-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FF4I+KPkDlEZU1eFVBHgbnD+x6NgX6nGJakfElRIHRVK/bUpFnYTKRT2T+CEdTWw GGzBYOrTrWEBLj2n11l2wQ== 0000950170-98-002410.txt : 19981228 0000950170-98-002410.hdr.sgml : 19981228 ACCESSION NUMBER: 0000950170-98-002410 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19981224 GROUP MEMBERS: GENERAL ELECTRIC CAPITAL CORP GROUP MEMBERS: GENERAL ELECTRIC CAPITAL SERVICES, INC. GROUP MEMBERS: GENERAL ELECTRIC COMPANY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HI RISE RECYCLING SYSTEMS INC CENTRAL INDEX KEY: 0000906605 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 650222933 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-53805 FILM NUMBER: 98775256 BUSINESS ADDRESS: STREET 1: 8505 N W 74TH STREET CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 3055970243 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP CENTRAL INDEX KEY: 0000040554 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 131500700 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 260 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06927 BUSINESS PHONE: 2033574000 MAIL ADDRESS: STREET 1: 260 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06927 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL ELECTRIC CREDIT CORP DATE OF NAME CHANGE: 19871216 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 HI-RISE RECYCLING SYSTEMS, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 428396 10 5 - -------------------------------------------------------------------------------- (CUSIP Number) NANCY E. BARTON GENERAL ELECTRIC CAPITAL CORPORATION 260 LONG RIDGE ROAD (203) 357-4000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) OCTOBER 28, 1998 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See section 240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). THIS DOCUMENT CONSIST OF 22 PAGES. SCHEDULE 13D - -------------------- CUSIP No.428396 10 5 - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS GENERAL ELECTRIC CAPITAL CORPORATION IRS # 13-1500700 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [x] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York, USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 1,024,155 OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------ 8 SHARED VOTING POWER -0- ------------------------------------------------ 9 SOLE DISPOSITIVE POWER 1,024,155 ------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED 1,024,155 BY EACH REPORTING PERSON - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.3% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 2 of 22 SCHEDULE 13D - --------------------- CUSIP NO. 428396 10 5 - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS GENERAL ELECTRIC CAPITAL SERVICES, INC. IRS #06-11095031 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |X| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware, USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON Disclaimed. See 11 below. WITH ----------------------------------------------- 8 SHARED VOTING POWER -0- ---------------------------------------------- 9 SOLE DISPOSITIVE POWER Disclaimed. See 11 below. ----------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficial ownership of all shares of Common Stock is disclaimed by General Electric Capital Services, Inc. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* Not Applicable - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Disclaimed. See 11 above. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 3 of 22 SCHEDULE 13D - --------------------- CUSIP NO. 428396 10 5 - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS GENERAL ELECTRIC COMPANY IRS #14-0089340 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (See Instructions) (a) [ ] (b) [x] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* (See Instructions) Not Applicable - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [x] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York, USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON Disclaimed. See 11 below. WITH ----------------------------------------------- 8 SHARED VOTING POWER -0- ----------------------------------------------- 9 SOLE DISPOSITIVE POWER Disclaimed. See 11 below. ----------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficial ownership of all shares of Common Stock is disclaimed by General Electric Company. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| Not Applicable - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Disclaimed. See 11 above. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 4 of 22 SCHEDULE 13D FOR GENERAL ELECTRIC CAPITAL CORPORATION ITEM 1. SECURITY AND ISSUER. This Schedule 13D (this "Statement") relates to common stock, par value $.01 per share (the "Common Stock"), of Hi-Rise Recycling Systems, Inc., a Florida corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 16255 NW 54th Avenue, Miami, Florida 33014. ITEM 2. IDENTITY AND BACKGROUND. (a) - (c) This Statement is filed by General Electric Capital Corporation ("GECC"), for and on behalf of itself, General Electric Capital Services, Inc. ("GECS") and General Electric Company ("GE," and together with GECC and GECS, the "Filing Persons"). The agreement among each of the Filing Persons that this Statement be filed on behalf of each of them is attached hereto as Exhibit 1. GECS is a wholly-owned subsidiary of GE and GECC is a wholly-owned subsidiary of GECS. GECC is a New York corporation. GECC, together with its subsidiaries, engages in financing services that include lending, equipment management services and annuities and maintains its principal executive offices at 260 Long Ridge Road, Stamford, Connecticut 06927. GECS is a Delaware corporation with its principal executive offices located at 260 Long Ridge Road, Stamford, Connecticut 06927. The business of GECS consists of the ownership of two principal subsidiaries which, together with their affiliates, constitute GE's principal financial services businesses. GE is a New York corporation with its principal executive offices located at 3135 Easton Turnpike, Fairfield, Connecticut 06431. GE engages in providing a wide variety of industrial, commercial and consumer products and services. For information with respect to the identity and background of each officer and director of the Filing Persons, see Schedules I, II and III attached hereto and hereby incorporated herein. The information required herein with respect to the respective executive officers and directors of the Filing Persons is to the best knowledge of the Filing Persons. If subsequent to the date of this Statement additional information is received with respect to such individuals which would cause a Page 5 of 22 material change in the information contain herein, an amendment to this Statement will be filed that will set forth such change in information. (d) and (e). Except as set forth in Schedule IV, which is hereby incorporated herein, during the past five years, none of the Filing Persons, nor, to the best of their knowledge, any of their directors or executive officers, has been convicted in a criminal proceeding, (excluding traffic violations or similar misdemeanors), or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding has been subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) All of the executive officers and directors of the Filing Persons are U.S. citizens, except that (i) Nigel D.T. Andrews, a GECS director and executive officer and a GECC director, is a citizen of the United Kingdom, (ii) Paolo Fresco, a director of GE, is an Italian citizen, (iii) Claudio X. Gonzalez, a director of GE, is a citizen of Mexico, (iv) Kaj Ahlmann, an executive officer and a director of GECS, is a citizen of Denmark, (v) Andrea Jung, a director of GE is a citizen of Canada and (vi) G.S. Malm, the senior vice president-Asia of GE is a citizen of Sweden. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The Common Stock reported herein is beneficially owned by GECC through warrants which were acquired by GECC pursuant to a loan transaction between GECC, as Lender, and the Issuer, as Borrower. On October 28, 1998, GECC and certain other Lenders named therein (collectively, the "Lenders") entered into a Credit Agreement with the Issuer and certain other Borrowers (the "Borrowers") named therein (the "Credit Agreement"). The Credit Agreement provided for maximum borrowings by the Issuer from the Lenders of $40,000,000 (the "Loan"). As consideration for GECC extending credit under the Credit Agreement, the Issuer and GECC entered into a Securities Purchase Agreement dated October 28, 1998 (the "Securities Purchase Agreement") providing for the purchase on that date by GECC of a Warrant (the "Warrant"), exercisable at any time or from time to time to and including October 28, 2008, to purchase 1,000,158 shares of the Common Stock of the Issuer at an exercise price of $1.50 per share. Additionally, as a result of an error which was corrected in a Letter dated as of December 22, 1998 and pursuant to the anti-dilution provisions of the Warrant, the Warrant was adjusted to provide for the purchase of 1,024,155 shares of the Common Stock of the Issuer at an exercise price of $1.50 per share. GECC also entered into a Registration Rights Agreement with the Issuer, dated October 28, 1998 (the "Registration Rights Agreement"), providing GECC with certain registration rights with respect to the shares of Common Stock purchasable under the Warrant. Although the Warrant is immediately exercisable, as of December 24, 1998, the Warrant had not been exercised by GECC. Upon any such event, GECC anticipates funding the exercise price of the Common Stock with working capital. Page 6 of 22 ITEM 4. PURPOSE OF TRANSACTION. The purpose of the Issuer conveying the Warrant to GECC was to provide additional consideration to GECC for its entering into the Credit Agreement. GECC intends to hold the Warrant as an investment and in the ordinary course of business and not for the purpose of effecting a change in the control of the Issuer. GECC intends to review its investment in the Warrant on a regular basis and as a result thereof may, at any time or from time to time, exercise all or a portion of such warrant, acquire additional shares of the Common Stock in the open market or private transactions or otherwise, or dispose of all or a portion of such warrant and/or any of the Common Stock acquired by it upon the exercise thereof. Any such acquisition or disposition would be in compliance with all applicable laws and regulations. Except as otherwise set forth herein, none of the Filing Persons has any current plans or proposals which relate to or would result in the matters set forth in items (a)-(j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The aggregate number and percentage of Common Stock beneficially owned by the Reporting Person are 1,024,155 and 8.3%, respectively, on December 24, 1998. GECS and GE disclaim beneficial ownership in any shares of the Common Stock and the Warrant. None of the Filing Persons, nor to the best of their knowledge, any of their executive officers and directors, beneficially own any securities of the Issuer or has a right to acquire any securities of the Issuer. (b) GECC would have sole power to vote and dispose of the Common Stock obtained upon exercise of the Warrant (up to 1,024,155 shares). None of the Filing Persons, nor, to the best of their knowledge, any of their executive officers and directors, presently has the power to vote or to direct the vote or to dispose or direct the disposition of any of the securities which they may be deemed to beneficially own. (c) None of the Filing Persons, nor, to their best knowledge, any of their executive officers or directors, has effected any transaction in securities of the Issuer in the past 60 days. (d) No person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, securities held by GECC except for GECC. (e) Not applicable. Page 7 of 22 Neither the filing of the Statement or any amendment thereto, nor anything contained herein is intended as, or should be construed as, an admission that any Filing Person is the "beneficial owner" of any shares of Common Stock which any other Filing Person is deemed to beneficially own. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The Warrant is exercisable at any time or from time to time to and including October 28, 2008, to purchase 1,024,155 shares of the Common Stock of the Issuer at an exercise price of $1.50 per share. Under the Warrant, GECC has the right, during the period through and including October 28, 2008, to sell its Warrant or the underlying Common Stock back to the Issuer at any time after (i) the termination by the Borrowers of any of the loans made by the Lenders under the Credit Agreement, (ii) the aggregate amount of permanent reductions in the outstanding principal balance of the loans made pursuant to the Credit Agreement equals or exceeds $10,000,000, (iii) a secondary public offering, (iv) an event of default by the Issuer under the Credit Agreement, or (v) the adoption by the Issuer of an employee stock ownership plan. The Warrant also contains standard anti-dilution protections as well as anti-dilution protection for certain acquisitions by the Issuer. Under the Securities Purchase Agreement, in the event the Issuer engages in any business combination, whether by way of merger, asset purchase or otherwise, the Issuer has agreed to sell to GECC and certain other purchasers named therein a warrant to purchase a number of shares of Common Stock of the Issuer equal to 8% of any Common Stock issued or issuable pursuant to any rights, warrants or options to purchase Common Stock or convertible securities pursuant to such business combination at an exercise price per share equal to the effective per share value of the Common Stock so issued or issuable pursuant to such business combination. Under the Registration Rights Agreement, GECC is entitled to request from the Issuer the registration under the Securities Act of 1933, as amended (the "Securities Act") of the Common Stock acquired by GECC upon exercise of the Warrant, at any time after October 28, 1998 through and including the second anniversary of the expiration date of the Warrant, up to a maximum of two such registrations, provided that the second request for registration cannot be within two years of the first request. GECC is also entitled to include the Common Stock acquired by it upon exercise of the Warrant in a registration under the Securities Act being filed by the Issuer. The foregoing descriptions of the Warrant, the Securities Purchase Agreement and the Registration Rights Agreement contained in this Schedule 13D are summaries and are qualified in their entirety by reference to the text of such agreements, copies of which are attached hereto as Exhibits 2 through 4 respectively, and are incorporated herein by reference Otherwise, none of the Filing Persons, nor, to the best of their knowledge, any of their executive officers or directors, has any contracts, arrangements, understanding, or relationships (legal or otherwise) with any person with respect to any securities of the Issuer. Page 8 of 22 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. SCHEDULE DESCRIPTION - -------- ----------- I Directors and Officers of GECC II Directors and Officers of GECS III Directors and Officers of GE IV Litigation EXHIBIT DESCRIPTION - ------- ----------- 1. Joint Filing Agreement dated as of December 24, 1998 by and among GECC, GECS and GE. 2. Securities Purchase Agreement dated October 28, 1998, between GECC, certain other Purchasers and the Issuer. 3. Registration Rights Agreement, dated October 28, 1998, between GECC, certain other Stockholders and the Issuer. 4. Stock Purchase Warrant, dated October 28, 1998. Page 9 of 22 SIGNATURES After reasonable inquiry and to the best of its knowledge and belief, the undersigned hereby certify that the information set forth in this statement is true, complete and correct. Date: December 24, 1998 GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ NANCY E. BARTON -------------------- Name: Nancy E. Barton Title: Senior Vice President, General Counsel and Secretary Date: December 24, 1998 GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ NANCY E. BARTON ------------------- Name: Nancy E. Barton Title: Senior Vice President, General Counsel and Secretary Date: December 24, 1998 GENERAL ELECTRIC COMPANY By: /s/ NANCY E. BARTON ------------------- Name: Nancy E. Barton Title: Attorney-In-Fact Page 10 of 22 SCHEDULE AND EXHIBIT INDEX SCHEDULE DESCRIPTION - -------- ----------- I Directors and Officers of GECC II Directors and Officers of GECS III Directors and Officers of GE IV Litigation EXHIBIT DESCRIPTION - ------- ----------- 1. Joint Filing Agreement dated as of December 24, 1998 by and among GECC, GECS and GE. 2. Securities Purchase Agreement dated October 28, 1998, between GECC, certain other Purchasers and the Issuer. 3. Registration Rights Agreement, dated October 28, 1998, between GECC, certain other Stockholders and the Issuer. 4. Stock Purchase Warrant, dated October 28, 1998. Page 11 of 22 Schedule I GENERAL ELECTRIC CAPITAL CORPORATION DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS: NAME PRESENT PRESENT BUSINESS PRINCIPAL ADDRESS OCCUPATION GECC N.D.T. Andrews 260 Long Ridge Road Stamford, CT 06927 Executive Vice 260 Long Ridge Road President, GECC. N.E. Barton GECC Senior Vice President. 260 Long Ridge Road General Counsel and Stamford, CT 06927 Secretary, GECC. J.R. Bunt GE Vice President and 3135 Easton Turnpike Treasurer, GEC. Fairfield, CT 06431 David M. Cote GE Appliances President and Chief Executive Appliance Park Officer GE Appliances Louisville, KY 40225 D.D. Dammerman GE Vice President and 3135 Easton Turnpike Executive Officer Fairfield, CT 06431 B.W. Heineman, Jr. GE Senior Vice President, 3135 Easton Turnpike General Counsel and Fairfield, CT 06431 Secretary, GEC. Jeffrey R. Immelt GE Medical Systems President and Chief Executive 3000 N. Grandview Blvd. Officer Waukesha, WI 53188 W. James McNerney, Jr. GE Aircraft Engines President and Chief Executive 1 Neumann Way Officer Cincinnati, OH 45215 Page 12 of 22 John H. Myers GE Investment Corporation Chairman and President 3003 Summer Street Stamford, CT 06904 R.L. Nardelli GE President and Chief One River Road Executive Officer Schenectady, NY 12345 GE Power Systems D.J. Nayden GECC President and Chief 260 Long Ridge Road Operating Officer, GECC Stamford, CT 06927 M.A. Neal GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 J.A. Parke GECC Senior Vice President, 260 Long Ridge Road Finance, GECC. Stamford, CT 06927 J.M. Samuels GE Vice President and 3135 Easton Turnpike Senior Counsel, Fairfield, CT 06431 Corporate Taxes, GE. E.D. Stewart GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 J.F. Welch, Jr. GE Chairman and Chief 3135 Easton Turnpike Executive Officer, GEC. Fairfield, CT 06431 G.C. Wendt GECC Chairman and Chief 260 Long Ridge Road Executive Officer, GECC. Stamford, CT 06927 EXECUTIVE OFFICERS: G.C. Wendt GECC Chairman and Chief 260 Long Ridge Road Executive Officer, GECC. Stamford, CT 06927 D.J. Nayden GECC President and Chief 260 Long Ridge Road Operating Officer, GECC. Stamford, CT 06927 N.D.T. Andrews GECC Executive Vice 260 Long Ridge Road President, GECC. Page 13 of 22 Stamford, CT 06927 M.A. Neal GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 E.D. Stewart GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 N.E. Barton GECC Senior Vice President, 260 Long Ridge Road General Counsel and Stamford, CT 06927 Secretary, GECC. See Schedule I. J.A. Colica GECC Senior Vice President, 260 Long Ridge Road and Manager Global Risk Stamford, CT 06927 Management. M.D. Fraizer GECC Senior Vice President, 292 Long Ridge Road Insurance/Investment Stamford, CT 06927 Products, GECC. R.L. Lewis GECC Senior Vice President, 1600 Sumner Street and General Manager 6th Floor Structured Finance, Stamford, CT 06905 GECC. Group See Schedule I. J.A. Parke GECC Senior Vice President, 260 Long Ridge Road Finance, GECC. Stamford, CT 06927 See Schedule I. L.J. Toole GECC Senior Vice President, 260 Long Ridge Road Human Resources, Stamford, CT 06927 GECC. See Schedule I. J.S. Werner GECC Senior Vice President, 201 High Ridge Road Corporate Treasury and Stamford, CT 06927 Global Funding Operation, GECC. Page 14 of 22 Schedule II GENERAL ELECTRIC CAPITAL SERVICES, INC. DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS: PRESENT PRESENT BUSINESS PRINCIPAL NAME ADDRESS OCCUPATION G.C. Wendt GECS Chairman, President 260 Long Ridge Road and Chief Executive Stamford, CT 06927 Officer, GECS. See Schedule I K. Ahlmann ERC Executive Vice 5200 Metcalf President, GECS. Overland Park, KS 66202 President and Chief Operating Officer, Employers Reinsurance Corp. N.D.T. Andrews GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 J.R. Bunt GE Vice President and 3135 Easton Turnpike Treasurer, GEC. Fairfield, CT 06431 David M. Cote GE Appliances President and Chief Executive Appliance Park Officer GE Appliances Louisville, KY 40225 D.D. Dammerman GE Vice Chairman and 3135 Easton Turnpike Executive Officer, GEC. Fairfield, CT 06431 B.W. Heineman, Jr. GE Senior Vice President, 3135 Easton Turnpike General Counsel and Fairfield, CT 06431 Secretary, GEC. Jeffrey R. Immelt GE Medical Systems President and Chief Executive 3000 N. Grandview Blvd. Officer Waukesha, WI 53188 Page 15 of 22 W. James McNerney, Jr. GE Aircraft Engines President and Chief Executive 1 Neumann Way Officer Cincinnati, OH 45215 John H. Myers GE Investment Corporation Chairman and President 3003 Summer Street Stamford, CT 06904 R.L. Nardelli GE President and Chief Executive One River Road Officer GE Power Systems. Schenectady, NY 12345 D.J. Nayden GECC President and Chief 260 Long Ridge Road Operating Officer, Stamford, CT 06927 GECC. M.A. Neal GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 J.M. Samuels GE Vice President and 3135 Easton Turnpike Senior Counsel, Fairfield, CT 06431 Corporate Taxes, GEC. E.D. Stewart GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 J.F. Welch, Jr. GE Chairman and Chief 3135 Easton Turnpike Executive Officer, Fairfield, CT 06431 GEC. EXECUTIVE OFFICERS: Joan C. Amble GECC Vice President and Comptroller 260 Long Ridge Road Stamford, CT 06927 G.C. Wendt GECC Chairman and Chief 260 Long Ridge Road Executive Officer, GECC. Stamford, CT 06927 Barbara E. Daniele GECC Vice President and Senior 260 Long Ridge Road Litigation Counsel. Stamford, CT 06927 Richard D'Avino GECC Vice President and Senior 777 Long Ridge Road Counsel, Taxes. Stamford, CT 06927 Page 16 of 22 G.C. Wendt GECS Chairman, President 260 Long Ridge Roadand Chief Executive Stamford, CT 06927 Officer, GECS. K. Ahlmann ERC Executive Vice 5200 Metcalf President, GECS. Overland Park, KS 66202 President and Chief Operating Officer, ERC. N.D.T. Andrews GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 See Schedule I. D.J. Nayden GECC President and Chief 260 Long Ridge Road Operating Officer, GECC. Stamford, CT 06927 See Schedule I. M.A. Neal GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 See Schedule I. E.D. Stewart GECC Executive Vice 260 Long Ridge Road President, GECC. Stamford, CT 06927 See Schedule I. N.E. Barton GECC Senior Vice President, 260 Long Ridge Road General Counsel and Stamford, CT 06927 Secretary, GECC. See Schedule I. J.A. Parke GECC Senior Vice President, 260 Long Ridge Road Finance, GECC. Stamford, CT 06927 See Schedule I. L.J. Toole GECC Senior Vice President, 260 Long Ridge Road Human Resources, Stamford, CT 06927 GECC. See Schedule I. J.S. Werner GECC Senior Vice President, 201 High Ridge Road Corporate Treasury and Stamford, CT 06927 Global Funding See Schedule I. Page 17 of 22 Schedule III GENERAL ELECTRIC COMPANY DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS: PRESENT PRESENT BUSINESS PRINCIPAL NAME ADDRESS OCCUPATION J.J. Cash, Jr. Harvard Business School Professor of Business Baker Library 187 Administration, Graduate Soldiers Field School of Business Boston, MA 02163 Administration, Harvard University S.S. Cathcart 222 Wisconsin Avenue Director and Retired Suite 103 Chairman of the Board, Lake Forest, IL 60045 Illinois Tool Works. D.D. Dammerman GE Vice Chairman of the Board, 3135 Easton Turnpike Senior Vice President, Fairfield, CT 06431 Finance, GE P. Fresco Fiat SpA Vice Chairman of the Via Nizza 250 Board and Executive 10126, Torino, Italy Officer, GE. C.X. Gonzalez Kimberly-Clark de Chairman of the Board Mexico, S.A. de C.V. and Chief Executive Jose Luis Lagrange 103, Officer, Kimberly- Tercero Piso Clark de Mexico, S.A. de C.V. Colonia Los Morales Mexico, D.F. 11510 Andrea Jung Avon Products Former member of the 1345 Avenue of the the Board of Directors Americas Federated Department NY, NY 10001 Stores G.G. Michelson Federated Department Former Member of the Board of Stores Directors -- Federated 151 West 34th Street Department Stores, New York, NY 10001 Page 18 of 22 E.F. Murphy GE Vice Chairman of the 3135 Easton Turnpike Board and Executive Fairfield, CT 06431 Officer, GE. S. Nunn King & Spalding Partner, King & Spalding. 191 Peachtree Street, N.E. Atlanta, GA 30303 J. D. Opie GE Vice Chairman of the 3135 Easton Turnpike Board and Executive Fairfield, CT 06431 Officer, GE. R. S. Penske Penske Corporation Chairman of the Board 13400 Outer Drive, West and President Detroit, MI 48239-4001 Penske Corporation F.H.T. Rhodes Cornell University President Emeritus, 3104 Snee Building Cornell University. Ithaca, NY 14853 A.C. Sigler Champion International Former Chairman of the Board, Corporation Former Chief Executive 1 Champion Plaza Officer and Director Stamford, CT 06921 Champion International Corporation. D.A. Warner III J.P. Morgan & Co., Inc. Chairman of the Board and and Morgan Guaranty Chief Executive Officer Trust Co. J.P. Morgan & Co. 60 Wall Street & Co., Incorporated New York, NY 10260 and Morgan Guaranty Trust Company. J.F. Welch, Jr. GE Chairman of the Board 3135 Easton Turnpike and Chief Executive Fairfield, CT 06431 Officer, GE. EXECUTIVE OFFICERS: J.F. Welch, Jr. GE Chairman of the Board 3135 Easton Turnpike and Chief Executive Fairfield, CT 06431 Officer, GE. P.D. Ameen GE Vice President and 3135 Easton Turnpike Comptroller, GE. Fairfield, CT 06431 Page 19 of 22 J.R. Bunt GE Vice President and 3135 Easton Turnpike Treasurer, GE. Fairfield, CT 06431 D. L. Calhoun GE Vice President and Nela Park Treasurer Cleveland, OH 44122 W. J. Conaty GE Senior Vice President 3135 Easton Turnpike Human Resources, GE. Fairfield, CT 06431 D.M. Cote GE Senior Vice President -- GE. 3135 Easton Turnpike Appliances Fairfield, CT 06431 D. D. Dammerman GE Vice Chairman of the Board 3135 Easton Turnpike Senior Vice President, Fairfield, CT 06431 Finance, GE. L.S. Edelheit GE Senior Vice President P.O. Box 8 -- Corporate Research Schenectady, NY 12301 and Development, GE. B.W. Heineman, Jr. GE Senior Vice President, 3135 Easton Turnpike General Counsel Fairfield, CT 06431 and Secretary, GE. J.R. Immelt GE Senior Vice President P.O. 414 Medical Systems Milwaukee, WI 53201 G.S. Malm GE Senior Vice President - 3135 Easton Turnpike Asia Fairfield, CT 06431 W.J. McNerney GE Senior Vice President, 1 Neumann Way GE Aircraft Engines Cinncianti, OH 05215 E.F. Murphy GE Vice Chairman of the Board 3135 Easton Turnpike and Executive Officer Fairfield, CT 06431 R.L. Nardelli GE Senior Vice President, One River Road GE Power Systems Schenectady, NY 12345 R.W. Nelson GE Vice President 3135 Easton Turnpike Corporate Financial Fairfield, CT 06431 Planning