1
EXHIBIT 4.2
AGREEMENT
This Agreement (this "Agreement") dated as of June 29, 2001 is entered
into by and between Champion Enterprises, Inc., a corporation organized under
the laws of Michigan (together with its successors, "Champion"), and Xxxxxxxx
International, Ltd., a company organized under the laws of Bermuda (together
with its successors, "Xxxxxxxx").
The parties hereto agree as follows:
1. Purchase and Sale. In consideration of and upon the basis of the
representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:
(a) Xxxxxxxx agrees to purchase from Champion, and Champion
agrees to sell to Xxxxxxxx on the Initial Closing Date (as defined below),
in accordance with Section 2 below, twenty thousand (20,000) shares (the
"Initial Preferred Shares") of Champion's Series B-1 Cumulative Convertible
Preferred Stock (the "Series B-1 Preferred Stock"), having the terms and
conditions set forth in the Certificate of Rights and Preferences attached
hereto as Annex A (the "Certificate of Rights and Preferences"), at a price
of one thousand dollars ($1,000) per share for an aggregate purchase price
of twenty million dollars ($20,000,000). Xxxxxxxx shall have the right to
convert the outstanding Initial Preferred Shares into shares of Common
Stock of Champion, par value one dollar ($1.00) (the "Common Stock"), in
the manner, and subject to the terms, specified in this Agreement and in
the Certificate of Rights and Preferences.
(b) The closing (the "Initial Closing") of the sale of the
Initial Preferred Shares shall occur on the second (2nd) Business Day,
after and excluding the date hereof, or at such other date and time as
Xxxxxxxx and Champion shall mutually agree (such date, the "Initial Closing
Date").
(c) Champion grants Xxxxxxxx rights (the "Xxxxxxxx Rights") to
require Champion to issue to it from time to time, in whole or in part, up
to an aggregate of twelve thousand (12,000) shares of additional series of
Champion preferred stock (e.g., Series B-2 Cumulative Convertible Preferred
Stock, Series B-3 Cumulative Convertible Preferred Stock, etc.) having,
except as set forth below, similar terms, conditions, rights, preferences
and privileges as the Series B-1 Preferred Stock (such shares shall
collectively be referred to as the "Additional Preferred Shares" and
together with the Initial Preferred Shares, the "Series B Preferred
Shares") at a price of one thousand dollars ($1,000) per share for an
aggregate purchase price for all Xxxxxxxx Rights of twelve million dollars
($12,000,000). Xxxxxxxx shall have the right to convert the outstanding
Additional Preferred Shares into shares of Common Stock in the manner, and
subject to the terms, specified in this Agreement and in a certificate of
rights and preferences for each such series of Additional Preferred Shares
(each, a "Subsequent Certificate of Rights and Preferences" and
collectively, the "Subsequent Certificates of Rights and Preferences").
Each Subsequent Certificate of Rights and Preferences shall have the same
terms and conditions as the Certificate of Rights and Preferences, except
2
that (A) the Conversion Price (as defined therein) shall equal the greater
of (i) one hundred twenty percent (120%) of the Average Market Price (as
defined therein) calculated as of the corresponding Subsequent Closing Date
and (ii) seven dollars and fifty cents ($7.50); and (B) the number of
Additional Preferred Shares issued pursuant to each Subsequent Certificate
of Rights and Preferences may differ from the number of shares of Series
B-1 Preferred Stock. To exercise any Xxxxxxxx Rights, Xxxxxxxx shall
deliver one or more written notices substantially in the form attached
hereto as Annex B (a "Xxxxxxxx Notice") to Champion from time to time
commencing from the date six months after and excluding the date hereof and
ending no later than twenty-one (21) months after and excluding the date
hereof (the "Xxxxxxxx Rights Period"). Upon satisfaction or, if applicable,
waiver of the relevant conditions set forth in Sections 14 and 15 hereof,
the closing of each exercise of Xxxxxxxx Rights (each, a "Subsequent
Closing") shall take place on the date that is two (2) Business Days
following and excluding delivery of the Xxxxxxxx Notice, or at such other
date and time as Xxxxxxxx and Champion shall mutually agree (such date and
time being referred to herein as the "Subsequent Closing Date," and
together with the Initial Closing Date, each a "Closing Date").
(d) Champion grants Xxxxxxxx the rights to redeem all or part of
each series of Series B Preferred Shares (including any accrued and unpaid
dividends) commencing twenty-four (24) months following and excluding the
Initial Closing Date, pursuant to the terms and conditions set forth in the
Certificate of Rights and Preferences or Subsequent Certificate of Rights
and Preferences of each such series (the "Redemption Rights"), upon
delivery of a notice of redemption in the form attached hereto as Annex C
(the "Redemption Notice"). Under certain circumstances set forth in the
Certificate of Rights and Preferences or Subsequent Certificate of Rights
and Preferences of each such series, Champion may satisfy its redemption
obligations by delivering shares of Common Stock (the amount of which shall
be determined pursuant to the terms and conditions set forth in the
Certificate of Rights and Preferences or Subsequent Certificate of Rights
and Preferences of each such series) (the "Redemption Common Stock").
(e) As used herein, the term "Common Shares" means the Redemption
Common Stock and shares issuable upon conversion or redemption of or as
dividends under the Series B Preferred Shares, and all other Common Stock
issuable under the Certificate of Rights and Preferences, Subsequent
Certificates of Rights and Preferences or this Agreement; the term
"Investment Securities" means the Series B Preferred Shares issued
hereunder, and all Common Shares; the term "Business Day" means any day on
which the Common Stock may be traded on the NYSE or, if not admitted for
trading on the NYSE, on any day other than a Saturday, Sunday or holiday on
which banks in New York City are required or permitted to be closed; and
the term "NYSE" means the New York Stock Exchange, but if the New York
Stock Exchange is not then the principal U.S. trading market for the Common
Stock, or such other applicable common stock, then "NYSE" shall be deemed
to mean the principal U.S. national securities exchange (as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) on which
the Common Stock, or such other applicable common stock, is then traded, or
if such Common Stock, or such other applicable common stock, is not then
listed or admitted to trading on any national securities exchange but is
designated as a national market system security or a Nasdaq SmallCap Market
Security by the National
2
3
Association of Securities Dealers, Inc. ("NASD"), then such market system,
or if such Common Stock, or such other applicable common stock, is not
listed or quoted on any of the foregoing, then the OTC Bulletin Board.
2. Initial Closing. The Initial Closing shall take place initially via
facsimile on the Initial Closing Date in the manner set forth below; provided
that original certificates representing shares of Series B-1 Preferred Stock
shall be delivered via Federal Express or another reputable overnight carrier to
Xxxxxxxx as Xxxxxxxx instructs in writing. At the Initial Closing, the following
deliveries shall be made:
(a) Series B-1 Preferred Stock. Champion shall deliver to
Xxxxxxxx four (4) stock certificates, each representing five thousand
(5,000) shares of Series B-1 Preferred Stock, duly executed by Champion in
definitive form, and shall register such shares in the shareholder register
of Champion.
(b) Purchase Price. Xxxxxxxx shall cause to be wire transferred
to Champion, in accordance with the instructions set forth in Section 20,
the aggregate purchase price of twenty million dollars ($20,000,000) in
immediately available United States funds.
(c) Closing Documents. The closing documents required by Sections
14 and 15 shall be delivered to Xxxxxxxx and Champion, respectively.
(d) Delivery Notice. An executed copy of the delivery notice in
the form attached hereto as Annex E shall be delivered to Xxxxxxxx.
The deliveries specified in this Section 2 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.
3. Subsequent Closing. Each Subsequent Closing shall take place
initially via facsimile on the Subsequent Closing Date in the manner set forth
below; provided that original certificates representing Additional Preferred
Shares shall be delivered via Federal Express or another reputable overnight
carrier to Xxxxxxxx as Xxxxxxxx instructs in writing. At each Subsequent
Closing, the following deliveries shall be made:
(a) Additional Preferred Shares. Champion shall issue and deliver
to Xxxxxxxx stock certificates, each representing five thousand (5,000)
Additional Preferred Shares (except that to the extent the number of
Additional Preferred Shares to be delivered is not evenly divisible by five
thousand (5,000), one (1) stock certificate shall represent the remaining
shares), duly executed by Champion, and shall register such shares in the
shareholder register of Champion.
(b) Purchase Price. Xxxxxxxx shall cause to be wire transferred
to Champion, in accordance with the instructions set forth in Section 20,
one thousand dollars ($1,000) per Additional Preferred Share, in the
aggregate the "Additional Issuance Price" as specified in the applicable
Xxxxxxxx Notice (the "Additional Issuance Price")
3
4
payable on such Subsequent Closing Date, in immediately available United
States dollars.
(c) Closing Documents. The closing documents required by Sections
14 and 15 shall be delivered to Xxxxxxxx and Champion, respectively.
(d) Delivery Notice. An executed copy of the delivery notice in
the form attached hereto as Annex E shall be delivered to Xxxxxxxx.
The deliveries specified in this Section 3 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.
4. Representations and Warranties of Champion. Champion hereby
represents and warrants to Xxxxxxxx on each Closing Date, as follows:
(a) Champion has been duly incorporated and is validly existing
in good standing under the laws of Michigan or, after the Initial Closing
Date, if another entity has succeeded Champion in accordance with the terms
hereof, under the laws of one of the states of the United States.
(b) The execution, delivery and performance of this Agreement,
the Certificate of Rights and Preferences and Subsequent Certificates of
Rights and Preferences (including the authorization, sale, issuance and
delivery of the Investment Securities) have been duly authorized by all
requisite corporate action and no further consent or authorization of
Champion, its Board of Directors or its shareholders is required, except as
otherwise contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by
Champion and, when this Agreement is duly authorized, executed and
delivered by Xxxxxxxx, will be a valid and binding agreement enforceable
against Champion in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity. The issuance of the Investment Securities are
not and will not be subject to any preemptive right or rights of first
refusal that have not been properly waived or complied with.
(d) Champion has full corporate power and authority necessary to
(i) own and operate its properties and assets, execute and deliver this
Agreement, (ii) perform its obligations hereunder and under the Certificate
of Rights and Preferences or Subsequent Certificates of Rights and
Preferences (including, but not limited to, the issuance of the Investment
Securities) and (iii) carry on its business as presently conducted and as
presently proposed to be conducted. Champion and its subsidiaries are duly
qualified and are authorized to do business and are in good standing as
foreign corporations in all jurisdictions in which the nature of their
activities and of their properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the
4
5
business affairs, assets, results of operations or prospects of Champion
and its subsidiaries, taken as a whole. Set forth on Schedule 4(d) attached
hereto, is a complete list of all subsidiaries of Champion as of the date
hereof.
