice) to
which such Holder shall be entitled upon such
redemption, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash
in an amount equal to the same fraction of the Daily
Market Price per share on the Business Day
immediately preceding the Stock Redemption Closing
Date, and, in case such redemption is for only part
of the shares represented by the certificate
surrendered, at such address specified by the Holder
via reputable overnight courier, a new Preferred
Stock certificate of like tenor, calling in the
aggregate on the face thereof for the number of
shares of Series B-2 Preferred Stock which have not
been redeemed. The number of shares of Registered
Common Stock to be delivered at such closing shall
equal the quotient of (x) the aggregate Redemption
Amount of the shares of Series B-2 Preferred Stock
being redeemed (calculated as of the Stock Redemption
Closing Date) divided by (y) the greater of (1) the
lesser of (A) the Average Market Price calculated as
of the Redemption Notice Date, (B) the Daily Market
Price on the date the Company delivers its election
to redeem such shares for Registered Common Stock and
(C) if the Company fails to deliver an election to
redeem such shares for Registered Common Stock by the
fifth Business Day following and excluding the
Redemption Notice Date, the Daily Market Price on the
fifth Business Day following and excluding the
Redemption Notice Date and (2) in the case of
redemptions pursuant to Section 6(B)(i)(A) only (and
not in case of redemption pursuant to Section
6(B)(i)(B)), an amount equal to the product of (a)
the quotient of six dollars divided by eight dollars
and fifty cents ($6.00/$8.50) times (b) the
Main Agreement Date Price (as defined in the
Certificate of Rights and Preferences of Series C
Cumulative Convertible Preferred Stock). It shall be
a condition of the redeeming Holder's obligation to
close that each of the following are satisfied,
unless waived by such Holder:
A. (1) the representations and
warranties made by the Company in the Main
Agreement shall be true and correct as of
the Stock Redemption Closing Date, except
that those representations and warranties
which only address matters on a particular
date shall only be true and correct as of
such date; (2) the Company shall have
complied fully with all of the covenants and
agreements in the Main Agreement; (3) all
shares to be issued upon such redemption
shall be registered under the Securities
Act, shall be freely tradable and shall be
duly listed and admitted to trading on the
New York Stock Exchange, Nasdaq National
Market or American Stock Exchange (unless,
with respect to clause (3) only, the Holder
expressly consents in writing to the
issuance of unregistered Common Stock); and
such Holder shall have received a
certificate of the Chief Executive Officer
or the Chief Financial Officer of the
Company dated such date and to the effect of
clauses (1), (2) and (3).
B. On the Stock Redemption Closing
Date, the Company shall have delivered to
the Holder an opinion of Dykema Gossett PLLC
(or such other counsel reasonably
satisfactory to such Holder) reasonably
satisfactory to such Holder, dated the date
of delivery, confirming in substance the
matters covered in paragraphs (a), (b), (c),
(d), (e), (f) and subsection (i) of (g) of
Section 4 of the Main Agreement and to the
effect that the offer and sale of such
Registered Common Stock to such Holder
hereunder do not require registration under
the Securities Act.
C. There shall not exist an
Issuance Blockage (as defined in the Main
Agreement) and the issuance of Common Stock
shall not cause the Company to exceed the
Maximum Number (as defined in the Main
Agreement).
The Company shall use its best efforts to cause each
of the foregoing conditions to be satisfied at the
earliest possible date. If such conditions are not
satisfied or waived on or before the Stock Redemption
Closing Date, then the Holder may, at its sole
option, and at any time, (1) withdraw the Redemption
Notice by written notice to the Company regardless of
whether such conditions have been satisfied or waived
as of the withdrawal date and, after such withdrawal,
shall have no further obligations with respect to
such Redemption Notice and may submit a Redemption
Notice with respect to the shares referenced in the
withdrawn Redemption Notice at any time or (2) elect
cash redemption as set forth in Section 6(B)(ii), in
which case, the Cash Redemption Closing Date shall be
the second Business Day after and excluding the date
on which the Holder notifies the Company in writing
of its election for cash redemption to the extent
permitted under the terms of the Company's credit
facilities set forth in Champion's SEC
Filings (as defined in the Main Agreement) made on or
before the date of the Main Agreement and excluding
any subsequent amendments or extensions thereto.