and Analysis, GE. Page 20 of 22 > J. D. Opie GE Vice Chairman of the 3135 Easton Turnpike Board and Executive Fairfield, CT 06431 Officer, GE. G.M. Reiner GE Senior Vice President 3135 Easton Turnpike Chief Information Fairfield, CT 06431 Officer, GE. J.G. Rice GE Vice President, GE. 2901 East Lake Road Transportation Systems Erie, PA 16531 G.L. Rogers GE Senior Vice President 1 Plastics Avenue GE Plastics, GE. Pittsfield, MA 01201 L.G. Trotter GE Senior Vice President GE 41 Woodford Avenue Industrial Systems Plainville, CT 06062 Page 21 of 22 Schedule IV 1. Her Majesty's Inspectorate of Pollution v. IGE Medical Systems Limited (St. Albans Magistrates Court, St. Albans, Hertsfordshire, England, Case No. 04/00320181) In April, 1994, General Electric Medical Systems' U.K. subsidiary, IGE Medical Systems Limited ("IGEMS") discovered the loss of a radioactive barium source at the Radlett, England facility. The lost source, used to calibrate nuclear camera detectors, emits a very low level of radiation. IGEMS immediately reported the loss as required by the U.K. Radioactive Substances Act. An ensuing investigation, conducted in cooperation with government authorities, failed to locate the source. On July 21, 1994, Her Majesty's Inspectorate of Pollution ("HMIP") charged IGEMS with violating the Radioactive Substances Act by failing to comply with a condition of registration. The Act provides that a registrant like IGEMS, which "does not comply with a limitation or condition subject to which (it) is so registered ... shall be guilty of (a criminal) offense." Condition 7 of IGEMS' registration states that it "shall so far as is reasonably practicable prevent ... loss of any registered source." At the beginning of trial on February 24, 1995, IGEMS entered a guilty plea and agreed to pay of fine of (pound)5,000 and assessed costs of (pound)5,754. The prosecutors presentation focused primarily on the 1991 change in internal IGEMS procedures and, in particular, the source logging procedure. The prosecutor complimented IGEMS' investigation and efforts to locate the source and advised the court that IGEMS had no previous violations of the Radioactive Substances Act. He also told the court that the Radlett plant had been highlighted as an exemplary facility to HMIP inspectors as part of their training. In mitigation, IGEMS emphasized the significant infrastructure and expense undertaken by IGEMS to provide security for radiation sources and the significant effort and expense incurred in attempting to locate the missing source. Page 22 of 22 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 1. Joint Filing Agreement dated as of December 24, 1998 by and among GECC, GECS and GE. 2. Securities Purchase Agreement dated October 28, 1998 between GECC, certain other Purchasers and the Issuer. 3. Registration Rights Agreement, dated October 28, 1998, between GECC, certain other Stockholders and the Issuer. 4. Stock Purchase Warrant, dated October 28, 1998. EX-1 2 EXHIBIT 1 JOINT FILING AGREEMENT Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned each hereby agrees to the joint filing, on behalf of each of the undersigned, of this Schedule 13D dated December 24, 1998, and all subsequent amendments thereto. This Joint Filing Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Dated: December 24, 1998 GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ NANCY E. BARTON -------------------- Name: Nancy E. Barton Title: Senior Vice President, General Counsel and Secretary GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ NANCY E. BARTON --------------------- Name: Nancy E. Barton Title: Senior Vice President, General Counsel and Secretary GENERAL ELECTRIC COMPANY By: /s/ NANCY E. BARTON ------------------- Name: Nancy E. Barton Title: Attorney-In-Fact EX-2 3 EXHIBIT 2 SECURITIES PURCHASE AGREEMENT BY AND AMONG HI-RISE RECYCLING SYSTEMS, INC. AND GENERAL ELECTRIC CAPITAL CORPORATION NATIONSBANK, NATIONAL ASSOCIATION KEY CORPORATE CAPITAL INC. DATED AS OF October 28, 1998
TABLE OF CONTENTS ARTICLE I ISSUANCE AND SALE OF THE SECURITIES.............................................................1 1.1 Securities Purchase....................................................................1 1.2 Closing Transactions...................................................................1 ARTICLE II CONDITIONS TO CLOSING...........................................................................2 2.1 Conditions to the Purchasers' Obligations..............................................2 2.2 Conditions to the Company's Obligations................................................3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................3 3.1 Authorization of Transactions..........................................................4 3.2 Capitalization.........................................................................4 3.3 Absence of Conflicts...................................................................5 3.4 Exemption from Registration; Restrictions on Offer and Sale of Same or Similar Securities.....................................................................5 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................6 4.1 Organization and Power.................................................................6 4.2 Authorization..........................................................................6 4.3 Absence of Conflicts...................................................................6 ARTICLE V ADDITIONAL AGREEMENTS...........................................................................7 5.1 Survival...............................................................................7 5.2 Indemnification........................................................................7 5.4 Press Releases and Announcements.......................................................8 5.5 Further Transfers......................................................................8 5.6 Specific Performance...................................................................8 5.7 Transfer of Securities.................................................................9 (a) General Provisions............................................................9 (b) Opinion Delivery..............................................................9 (c) Rule 144A.....................................................................9 (d) Removal of Legend.............................................................9 ARTICLE VI DEFINITIONS....................................................................................10 ARTICLE VII MISCELLANEOUS..................................................................................11 7.1 Amendment and Waiver..................................................................11 7.2 Notices...............................................................................11 7.3 Binding Agreement; Assignment.........................................................12 7.4 Severability..........................................................................12 i 7.5 No Strict Construction................................................................12 7.6 Headings; Interpretation..............................................................12 7.7 Entire Agreement......................................................................12 7.8 Counterparts..........................................................................13 7.9 Governing Law.........................................................................13 7.10 Parties in Interest...................................................................13
EXHIBITS Exhibit A - Form of Warrant Exhibit B - Form of Registration Rights Agreement LIST OF ANNEXES AND SCHEDULES Annex I - Purchasers Annex II - Purchasers' Warrants Annex III - Notice Schedule 3.2 - Capitalization Schedule Schedule 3.3 - Conflicts Schedule ii SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of October 28, 1998 by and among Hi-Rise Recycling Systems, Inc., a Florida corporation (the "Company"), and the Persons set forth on Annex I attached hereto (collectively, the "Purchasers" and each a "Purchaser"). Except as otherwise indicated herein, capitalized terms used herein are defined in Article VI hereof. Subject to the terms and conditions set forth herein, the Purchasers desire to purchase from the Company, and the Company desires to issue to each Purchaser, a warrant to purchase at any time after the Closing Date a number of shares of the Company's common stock, par value $0.01 per share (the "Common Stock") as set forth opposite such Purchaser's name on Annex II attached hereto (each a "Warrant" and collectively, the "Warrants") under the circumstances as described herein. The Underlying Common Stock and the Warrants are sometimes referred to herein as the "Securities." In consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement, the parties hereto agree as follows: ARTICLE I ISSUANCE AND SALE OF THE SECURITIES 1.1 SECURITIES PURCHASE. On the terms and subject to the conditions of this Agreement: (a) At the Closing, the Company shall issue and sell to each Purchaser its Warrant, which shall be substantially in the form of EXHIBIT A attached hereto. The purchase price of each Warrant shall be $10.00. (b) In the event that during the period commencing on the date hereof through and including the Commitment Termination Date (Acquisition Loan) (as defined in the Credit Agreement), the Company engages in any business combination transaction whether by way of stock purchase, merger, asset purchase or otherwise (an "Acquisition"), immediately upon the consummation of each Acquisition, the Company shall issue and sell to each Purchaser a warrant (the "Additional Warrants") to purchase a number of shares of Common Stock which together with all of the other Additional Warrants to be issued to the other Purchasers pursuant to this Section 1.1 (b) equals to 8%of any Common Stock issued or issuable pursuant to any rights, warrants or options to subscribe or purchase Common Stock or convertible securities of the Company issued pursuant to such Acquisition for an exercise price per share equal to the effective per share value of the, Common Stock so issued or issuable in such Acquisition. The purchase price for each Additional Warrant shall be $10.00. Any Additional Warrants granted shall be exercisable in whole or in part at any time from the date of such issuance through and including the 10th anniversary of the Closing Date (as hereinafter defined). The Additional Warrants shall be in substantially the same form as the Warrants, except as otherwise set forth in this Section 1.1 (b) and that Section 2A thereof shall be omitted. 1.2 CLOSING TRANSACTIONS. (a) CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Olshan Grundman Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York 10022 at 10:00 a.m. (so long as all conditions to the obligations of the parties to consummate the transactions contemplated hereby have been satisfied or waived) on the date of closing of the Financing (as defined below), or at such other time and location as is mutually agreed upon by the Company and the Purchasers. The date and time of the Closing are herein referred to as the "Closing Date." (b) TRANSFERS. Subject to the conditions set forth in this Agreement, at the Closing Date, the Company shall issue and deliver to each Purchaser, its Warrant duly registered in the name of such Purchaser or its nominee against payment by such Purchaser of $10.00 (the foregoing is collectively referred to hereinafter as the "Closing Transaction"). Payment of the purchase price for the Warrants shall be made by check. ARTICLE II CONDITIONS TO CLOSING 2.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligations of the Purchasers to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date: (a) the representations and warranties set forth herein or incorporated by reference in Article III hereof and in any writing delivered by the Company pursuant hereto will be true and correct in all material respects at and as of the Closing Date; (b) the Company will have performed and complied in all material respects with each of the covenants and agreements required to be performed by it under this Agreement and the agreements and documents attached hereto as Exhibits prior to the Closing; (c) the Company and the Purchasers shall have entered into a registration rights agreement with respect to the Underlying Common Stock (the "Registration Rights Agreement") substantially in the form set forth in EXHIBIT B attached hereto; (d) each of the conditions which are required to be satisfied pursuant to Section 2 of that certain Credit Agreement, dated as of the date hereof (the "Credit Agreement"), among the Company, the other parties named as Borrowers thereto, General Electric Capital Corporation ("GE Capital"), NationsBank, National Association ("NationsBank"), and Key Corporate Capital Inc. ("Key") (GE Capital, NationsBank and Key, collectively referred to as the "Lenders") and the other parties which may from time to time be Lenders thereunder, and GE Capital, as Administrative Agent, and NationsBank, as Revolver Agent); (e) the Purchasers shall have received an opinion, dated the Closing Date, of counsel to the Company, which counsel is experienced in transactions of the type contemplated hereby and in the form and substance reasonably satisfactory to the Purchasers; - 2 - (f) all proceedings to be taken by the Company in connection with the consummation of the Closing Transaction and the other transactions contemplated hereby and all certificates, opinions, instruments and other documents, including customary representations, warranties, covenants, conditions and remedies for breach, required to be delivered by the Company in accordance with the Credit Agreement; (g) all consents and waivers by third parties that are required for the consummation of the transactions contemplated hereby and the performance of the Company's obligations set forth in the Warrant and the Registration Rights Agreement shall have been obtained other than those the failure of which to be obtained would not have a Material Adverse Effect on or which would not adversely affect the performance of such obligations; and (h) all governmental filings, authorizations and approvals that are required for the consummation of the transactions contemplated hereby, if any, will have been duly made and obtained and all waiting periods will have expired on terms reasonably satisfactory to the Purchasers other than those filings, authorizations or approvals the absence of which would not, individually or in the aggregate, have a Material Adverse Effect or adverse effect on the performance of obligations under the Warrant and the Registration Rights Agreement. Any condition to the obligations of the Purchasers specified in this Section 2.1 may be waived in writing by the Purchasers. 