(e) No consent, approval, authorization or order of any court,
governmental agency or other body is required for execution and delivery by
Champion of this Agreement or the performance by Champion of any of its
obligations hereunder and under the Certificate of Rights and Preferences
or Subsequent Certificates of Rights and Preferences other than such as may
already have been received.
(f) Neither the execution and delivery by Champion of this
Agreement nor the performance by Champion of any of its obligations
hereunder and under the Certificate of Rights and Preferences or Subsequent
Certificates of Rights and Preferences:
(i) violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the giving of notice or
the lapse of time or both would be reasonably likely to constitute a
default) or creates any rights in respect of any person under (A) the
certificates of incorporation or by-laws of Champion or any of its
subsidiaries, (B) any decree, judgment, order, or determination of any
court, governmental agency or body, or arbitrator having jurisdiction
over Champion or any of its subsidiaries or any of their respective
properties or assets or any material law, treaty, rule or regulation,
(C) the terms of any bond, debenture, note, indenture, credit
agreement or any other evidence of indebtedness, or any material
agreement, stock option or other similar plan, lease, mortgage, deed
of trust or other instrument to which Champion or any of its
subsidiaries is a party, by which Champion or any of its subsidiaries
is bound, or to which any of the properties or assets of Champion or
any of its subsidiaries is subject, (D) the terms of any "lock-up" or
similar provision of any underwriting or similar agreement to which
Champion or any of its subsidiaries is a party, (E) any material rule
or regulation of the NASD or the New York Stock Exchange or any rule
or regulation of the markets where Champion's securities are publicly
traded or quoted applicable to Champion or the transactions
contemplated hereby or (F) the Rights Agreement by and between
Champion and Xxxxxx Trust and Savings Bank, dated January 9, 1996,
except for such violations, conflicts, breaches or defaults referred
to in clauses (B), (C), (D) and (E) that would not affect Champion's
ability to execute and deliver or to perform any of its obligations
under this Agreement, the Certificate of Rights and Preferences or any
Subsequent Certificate of Rights and Preferences; or
(ii) results in the creation or imposition of any lien,
charge or encumbrance upon any Investment Securities or any material
lien, charge or encumbrance upon any of the properties or assets of
Champion or any of its subsidiaries.
(g) Champion has validly reserved for issuance to Xxxxxxxx the
Preferred Shares and any Additional Preferred Shares under this Agreement
and five
5
6
million (5,000,000) shares of Common Stock. When issued to Xxxxxxxx against
payment therefor, each Investment Security:
(i) will have been duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
(ii) will be free and clear of any security interests,
liens, claims or other encumbrances; and
(iii) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of
Champion.
(h) As of the date hereof, Champion satisfies all maintenance
criteria of the New York Stock Exchange and, after the Closing Date,
Champion satisfies all maintenance criteria for the New York Stock
Exchange, Nasdaq National Market, or American Stock Exchange, or has a
valid exemption from such criteria of which it has previously notified
Xxxxxxxx in writing. To the best knowledge of Champion, after due inquiry,
no present set of facts or circumstances will (with the passage of time or
the giving of notice or both or neither) cause any of the Common Stock to
be delisted from the New York Stock Exchange. At the Initial Closing Date,
all of the Covered Securities (as defined in Section 5.b) will, when
issued, be duly listed and admitted for trading on all of the markets where
shares of Common Stock are traded, including the New York Stock Exchange.
At each Subsequent Closing Date, all of the Covered Securities (as defined
in Section 5.b) will, when issued, be duly listed and admitted for trading
on all of the markets where shares of Common Stock are traded, including
one of the following: (i) the New York Stock Exchange, (ii) the Nasdaq
National Market, or (iii) the American Stock Exchange.
(i) There is no pending or, to the best knowledge of Champion,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over
Champion or any of its affiliates that would materially affect the
execution by Champion of, or the performance by Champion of its obligations
under, this Agreement, the Certificate of Rights and Preferences or
Subsequent Certificates of Rights and Preferences.
(j) Xxxxx Xxxxx 00, 0000, xxxx of Champion's filings with the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act") or under Section
13(a) or 15(d) of the Exchange Act (each an "SEC Filing") contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading. Since March 31,
1998, there has not been any pending or, to the best knowledge of Champion,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over
Champion or any of its affiliates that could cause a material adverse
change in the condition, financial or otherwise, or in the business
affairs, assets, results of operations or prospects of Champion, whether or
not arising in the ordinary course of business, except as disclosed in
Champion's SEC Filings on or before the date
6
7
immediately prior to and excluding the date hereof. Since the date of
Champion's most recent SEC Filing, there has not been, any material adverse
change in the condition, financial or otherwise, or in the business
affairs, assets, results of operations or prospects of Champion, whether or
not arising in the ordinary course of business.
(k) The offer and sale of the Investment Securities to Xxxxxxxx
pursuant to this Agreement will, subject to compliance by Xxxxxxxx with the
applicable representations and warranties contained in Section 8 hereof and
with the applicable covenants and agreements contained in Section 12
hereof, be made in accordance with an exemption from the registration
requirements of the Securities Act and any applicable state law. Neither
Champion nor any agent on its behalf has solicited or will solicit any
offers to sell or has offered to sell or will offer to sell all or any part
of the Series B Preferred Shares to any person or persons so as to bring
the sale of such Series B Preferred Shares by Champion within the
registration provisions of the Securities Act.
(l) Immediately prior to the Initial Closing Date, the authorized
capital stock of Champion consists of one hundred twenty million
(120,000,000) shares of Common Stock, par value one dollar ($1.00), and
five million (5,000,000) shares of preferred stock, no par value
("Preferred Stock") of which seven hundred and fifty thousand (750,000) are
designated Series A Preferred Stock. Immediately prior to the Initial
Closing Date, (A) forty-seven million nine hundred and forty-seven thousand
one hundred and sixty-five (47,947,165) shares of Common Stock and no
shares of Series A Preferred Stock were issued and outstanding, (B) seven
million two hundred and sixty-three thousand one hundred and sixty-seven
(7,263,167) shares of Common Stock and seven hundred and fifty thousand
(750,000) shares of Series A Preferred Stock are currently reserved and
subject to issuance upon the exercise of outstanding stock options,
warrants or other convertible rights, (C) no shares of Common Stock are
held in the treasury of Champion, and (D) up to three hundred and
thirty-four thousand one hundred and forty-seven (334,147) additional
shares of Common Stock may be issued under the Champion Enterprises, Inc.
Savings Plan. All of the outstanding shares of Preferred Stock and Common
Stock are, and all shares of capital stock which may be issued pursuant to
stock options, warrants or other convertible rights will be, when issued
and paid for in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable, free of any
preemptive rights in respect thereof and issued in material compliance with
all applicable state and federal laws concerning issuance of securities. As
of the date hereof, except as set forth above, and except for shares of
Common Stock or other securities issued upon conversion, exchange, exercise
or purchase associated with the securities, options, warrants, rights and
other instruments referenced above, no shares of capital stock or other
voting securities of Champion were outstanding, no equity equivalents,
interests in the ownership or earnings of Champion or other similar rights
were outstanding, and there were no existing options, warrants, calls,
subscriptions or other rights or agreements or commitments relating to the
capital stock of Champion or any of its subsidiaries or obligating Champion
or any of its subsidiaries to issue, transfer, sell or redeem any shares of
capital stock, or other equity interest in, Champion or any of its
subsidiaries or obligating Champion or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement or commitment. Attached hereto as Schedule 4(l) is a true
and correct list as
7
8
of the date of this Agreement of all outstanding options, warrants, calls,
subscriptions and other rights or agreements or commitments relating to the
issuance of additional shares of capital stock of Champion and with respect
to each a description of the number and class of securities and the
exercise price thereof.
(m) Solvency. The sum of the assets of Champion, at a fair
valuation, exceeds its liabilities. Champion has sufficient capital with
which to conduct its business as presently conducted and as proposed to be
conducted and Champion has not incurred debts, and does not intend to incur
debts, beyond its ability to pay such debts as they mature. For purposes of
this paragraph, "debt" means any liability on a claim, and "claim" means
(x) a right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (y) a right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured.
(n) Audited Financials. Attached hereto as Annex F is a true,
correct and complete copy of (i) the report of PricewaterhouseCoopers LLP
dated February 13, 2001, together with the accompanying consolidated
financial statements and schedules of Champion at December 31, 2000 and the
results of Champion's operations and cash flows for each of the three (3)
years in the period ended December 31, 2000, as such report appears in the
Annual Report on Form 10-K for the fiscal year ended December 31, 2000
filed by Champion with the SEC (the "Auditor Report") and (ii) the written
consent of PricewaterhouseCoopers LLP to the inclusion of its report
described in clause (i) herein.
(o) Equivalent Value. As of the Initial Closing Date, the
consideration that Champion is receiving from Xxxxxxxx is equivalent in
value to the consideration Xxxxxxxx is receiving from Champion pursuant to
this Agreement. As of the Initial Closing Date, under the terms of this
Agreement, Champion is receiving fair consideration from Xxxxxxxx for the
agreements, covenants, representations and warranties made by Champion to
Xxxxxxxx.
(p) No Non-Public Information. Xxxxxxxx has not requested from
Champion, and Champion has not furnished to Xxxxxxxx, any material
non-public information concerning Champion or its subsidiaries.
(q) Restatement Notices. As of each Subsequent Closing Date,
Champion has provided Xxxxxxxx with all Restatement Notices (as defined in
the Certificate of Rights and Preferences or Subsequent Certificates of
Rights and Preferences) required to be delivered following a Restatement
(as defined in the Certificate of Rights and Preferences or Subsequent
Certificates of Rights and Preferences).