(C) The Company shall at all times reserve for
issuance such number of its shares of Common Stock as shall be
required under the Main Agreement.
(D) The Company will procure, at its sole expense,
the listing of the Common Stock issuable upon conversion or
redemption of the Series B-2 Preferred Stock and shares
issuable as dividends hereunder, subject to issuance or notice
of issuance, on all stock exchanges and quotation systems on
which the Common Stock is then listed or quoted, no later than
the date on which such Series B-2 Preferred Stock is issued to
the Holder and thereafter shall use its best efforts to
prevent delisting or removal from quotation of such shares.
The Company will pay any and all documentary stamp or similar
issue or transfer taxes that may be payable in respect of the
issuance or delivery of shares of Common Stock on conversion
or redemption of shares of the Series B-2 Preferred Stock. The
Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involving the issue
and delivery of shares of Common Stock in a name other than
that in which the shares of Series B-2 Preferred Stock so
converted or redeemed were registered, and no such issue and
delivery shall be made unless and until the person requesting
such issue has paid to the Company the amount of any such tax,
or has established, to the reasonable satisfaction of the
Company, that such tax has been paid.
(E) No fractional shares or scrip representing
fractional shares shall be issued upon the conversion or
redemption of the Series B-2 Preferred Stock. If any such
conversion or redemption would otherwise require the issuance
of a fractional share of Common Stock, an amount equal to such
fraction multiplied by the current Daily Market Price per
share of Common Stock on the date of conversion or redemption
shall be paid to the Holder in cash by the Company. If more
than one share of Series B-2 Preferred Stock shall be
surrendered for conversion or redemption at one time by or for
the same Holder, the number of full shares of Common Stock
issuable upon conversion or redemption thereof shall be
computed on the basis of the aggregate number of shares of
Series B-2 Preferred Stock so surrendered.
(F) Business Combinations.
(i) In case the Company after the date of
the Main Agreement is party to (a) any acquisition of
the Company by means of merger or other form of
corporate reorganization in which outstanding shares
of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the
Acquiring Person or its Parent, Subsidiary or
affiliate, (b) a sale of all or substantially all of
the assets of the Company (on a consolidated basis)
in a single transaction or series of related
transactions, (c) any other transaction or series of
related transactions by the Company in which the
power to cast the majority of the eligible votes at a
meeting of the Company's shareholders at which
directors are elected is transferred to a single
entity or group acting in concert, or (d) a
capital reorganization or reclassification of the
Common Stock or Other Securities (other than a
reorganization or reclassification in which the
Common Stock or Other Securities are not converted
into or exchanged for cash or other property, and,
immediately after consummation of such transaction,
the shareholders of the Company immediately prior to
such transaction own the Common Stock, Other
Securities or other voting stock of the Company in
substantially the same proportions relative to each
other as such shareholders owned immediately prior to
such transaction), then, and in the case of each such
transaction (each of which is referred to herein as
"Business Combination"), proper provision shall be
made so that, upon the basis and the terms and in the
manner provided herein, the Holder of each
unconverted and unredeemed share of Series B-2
Preferred Stock, upon conversion or redemption hereof
at any time after the consummation of such Business
Combination, shall be entitled to receive upon such
conversion or redemption, in lieu of the cash, Common
Stock or Other Securities issuable upon such
conversion or redemption prior to such consummation,
any of the following, as shall be elected, in whole
or in part, from time to time, by such Holder:
A. the stock and other securities,
cash and property to which such Holder would
have been entitled upon such consummation if
such Holder had converted such Series B-2
Preferred Stock immediately prior thereto;
B. the stock and other securities,
cash and property to which such Holder would
have been entitled upon such consummation if
(i) such Holder had elected redemption of
such Series B-2 Preferred Stock, with the