2.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: (a) the representations and warranties set forth in Article IV hereof and in any writing delivered by the Purchasers pursuant hereto will be true and correct in all material respects at and as of the Closing Date; (b) each of the Purchasers will have performed and complied in all material respects with all of the covenants and agreements required to be performed by it under this Agreement prior to the Closing; (c) all consents and waivers by third parties that are required for the consummation of the transactions contemplated hereby and the performance of the Company's obligations set forth in the Warrant and the Registration Rights Agreement shall have been obtained other than those the failure of which to be obtained would not have a Material Adverse Effect on or which would not adversely affect the performance of such obligations; and (d) all governmental filings, authorizations and approvals that are required for the consummation of the transactions contemplated hereby, if any, will have been duly made and obtained and all waiting periods will have expired on terms reasonably satisfactory to the Company other than those filings, authorizations or approvals the absence of which would not, individually or in the aggregate, have a Material Adverse Effect. The conditions specified in this Section 2.2 may be waived in writing by the Company. - 3 - ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY As a material inducement to the Purchasers to enter into this Agreement, the Company hereby makes each and every one of the representations and warranties of the Company and each of the Borrowers which are set forth in the Credit Agreement and the other Loan Documents, including without limitation, Section 3 of the Credit Agreement, all of which are incorporated herein by this reference and are hereby made a part hereof as though such representations and warranties were set forth herein in full. In addition, the Company hereby represents and warrants to the Purchasers that: 3.1 AUTHORIZATION OF TRANSACTIONS. The Company has full corporate power and authority to execute and deliver this Agreement, the agreements and documents attached hereto as Exhibits and the other agreements and documents contemplated hereby. The Board of Directors has duly approved this Agreement and has duly authorized the execution and delivery of this Agreement, the agreements and documents attached hereto as Exhibits and the other agreements and documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby. No other corporate proceedings on the part of the Company are necessary, or are required by the rules of the NASDAQ Stock Market to approve and authorize the execution and delivery of this Agreement, the agreements and documents attached hereto as Exhibits and the other agreements and documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby. This Agreement, the Warrant and the Registration Rights Agreement, and documents attached hereto as Exhibits and the other agreements and documents contemplated hereby have been duly executed and delivered by the Company and constitute valid and binding agreements of the Company, enforceable against the Company in accordance with their terms. 3.2 CAPITALIZATION. (a) The authorized, issued and outstanding capital stock of the Company is as set forth on SCHEDULE 3.2. All of the issued and outstanding shares of capital stock of the Company have been duly authorized, are validly issued, fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth on SCHEDULE 3.2, or as disclosed in the Credit Agreement, there are no outstanding or authorized securities with profit participating features or profit interests, or options, warrants, registration rights, rights or other agreements or commitments to which the Company is a party or which are binding upon the Company providing for the issuance, disposition, registration or acquisition of any of its capital stock or any such securities or interests (collectively "Options")(other than this Agreement). Except as set forth on SCHEDULE 3.2, there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company. Except as set forth on SCHEDULE 3.2 or as contemplated herein, there are no voting trusts, proxies or any other agreements or understandings with respect to the voting of the capital stock of the Company. Except as set forth on SCHEDULE 3.2 or as contemplated herein, the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any Options. (b) Since June 30, 1998, except as set forth on SCHEDULE 3.2, or as disclosed in the Credit Agreement, or as contemplated herein, the Company has not issued, sold or transferred any notes, bonds or other debt securities (except, in the case of the Company, the issuance of the notes and borrowings pursuant to the Financing) or any equity securities, securities convertible, - 4 - exchangeable or exercisable into equity securities, or warrants, options or other rights to acquire equity securities, of the Company or any of the Subsidiaries. (c) Upon the issuance and delivery of the Warrants in accordance with this Agreement, (i) each Warrant will be a valid and binding agreement of the Company, and enforceable against the Company in accordance with its terms; and (ii) the Purchasers will acquire, subject to the restrictions of this Agreement and the federal and state securities laws, good, valid and marketable title to the Warrants, free and clear of all liens, claims, preemptive rights, options, warrants, rights, commitments, charges, encumbrances, equities, proxies or voting or other agreements whatsoever. (d) Upon the issuance and delivery of the Underlying Common Stock in accordance with the Warrants, (i) the Underlying Common Stock will be duly authorized, validly issued, fully paid and nonassessable; and (ii) the Purchasers will acquire, subject to the restrictions of the Warrants and the federal and state securities laws, good, valid and marketable title to the Underlying Common Stock, free and clear of all liens, claims, preemptive rights, options, warrants, rights, commitments, charges, encumbrances, equities, proxies or voting or other agreements whatsoever. (e) The registration rights granted to each of the Purchasers pursuant to the Registration Rights Agreement are not subordinate to any other registration rights granted by the Company to any other Person. 3.3 ABSENCE OF CONFLICTS. Except as set forth on SCHEDULE 3.3, the execution, delivery and performance of this Agreement, the Warrant and the Registration Rights Agreement, and the consummation of the transactions contemplated hereby and thereby do not and will not (a) conflict with or result in a breach of any of the provisions of, (b) constitute a default under, (c) result in a violation of, (d) give any third party the right to terminate or to accelerate any obligation under, (e) result in the creation of any lien, security interest, charge or encumbrance upon the Common Stock or (f) require any authorization, consent, approval, exemption or other action by or notice to any court or other governmental body, under the provisions of the articles of incorporation or bylaws of the Company or any of the Subsidiaries or any indenture, mortgage, lease, license, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is bound or affected, or any law, statute, rule or regulation or any judgment, order or decree to which the Company or any of the Subsidiaries is subject. 3.4 EXEMPTION FROM REGISTRATION; RESTRICTIONS ON OFFER AND SALE OF SAME OR SIMILAR SECURITIES. The offer and sale of the Securities made pursuant to this Agreement will be exempt from the registration requirements of the Securities Act. Neither the Company nor any Person acting on its behalf has, in connection with the offering of the Securities, engaged in (A) any form of general solicitation or general advertising (as those terms are used within the meaning of Rule 502(c) under the Securities Act), (B) any action involving a public offering within the meaning of Section 4(2) of the Securities Act, or (C) any action that would require the registration under the Securities Act of the offering and sale of the Securities pursuant to this Agreement or that would violate applicable state securities or "blue sky" laws. The Company has not made and will not prior to the Closing make, directly or indirectly, any offer or sale of the Securities or of securities of the same or a similar class as the Securities if as a result the offer and sale of the Securities contemplated hereby could fail to be entitled to exemption from the registration requirements of the Securities Act. As used herein, the terms "offer" and "sale" have the meanings specified in Section 2(c) of the Securities Act. - 5 - 3.5 WARRANTS. The Warrants purchased pursuant to this Agreement collectively equal eight percent (8%) of the Fully Diluted Common Stock of the Company. For the purpose hereof, "Fully Diluted Common Stock" shall mean the aggregate of all outstanding Common Stock as of the date hereof, plus all shares of Common Stock issuable upon the exercise or conversion of securities exercisable for, or convertible into, shares of Common Stock of the Company which securities are outstanding or issuable as of the date hereof. 3.6 REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in this Article III and made by the Company elsewhere in this agreement are true and correct in all respects on the date of this Agreement unless waived by the Purchasers. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS As a material inducement to the Company to enter into this Agreement, each Purchaser hereby represents and warrants for itself to the Company that: 4.1 ORGANIZATION AND POWER. Such Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or a national bank duly licensed by the Office of the Comptroller of the Currency and its charter has not been revoked, as the case may be, with full corporate or other power, as the case may be, and authority to enter into this Agreement and perform its obligations hereunder. 4.2 AUTHORIZATION. The execution, delivery and performance of this Agreement by such Purchaser and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate or other action, as the case may be, on the part of such Purchaser, and no other corporate or other proceedings, as the case may be, on its part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement constitutes a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms. 4.3 ABSENCE OF CONFLICTS. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (a) conflict with or result in a breach of any of the provisions of, (b) constitute a default under, (c) result in a violation of, or (d) require any authorization, consent, approval, exemption or other action by or notice to any court or other governmental body, under the provisions of the certificate of incorporation, bylaws or articles of association, as the case may be, of such Purchaser or any agreement or instrument to which such Purchaser is bound or affected, or any applicable law, statute, rule or regulation or any judgment, order or decree to which such Purchaser is subject. 4.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in this Article IV and made by such Purchasers elsewhere in this Agreement are true and correct in all respects on the date of this Agreement unless waived by the Company. ARTICLE V ADDITIONAL AGREEMENTS - 6 - 5.1 SURVIVAL. Notwithstanding any examination made for or on behalf of the Purchasers, the knowledge of any of their respective officers, directors, stockholders, employees or agents, or the acceptance of any certificate or opinion, all representations, warranties, covenants and agreements set forth in this Agreement or in any writing delivered in connection with this Agreement shall survive the Closing and, subject to the provisions of the following sentence, shall be fully effective and enforceable and shall survive until the later of (i) the full satisfaction of all obligations and liabilities of the Company and the other Borrowers, and each of them, under the Credit Agreement and the other Loan Documents and the termination in full of all obligations of the Lenders to extend credit to the Borrowers, or any of them, and (ii) the termination of their respective statute of limitations applicable thereto. 