8
9
5. Registration Provisions.
(a) Champion shall, as soon as practicable and at its own
expense, but in no event later than twenty (20) calendar days after, and
including, the Initial Closing Date, file a Registration Statement (as
defined below) under the Securities Act covering the resale of all of the
Common Shares and shall use its best efforts to cause such Registration
Statement to be declared effective on or prior to one hundred and fifteen
(115) calendar days following, and including, the Initial Closing Date (the
"Required Registration Date") and shall promptly amend such Registration
Statement or file an additional Registration Statement from time to time if
the maximum number of Common Shares issued or issuable upon conversion of
the Series B Preferred Shares is greater than the number of Common Shares
registered pursuant to such Registration Statement. The obligations to have
the Registration Statement declared effective and to maintain such
effectiveness as provided in this Section 5 are referred to herein as the
"Registration Requirement." Pursuant to the preceding sentence, Champion
shall register pursuant to such Registration Statement not less than the
number of shares of Common Stock equal to 1.5 times the total number of
Common Shares issued or issuable under this Agreement (including all shares
issued or issuable under the Series B Preferred Shares, whether upon
conversion or redemption) within the year following such date or otherwise
on an as-converted basis as of such date (the "Registrable Number").
Champion shall promptly amend such Registration Statement (or, if
necessary, file a new Registration Statement) at any time that the number
of Common Shares issued and issuable under this Agreement exceeds eighty
percent (80%) of the number of shares then registered so that the
Registrable Number (as determined on such date) of Common Shares shall be
registered and freely tradable.
(b) Each Common Share is a "Covered Security" and the
registration statement filed or required to be filed under the Securities
Act in accordance with Section 5(a) hereof, along with any amendments and
additional registration statements, is referred to as the "Registration
Statement". Champion shall provide prompt written notice to Xxxxxxxx when
the Registration Statement has been declared effective by the SEC.
(c) Champion will use its best efforts to: (A) keep the
Registration Statement effective until the earlier of (x) the later of (i)
the second anniversary of the issuance of the last Covered Security that
may be issued, or (ii) such time as all of the Covered Securities issued or
issuable to Xxxxxxxx can be sold by Xxxxxxxx or any of its affiliates
within a three (3)-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 under the
Securities Act ("Rule 144") or (y) the date all of the Covered Securities
issued or issuable shall have been sold by Xxxxxxxx (such later period, the
"Registration Period"); (B) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement (as so amended and supplemented
from time to time, the "Prospectus") as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Covered Securities by Xxxxxxxx or any of its affiliates; (C) furnish such
number of Prospectuses and other documents incident thereto, including any
amendment of or supplement to the Prospectus, as Xxxxxxxx from time to time
may reasonably request; (D) cause all Covered Securities to be
9
10
listed on each securities exchange and quoted on each quotation service on
which similar securities issued by Champion are then listed or quoted; (E)
provide a transfer agent and registrar for all Covered Securities and a
CUSIP number for all Covered Securities; (F) otherwise comply with all
applicable rules and regulations of the SEC, the New York Stock Exchange
and any other exchange or quotation service on which the Covered Securities
are obligated to be listed or quoted under this Agreement; and (G) file the
documents required of Champion and otherwise obtain and maintain requisite
blue sky clearance in (x) New York and all other jurisdictions in which any
of the shares of Common Stock were originally sold and (y) all other states
specified in writing by Xxxxxxxx, provided, however, that as to this clause
(y), Champion shall not be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or has
not so consented. Xxxxxxxx shall have the right to approve the description
of the selling shareholder, plan of distribution and all other references
to Xxxxxxxx contained in any Registration Statement and any Prospectus.
(d) Champion shall furnish to Xxxxxxxx upon request a reasonable
number of copies of a supplement to or an amendment of any Prospectus as
may be necessary in order to facilitate the public sale or other
disposition of all or any of the Covered Securities by Xxxxxxxx or any of
its affiliates pursuant to the Registration Statement.
(e) With a view to making available to Xxxxxxxx and its
affiliates the benefits of Rule 144 and Form S-3 under the Securities Act,
Champion covenants and agrees to: (A) make and keep available adequate
current public information (within the meaning of Rule 144(c)) concerning
Champion, until the earlier of (x) the second (2nd) anniversary of the
issuance of the last Covered Security to be issued or (y) such date as all
of the Covered Securities shall have been resold by Xxxxxxxx or any of its
affiliates; and (B) furnish to Xxxxxxxx upon request, as long as Xxxxxxxx
owns any Covered Securities, (x) a written statement by Champion that it
has complied with the reporting requirements of the Securities Act and the
Exchange Act, (y) a copy of the most recent annual or quarterly report of
Champion, and (z) such other information as may be reasonably requested in
order to avail Xxxxxxxx and its affiliates of Rule 144 or Form S-3 with
respect to such Covered Securities.
(f) Notwithstanding anything else in this Section 5, if, at any
time during which a Prospectus is required to be delivered in connection
with the sale of any Covered Security, Champion determines in good faith
that a development has occurred or a condition exists as a result of which
the Registration Statement or the Prospectus contains a material
misstatement or omission, or that a material transaction in which Champion
is engaged or proposes to engage would require an amendment to the
Registration Statement, a supplement to the Prospectus, or a filing under
the Exchange Act or other public disclosure of material information and the
disclosure of such transaction would be premature or injurious to the
consummation of the transaction, Champion will immediately notify Xxxxxxxx
thereof by telephone and in writing. Upon receipt of such notification,
Xxxxxxxx and its affiliates will immediately suspend all offers and sales
of any Covered Security pursuant to the Registration Statement. In such
event, Champion will amend or supplement the Registration Statement and the
Prospectus or
10
11
make such filings or public disclosures as promptly as practicable and will
use its best efforts to take such other steps as may be required to permit
sales of the Covered Securities thereunder by Xxxxxxxx and its affiliates
in accordance with applicable federal and state securities laws. Champion
will promptly notify Xxxxxxxx after it has determined in good faith that
such sales have become permissible in such manner and will promptly deliver
copies of the Registration Statement and the Prospectus (as so amended or
supplemented, if applicable) to Xxxxxxxx in accordance with paragraphs (c)
and (d) of this Section 5. Notwithstanding the foregoing, (A) under no
circumstances shall Champion be entitled to exercise its right to suspend
sales of any Covered Securities as provided in this Section 5(f) and
pursuant to the Registration Statement for more than a total of sixty (60)
days in any twelve (12)-month period, (B) the period during which such
sales may be suspended (each a "Blackout Period") at any time shall not
exceed thirty (30) days, and (C) no Blackout Period may commence less than
thirty (30) days after the end of the preceding Blackout Period.
(g) Upon the commencement of a Blackout Period pursuant to this
Section 5, Xxxxxxxx will notify Champion of any contract to sell, assign,
deliver or otherwise transfer any Covered Security (each a "Sales
Contract") that Xxxxxxxx or any of its affiliates has entered into prior to
the commencement of such Blackout Period and that would require delivery of
such Covered Securities during such Blackout Period, which notice will
contain the aggregate sale price and volume of Covered Securities pursuant
to such Sales Contract. Upon receipt of such notice, Champion will
immediately notify Xxxxxxxx of its election either (i) to terminate the
Blackout Period and, as promptly as practicable, amend or supplement the
Registration Statement or the Prospectus in order to correct the material
misstatement or omission and deliver to Xxxxxxxx copies of such amended or
supplemented Registration Statement and Prospectus in accordance with
paragraphs (c) and (d) of this Section 5, or (ii) to continue the Blackout
Period in accordance with this paragraph. If Champion elects to continue
the Blackout Period (and, in any case, if a Blackout Period continues), and
Xxxxxxxx or any of its affiliates are therefore unable to consummate the
sale of Covered Securities pursuant to the Sales Contract, Champion will
promptly indemnify each Xxxxxxxx Indemnified Party (as such term is defined
in Section 18.a. below) against any Proceeding (as such term is defined in
Section 18.a. below) that each Xxxxxxxx Indemnified Party may incur arising
out of or in connection with Xxxxxxxx'x breach or alleged breach of any
such Sales Contract, and Champion shall reimburse each Xxxxxxxx Indemnified
Party for any reasonable costs or expenses (including reasonable legal
fees) incurred by such party in investigating or defending any such
Proceeding.
(h) In addition to any other remedies available to Xxxxxxxx under
this Agreement or at law or equity, if the Registration Statement has not
been declared effective by the Required Registration Date or such
Registration Statement is not available with respect to all Covered
Securities at any time on or after the Required Registration Date (except
during a Blackout Period permitted under Section 5(f)), then the Conversion
Prices (as defined in the Certificate of Rights and Preferences and
Subsequent Certificates of Rights and Preferences) shall be permanently
decreased by one fifteenth of one percent (1/15 of 1%) for each day,
compounded monthly, that such
11
12
Registration Statement is not available with respect to all Covered
Securities (except during a Blackout Period permitted under Section 5(f)).
(i) If the Registration Requirement is not met at any point in
time during the Registration Period then the Xxxxxxxx Rights Period shall
be extended by one (1) day for each day (or portion thereof) that the
Registration Requirement shall have not been met.
6. "Market Stand-Off" Agreement. If requested by Champion and an
underwriter in a firm commitment underwritten public offering of Common Stock
with net proceeds of at least twenty-five million dollars ($25,000,000) to
Champion, after underwriter's discounts or commissions and other fees or
expenses, Xxxxxxxx shall not sell or otherwise transfer or dispose of any Common
Stock (other than Common Stock included in the registration) during the ninety
(90) day period (or such shorter period, if so notified by Champion in writing)
following the effective date of a registration statement of Champion filed under
the Securities Act, provided that:
(a) such agreement shall only apply to registration statements of
Champion including securities to be sold on its behalf to the public in an
underwritten offering where the effective date of any such registration
statement shall not occur before the first anniversary of the effective
date of the immediately prior registration statement with respect to which
Xxxxxxxx was required to provide such agreement;
(b) all officers and directors of Champion and all purchasers or
subsequent holders of Offered Shares (other than subsequent holders who
acquire such securities through bona fide purchases in the public market)
are bound by and have entered into similar agreements; and
(c) Champion shall (and shall cause such underwriter to) use best
efforts to cause such stand-off period not to exist or, if it does exist,
to terminate at the earliest practicable date.
The obligations described in this Section 6 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a transaction on Form S-4 or similar forms that may be promulgated in the
future.
7. Conversion and Redemption of Preferred Shares.
(a) Preferred Shares and Additional Preferred Shares are
convertible and redeemable into Common Shares in accordance with the terms
and conditions set forth in Section 6 of the Certificate of Rights and
Preferences and Subsequent Certificates of Rights and Preferences. The form
of the "Preferred Stock Conversion Notice" to be executed and delivered by
Xxxxxxxx to Champion as specified therein is attached hereto as Annex G and
the form of the "Preferred Stock Conversion Delivery Notice" to be executed
and delivered by Champion to Xxxxxxxx as specified therein is attached
hereto as Annex H.
