CERTIFICATE OF DESIGNATION
OF
CLASS B SERIES 2 PREFERRED STOCK
OF
SF HOLDINGS GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, Hans Heinsen, Senior Vice President, and Harvey L.
Friedman, Secretary, of SF Holdings Group, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), do hereby
certify that pursuant to authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") under the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Corporation has duly
adopted the following resolution creating a series of fifteen thousand (15,000)
shares of Class B Preferred Stock, par value $.001 per share, and designated as
Class B Series 2 Preferred Stock, as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation, fifteen thousand (15,000) of the authorized shares
of Class B Preferred Stock are hereby designated as Class B Series 2 Preferred
Stock. The powers, preferences and rights, and the qualifications, limitations
and restrictions, of the Class B Series 2 Preferred Stock are as follows:
1. The holder of shares of Class B Series 2 Preferred Stock shall not
be entitled to receive any dividends whatsoever.
2. The Class B Series 2 Preferred Stock shall, with respect to
distributions upon the liquidation, winding up or dissolution of the
Corporation, rank junior to the Preferred Stock and senior to all classes of
Common Stock of the Corporation and, except as provided in the following
proviso, to each other class or series of capital stock issued by the
Corporation now or hereafter created (collectively, together with the Common
Stock, "Series 2 Junior Stock"); provided, however, that the Board of Directors
may authorize a class or series of preferred stock on a parity in powers,
preferences and rights to the Class B Series 2 Preferred Stock (collectively,
"Series 2 Parity Stock") or senior in powers, preferences and rights to the
Class B Series 2 Preferred Stock (collectively, "Series 2 Senior Stock") if
approved by the holders of a majority of the shares of Class B Series 2
Preferred Stock; provided, however, that no such class or series of Series 2
Senior Stock shall be senior in powers, preferences and rights to the Preferred
Stock except as provided in subparagraph 1 of Paragraph A of Article FOURTH of
the Certificate of Incorporation.
3. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, no payment or distribution of
assets shall be made to or set apart for the holders of Series 2 Junior Stock
unless the holders of shares of Class B Series 2
<PAGE>
Preferred Stock shall have received, out of assets legally available therefor,
one thousand dollars ($1,000) per share of Class B Series 2 Preferred Stock (the
"Liquidation Value"). If upon any such distribution of assets in liquidation or
dissolution or upon the winding up of the affairs of the Corporation the amount
which would be distributed to the holder of the outstanding shares of Class B
Series 2 Preferred Stock would be less than this amount, then such lesser amount
shall be distributed pro rata to the holders of then outstanding shares of Class
B Series 2 Preferred Stock and to the holders of then outstanding shares of
Series 2 Parity Stock, and no distribution shall be made to the holders of
Series 2 Junior Stock. None of the consolidation or the merger of the
Corporation, or the sale, lease or transfer by the Corporation of all or any
part of its assets, shall be deemed to be a liquidation, dissolution or winding
up of the Corporation for purposes of this paragraph 3.
4. (a) The Corporation shall redeem all, but not less than all, of the
Class B Series 2 Preferred Stock on March 13, 2010, out of funds legally
available for such purpose, at a redemption price per share, in cash, equal to
the aggregate Liquidation Value (as defined in the Certificate of
Incorporation). Notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the Corporation.
Each such redemption notice shall state: (i) the redemption date; (ii) the
number of shares of Class B Series 2 Preferred Stock to be redeemed; and (iii)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price. On or after the date so specified, each holder
of then outstanding shares of Class B Series 2 Preferred Stock so to be redeemed
shall surrender the certificate or certificates evidencing the Class B Series 2
Preferred Stock held by such holder to the Corporation at its principal office
(or such other office or agency of the Corporation as the Corporation may
designate in such notice), in exchange for payment to its order or that of its
nominee, as such holder shall request, in an aggregate amount equal to the
aggregate redemption amount of the shares of Class B Series 2 Preferred Stock so
redeemed. All shares of Preferred Stock which are redeemed pursuant to this
paragraph 4 shall be cancelled and shall not be reissued.
(b) No dividend or other distribution (payable other than in shares
of Series 2 Junior Stock) shall be paid to the holders of Series 2 Junior Stock,
and no shares of Series 2 Junior Stock shall be purchased, redeemed or otherwise
acquired by the Corporation or any of its subsidiaries (except by conversion
into or in exchange for Series 2 Junior Stock), nor shall any monies be paid or
made available for a purchase, redemption or sinking fund for the purchase or
redemption of any Series 2 Junior Stock unless the Corporation shall not be in
default on any of its obligations to purchase or redeem the Class B Series 2
Preferred Stock pursuant to this paragraph 4.
5. (a) The shares of Class B Series 2 Preferred Stock may, at the
option of the holder, at any time and from time to time, be converted into
shares of fully paid and non-assessable shares of Class A Common Stock or Class
B Common Stock, at the conversion ratio of one (1) share of Class B Series 2
Preferred Stock for 8.89963 shares of Class A Common Stock or Class B Common
Stock, subject to adjustment for any subdivision or combination of, or
<PAGE>
stock dividend on, the Class A Common Stock or Class B Common Stock. The fifteen
thousand (15,000) shares of Class B Series 2 Preferred Stock authorized shall,
initially, be convertible into one hundred thirty three thousand four hundred
ninety four and one-half (133,494.5) shares of Class A Common Stock or Class B
Common Stock.