5.2 INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each of the Purchasers, including each of their respective Affiliates, and the directors, officers, agents, employees, accountants and attorneys thereof (each of the Purchasers and each such other Person, an "Indemnified Party") from and against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively "Liabilities"), and will reimburse each Indemnified Party for all fees and expenses (including the reasonable fees and expenses of outside counsel) (collectively, "Expenses") as they are incurred in investigating, preparing or defending any claim, action, proceeding or investigation, whether or not in connection with pending or threatened litigation or arbitration and whether or not any Indemnified Party is a party thereto (collectively, "Actions"), arising out of (i) any material breach of any of the representations or warranties made by the Company in this Agreement or any of the agreements or certificates, documents or other writings contemplated hereby or delivered in connection herewith, (ii) any breach or violation of or failure to fully perform any material covenant, agreement or obligation of the Company in this Agreement or any of the agreements contemplated hereby, or (iii) any Action by any third party arising out of or in connection with the transactions contemplated by this Agreement or any Indemnified Party's actions or inactions in connection with any such transactions, PROVIDED, HOWEVER, that the Company shall not indemnify any Indemnified Party from Liabilities or reimburse Expenses incurred by such party to the extent they arise out of the willful misconduct, gross negligence or bad faith (as finally determined by a court of competent jurisdiction) of such party. The Company shall not, in connection with any one such Action or separate but substantially similar or related Actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (and any appropriate local counsel) for all of the Indemnified Parties, unless in the reasonable judgment of counsel for an Indemnified Party a conflict of interest exists between an Indemnified Party and another Indemnified Party such that it is inappropriate or unadvisable for both such Indemnified Parties to be represented by one counsel in such matter. If multiple claims are brought against an Indemnified Party (including in an arbitration), with respect to at least one of which indemnification is permitted under applicable law and provided for under this Agreement, the Company agrees that any award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for, except to the extent the award expressly states that the award, or any portion thereof, is based solely on a claim as to which indemnification is not available. (b) The indemnification provisions of this Section 5.2 are in addition to, and not in derogation of, any statutory or common law remedy any party may have for misrepresentation, breach of warranty or breach of covenant. - 7 - 5.3 BOARD OF DIRECTORS. The Company agrees that the Purchasers shall have the right to designate a single representative to attend and observe all meetings of the Board of Directors. The Purchasers hereby agree that the initial representative shall be a representative appointed by GE Capital. The Purchasers shall be entitled by the consent of the Purchaser holding a majority of Underlying Common Stock to appoint a replacement representative by advising the Company of such fact in a writing signed by each of the Purchasers. The Company further agrees that all notices and other documents provided to the Board of Directors shall be provided to such representative, except for any documents that may be privileged or confidential. 5.4 PRESS RELEASES AND ANNOUNCEMENTS. Except to the extent otherwise agreed by the Purchasers, the Company will not disclose the transactions contemplated hereby, including by making any press release related to this Agreement or the transactions contemplated herein, or other announcement to the employees, customers or suppliers of the Company and the Subsidiaries, without the prior written approval of the Purchasers (which shall not be unreasonably withheld), and the Company will not disclose the name of any Purchaser participating therein without the prior written consent of such Purchaser, except where the Company has been advised by its counsel that such disclosure is required by law. This Section 5.4 shall not be construed to prohibit the disclosure of the transactions contemplated hereby in the Company's periodic reports, proxy statements and registration statements required to be filed from time to time with the U.S. Securities and Exchange Commission. 5.5 FURTHER TRANSFERS. The Company (at its own expense) will execute and deliver such further instruments of conveyance and transfer and take such additional action as the Purchasers may reasonably request to effect, consummate, confirm or evidence the transfer to the Purchasers of the Securities and any other transactions contemplated hereby. The Company will execute such documents as may be necessary to assist the Purchasers in preserving or perfecting their respective rights in the Securities and will also do such acts as are necessary to perform its representations, warranties and agreements herein, including by, after the Closing, making all registrations, filings and applications, giving all notices and obtaining all governmental, third party or other consents, transfers, approvals, orders, qualifications and waivers desirable for the consummation of the transactions contemplated hereby which, for any reason, had not been made, given or obtained prior to the Closing. 5.6 SPECIFIC PERFORMANCE. The Company acknowledges that the business of the Company and the Subsidiaries and the Securities are unique and recognize and affirm that in the event of a breach of this Agreement by the Company, money damages may be inadequate and the Purchasers may have no adequate remedy at law. Accordingly, the Company agrees that the Purchasers shall have the right, in addition to any other rights and remedies existing in their favor at law or in equity, to enforce their rights and the Company's obligations hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security). 5.7 TRANSFER OF SECURITIES. (a) GENERAL PROVISIONS. The Securities are transferable only pursuant to (i) public offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A of the Securities Act (or any similar rule or rules then in force) if such rule is available or (iii) subject to the conditions specified in Section 5.8 below, any other legally available means of transfer. - 8 - (b) OPINION DELIVERY. In connection with the transfer of any Securities (other than a transfer described in subsection 5.7(a)(i) or (ii) above and other than a transfer by a Purchaser to an Affiliate of such Purchaser), the holder thereof shall deliver written notice to the Company describing in reasonable detail the transfer or proposed transfer, together with an opinion, in form and substance reasonably satisfactory to the Company and its counsel, to the effect that such transfer of Securities may be effected without registration of such Securities under the Securities Act. In addition, if the holder of the Securities delivers to the Company an opinion, in form and substance reasonably satisfactory to the Company and its counsel, no subsequent transfer of such Securities shall require registration under the Securities Act, the Company shall promptly upon such contemplated transfer deliver new certificates for such Securities which do not bear the Securities Act legend set forth in Section 5.8. If the Company is not required to deliver new certificates for such Securities not bearing such legend, the holder thereof shall not transfer the same until the prospective transferee has confirmed to the Company in writing its agreement to be bound by the conditions contained in this Section and Section 5.8. (c) RULE 144A. Upon the request of any Purchaser, the Company shall promptly supply to such Purchaser or its prospective transferees all information regarding the Company required to be delivered in connection with a transfer pursuant to Rule 144A of the Securities Act. (d) REMOVAL OF LEGEND. Notwithstanding the foregoing or any legend set forth on the Warrants or certificates representing Underlying Common Stock, if any Securities are eligible for sale pursuant to Rule 144(k), the Company shall, upon the request of the holder of such Securities, remove the legend set forth in Section 5.8 from the certificates for such Securities. In such event, the holder of such Security shall furnish a representation letter to the Company which shall (i) contain such information required pursuant to Rule 144(k) and (ii) be in a form reasonably satisfactory to the Company's counsel. 5.8 PURCHASERS' REPRESENTATIONS. Each Purchaser represents that it is an "Accredited Investor" within the meaning of the Securities Act. Each Purchaser understands that the Securities constitute "restricted securities" within the meaning of Rule 144 under the Securities Act. Each Purchaser hereby represents that it is acquiring the restricted securities purchased hereunder or acquired pursuant hereto for its own account with the present intention of holding such securities for purposes of investment, and that it has no current intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws; PROVIDED, that nothing contained herein shall prevent any of the Purchasers and subsequent holders of restricted securities from transferring such securities in compliance with the provisions of Section 5.7. Each Purchaser understands that the restricted securities are being offered and sold in reliance on exemptions from the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy of the Purchasers' representations, warranties, agreements, acknowledgments and understandings set forth herein to determine its suitability to acquire the restricted securities. Each instrument or certificate for the Warrants shall be imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON OCTOBER 28, 1998, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 28, 1998, BETWEEN THE ISSUER (THE "COMPANY") - 9 - AND THE PURCHASERS NAMED THEREIN, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE." The Underlying Common Stock shall also be subject to certain transfer restrictions and each certificate representing such shares purchased upon exercise of this Warrant shall bear a legend substantially in the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON ___________ THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT IN RESPECT OF WHICH THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO SUCH EFFECT OR OTHERWISE IN ACCORDANCE WITH THE SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 28, 1998, BETWEEN THE ISSUER (THE "COMPANY") AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE." ARTICLE VI DEFINITIONS "Affiliate"shall have the meaning ascribed to such term in the Credit Agreement. "Business Day" shall have the meaning ascribed to such term in the Credit Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Financing" means the financing provided to the Borrowers pursuant to the Credit Agreement. "Loan Documents" shall have the meaning ascribed to such term in the Credit Agreement. "Material Adverse Effect"shall have the meaning ascribed to such term in the Credit Agreement. "Person" means any individual, sole proprietorship, partnership (including a limited partnership), joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, limited liability company, joint stock company, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof) or other business entity. - 10 - "SEC" means the United States Securities and Exchange Commission and any successor to the functions thereof. "Securities Act" means the Securities Act of 1933, as amended. "Subsidiary"shall have the meaning ascribed to such term in the Credit Agreement. "Underlying Common Stock" means (i) the Common Stock issued or issuable upon exercise of the Warrants, and (ii) any Common Stock issued or issuable with respect to the securities referred to above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. ARTICLE VII MISCELLANEOUS 7.1 AMENDMENT AND WAIVER. This Agreement may be amended and any provision of this Agreement may be waived, provided that, subject to the last sentence of Section 2.1 and the last sentence of Section 2.2, any such amendment or waiver will be binding upon a party only if such amendment or waiver is set forth in a writing executed by each of the Company and the Purchasers. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any party under or by reason of this Agreement. 7.2 NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b), one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (c) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address indicated on ANNEX III or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person designated on ANNEX III to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 7.3 BINDING AGREEMENT; ASSIGNMENT. (a) This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by the Company without the prior written consent of the Purchasers. - 11 - (b) The Purchasers may, upon prior written notice to the Company, at their sole discretion, assign, in whole or in part, their respective rights and obligations pursuant to this Agreement to one or more of their respective Affiliates. 7.4 SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. 7.5 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person. 7.6 HEADINGS; INTERPRETATION. The headings used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and will not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement will be enforced and construed as if no caption had been used in this Agreement. Whenever the term "including" is used in this Agreement (whether or not that term is followed by the phrase "but not limited to" or "without limitation" or words of similar effect) in connection with a listing of one or more items or matters, that listing will be interpreted to be illustrative only and will not be interpreted as a limitation on, or an exclusive listing of, such items or matters. 