12
13
(b) If the number of Common Shares issued and issuable under this
Agreement (including, but not limited to, all Common Shares issued or
issuable upon conversion or redemption (notwithstanding any limitations on
redemption on any date on or after the date one-hundred and twenty (120)
days before and excluding the second anniversary of the Main Agreement) of
Series B Preferred Shares issued or issuable under this Agreement) on the
date of any Preferred Stock Conversion Notice (each a "Xxxxxxxx Notice
Date") or Redemption Notice would result in Xxxxxxxx receiving more than
seventeen and one-half percent (17.5%) of the shares of Common Stock
outstanding as of the date of this Agreement (the "Original Number") and
Xxxxxxxx'x receipt of twenty percent (20%) or more of the Original Number
would require the approval (the "Required Consent") of the holders of
Common Stock pursuant to the listing requirements or rules of the NYSE,
Champion (A) shall not issue Common Shares (the "Issuance Blockage") to the
extent that the total number of Common Shares issued hereunder would exceed
nineteen and ninety-nine one-hundredths percent (19.99%) of the Original
Number, (B) shall notify Champion's shareholders of a shareholder meeting
for the purpose of voting on the Required Consent within twenty (20)
Business Days from and including the Xxxxxxxx Notice Date or Redemption
Notice, which meeting shall be held on or before the sixtieth (60th)
calendar day after the Xxxxxxxx Notice Date, and (C) shall otherwise use
its best efforts to obtain, on or before the sixtieth (60th) day after the
Xxxxxxxx Notice Date or Redemption Notice, the Required Consent for the
issuance of all Common Shares issued or issuable under this Agreement
(including, but not limited to, all Common Shares issued or issuable upon
conversion or redemption of Series B Preferred Shares issued or issuable
under this Agreement) including, but not limited to, recommending to
Champion's shareholders that such shareholders give the Required Consent
and not withdrawing such recommendation. Notwithstanding anything else in
this paragraph, if at any time before the Required Consent has been
obtained, or if Champion otherwise does not have sufficient authorized
shares to fulfill its obligation, (i) Xxxxxxxx shall have the right to
convert and redeem (subject to any restrictions on redemption) Series B
Preferred Shares, the conversion or redemption of which would not cause the
total number of shares issued hereunder to exceed nineteen and ninety-nine
one-hundredths percent (19.99%) of the Original Number (or up to the total
number of available authorized shares, if less) into Common Stock and (ii)
Xxxxxxxx shall have the right to convert and redeem up to that amount of
the Series B Preferred Shares (regardless of any remaining time period that
must pass before redemption may occur under the Certificate of Rights and
Preferences or any Subsequent Certificate of Rights and Preferences), the
conversion or redemption of which would cause the total number of shares
issued hereunder to exceed nineteen and ninety-nine one-hundredths percent
(19.99%) of the Original Number or that number which is unavailable for
issuance, as the case may be, into the rights described herein (the "Excess
Rights"). Xxxxxxxx shall exercise such right to obtain Excess Rights by
delivering one or more written notices in the form attached hereto as Annex
I (an "Excess Rights Notice") to Champion from time to time. The stated
value of the Excess Rights shall be an amount equal to the product of (A)
the Average Price on the Excess Notice Date multiplied by (B) the number of
Common Shares that would be issuable in respect of such conversion but for
the Issuance Blockage (without regard to any requirement to deliver a 65
Day Notice). At any time on or after the date of the first Excess Rights
Notice, Xxxxxxxx may, at its sole option, convert its Excess Rights
13
14
into a new series of Additional Preferred Shares. "Average Price" means (A)
the daily volume weighted average price on the NYSE or, if no such sale
takes place on such date, the average of the closing bid and asked prices
on the NYSE thereof on such date, in each case as reported by Bloomberg,
L.P. (or by such other entity as Xxxxxxxx and Champion may agree), or (B)
if such Common Stock is not then listed or admitted to trading on the NYSE,
the higher of (1) the book value per share thereof as determined by any
firm of independent public accountants of recognized standing selected by
the Board of Directors of Champion as of the last day of any month ending
within sixty (60) days preceding the date as of which the determination is
to be made and (2) the fair value per share thereof determined in good
faith by the Board of Directors of Champion of a date which is within ten
(10) days of the date as of which the determination is to be made
(c) The aggregate number of Common Shares issuable upon
conversion or redemption of the Series B Preferred Shares, when combined
with all shares of Common Stock then beneficially owned (as determined
pursuant to Exchange Act Rule 13d-3) by Xxxxxxxx, shall not exceed the
Maximum Number of shares of Common Stock. The "Maximum Number" equals the
sum of four million six hundred and seventy-four thousand eight hundred and
forty-nine (4,674,849) plus the Exercisable Number. The "Exercisable
Number" is initially zero (0) and thereafter may be increased upon
expiration of a sixty-five (65) day period (the "Notice Period") after
Xxxxxxxx delivers a notice (a "65 Day Notice") to Champion designating an
aggregate number of Common Shares in excess of the Maximum Number which
shall be issuable upon conversion or redemption of the Series B Preferred
Shares. A 65 Day Notice may be given at any time. From time to time
following the Notice Period, Common Stock may be issued to Xxxxxxxx on any
Business Day for any quantity of Common Stock, such that the aggregate
number of shares of Common Stock issued hereunder is less than or equal to
the Maximum Number. Nothing in this Section 6(c) shall limit or apply to
the creation or conversion of Excess Rights under Section 6(b).
8. Representations and Warranties of Xxxxxxxx. Xxxxxxxx hereby
represents and warrants to Champion on each Closing Date:
(a) Xxxxxxxx has been duly incorporated and is validly existing
under the laws of Bermuda.
(b) The execution, delivery and performance of this Agreement by
Xxxxxxxx have been duly authorized by all requisite corporate action and no
further consent or authorization of Xxxxxxxx, its Board of Directors or its
shareholders is required. This Agreement has been duly executed and
delivered by Xxxxxxxx and, when duly authorized, executed and delivered by
Champion, will be a valid and binding agreement enforceable against
Xxxxxxxx in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity.
(c) Xxxxxxxx understands that no United States federal or state
agency has passed on, reviewed or made any recommendation or endorsement of
the Investment Securities.
14
15
(d) Xxxxxxxx is an "accredited investor" as such term is defined
in Regulation D promulgated under the Securities Act.
(e) Xxxxxxxx is purchasing the Investment Securities for its own
account for investment only and not with a view to, or for resale in
connection with, the public sale or distribution thereof in the United
States, except pursuant to sales registered under the Securities Act or an
exemption therefrom.
(f) Xxxxxxxx understands that the Investment Securities are being
or will be offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal securities laws and
that Champion is relying on the truth and accuracy of, and Xxxxxxxx'x
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Xxxxxxxx set forth herein in order to
determine the availability of such exemptions and the eligibility of
Xxxxxxxx to acquire the Investment Securities.
(g) Xxxxxxxx has had access to documents publicly filed with the
SEC by Champion, and has been given a reasonable opportunity to ask
questions of Champion's officers regarding publicly available information
concerning Champion.
9. Right of First Offer. Subject to the terms and conditions specified
in this Section 9, Champion hereby grants to (i) Xxxxxxxx or (ii) any affiliate
or wholly-owned subsidiary of Xxxxxxxx (collectively, the "First Offer
Shareholders"), a right of first offer with respect to future sales by Champion
of its Offered Shares (as hereinafter defined). The term "Offered Shares" means
any shares of, or securities convertible into or exercisable or exchangeable for
any shares of, any class of its capital stock where the aggregate number of
shares or price per share of such capital stock issuable at closing, or upon
conversion, redemption exercise, exchange or otherwise, cannot be determined as
of the date such agreement is entered into or is subject to change as of any
date for any reason other than stock splits, recombinations, stock dividends or
the like. Each time Champion has a bona fide intention to offer to sell to a
third party any Offered Shares, Champion shall first negotiate with the First
Offer Shareholders to sell such Offered Shares in accordance with the following
provisions:
(a) Champion shall deliver a notice in accordance with Section 20
of this Agreement ("Offer Notice") to Xxxxxxxx stating (i) its bona fide
intention to offer such Offered Shares, (ii) the number of such Offered
Shares proposed to be offered and (iii) the price and terms upon which it
proposes to offer such Offered Shares.
(b) For three (3) Business Days after delivery of the Offer
Notice, Champion shall negotiate exclusively and in good faith with the
First Offer Shareholders with respect to the proposed sale of Offered
Shares and Champion shall not enter into or continue negotiations with,
respond to, furnish information to, or consummate any transaction with any
person or entity concerning any transaction regarding any shares of, or
securities convertible into or exercisable or exchangeable for any shares
of, any class of its capital stock.
15
16
(c) Within three (3) Business Days after delivery of the Offer
Notice, the First Offer Shareholders may elect by delivering a written
notice to Champion, to purchase or obtain, at the price and on the terms
specified in the Offer Notice (or on terms that are substantially similar
to, or more favorable to Champion than, the terms contained in the Offer
Notice), all but not less than all of the Offered Shares; provided, that
Champion shall use commercially reasonable efforts to cause the First Offer
Shareholders to be able to participate in the purchase of the Offered
Shares to the extent the First Offer Shareholders desire to do so. If the
Offer Notice specifies consideration other than cash is to be paid for the
Offered Shares, the First Offer Shareholders may, at their sole option, (if
they choose to purchase such Offered Shares) deliver either of (i) such
consideration or (ii) cash equal to the fair market value of such
consideration on the date and at the time such offer is accepted. The
closing of any such transaction shall occur not later than twenty (20)
Business Days after Champion receives written notice of such election. If
the First Offer Shareholders do not so elect within three (3) days after
delivery of the Offer Notice or if Champion and the First Offer
Shareholders are unable to reach agreement on the terms of a sale of the
Offered Shares to the First Offer Shareholders, then Champion may sell the
Offered Shares to any Person at the price and on terms that are no less
favorable to Champion than the terms contained in the Offer Notice within
ninety (90) days after the date of the Offer Notice.
(d) The right of first offer in this Section 9 shall not be
applicable to any issuance or sale of the following securities.