Redemption Notice Date occurring immediately
prior thereto (notwithstanding any
restrictions on redemption existing on such
Redemption Notice Date) and (ii) the Company
had elected to redeem such shares for
Registered Common Stock immediately prior
thereto
C. the number of shares of common
stock of the Acquiring Person or its Parent,
at the election of the Holder, determined by
dividing (A) the amount equal to the product
obtained by multiplying (1) the number of
shares of the Company's Common Stock (or
Other Securities) to which such Holder would
have been entitled had such holder converted
such Series B-2 Preferred Stock immediately
prior to such consummation, times (2) the
greater of the Acquisition Price and the
Conversion Price in effect on the Business
Day immediately preceding the date of such
consummation, by (B) the Daily Market Price
per share of the common stock of the
Acquiring Person or its Parent, as the case
may be, on the Business Day immediately
preceding the date of such consummation;
D. the number of shares of common
stock of the Acquiring Person or its Parent,
at the election of the Holder, determined by
dividing (A) the aggregate Redemption Amount
of such shares of Series B-2 Preferred Stock
by (B) the lesser of (1) the Average Market
Price of the common stock of the Acquiring
Person or its Parent, as the case may be,
calculated as of the date the Business
Combination is consummated, and (2) the
quotient of (a) the product of (i) the
Conversion Price (but if before such
consummation the Company shall combine,
subdivide or reclassify its Common Stock,
shall declare any dividend payable in shares
of Common Stock, or shall take any other
action of a similar nature affecting such
shares, this amount shall be adjusted to the
extent appropriate to reflect such event or
events) and (ii) the Daily Market Price per
share of the common stock of the Acquiring
Person or its Parent, as the case may be, on
the Business Day immediately preceding the
date of such consummation divided by (b) the
Daily Market Price per share of the
Company's Common Stock on the Business Day
immediately preceding the date of such
consummation. The foregoing notwithstanding,
if the Acquiring Person or its Parent, as
the case may be, shall combine, subdivide or
reclassify its Common Stock, or shall
declare any dividend payable in shares of
its Common Stock, or shall take any other
action of a similar nature affecting such
shares, the conversion or redemption price
in this clause (D) shall be adjusted to the
extent appropriate to reflect such event,
including appropriate adjustments to account
for any such event that occurs during any of
the measurement periods set forth in the
previous sentence; or
E. cash in an amount equal to one
hundred thirty-three percent (133%) of the
aggregate Redemption Amount of such shares
of Series B-2 Preferred Stock;
provided, that if the Company delivers to such Holder
a written notice in the form of Annex K to the Main
Agreement (a "Business Combination Restriction
Notice") no later than the fifteenth (15th) calendar
day after and excluding the date on which the
proposed Business Combination is first publicly
disclosed and no later than the fifteenth (15th)
calendar day before and excluding the closing date of
such Business Combination, then in lieu of clauses
(A), (B), (C), (D) and (E) above and all other rights
and preferences under this Certificate of Rights and
Preferences, the Holder shall receive, on such
closing date, in exchange for the shares of Series
B-2 Preferred Stock then held by such Holder, (1) the
stock and other securities, cash and property to
which such Holder would have been entitled upon such
closing date if such Holder had, (a) converted such
Series B-2 Preferred Stock immediately prior to such
closing date or (b) redeemed (notwithstanding any
restrictions on redemption existing on such
Redemption Notice Date) such Series B-2 Preferred
Stock effective upon such closing date, calculated as
if the Redemption Notice Date occurred immediately
prior to such closing date and the Company had
elected to redeem such shares for Registered Common
Stock immediately prior thereto (the selection of (a)
or (b) shall be made by such Holder in its sole
discretion by written notice delivered to the Company
no later than the third (3rd) Business Day before and
including such closing date; provided that such
Holder may change such election at any time if any
material change shall occur in (i) the closing date,
(ii) the consideration deliverable to Common Stock
holders in such Business Combination, (iii) the