7.7 ENTIRE AGREEMENT. This Agreement and the documents referred to herein contain the entire agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way. 7.8 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which taken together will constitute one and the same instrument. 7.9 GOVERNING LAW. THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. 7.10 PARTIES IN INTEREST. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties and their respective successors and assigns any rights or remedies under or by virtue of this Agreement. [Remainder of Page Intentionally Left Blank. Signatures Follow on Next Page.] - 12 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. HI-RISE RECYCLING SYSTEMS, INC. By: /s/ J. Gary McAlpin Name: J. Gary McAlpin Title: Chief Operating Officer General Electric Capital Corporation By: /s/Timothy B. Perusek Name: Timothy B. Perusek Title: Vice President NationsBank, National Association By: /s/John Foreman Name: John Foreman Title: Vice President Key Corporate Capital Inc. By: /s/Laura A. Coneglio Name: Laura A. Coneglio Title: Assistant Vice President - 13 - EX-3 4 EXHIBIT 3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, (the "Agreement"), dated as of October 28, 1998 between Hi-Rise Recycling Systems, Inc., a Florida corporation (the "Company"), and the Persons set forth on Annex I attached hereto (collectively, the "Holders" and each a "Holder"). 1. BACKGROUND. The Company is a party to a certain Securities Purchase Agreement (this term and all other capitalized terms used herein without definition having the meaning specified in Section 7 hereof), which governs certain rights and obligations of the Company and the Holders. The Holders own warrants to purchase shares of Common Stock as set forth on Annex II attached hereto. 2. REGISTRATION RIGHTS. 2.1. INCIDENTAL (PIGGYBACK) REGISTRATION. If at any time, the Company proposes to register any of its securities under the Securities Act of 1933, as amended (the "Securities Act"), for public offering and sale, the Company shall give notice to the Holders of its intention to effect such a registration prior to the filing with the Securities and Exchange Commission (the "SEC") of such registration statement. Notwithstanding the foregoing, a piggyback registration pursuant to this Section 2.1 shall not include any registration statement (i) on Form S-8 or any successor form to such form, (ii) on Form S-4 or any successor form to such form, (iii) filed in connection with an exchange offer or an offering of Common Stock or of securities convertible or exchangeable into Common Stock made solely to its existing stockholders in connection with a rights offering or solely to the Company's employees, or a post-effective amendment to any then effective registration statement. Upon written request of any Holder, given within 7 days after receipt from the Company of such notice, the Company shall use its best efforts to cause the number of such Holder's Registrable Securities referred to in such request to be included in such registration statement; provided, however, that in the event that the offering pursuant to such registration statement shall be underwritten and the underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration pursuant to this Section 2.1 exceeds the number of securities which can be sold in the offering without adversely affecting the offering price or the marketing of the Company's securities, the Company may first include in such registration all securities the Company proposes to sell, and such Holder shall accept a reduction (pro rata with the other Holders who shall have duly requested to include Registrable Securities in such registration and other holders of the Company's equity securities entitled to register such securities on such registration statement whose registration rights are not subordinate to such Holder's ("parri passu holders"), on the basis of the proportion that the market value (based upon the proposed offering price of such securities or the mid-point of the range of the proposed offering prices if any of such securities (the "Market Value")) of each security holder's aggregate securities requested to be registered bears to the Market Value of the aggregate amount of all such equity securities (other than those to be sold for the Company's account) as to which registration is sought by the Holders and the parri passu holders) in the number of securities to be included in such registration, which reduction may, if necessary, be total. Nothing in this Section 2.1 shall limit the Company's ability to withdraw, or temporarily cease to seek effectiveness of, a registration statement it has filed either before or after its effectiveness. 2.2. DEMAND REGISTRATION. (a) Except as provided in Section 2.2(b) below, upon the written request of the Holders owning not less than ten percent (10%) of the Registrable Securities that the Company effect pursuant to this Agreement the registration of the resale of the Registrable Securities under the Securities Act (which request shall specify the Registrable Securities so requested to be registered by each such Holder, the Proposed Amounts thereof and the intended method of disposition by such Holders), the Company will, as expeditiously as reasonably possible, use its best efforts to effect the registration under the Securities Act of the resale of the Proposed Amount of Registrable Securities, for disposition in accordance with the intended method of disposition stated in such request; provided, however that (i) if in the good faith judgment of the Board of Directors of the Company, such registration would be detrimental to the Company and the Board of Directors of the Company concludes, as a result, that it is in the best interests of the Company to defer the filing of such registration statement at such time, and (ii) the Company shall furnish to such Holders a certificate signed by an executive officer of the Company that the Board of Directors of the Company has made such a determination and that it is, therefore, necessary to defer the filing of such registration statement, then the Company shall have the right to defer such filing for the period during which such registration would be detrimental, provided that the Company may not defer the filing for a period of more than 120 days after receipt of the request of such Holders. The Company shall be entitled to include in any registration statement filed pursuant to this Section 2.2: (A) securities of the Company held by any other security holder of the Company, and (B) in an underwritten public offering, securities of the Company to be sold by the Company for its own account, except as and to the extent that (x) in the opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), such inclusion would adversely affect the marketing of the Registrable Securities to be sold by such Holders or (y) in the reasonable opinion of such Holders owning a majority of the Proposed Amount of Registrable Securities (if such method of disposition is not an underwritten public offering), such inclusion would adversely affect the price at which such Registrable Securities may be sold pursuant to the plan of distribution; provided, however, that if, after such registration statement has been filed, the managing underwriter believes that the inclusion of all securities requested to be included in the proposed underwritten public offering would adversely affect the marketing of the Registrable Securities or, in the case of a distribution that is not an underwritten public offering, if such Holders owning a majority of the Proposed Amount of Registrable Securities reasonably believe that the inclusion of all securities requested to be included in such registration statement would adversely affect the price at which the Registrable Securities may be sold pursuant to the plan of distribution, then the aggregate amount of securities to be offered by the Company and such other security holders of the Company shall be reduced so as to permit the offering of all Registrable Securities requested by all the Holders of the entire Proposed Amount of Registrable Securities without such adverse effects. (b) The Company shall not be obligated to take any action to effect any registration requested by the Holders pursuant to Section 2.2(a) hereof (i) after the Company has effected two (2) such registrations pursuant to this Agreement and each such registration has been declared or ordered effective, (ii) for a period of two (2) years after the Company has effected one such registration pursuant to Section 2.2(a) hereof and such registration has been declared or ordered effective, such two year period to commence on the date the registration statement was -2- declared or ordered effective or (iii) at any time after the second anniversary of the expiration date of the Warrants. (c) Notwithstanding any other provision of this Agreement to the contrary, a registration requested pursuant to this Section 2.2 shall not be deemed to have been effected (i) unless it has become effective, provided that a registration that does not become effective after the Company has filed a registration statement with respect thereto by reason of the refusal of Holders owning a majority of the Proposed Amount to proceed shall be deemed to have been effected by the Company unless the Holders shall have elected to pay all Company Registration Expenses in connection with such registration, (ii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by the Holders, or (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied other than by reason of some wrongful act or omission, or act or omission in bad faith, by the Holders. 2.3. HOLDBACK AGREEMENTS. Each Holder, if, as and when such Holders Registrable Securities are covered by a Registration Statement, agrees, if necessary to effectuate an underwritten offering of the Company's equity securities in the reasonable judgment and at the request of the managing underwriter or underwriters (to the extent timely notified in writing by such managing underwriter or underwriters), not to effect any public sale or distribution of securities of the Company of any class included in such Registration Statement, including a sale pursuant to Rule 144 (or any similar rule then in force) under the Securities Act, except as part of such underwritten registration, during the 10-day period prior to, and a period of up to 120 days (as reasonably determined by the Company and the managing underwriter or underwriters) beginning on the effective date of any such underwritten offering (any such period in respect of a Registration Statement being referred to as a "Holding Period"); PROVIDED, however, that the period of time for which the Company is to maintain the effectiveness of such Registration Statement pursuant to Section 2.4 shall be increased by the length of the applicable Holding Period. 2.4. REGISTRATION PROCEDURES. Subject to the limitations set forth elsewhere herein, if and whenever the Company is required by the provisions of this Agreement to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company will, as expeditiously as possible: (a) in the case of a registration under Section 2.2 hereof, prepare and file with the SEC (such filing to be made within 60 days after the initial request by the requesting Holders pursuant to Section 2.2(a) a registration statement with respect to such Registrable Securities on a form appropriate to permit such Holders to sell the Proposed Amount in accordance with such Holders' intended method of distribution and use its best efforts to cause such registration statement to become and remain effective; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for such period as shall be requested by the Holders owning the Proposed Amount, which period shall not exceed twelve (12) months and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities -3- covered by such registration statement during such period;; provided, however, that if such registration has been effected pursuant to Form S-3 (or any successor form), then such period of effectiveness shall be until the earlier of (i) 24 months or (ii) the date that the offering is completed or terminated; (c) furnish to a single firm of counsel, initially Steel Hector & Davis LLP, or such other counsel thereafter designated by the Holders who hold a majority of the Registrable Securities being sold (the "Holder's Counsel"), and each underwriter of the securities being sold by such Holders, at least 5 days prior to the filing thereof, such number of copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents, as such counsel may reasonably request, in substantially the form in which they are proposed to be filed with the SEC, in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Holders; (d) use its best efforts to register or qualify such Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each underwriter of the securities being sold by such Holders shall reasonably request, and do any and all other acts and things which may be necessary or advisable to enable such Holders and such underwriter to consummate the disposition in such jurisdictions of such Registrable Securities except that the Company shall not for any purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (d), it would not be obligated to be so qualified, or subject itself to taxation in any such jurisdiction; (e) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the disposition of such Registrable Securities; (f) notify the Holders owning the Proposed Amount, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the Company's becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to such Holders and each underwriter a reasonable amount of copies of a prospectus supplement or amendment