(i) Common Stock issued as consideration for the acquisition
of at least fifty percent (50%) of the voting capital stock or assets
of a bona fide operating company in a similar or complementary line of
business to that of Champion, as determined reasonably and in good
faith by Champion's Board of Directors whether through purchase,
merger, consolidation, tender offer or otherwise, provided that the
purpose of Champion entering into any such transaction shall not be to
raise capital, directly or indirectly, or otherwise to avoid the
requirements of this Section 9;
(ii) Common Stock issued pursuant to any stock split,
dividend or distribution payable in additional shares of Common Stock
or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of
Common Stock without payment of any consideration by such holder;
(iii) Common Stock issuable or issued to employees,
consultants or directors of Champion directly or pursuant to a stock
option plan, employee stock purchase plan or restricted stock plan, or
other similar arrangements related to compensation for services in
effect on the date of this Agreement or approved by Champion's
shareholders, in each case in the ordinary course of business
consistent with Champion's past practice; or
16
17
(iv) Common Stock issued as dividends on, or upon conversion
or redemption of, Champion's Series A Preferred Stock outstanding as
of the date of this Agreement and Series B Preferred Shares.
(v) Common Stock issued in a bona fide firm commitment
underwritten offering to the public with net proceeds of at least
twenty-five million dollars ($25,000,000) to Champion, after
underwriter's discounts or commissions and other fees or expenses.
(e) Notwithstanding the provisions of this Section 9, the right
of first offer hereunder shall apply only during those periods from time to
time when Xxxxxxxx, together with its affiliates and wholly-owned
subsidiaries, owns Series B Preferred Shares (i) convertible or redeemable
(without regard to any 65 Day Notice requirement, Issuance Blockage or
passage of time required until the redemption rights vest) into a number of
Common Shares that exceeds three and one-half percent (3.5%) of the
Original Number or (ii) with an aggregate Redemption Amount of at least
fifteen million dollars ($15,000,000).
10. Covenants of Champion. Champion covenants and agrees with Xxxxxxxx
as follows:
(a) For so long as Xxxxxxxx owns or has the right to purchase any
Series B Preferred Shares, and for a period of one (1) year thereafter,
Champion will (i) maintain the eligibility of the Common Stock for listing
on the New York Stock Exchange, Nasdaq National Market, or American Stock
Exchange and (ii) regain the eligibility of the Common Stock for listing or
quotation on all markets and exchanges including the New York Stock
Exchange, Nasdaq National Market, or American Stock Exchange, in the event
that the Common Stock is delisted by the New York Stock Exchange or any
other applicable market or exchange; and will use commercially reasonable
efforts to (iii) cause the representations and warranties contained in
Section 4 to be and remain true and correct.
(b) Champion will provide Xxxxxxxx with an opportunity, which
shall not be less than one (1) full Business Day to review and comment on
any public disclosure by Champion of information regarding this Agreement
and the transactions contemplated hereby, prior to such public disclosure.
Beginning on the date hereof and for so long as Xxxxxxxx owns or has the
right to purchase any Series B Preferred Shares and for a period of ninety
(90) days thereafter, Champion will promptly notify Xxxxxxxx immediately
following any press release or other information disseminated to any
shareholder, analyst, or media source.
(c) As soon as such information is available (but in no event
later than two (2) weeks after the Closing Date), Champion shall deliver to
Xxxxxxxx a written notice stating the number of outstanding shares of
Common Stock as of the Initial Closing Date.
(d) Champion will make all filings required by law with respect
to the transactions contemplated hereby.
17
18
(e) Champion will comply with the terms and conditions of the
Series B Preferred Shares as set forth in the Certificate of Rights and
Preferences and Subsequent Certificates of Rights and Preferences, and will
not amend the Certificate of Rights and Preferences or Subsequent
Certificates of Rights and Preferences without the required consent of the
holders of Series B Preferred Shares.
(f) For so long as Xxxxxxxx holds any Series B Preferred Shares
or Xxxxxxxx Rights, prior to the filing of each of its quarterly reports on
Form 10-Q with the SEC, Champion shall deliver to Xxxxxxxx a review report
relating to the final consolidated unaudited financial statements contained
therein, prepared by PricewaterhouseCoopers LLP in accordance with
Statements of Auditing Standard No. 71. For so long as Xxxxxxxx holds any
Series B Preferred Shares or Xxxxxxxx Rights, Xxxxxxxx shall pay for
one-half (1/2) of the cost of the two (2) such quarterly reviews for the
quarters ending March 31 and September 30 of each year for up to an
aggregate maximum of $50,000; provided, however, that Champion shall pay
all other amounts payable for such reports and the full amount payable for
the quarter ending June 30 of each year.
(g) Champion shall use commercially reasonable efforts to cause
the Common Shares to be eligible for book-entry transfer through The
Depository Trust Company (or any successor thereto) as soon as practicable
after the date of this Agreement and thereafter to use commercially
reasonable efforts to maintain such eligibility.
(h) Champion shall at all times reserve for issuance such number
of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all such Series B Preferred Shares and to satisfy
its delivery obligation upon such conversion and to effect the redemption
of the Series B Preferred Shares.
(i) Champion shall deliver a notice (an "Increase Notice")
stating the increase, if any, in the aggregate number of shares of Common
Stock outstanding as of the last day of the preceding month over the number
outstanding as of the last day of the second preceding month, or in the
case of the last day of the month immediately following the Initial Closing
Date, the number of shares outstanding specified in Section 4(l). Unless
expressly waived by Xxxxxxxx, Champion shall deliver an Increase Notice to
Xxxxxxxx on or before the tenth (10th) day of every calendar month from and
including the Initial Closing Date;
(j) Champion shall, within one (1) Business Day after and
excluding each Closing Date publicly distribute a press release disclosing
the material terms of such Closing and shall, within three (3) Business
Days after and excluding each Closing Date file a report with the SEC on
Form 8-K with respect to the same.
11. Consolidation, Merger, Etc. In case Champion shall be a party to
any Business Combination (as defined in the Certificate of Rights and
Preferences or Subsequent Certificates of Rights and Preferences), Xxxxxxxx and
its assigns shall have the rights set forth in the Certificate of Rights and
Preferences and Subsequent Certificates of Rights and Preferences regarding
Business Combinations in addition to the rights contained in this Agreement.
18
19
"Acquirer" means, in connection with any Business Combination, the continuing or
surviving corporation of a consolidation or merger with Champion (if other than
Champion), the transferee of all or substantially all of the properties or
assets of the Company, the corporation consolidating with or merging into
Champion in a consolidation or merger in connection with which Common Stock is
changed into or exchanged for stock or other securities of any other person or
cash or any other property, or, in the case of a capital reorganization or
reclassification, Champion. Champion agrees that it will not enter into an
agreement with an Acquirer for a Business Combination unless such agreement
expressly obligates the Acquirer to assume all of Champion's obligations under
this Agreement, the Certificate of Rights and Preferences and the Subsequent
Certificates of Rights and Preferences including, but not limited to, the
dividend, liquidation, conversion, exercise, redemption, voting and other
provisions regarding the Series B Preferred Stock and the Xxxxxxxx Rights
contained herein and therein. Without limiting the foregoing, all unexercised
and unexpired Xxxxxxxx Rights shall automatically be converted into equivalent
rights with respect to the Acquirer including, but not limited to, the right to
receive the equivalent of the Additional Preferred Shares issuable upon the
exercise of such rights and to receive the consideration for such Additional
Preferred Shares set forth in Section 6(F) of the Subsequent Certificate of
Rights and Preferences governing such series of Additional Preferred Shares;
provided that if the Company delivers to Xxxxxxxx a written notice in the form
attached as Annex K hereto stating its election to redeem the Xxxxxxxx Rights no
later than the fifteenth (15th) calendar day after and excluding the date on
which the proposed Business Combination is first publicly disclosed and no later
than the fifteenth (15th) calendar day before and excluding the closing date of
such Business Combination, then upon such closing date, any Xxxxxxxx Rights that
remain unexercised as of such closing date shall be redeemed and Champion shall
pay to Xxxxxxxx (or shall cause Acquirer to pay to Xxxxxxxx) on or before such
closing date cash equal to the product of (i) the aggregate amount of such
Xxxxxxxx Rights multiplied by (ii) the Merger Payment Percentage (as defined in
the Certificate of Rights and Preferences). On or before the date an agreement
is entered into with an Acquirer for a Business Combination, the Company shall
deliver to Xxxxxxxx written notice that the Acquirer has assumed such
obligations. Provided that Champion is in compliance with this Section 11 and
Section 6(F) of the Certificate of Rights and Preferences and each Subsequent
Certificate of Rights and Preferences, Xxxxxxxx and other holders of Series B
Preferred Shares shall vote their Series B Preferred Shares in favor of any
Business Combination upon which, in accordance with applicable law or the
Certificate of Rights and Preferences or any Subsequent Certificate of Rights
and Preferences, Xxxxxxxx or such holders shall have the right to vote as a
single class not aggregated with holders of the Common Stock; provided, however,
that the Business Combination agreements must provide either for (i) such
rights, preferences and privileges for the Series B Preferred Shares pursuant to
the provisions of this Agreement, the Certificate of Rights and Preferences or
any Subsequent Certificate of Rights and Preferences or (ii) the redemption of
any unexercised and unexpired Xxxxxxxx Rights as provided in this Section 11,
and the payment in exchange for the Series B Preferred Shares pursuant to a
Business Combination Restriction Notice under Section 6F of the Certificate of
Rights and Preferences and any Subsequent Certificate of Rights and Preferences.
Notwithstanding the foregoing, this Section 11 shall not be construed to
obligate Xxxxxxxx or its assigns to vote their Common Shares in favor of any
Business Combination.
12. Covenants of Xxxxxxxx. Xxxxxxxx hereby covenants and agrees with
Champion that:
19
20
(a) Neither Xxxxxxxx, nor any of its affiliates, will at any time
offer or sell any Investment Securities other than pursuant to registration
under the Securities Act or pursuant to an available exemption therefrom.
(b) Neither Xxxxxxxx, nor any of its affiliates, shall engage an
underwriter for an underwritten public offering of Common Shares, unless
such underwriter shall be reasonably satisfactory to Champion.
(c) Neither Xxxxxxxx, nor any of its affiliates, shall engage in
short sales of Champion's securities.
13. Legend. Subject to Section 5, Xxxxxxxx understands that the
certificates or other instruments representing the Investment Securities shall
bear a restrictive legend in the following form (and a stop transfer order may
be placed against transfer of such certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, OR (2) THE SALE IS MADE IN ACCORDANCE WITH RULE
144 OR (3) THE SALE IS MADE IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION
UNDER THE SECURITIES ACT AND THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
The legend set forth above shall be removed and Champion shall issue a
certificate without such legend to any holder of Investment Securities if,
unless otherwise required by state securities laws, (a) such shares are sold
pursuant to Rule 144 or an effective Registration Statement under the Securities
Act, or (b) such holder provides Champion with an opinion of counsel reasonably
satisfactory to Champion that such shares may be publicly sold pursuant to an
exemption from such registration requirements without restriction.