Acquisition Price, or (iv) any material term or
condition of such Business
Combination) and (2) in addition to all consideration
received by such Holder under clause (1) above, cash
equal to the product of (x) the aggregate Redemption
Amount of such shares of Series B-2 Preferred Stock
multiplied by (y) the Merger Adjustment Percentage
and provided further, that if such Holder converts or
redeems shares of Series B-2 Preferred Stock on or
after the date of delivery of the Business
Combination Restriction Notice and before the date of
closing of such Business Combination, then in
addition to the stock and other securities, cash and
property that such Holder has received, or is
entitled to receive, upon the conversion or
redemption of such shares, such Holder shall be
entitled to receive upon the date of closing of such
Business Combination the cash amount described in
clause (2) above (but not the stock and other
securities, cash and property described in clause (1)
above) with respect to all such previously converted
or redeemed shares. The "Merger Adjustment
Percentage" shall equal the product of the Merger
Payment Percentage multiplied by a fraction the
numerator of which shall be the number of days
remaining until the seventh (7th) anniversary of the
Issue Date and the denominator of which shall be two
thousand five hundred and twenty (2,520); provided
that the Merger Adjustment Percentage shall not be
less than zero percent (0%). The "Merger Payment
Percentage" shall equal (A) fifty percent (50%) minus
(B) the product of (1) ten percent (10%) multiplied
by (2) the quotient (which shall not be less than
zero percent (0%)) of (x) the Acquisition Price in
effect on the Business Day immediately preceding the
date of such consummation minus the Conversion Price
in effect on the Business Day immediately preceding
the date of such consummation divided by (y) the
Conversion Price in effect on the Business Day
immediately preceding the date of such consummation.
(ii) Notwithstanding anything contained
herein or in the Main Agreement to the contrary, the
Company will not effect any Business Combination
unless the requirements of Section 11 of the Main
Agreement have been met and unless, prior to the
consummation thereof, each Person (other than the
Company) that may be required to deliver any stock,
securities, cash or property upon conversion of
Series B-2 Preferred Stock as provided herein shall
assume, by written instrument delivered to, and
reasonably satisfactory to, the Holders of a Majority
of the Series B-2 Preferred Stock, (A) the
obligations of the Company under this Certificate of
Rights and Preferences (and if the Company shall
survive the consummation of such transaction, such
assumption shall be in addition to, and shall not
release the Company from, any continuing obligations
of the Company under this Certificate of Rights and
Preferences) and (B) the obligation to deliver to the
Holders of Series B-2 Preferred Stock such shares of
stock, securities, cash or property as, in accordance
with the foregoing provisions of this Section 6(F),
such Holders may be entitled to receive, and such
Person shall have similarly delivered to such Holders
an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to Holders of a
Majority of the Series B-2 Preferred Stock, stating
that the rights of such Holders under this
Certificate of Rights and Preferences shall
thereafter continue in full force and effect and the
terms hereof, including, without limitation, all of
the provisions of this Section 6(F) shall be
applicable to the stock, securities, cash or property
which such Person may be required to deliver upon any
conversion of Preferred Stock or exercise of any
rights pursuant hereto.
7. Status of Converted and Redeemed Shares; Limitations on
Series B-2 Preferred Stock. The Company shall return to the status of
unauthorized and undesignated shares of Preferred Stock each share of
Series B-2 Preferred Stock which shall be converted, redeemed or for
any other reason acquired by the Company, and such shares thereafter
may have such characteristics and designations as the Board may
determine (subject to Section 5), provided, however, no share of Series
B-2 Preferred Stock which shall be converted, redeemed or otherwise
acquired by the Company shall thereafter be reissued, sold or
transferred by the Company as Series B-2 Preferred Stock. The Company
will not issue any further shares of Series B-2 Preferred Stock. Except
for redemptions pursuant to Section 6(B), the Company shall have no
right to redeem the shares of Series B-2 Preferred Stock without the
consent of a Majority of the Holders.