so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (g) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to the Holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first day of the Company's first calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; -4- (h) enter into such agreements (including an underwriting agreement in customary form) and take such other actions as the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; (i) to use its best efforts to furnish to the Holders owning the Proposed Amount an opinion from the Company's counsel and a "cold comfort" letter from the Company's independent public accountant (in accordance with SAS 72), addressed to such Holders, in customary form and covering such matters of the type customarily covered by such opinions and "cold comfort" letters, in each case for the type of offering contemplated (i.e., underwritten or self-underwritten), as such Holders shall reasonably request; (j) make available for inspection by the Holders, by any other underwriter participating in any disposition to be effected pursuant to such registration statement, and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all reasonably pertinent financial and other records, reasonably pertinent corporate documents and properties of the Company, and cause all of the Company's officers, directors, employees and the independent public accountants who have audited its financial statements to supply all information reasonably requested by such Holders or any such underwriter, attorney, accountant or agent in connection with such registration statement; provided, however, that each such Holder and each such representative of such Holder, underwriter, attorney, accountant or agent must execute and deliver to the Company a confidentiality agreement in form and substance reasonably acceptable to the Company agreeing to keep any such information and records concerning the Company confidential; (k) permit such Holders to participate in the preparation of such registration or comparable statement; (l) at or prior to the effective date of the registration use commercially reasonable efforts to cause all Registrable Securities covered by such Registration Statement to be (i) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed or (ii) authorized to be quoted on the National Association of Securities Dealers Automated Quotation System if the securities so qualify and if the Company does not then have similar securities listed on any national securities exchange; and (m) in the case of an underwritten offering, enable the Registrable Securities to be in such denominations or such number of shares and registered in such names as the underwriters may request at least two business days prior to the sale of the Registrable Securities. In the case of an underwritten offering, the underwriters shall be selected by the Company and reasonably acceptable to such Holders owning a majority of the Proposed Amount of Registrable Securities. The Holders owning the Proposed Amount shall, upon receipt of any notice from the Company of the happening of any event of the kind described in subdivision (f) above, forthwith discontinue its disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holders' receipt of the copies of the supplemented or amended prospectus contemplated by said subdivision and, if so directed by the Company, will -5- deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holders' possession of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in subdivision (b) above shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when such Holders shall have received the copies of the supplemented or amended prospectus contemplated by subdivisions (f) above. The Holders shall enter into such customary agreements as requested by the Company in connection with the registration of securities as contemplated by this Agreement. The Holders shall furnish to the Company in writing such information and documents regarding such Holders and the distribution of such securities as may be required to be disclosed in the registration statement in question by the rules and regulations under the Securities Act or under any other applicable securities or blue sky laws of the jurisdictions referred to in Section 2.3(d) hereof. The Company may exclude from such registration the Registrable Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. If any such registration or comparable statement refers to any Holder by name or otherwise as the holder of any securities of the Company then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and presented to the Company in writing, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company's securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such Holder. 3. REGISTRATION EXPENSES. In connection with any registration of Registrable Securities pursuant to this Agreement the Company will, whether or not any registration pursuant to this Agreement shall become effective, from time to time promptly upon receipt of bills or invoices relating thereto, pay all expenses (other than Selling Expenses) incident to its performance of or compliance with this Agreement (the "Company Registration Expenses"), including without limitation all registration, filing and NASD fees, fees and expenses of compliance with securities or blue sky laws, word processing, duplicating and printing expenses, messenger and delivery expenses, fees and disbursements of counsel for the Company and all independent public accountants (including the expenses of any audit and/or "cold comfort" letter) and other Persons retained by the Company; and reasonable fees and expenses of the Holder's Counsel. In addition, in the event that an assignment of a Registrable Security occurs subsequent to the date of effectiveness of a Registration Statement filed pursuant to this Agreement, the Company shall pay all reasonable expenses necessary to amend or supplement such Registration Statement to reflect such assignment for the first two such assignments and the transferee shall pay for any subsequent assignments. Each Holder shall be responsible for its Selling Expenses. 4. INDEMNIFICATION. (a) The Company will, and hereby does, indemnify, to the extent permitted by law, each Holder, its officers and directors, if any, and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act, against all losses, -6- claims, damages, liabilities (or proceedings in respect thereof) and expenses under the Securities Act, joint or several, caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus (and as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities (or proceedings in respect thereof) or expenses are caused by any untrue statement or alleged untrue statement or an omission or alleged omission to state a material fact made in reliance on or in conformity with any information furnished in writing to the Company by any of the Holders or any participating underwriter expressly for use therein. If the offering pursuant to any registration statement provided for under this Agreement is made through underwriters, the Company agrees to enter into an underwriting agreement in customary form with such underwriters and to indemnify such underwriters, their officers and directors, if any, and each Person, if any, who controls such underwriters within the meaning of Section 15 of the Securities Act to the same extent as hereinbefore provided with respect to the indemnification of the Holders, their respective officers and directors, if any, and each Person, if any, who controls each of such Holders within the meaning of Section 15 of the Securities Act. (b) If for any reason the indemnity under Section 4(a) is unavailable, then the Company shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the indemnified party on the other or (ii) if the allocation provided by subdivision (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative fault of the Company on the one hand and the indemnified party on the other but also the relative benefits received by the Company and the indemnified party as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (c) Each of the Holders will, and hereby does, severally but not jointly, indemnify, to the extent permitted by law, the Company, its officers and directors, if any, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against all losses, claims, damages, liabilities (or proceedings in respect thereof) and expenses under the Securities Act, caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus (and as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading but only to the extent that such losses, claims, damages, liabilities (or proceedings in respect thereof) or expenses are caused by any untrue statement or alleged untrue statement made in reliance on or in conformity with any information furnished to the Company by any such Holder. If the offering pursuant to any registration statement provided for under this Agreement is made through underwriters, each Holder agrees to enter into an underwriting agreement in customary form with such underwriters and to indemnify such underwriters, their officers and directors, if any, and each Person who controls such underwriters within the meaning of Section 15 of the Securities Act to the same extent as hereinbefore provided with respect to the indemnification of the Company, its -7- officers and directors, if any, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act. (d) If for any reason the indemnity under Section 4(c) is unavailable, then any such Holder shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of such Holder on the one hand and of the indemnified party on the other or (ii) if the allocation provided by subdivision (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative fault of such Holder on the one hand and the indemnified party on the other but also the relative benefits received by such Holder and the indemnified party as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (e) The Holders and the Company shall make payments of all amounts required to be made pursuant to the foregoing provisions of this Section 4 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due and payable. 5. LIMITATIONS ON SALE OR DISTRIBUTION OF SECURITIES. If a registration under this Agreement shall be in connection with an underwritten public offering of securities for the Company's or any other security holder's account (other than any of the Holders), the Holders shall be deemed to have agreed by acquisition of such Registrable Securities not to effect any public sale or distribution, including any sale pursuant to Rule 144 under the Securities Act, of any Registrable Securities, during such period prior and subsequent to the commencement of the offering of securities pursuant to such registration statement as may be reasonably requested by the underwriters thereof, and in all cases to otherwise comply with all applicable rules under the Securities Act and the Exchange Act, including, without limitation, Regulation M. 6. REGISTRATION RIGHTS TO OTHERS. If the Company shall at any time hereafter provide to any holder of any securities of the Company rights with respect to the registration of such securities under the Securities Act, such rights shall not be superior to and shall not be in conflict with any of the rights provided in this Agreement to the Holders. 7. DEFINITIONS. The following terms have the following respective meanings for the purpose of this Agreement: CREDIT AGREEMENT: That certain Credit Agreement, dated as of the date hereof, among the Company, the other parties named as Borrowers thereto, General Electric Capital Corporation, NationsBank, National Association, and Key Corporate Capital Inc. and the other parties which may from time to time be Lenders thereunder, and General Electric Capital Corporation, as Administrative Agent, and NationsBank, National Association, as Revolver Agent) EXCHANGE ACT: The Securities Exchange Act of 1934 or any similar federal statute as at the time in effect, and any reference to a particular Section of such Act shall include a reference to the comparable Section, if any, of any such similar federal statute. -8- PERSON: The term "Person" shall have the meaning ascribed to such term in the Credit Agreement. PROPOSED AMOUNT: With respect to the Registrable Securities, the aggregate amount of Registrable Securities that the Holders thereof shall request the Company to register pursuant to Section 2. REGISTRABLE SECURITIES: The shares of Common Stock of the Company underlying or issued pursuant to the exercise of the warrants and the additional warrants to purchase such Common Stock issued or issuable by the Company to the Holders pursuant to the Securities Purchase Agreement (the "Shares"), including any additional securities of the Company issued in respect of the Shares, including by way of a stock split, dividend or other recapitalization or exchange of securities with or by the Company. Once issued such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act or if the Holders may sell the Registrable Securities without restriction pursuant to Rule 144K under the Securities Act (or successor thereto) and the restrictive legends have been removed from the certificates representing such securities, (iii) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force, or (iv) they shall have ceased to be outstanding. SECURITIES ACT: The Securities Act of 1933, as amended or any similar Federal statute as at the time in effect, and any reference to a particular Section of such Act shall include a reference to the comparable Section, if any, of any such similar Federal statute. SECURITIES PURCHASE AGREEMENT: That certain Securities Purchase Agreement dated as of October 28, 1998 by and among the Company and the purchasers named therein. SELLING EXPENSES: All underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by such Holders. 