14. Conditions Precedent to Xxxxxxxx'x Obligations. The obligations of
Xxxxxxxx hereunder are subject to the performance by Champion of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent, unless expressly waived in writing by Xxxxxxxx:
(a) On each Closing Date, (i) the representations and warranties
made by Champion in this Agreement shall be true and correct, except those
representations and warranties which address matters only as of a
particular date, which shall be true and correct as of such date; (ii)
Champion shall have complied fully with all of the covenants
20
21
and agreements in this Agreement; and (iii) Xxxxxxxx shall have received
(A) on the Initial Closing Date a certificate of the Chief Financial
Officer of Champion dated such date and to such effect and (B) on each
Subsequent Closing Date a certificate of the Chief Executive Officer and
the Chief Financial Officer of Champion dated such date and to such effect.
(b) On each Closing Date, Champion shall have delivered to
Xxxxxxxx an opinion of Xxxxxx Xxxxxxx PLLC reasonably satisfactory to
Xxxxxxxx, dated the date of delivery, confirming in substance the matters
covered in paragraphs (a), (b), (c), (d), (e), (f) and subsection (i) of
(g) of Section 4 hereof and to the effect that the offer and sale of the
Investment Securities to Xxxxxxxx hereunder do not require registration
under the Securities Act.
(c) On the Initial Closing Date, Xxxxxxxx shall have received a
letter from PricewaterhouseCoopers LLP to the effect that, as of such date,
it consents to the inclusion in this Agreement of the Auditor Report. On
each Subsequent Closing Date, Xxxxxxxx shall receive a report of
PricewaterhouseCoopers LLP, together with the accompanying consolidated
financial statement and schedules of Champion and results of Champion's
operations and cash flows, as such report appears in the most recent Form
10-K filed by Champion with the SEC.
(d) On or prior to each Subsequent Closing Date, Champion shall
have filed with the Michigan Secretary of State a Subsequent Certificate of
Rights and Preferences, with terms and conditions of the applicable series
of Additional Preferred Shares as required by this Agreement.
15. Conditions Precedent to Champion's Obligations. The obligations of
Champion hereunder are subject to the performance by Xxxxxxxx of its obligations
hereunder and to the satisfaction (unless expressly waived in writing by
Champion) of the additional conditions precedent that, on each Closing Date: (i)
the representations and warranties made by Xxxxxxxx in this Agreement shall be
true and correct; (ii) Xxxxxxxx shall have complied fully with all the covenants
and agreements in this Agreement; and (iii) Champion shall have received on each
such date a certificate of an appropriate officer of Xxxxxxxx dated such date
and to such effect.
16. Fees and Expenses. Each of Xxxxxxxx and Champion agrees to pay its
own expenses incident to the performance of its obligations hereunder,
including, but not limited to the fees, expenses and disbursements of such
party's counsel, except as is otherwise expressly provided in this Agreement.
17. Non-Performance.
(a) If Champion, at any time, shall fail to deliver the
Investment Securities to Xxxxxxxx required to be delivered pursuant to this
Agreement, in accordance with the terms and conditions of this Agreement,
for any reason other than the failure of any condition precedent to
Champion's obligations hereunder or the failure by Xxxxxxxx to comply with
its obligations hereunder, then Champion shall:
21
22
(i) indemnify and hold Xxxxxxxx harmless against any loss,
claim or damage (including without limitation, incidental and
consequential damages) arising from or as a result of such failure by
Champion; and
(ii) reimburse Xxxxxxxx for all of its reasonable
out-of-pocket expenses, including fees and disbursements of its
counsel, incurred by Xxxxxxxx in connection with this Agreement and
the transactions contemplated herein and therein.
(b) If Xxxxxxxx, at any time, shall fail to make the payments to
Champion required to be delivered pursuant to this Agreement, in accordance
with the terms and conditions of this Agreement, for any reason other than
the failure of any condition precedent to Xxxxxxxx'x obligations hereunder
or the failure by Champion to comply with its obligations hereunder, then
Xxxxxxxx shall:
(i) indemnify and hold Champion harmless against any loss,
claim or damage (including without limitation, incidental and
consequential damages) arising from or as a result of such failure by
Xxxxxxxx; and
(ii) reimburse Champion for all of its reasonable
out-of-pocket expenses, including fees and disbursements of its
counsel, incurred by Champion in connection with this Agreement and
the transactions contemplated herein and therein.
18. Indemnification.
(a) Indemnification of Xxxxxxxx. Champion hereby agrees to
indemnify Xxxxxxxx and each of its officers, directors, employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Exchange Act) any of the foregoing persons (each a "Xxxxxxxx
Indemnified Party") against any claim, demand, action, liability, damages,
loss, cost or expense (including, without limitation, reasonable legal fees
and expenses) (a "Proceeding"), that it may incur in connection with any of
the transactions contemplated hereby arising out of or based upon:
(i) any untrue or alleged untrue statement of a material
fact in a SEC Filing by Champion or any of its affiliates or any
person acting on its or their behalf or omission or alleged omission
to state therein any material fact necessary in order to make the
statements, in the light of the circumstances under which they were
made, not misleading by Champion or any of its affiliates or any
person acting on its or their behalf;
(ii) any of the representations or warranties made by
Champion herein being untrue or incorrect at the time such
representation or warranty was made; and
(iii) any breach or non-performance by Champion of any of
its covenants, agreements or obligations under this Agreement, the
Certificate of Rights and Preferences and Subsequent Certificates of
Rights and Preferences;
22
23
and Champion hereby agrees to reimburse each Xxxxxxxx Indemnified Party for any
reasonable legal or other expenses incurred by such Xxxxxxxx Indemnified Party
in investigating or defending any such Proceeding; provided, however, that the
foregoing indemnity shall not apply to any Proceeding to the extent that it
arises out of, or is based upon, the gross negligence or willful misconduct of
Xxxxxxxx in connection therewith. Furthermore, the foregoing indemnity rights
will not take effect unless and until the total amount of the indemnification in
the aggregate is ten thousand dollars ($10,000) or greater.
(b) Indemnification of Champion. Xxxxxxxx hereby agrees to
indemnify Champion and each of its officers, directors, employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Exchange Act) any of the foregoing persons (each a "Champion
Indemnified Party") against any Proceeding, that it may incur in connection
with any of the transactions contemplated hereby arising out of or based
upon:
(i) any untrue or alleged untrue statement of a material
fact included in an SEC filing by Champion with the express written
consent of Xxxxxxxx therefor by Xxxxxxxx or any of its affiliates or
any person acting on its or their behalf or omission or alleged
omission to state any such material fact necessary in order to make
the statements, in the light of the circumstances under which they
were made, not misleading by Xxxxxxxx or any of its affiliates or any
person acting on its or their behalf;
(ii) any of the representations or warranties made by
Xxxxxxxx herein being untrue or incorrect at the time such
representation or warranty was made; and
(iii) any breach or non-performance by Xxxxxxxx of any of
its covenants, agreements or obligations under this Agreement;
and Xxxxxxxx hereby agrees to reimburse each Champion Indemnified Party for any
reasonable legal or other expenses incurred by such Champion Indemnified Party
in investigating or defending any such Proceeding; provided, however, that the
foregoing indemnity shall not apply to any Proceeding to the extent that it
arises out of, or is based upon, the gross negligence or willful misconduct of
Champion in connection therewith. Furthermore, the foregoing indemnity rights
will not take effect unless and until the total amount of the indemnification in
the aggregate is ten thousand dollars ($10,000) or greater.
(c) Conduct of Claims.
(i) Whenever a claim for indemnification shall arise under
this Section 18, the party seeking indemnification (the "Indemnified
Party"), shall notify the party from whom such indemnification is
sought (the "Indemnifying Party") in writing of the Proceeding and the
facts constituting the basis for such claim in reasonable detail;
23
24
(ii) Such Indemnifying Party shall have the right to retain
the counsel of its choice in connection with such Proceeding and to
participate at its own expense in the defense of any such Proceeding;
provided, however, that counsel to the Indemnifying Party shall not
(except with the consent of the relevant Indemnified Party) also be
counsel to such Indemnified Party. In no event shall the Indemnifying
Party be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances; and
(iii) No Indemnifying Party shall, without the prior written
consent of the Indemnified Parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Section unless such
settlement, compromise or consent (A) includes an unconditional
release of each Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim and (B) does not
include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Party.
19. Survival of the Representations, Warranties, etc. The respective
representations, warranties, and agreements made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of and payment for any Investment
Securities issuable hereunder.
20. Notices. All communications hereunder shall be in writing and
delivered as set forth below.
(a) If sent to Xxxxxxxx, all communications shall be delivered by
hand, sent by reputable overnight courier or transmitted and confirmed by
facsimile to Xxxxxxxx, unless otherwise notified in writing of a substitute
address, at:
Xxxxxxxx International, Ltd.
C/o A. S. & K. Services Ltd.
Xxxxx Xxxxx, 00 Xxxxx Xxxxxx
Xxxxxxxx XX XX
Bermuda
Attention: Xxxxxxxx Xxxxxx, Corporate Administrator
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
24
25
Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If sent to Champion, all communications shall be delivered by
hand, sent by reputable overnight courier or transmitted and confirmed by
facsimile to Champion, unless otherwise notified in writing of a substitute
address, at:
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx PLLC
00000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Attention: D. Xxxxxxx XxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the extent that any funds shall be delivered to Champion by wire transfer,
unless otherwise instructed by Champion, such funds should be delivered in
accordance with the following wire instructions:
Champion Enterprises, Inc.
Account Number: 1076-118940
ABA Number: 000000000
Bank: Comerica Bank
Account Name: Champion Enterprises, Inc.