(b) Upon receipt by the Corporation from the record holder of the
shares of Class B Series 2 Preferred Stock of a written request to convert its
shares of Class B Series 2 Preferred Stock, the shares of Class B Series 2
Preferred Stock shall be converted into shares of Class A Common Stock or Class
B Common Stock, as specified in such written request, at the conversion ratio
specified in subparagraph 5(a) above. The conversion of shares hereunder shall
be effective, subject to the terms of this paragraph 5, as of the close of
business on the date of the receipt by the Corporation of such request to
convert, and the holder entitled to receive the shares issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
on such date.
(c) The conversion of shares of Class B Series 2 Preferred Stock
shall be exercised by the surrender by the holder of the certificates
representing the shares being converted accompanied by a written notice of
conversion signed by such holder or its duly authorized agent, at the principal
office of the Corporation (or such other office or agency of the Corporation as
the Corporation may designate by notice in writing to the holders of Class B
Series 2 Preferred Stock) at any time during its usual business hours, and
stating the name or names in which such holder wishes the certificates for Class
A Common Stock or Class B Common Stock to be received upon conversion to be
issued and the address to which such certificates shall be delivered. In case
such notice shall specify a name or names other than that of the holder, such
notice shall be accompanied by payment of any and all transfer taxes payable
upon the issuance of the Class A Common Stock or Class B Common Stock upon
conversion and all instruments of transfer appropriately completed to permit
such issuance. Subject to the foregoing, the issuance of certificates for shares
of Class A Common Stock or Class B Common Stock upon conversion of shares of
Class B Series 2 Preferred Stock shall be made without charge to the holder of
such converted shares for any costs incurred by the Corporation in connection
with such conversion and related issuance of shares. As soon as practicable
after such surrender of such certificates, the Corporation shall issue and
deliver at such address as is specified by such holder the certificates for the
number of shares of Class A Common Stock or Class B Common Stock to which such
holder shall be entitled as aforesaid.
(d) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares, solely for the purpose of issue upon
the conversion of shares of Class B Series 2 Preferred Stock as herein provided,
such number of shares of Class A Common Stock and Class B Common Stock as shall
then be issuable upon the conversion of the shares of Class B Series 2 Preferred
Stock. All shares of Class A Common Stock and Class B Common Stock issuable upon
any conversion described herein shall, when issued, be duly and validly issued
and fully paid and non-assessable. The Corporation will take such action as may
be necessary to assure that all such shares of Class A Common Stock and Class B
Common Stock may be so issued without violation of any applicable requirements
of any national stock exchange upon which the shares of Common Stock of the
Corporation may be listed.
<PAGE>
6. In addition to the voting rights provided in paragraph 2 hereof,
and except as may otherwise be required by law, each holder of Class B Series 2
Preferred Stock shall have one vote in respect of each share of Class B Series 2
Preferred Stock held by it on all matters voted upon by the stockholders,
including election of directors, and shall vote together with the Class A Common
Stock and the Class B Common Stock as a single class.
7. In case at any time or from time to time the Corporation shall take
any action in respect of the Common Stock, then unless such action will not have
a materially adverse effect upon the conversion rights of the holders of Class B
Series 2 Preferred Stock, the conversion rights set forth in paragraph 5 hereof
shall, in the good faith judgment of the Board of Directors of the Corporation,
be adjusted in such manner as shall be equitable in the circumstances.
8. In the event that the Corporation shall propose (a) to pay any
stock dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, or (b) to offer to the holders
of its Common Stock rights, warrants or options to subscribe for or to purchase
any additional shares of Common Stock or shares of stock of any class or any
other securities, rights or options, or (c) to effect any reclassification of
its Common Stock (other than a reclassification involving only the subdivision
or combination of outstanding shares of Common Stock), or (d) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, or (e) to effect the
liquidation, dissolution or winding-up of the Corporation, or (f) to effect any
transaction that would constitute or effect a Change of Control (as defined in
the Certificate of Incorporation), then, in each such case, the Corporation
shall give to the holders of the Class B Series 2 Preferred Stock a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend, distribution or offer of rights, warrants or options, or
the date on which such reclassification, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding-up or Change of Control is to
take place and the date of participation therein by the holders of Common Stock,
if any such date is to be fixed. Such notice shall be so given at least 20 days
prior to (i) the record date for the purposes of any action covered by clause
(a) or (b) above or (ii) the earlier of the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock, for
the purposes of any action covered by clause (c), (d), (e) or (f) above.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and subscribed this
Certificate of Designation and do affirm the foregoing as true under the
penalties of perjury this 3rd day of December, 1999.
/s/ Hans Heinsen
----------------
Hans Heinsen
Senior Vice President
Attest:
/s/ Harvey L. Freidman
----------------------
Harvey L. Friedman
Secretary