25
26
21. Miscellaneous.
(a) The parties may execute and deliver this Agreement as a
single document or in any number of counterparts, manually, by facsimile or
by other electronic means, including contemporaneous xerographic or
electronic reproduction by each party's respective attorneys. Each
counterpart shall be an original, but a single document or all counterparts
together shall constitute one instrument that shall be the agreement. This
Agreement shall become effective when each party executes and delivers this
Agreement to the other party.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and assigns and, with
respect to Section 18 hereof, shall inure to the benefit of their
respective officers, directors, employees, agents, affiliates and
controlling persons, and no other person shall have any right or obligation
hereunder. Champion may not assign this Agreement. Notwithstanding anything
to the contrary in this Agreement, Xxxxxxxx may assign, pledge, hypothecate
or transfer any of the rights and associated obligations contemplated by
this Agreement (including, but not limited to, the Series B Preferred
Shares and the Common Shares), in whole or in part, at its sole discretion
(including, but not limited to, assignments, pledges, hypothecations and
transfers in connection with financing or hedging transactions with respect
to this Agreement, the Series B Preferred Shares and the Common Shares),
provided that any such assignment, pledge, hypothecation or transfer must
comply with applicable federal and state securities laws, and provided
further that the rights contained in Section 9 hereof may not be assigned,
pledged, hypothecated or transferred. No person acquiring Common Stock from
Xxxxxxxx pursuant to a public market purchase shall thereby obtain any of
the rights contained in this Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings,
both written and oral, between the parties hereto with respect to the
subject matter of this Agreement. Except as provided in this Section 21(b),
this Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. Notwithstanding the
provisions of this Section 21(b) set forth above, Xxxxxxxx shall not
assign, pledge, hypothecate or transfer any of the rights or associated
obligations contemplated by this Agreement (including, but not limited to,
the Series B Preferred Shares and the Common Shares), in whole or in part,
to any entity set forth on Schedule 21(b) hereto; provided that this
restriction shall not apply to (i) any such assignment, pledge,
hypothecation or transfer in connection with a Business Combination (as
defined in the Certificate of Rights and Preferences or any Subsequent
Certificate of Rights and Preferences) that is approved at any time by the
requisite vote of the Company's shareholders or Board of Directors or (ii)
the tender of Common Stock in any publicly announced tender offer.
(c) This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, and each of
the parties hereto hereby submits to the non-exclusive jurisdiction of any
state or federal court in the State of New York and any court hearing any
appeal therefrom, over any suit, action or proceeding against it arising
out of or based upon this Agreement (a "Related Proceeding"). Each of the
parties hereto hereby waives any objection to any Related Proceeding in
such courts
26
27
whether on the grounds of venue, residence or domicile or on the ground
that the Related Proceeding has been brought in an inconvenient forum.
(d) Each party represents and acknowledges that, in the
negotiation and drafting of this Agreement and the other instruments and
documents required or contemplated hereby, it has been represented by and
relied upon the advice of counsel of its choice. Each party hereby affirms
that its counsel has had a substantial role in the drafting and negotiation
of this Agreement and such other instruments and documents. Therefore, each
party agrees that no rule of construction to the effect that any
ambiguities are to be resolved against the drafter shall be employed in the
interpretation of this Agreement and such other instruments and documents.
(e) Without prejudice to other rights or remedies hereunder
(including any specified interest rate), and except as otherwise expressly
set forth herein, interest shall be due on any amount that is due pursuant
to this Agreement and has not been paid when due, calculated for the period
from and including the due date to but excluding the date on which such
amount is paid at the prime rate of U.S. money center banks as published in
The Wall Street Journal (or if The Wall Street Journal does not exist or
publish such information, then the average of the prime rates of three U.S.
money center banks agreed to by the parties) plus two percent (2%).
(f) Xxxxxxxx and Champion stipulate that the remedies at law of
the parties hereto in the event of any default or threatened default by
either party in the performance of or compliance with any of the terms of
this Agreement, the Certificate of Rights and Preferences and the
Subsequent Certificates of Rights and Preferences are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may
be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
(g) Any and all remedies set forth in this Agreement, the
Certificate of Rights and Preferences and Subsequent Certificates of Rights
and Preferences: (i) shall be in addition to any and all other remedies
Xxxxxxxx or Champion may have at law or in equity, (ii) shall be
cumulative, and (iii) may be pursued successively or concurrently as each
of Xxxxxxxx and Champion may elect. The exercise of any remedy by Xxxxxxxx
or Champion shall not be deemed an election of remedies or preclude
Xxxxxxxx or Champion, respectively, from exercising any other remedies in
the future.
(h) Champion agrees that the parties have negotiated in good
faith and at arms' length concerning the transactions contemplated herein,
and that Xxxxxxxx would not have agreed to the terms of this Agreement
without each and every of the terms, conditions, protections and remedies
provided herein and the Certificate of Rights and Preferences. Except as
specifically provided otherwise in this Agreement, the Certificate of
Rights and Preferences and the Subsequent Certificates of Rights and
Preferences, Champion's obligations to indemnify and hold Xxxxxxxx harmless
in accordance with Section 18 of this Agreement are obligations of Champion
that Champion promises to pay to Xxxxxxxx when and if they become due.
Champion shall record any such
27
28
obligations on its books and records in accordance with U.S. generally
accepted accounting principles. Except as specifically provided otherwise
in this Agreement, the Certificate of Rights and Preferences and the
Subsequent Certificates of Rights and Preferences, Xxxxxxxx'x obligations
to indemnify and hold Champion harmless in accordance with Section 18 of
this Agreement are obligations of Xxxxxxxx that Xxxxxxxx promises to pay to
Champion when and if they become due. Xxxxxxxx shall record any such
obligations on its books and records in accordance with U.S. generally
accepted accounting principles.
(i) This Agreement may be amended, modified or supplemented in
any and all respects, but only by a written instrument signed by Xxxxxxxx
and Champion expressly stating that such instrument is intended to amend,
modify or supplement this Agreement.
(j) Each of the parties will cooperate with the others and use
its best efforts to prepare all necessary documentation, to effect all
necessary filings, and to obtain all necessary permits, consents, approvals
and authorizations of all governmental bodies and other third-parties
necessary to consummate the transactions contemplated by this Agreement.
(k) For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires: (i) the terms defined in
this Agreement have the meanings assigned to them in this Agreement and
include the plural as well as the singular, and the use of any gender
herein shall be deemed to include the other gender and neuter gender of
such term; (ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with U.S. generally accepted
accounting principles; (iii) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement, unless the context shall otherwise
require; (iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions; (v) the words "herein", "hereof",
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular provision; (vi) the term "include" or
"including" shall mean without limitation; (vii) the table of contents to
this Agreement and all section titles or captions contained in this
Agreement or in any Schedule or Exhibit annexed hereto or referred to
herein are for convenience only and shall not be deemed a part of this
Agreement and shall not affect the meaning or interpretation of this
Agreement; (viii) any agreement, instrument or statute defined or referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statues and references to all
attachments thereto and instruments incorporated therein; and (ix)
references to a person are also to its permitted successors and assigns
and, in the case of an individual, to his or her heirs and estate, as
applicable.
28
29
(l) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that
the court making such determination shall have the power to reduce the
scope, duration, area or applicability of the term or provision, to delete
specific words or phrases, or to replace any invalid, void or unenforceable
term or provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or
unenforceable term or provision. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent
possible.
(m) Time shall be of the essence in this Agreement.
[SIGNATURE PAGE FOLLOWS]
29
30
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
CHAMPION ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------------
Title: EVP & CFO
-----------------------------------
XXXXXXXX INTERNATIONAL, LTD., by its duly
authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
------------------------------------
Title: Deputy CEO
-----------------------------------
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
------------------------------------
Title: Executive Vice President
-----------------------------------
30
31
ANNEX A
[FORM OF CERTIFICATE OF RIGHTS AND PREFERENCES OF
CLASS B-1 CUMULATIVE CONVERTIBLE PREFERRED STOCK OF
CHAMPION ENTERPRISES, INC.]
A-1
32
ANNEX B
[FORM OF XXXXXXXX NOTICE]
-------------, --
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention:
Ladies and Gentlemen:
Xxxxxxxx International, Ltd. ("Xxxxxxxx") hereby elects to exercise
the Xxxxxxxx Rights (as defined in the Agreement (the "Agreement") dated as of
June 29, 2001 by and between Xxxxxxxx and Champion Enterprises, Inc. Capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Agreement.
In accordance with the terms of Section 3 of the Agreement, the
Additional Issuance Price shall be and the Subsequent
Closing Date shall be .
XXXXXXXX INTERNATIONAL, LTD., by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
B-1
33
AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
B-2
34
ANNEX C
[FORM OF REDEMPTION NOTICE]
-------------, --
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention:
Ladies and Gentlemen:
Xxxxxxxx International, Ltd. ("Xxxxxxxx") hereby elects to exercise
the Redemption Rights (as defined in the Agreement (the "Agreement") dated as of
June 29, 2001 by and between Xxxxxxxx and Champion Enterprises, Inc. as to
shares of the Series B-[1] Cumulative Convertible Preferred Stock of
Champion Enterprises, Inc. Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.
XXXXXXXX INTERNATIONAL, LTD., by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
C-1
35
AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
C-2
36
ANNEX D
[FORM OF CHAMPION NOTICE]
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx") and the Redemption Notice dated .
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
Champion hereby elects to redeem shares of Series B-[1]
Cumulative Convertible Preferred Stock pursuant to Sections 1.d of the Agreement
and Section 6(B) of the Certificate of Rights and Preferences with:
IF CASH ELECTION STATE AMOUNT OF CASH
CASH
----------------
IF COMMON STOCK ELECTION STATE AMOUNT OF COMMON STOCK AND BASIS FOR CALCULATION
REGISTERED COMMON STOCK
----------------
UNREGISTERED COMMON STOCK
----------------
CHAMPION ENTERPRISES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
D-1
37
ANNEX E
[FORM OF DELIVERY NOTICE]
[date]
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.
Attached are copies of the front and back of (i) the [ ] original
stock certificates, each representing [ ] shares of Series B-1 Preferred
Stock, purchased by Xxxxxxxx on the date hereof and, together with a copy of the
overnight courier air xxxx which will be used to ship such stock certificates.
We have the executed original stock certificates and other documents required to
be delivered in connection with the Initial Closing Date. Upon our confirmation
of the payment of the [$ ] aggregate purchase price therefor, we will send
the original stock certificates by overnight courier to the following address:
Ms. Ele Stathatos
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
and we will send the other original documents by overnight courier to the
following address:
Xxxxxxxx International, Ltd.
C/o A.S.& K. Services Ltd.
Xxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxxxxxxx XX XX
Bermuda
Attn: Xxxxxxxx Xxxxxx, Corporate Administrator
Telephone: 000-000-0000
E-1
38
with a copy to:
Xxxxxxxx International Limited
c/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
Attached hereto as Exhibit 1 is a true, correct and complete copy of
the most recent report of PricewaterhouseCoopers LLP to the Board of Directors
and Shareholders of Champion, together with the accompanying consolidated
financial statements and schedules of Champion, as such report appears in the
most recent Annual Report on Form 10-K filed by Champion with the SEC, as well
as all Quarterly Reports on Form 10-Q filed by Champion with the SEC since the
date of such Form 10-K, together with all amendments thereto.
CHAMPION ENTERPRISES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
E-2
39
Exhibit 1
AUDITOR REPORT
[see attached]
1-1
40
ANNEX F
[AUDITOR REPORT]
[see tab ]
F-1
41
ANNEX G
[FORM OF PREFERRED STOCK CONVERSION NOTICE]
[date]
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention:
Telephone:
Facsimile:
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.
Xxxxxxxx hereby elects to convert shares of Series B[ ]
Preferred Stock into shares of Common Stock at a Conversion Price (as
defined in the Certificate of Rights and Preferences/Subsequent Certificate of
Rights and Preferences) of . In accordance with Section 6 of the
Certificate of Rights and Preferences/Subsequent Certificate of Rights and
Preferences, such shares of Common Stock shall be delivered to Xxxxxxxx [in
uncertificated form by book-entry transfer][in certificated form at the address
specified below:]
[delivery address to be added, if applicable:
Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, XX 00000
Attn: Ele Stathatos
Telephone: (000) 000-0000]
G-1
42
XXXXXXXX INTERNATIONAL, LTD., by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
G-2
43
ANNEX H
[FORM OF PREFERRED STOCK CONVERSION DELIVERY NOTICE]
[date]
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.
This notice confirms that shares of Series B[ ] Preferred Stock
have been converted by Xxxxxxxx into shares of Common Stock at a Conversion
Price (as defined in the Certificate of Rights and Preferences/Subsequent
Certificate of Rights and Preferences) of . [If the shares are being
delivered by book entry transfer, insert the following - Such shares of Common
Stock have been delivered to Xxxxxxxx in uncertificated form by book-entry
transfer.][If the shares are being delivered in physical form to the holder,
insert the following - Attached are copies of the front and back of the
original stock certificates, each representing shares of Common Stock,
together with a copy of the overnight courier air xxxx which will be used to
ship such stock certificates. We will send the original stock certificates by
overnight courier to the following address:
Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, XX 00000
Attn: Ele Stathatos
Telephone: (000) 000-0000
H-1
44
with a copy to:
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx]
[If Preferred Stock certificates tendered by Xxxxxxxx are not being fully
converted, insert the following - Also attached are copies of the front and back
of the original stock certificate representing shares of Series B[ ]
Preferred Stock, representing the unconverted portion of the tendered Series
B[ ] Preferred Stock certificates, together with a copy of the overnight
courier air xxxx which will be used to ship such stock certificate. We will send
the original stock certificate by overnight courier to Xxxxxx Brothers Inc. at
the address set forth in the previous paragraph.]
CHAMPION ENTERPRISES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
H-2
45
ANNEX I
[FORM OF EXCESS RIGHTS NOTICE]
-------------, --
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention:
Ladies and Gentlemen:
Xxxxxxxx International, Ltd. ("Xxxxxxxx") hereby elects to exercise
its right to convert/redeem some or all of its Series B Preferred Shares (as
defined in the Agreement (the "Agreement")) dated as of June 29, 2001 by and
between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx and, in lieu of
receipt of Common Shares upon [conversion][redemption] of
Series B Preferred Shares, hereby requests creation of Excess Rights with a
stated value of $ in accordance with the terms of the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
XXXXXXXX INTERNATIONAL, LTD., by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
I-1
46
AGREED AND ACKNOWLEDGED:
CHAMPION ENTERPRISES, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
I-2
47
ANNEX J
[FORM OF FIVE YEAR CONVERSION NOTICE]
[date]
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx") and the [Certificate of Rights and Preference
of the Series B-[ ] Cumulative Convertible Preferred Stock (the "Certificate")].
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement and the Certificate.
In compliance with Section 6(A)(i) of the Certificate, Champion hereby
elects to convert shares of Series B-[ ] Cumulative Preferred Stock,
which represents, all but not less than all of the shares of Series B-[ ]
Cumulative Preferred Stock. In compliance with Section 6(A)(i) of the
Certificate, Champion hereby represents that the Company has sufficient
Registered Common Stock to deliver to the Holder or Holders upon the closing of
such conversion.
CHAMPION ENTERPRISES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
J-1
48
ANNEX K
[FORM OF BUSINESS COMBINATION RESTRICTION NOTICE]
[date]
Xxxxxxxx International, Ltd.
C/x Xxxxxxxx Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June
29, 2001 by and between Champion Enterprises, Inc. ("Champion") and Xxxxxxxx
International, Ltd. ("Xxxxxxxx"), the Certificate of Rights and Preferences and
Subsequent Certificates of Rights and Preferences. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement and the Certificate.
Champion hereby represents that public disclosure has been made of a
Business Combination. [It hereby elects, pursuant to Section 6(F) of the
Certificate of Rights and Preferences and all Subsequent Certificates of Rights
and Preferences to redeem all outstanding Series B Preferred Shares for cash in
the amount of $ .][It hereby [further] elects, pursuant to Section
11 of the Agreement to redeem all outstanding Xxxxxxxx Rights for cash in the
amount of $ .]
CHAMPION ENTERPRISES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
K-1
49
TABLE OF CONTENTS
1. PURCHASE AND SALE...........................................................................................1
2. INITIAL CLOSING.............................................................................................3
3. SUBSEQUENT CLOSING..........................................................................................3
4. REPRESENTATIONS AND WARRANTIES OF CHAMPION..................................................................4
5. REGISTRATION PROVISIONS.....................................................................................9
6. "MARKET STAND-OFF" AGREEMENT...............................................................................12
7. CONVERSION AND REDEMPTION OF PREFERRED SHARES..............................................................12
8. REPRESENTATIONS AND WARRANTIES OF XXXXXXXX.................................................................14
9. RIGHT OF FIRST OFFER.......................................................................................15
10. COVENANTS OF CHAMPION...................................................................................17
11. CONSOLIDATION, MERGER, ETC..............................................................................18
12. COVENANTS OF XXXXXXXX...................................................................................19
13. LEGEND..................................................................................................20
14. CONDITIONS PRECEDENT TO XXXXXXXX'X OBLIGATIONS..........................................................20
15. CONDITIONS PRECEDENT TO CHAMPION'S OBLIGATIONS..........................................................21
16. FEES AND EXPENSES.......................................................................................21
17. NON-PERFORMANCE.........................................................................................21
18. INDEMNIFICATION.........................................................................................22
19. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC........................................................24
20. NOTICES.................................................................................................24
21. MISCELLANEOUS...........................................................................................26
ANNEXES
FORM OF CERTIFICATE OF RIGHTS AND
PREFERENCES OF CLASS B-1 CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF CHAMPION ENTERPRISES, INC....................................................................A-1
FORM OF XXXXXXXX NOTICE.........................................................................................B-1
FORM OF REDEMPTION NOTICE ......................................................................................C-1
FORM OF CHAMPION NOTICE.........................................................................................D-1
FORM OF DELIVERY NOTICE....................................................................................E-1, E-2
AUDITOR REPORT..................................................................................................F-1
FORM OF PREFERRED STOCK CONVERSION NOTICE..................................................................G-1, G-2
FORM OF PREFERRED STOCK CONVERSION DELIVERY NOTICE.........................................................H-1, H-2
50
FORM OF EXCESS RIGHTS NOTICE....................................................................................I-1
FORM OF FIVE YEAR CONVERSION NOTICE.............................................................................J-1
FORM OF BUSINESS COMBINATION RESTRICTION NOTICE.................................................................K-1
AUDITOR REPORT............................................................................................EXHIBIT 1
2
51
INDEX OF DEFINED TERMS
65 Day Notice....................................................................................................14
Additional Issuance Price.........................................................................................3
Additional Preferred Shares.......................................................................................1
Agreement.........................................................................................................1
Auditor Report....................................................................................................8
Average Price....................................................................................................13
Blackout Period..................................................................................................11
Business Day......................................................................................................2
Certificate of Rights and Preferences.............................................................................1
Champion..........................................................................................................1
Champion Indemnified Party.......................................................................................23
Closing Date......................................................................................................2
Common Shares.....................................................................................................2
Common Stock......................................................................................................1
Covered Security..................................................................................................9
Excess Rights....................................................................................................13
Excess Rights Notice.............................................................................................13
Exchange Act......................................................................................................2
Exercisable Number...............................................................................................14
First Offer Shareholders.........................................................................................15
Xxxxxxxx..........................................................................................................1
Xxxxxxxx Indemnified Party.......................................................................................22
Xxxxxxxx Notice...................................................................................................2
Xxxxxxxx Notice Date.............................................................................................13
Xxxxxxxx Rights...................................................................................................1
Xxxxxxxx Rights Period............................................................................................2
Increase Notice..................................................................................................18
Indemnified Party................................................................................................23
Indemnifying Party...............................................................................................23
Initial Closing...................................................................................................1
Initial Closing Date..............................................................................................1
Initial Preferred Shares..........................................................................................1
Investment Securities.............................................................................................2
Issuance Blockage................................................................................................13
Maximum Number...................................................................................................14
NASD..............................................................................................................3
Notice Period....................................................................................................14
NYSE..............................................................................................................2
i
52
Offer Notice.....................................................................................................15
Offered Shares...................................................................................................15
Original Number..................................................................................................13
Preferred Stock...................................................................................................7
Preferred Stock Conversion Delivery Notice.......................................................................12
Preferred Stock Conversion Notice................................................................................12
Proceeding.......................................................................................................22
Prospectus........................................................................................................9
Redemption Common Stock...........................................................................................2
Redemption Notice.................................................................................................2
Redemption Rights.................................................................................................2
Registrable Number................................................................................................9
Registration Period...............................................................................................9
Registration Requirement..........................................................................................9
Registration Statement............................................................................................9
Related Proceeding...............................................................................................26
Required Consent.................................................................................................13
Required Registration Date........................................................................................9
Rule 144..........................................................................................................9
Sales Contract...................................................................................................11
SEC...............................................................................................................6
Sec Filing........................................................................................................6
Securities Act....................................................................................................6
Series B Preferred Shares.........................................................................................1
Series B-1 Preferred Stock........................................................................................1
Subsequent Certificate of Rights and Preferences..................................................................1
Subsequent Certificates of Rights and Preferences.................................................................1
Subsequent Closing................................................................................................2
Subsequent Closing Date...........................................................................................2
ii