8. AMENDMENTS AND WAIVERS. This Agreement may be amended by a writing signed by both a majority of the Holders and the Company. Each Holder shall be bound by any consent authorized by this Section 8, whether or not such Registrable Securities shall have been marked to indicate such consent. 9. NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) one (1) Business Day after -9- deposit with a reputable overnight courier with all charges prepaid or (c) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address indicated on ANNEX III or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person designated on ANNEX III to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 10. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that money damages may be insufficient to compensate the Holders for breaches by the Company of the terms hereof and, consequently, that the equitable remedy of specific performance of the terms hereof will be available in the event of any such breach. 11. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 12. MISCELLANEOUS. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not. Each Holder may freely assign all or a portion of its rights under this Agreement. This Agreement, the Securities Purchase Agreement, the Warrants, the Credit Agreement and the Loan Documents described therein embody the entire agreement and understanding between the Company and the Holders and supersede all prior agreements and understandings relating to the subject matter hereof. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREUNDER. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. [Remainder of Page Intentionally Left Blank. Signatures Follow on Next Page.] -10- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first above written. HI-RISE RECYCLING SYSTEMS, INC. By: /s/ J. Gary McAlpin Name: J. Gary McAlpin Title: Chief Operating Officer General Electric Capital Corporation By: /s/Timothy B. Perusek Name: Timothy B. Perusek Title: Vice President NationsBank, National Association By: /s/John Foreman Name: John Foreman Title: Vice President Key Corporate Capital Inc. By: /s/Laura A. Coneglio Name: Laura A. Coneglio Title: Assistant Vice President -11- EX-4 5 EXHIBIT 4 THIS WARRANT WAS ORIGINALLY ISSUED ON OCTOBER 28, 1998 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO A SECURITIES PURCHASE AGREEMENT DATED AS OF OCTOBER 28, 1998 AMONG HI-RISE RECYCLING SYSTEMS, INC., GENERAL ELECTRIC CAPITAL CORPORATION, NATIONSBANK, NATIONAL ASSOCIATION AND KEY CORPORATE CAPITAL INC. A COPY OF THE SECURITIES PURCHASE AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY HI-RISE RECYCLING SYSTEMS, INC. TO THE HOLDER HEREOF UPON REQUEST. STOCK PURCHASE WARRANT Date of Issuance: October 28, 1998 Certificate No. 4 FOR VALUE RECEIVED, HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation (the "Company"), hereby grants to GE Capital Corporation, a New York corporation ("Holder"), or its permitted transferees and assigns the right to purchase from the Company at any time after the Date of Issuance (as defined below) a total of 1,024,155 Warrant Shares (as defined herein) at a price per share of $1.50 (the "Initial Exercise Price"). This Warrant is one of a series of warrants issued pursuant to the terms of the Securities Purchase Agreement, dated as of October 28, 1998 (the "Securities Purchase Agreement"), among the Company, General Electric Capital Corporation ("GE Capital"), NationsBank, National Association ("NationsBank"), and Key Corporate Capital Inc. ("Key"). Certain capitalized terms used herein are defined in Section 9 hereof. The amount and kind of securities obtainable pursuant to the rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant. This Warrant is subject to the following provisions: SECTION 1. EXERCISE OF WARRANT. 1A. EXERCISE PERIOD. The purchase rights represented by this Warrant may be exercised, in whole or in part, at any time and from time to time during the period commencing on the Date of Issuance through and including the 10th anniversary of the Date of Issuance (the "Exercise Period"). Notwithstanding the foregoing, the Holder must purchase a minimum of 10,000 Warrant Shares each time it chooses to purchase Warrant Shares, except to purchase the remaining Warrant Shares available to it. -1- 1B. EXERCISE PROCEDURE. (i) This Warrant shall be deemed to have been exercised when all of the following items have been delivered to the Company (the "Exercise Time"): (a) a completed Exercise Agreement, as described in Section 1C below, executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "Purchaser"); (b) this Warrant; (c) if the Purchaser is not the Registered Holder, an Assignment or Assignments in the form set forth in EXHIBIT I hereto evidencing the assignment of this Warrant to the Purchaser; and (d) a check payable to the Company in an amount equal to the product of the Exercise Price (as defined below) multiplied by the number of Warrant Shares being purchased upon such exercise (the "Aggregate Exercise Price"). (ii) Certificates for Warrant Shares purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within three (3) business days after the date of the Exercise Time together with any cash payable in lieu of a fraction of a share pursuant to Section 14 hereof. Unless all of the purchase rights represented by this Warrant have been exercised, the Company shall prepare a new warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not been exercised and shall, within such five-day period, deliver such new warrant to the Person designated for delivery in the Exercise Agreement. (iii) The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the Registered Holder of such Warrant Shares at the Exercise Time. (iv) The issuance of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares (other than transfer taxes payable because the holder of the Warrant Shares is other than the Registered Holder). (v) The Company shall not close its books against the transfer of this Warrant or of any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant. The Company shall from time to time take all such action as may be necessary to assure that the par value per share of the unissued Warrant Shares acquirable upon exercise of this Warrant is at all times equal to or less than the Exercise Price then in effect. In the event that the Company fails to comply with its obligations set forth in the foregoing sentence, the Purchaser may (but shall not be obligated to) purchase Warrant Shares hereunder at par value, and the Company shall be obligated to reimburse the Purchaser for the -2- aggregate amount of consideration paid in connection with such exercise in excess of the Exercise Price then in effect. (vi) The Company shall assist and cooperate with the Registered Holder or any Purchaser required to make any governmental filings or obtain any governmental approvals prior to or in connection with any exercise of this Warrant (including, without limitation, making any filings required to be made by the Company). (vii) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a Change of Control, Organic Change (as defined below) or other transaction affecting the Company, such exercise may at the election of the Registered Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction. (viii) The Company shall at all times reserve and keep available out of its authorized but unissued Common Stock solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant. All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges. The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares may be so issued without violation by the Company of any applicable law or governmental regulation or any requirements of any domestic securities exchange or automated quotation system upon which shares of Common Stock or other securities constituting Warrant Shares may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance) and shall cause such Warrant Shares to be listed on such exchange or automated quotation system. The Company shall not take any action which would cause the number of authorized but unissued Warrant Shares to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Warrant. (ix) If the Warrant Shares issuable by reason of exercise of this Warrant are at the time of exercise of this Warrant convertible into or exchangeable for any other stock or securities of the Company, the Company shall, at the Purchaser's option and upon surrender of this Warrant by such Purchaser as provided above together with any notice, statement or payment required to effect such conversion or exchange of Warrant Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser) a certificate or certificates representing the stock or securities into which the Warrant Shares issuable by reason of such conversion are convertible or exchangeable, registered in such name or names and in such denomination or denominations as such Purchaser has specified. (x) The Company shall not, and shall not permit its Subsidiaries to, directly or indirectly, by any action (including, without limitation, reincorporation in a jurisdiction other than Florida, amending its certificate of incorporation or through any Organic Change, issuance or sale of securities, recapitalization, reclassification of shares or any other voluntary action) avoid or seek to avoid the observance or performance of any of terms of this Warrant or impair or diminish its value (except for any action which ratably affects all Warrant Shares and shares of Common -3- Stock), but shall at all times in good faith assist in the carrying out of all such terms of this Warrant. Without limiting the generality of the foregoing, the Company shall (a) obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant and (b) except as set forth in this Section 1B, not undertake any reverse stock split, combination, reorganization or other reclassification of its capital stock which would have the effect of causing a material portion of the purchase rights represented hereby to become exercisable for less than one share of Common Stock. 1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the Purchaser shall deliver to the Company an Exercise Agreement in substantially the form set forth in EXHIBIT I hereto, except that if the Warrant Shares are not to be issued in the name of the Registered Holder, the Exercise Agreement shall also state the name of the Person to whom the certificates for the Warrant Shares are to be issued, and if the number of Warrant Shares to be issued does not include all of the Warrant Shares purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be issued. SECTION 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order to prevent dilution of the rights granted under this Warrant, the Initial Exercise Price shall be subject to adjustment from time to time as provided in this Section 2 (as so adjusted, the "Exercise Price"), and the number of Warrant Shares obtainable upon exercise of this Warrant shall be subject to adjustment from time to time, each as provided in this Section 2. 2A. CERTAIN ACQUISITIONS. If and when on or after the Date of Issuance the Company engages in a business combination transaction, whether by way of stock purchase, merger, asset purchase or otherwise, with either of the companies set forth on EXHIBIT III hereto or issues Common Stock as described in Exhibit III, then immediately upon the consummation of any such transaction or issuance, the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased so that this Warrant shall entitle the Registered Holder to purchase that number of Warrant Shares which shall bear the same proportion to the Fully Diluted Common Stock of the Company immediately after any such transaction or issuance as the proportion of that number of Warrant Shares in effect immediately prior to any such transaction or issuance bore to the Fully Diluted Common Stock of the Company immediately prior to such transaction or issuance. This adjustment shall be made separately for each such transaction and issuance. For the purposes hereof, "Fully Diluted Common Stock" as of a specified time shall mean the aggregate of all outstanding shares of Common Stock as of such time plus all shares of Common Stock issuable upon the exercise or conversion of securities exercisable for, or convertible into, shares of Common Stock of the Company which securities are outstanding or issuable at such time. 2B. ADJUSTMENT TO EXERCISE PRICE. If and whenever on or after the Date of Issuance the Company issues or sells, or in accordance with Section 2C is deemed to have issued or sold, any shares of Common Stock for a consideration per share less than the Exercise Price in effect immediately prior to the time of such issue or sale, then immediately upon such issue or sale or deemed issue or sale the Exercise Price shall be reduced to the Exercise Price determined by dividing (i) the sum of (1) the product derived by multiplying the Exercise Price in effect immediately prior to such issue or sale by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (2) the consideration, if any, received by the Company -4- upon such issue or sale, by (ii) the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. Notwithstanding anything in this Agreement to the contrary, there will be no adjustment pursuant to this Section 2B for any issuance or deemed issuance of Common Stock (i) issued in connection with the business combination transactions described in Section 2A above or Section 1.1 (b) of the Securities Purchase Agreement, (ii) pursuant to exercise of stock options, warrants and other rights to acquire Common Stock described in Schedule 3.2 of the Securities Purchase Agreement (as such number of shares is proportionately adjusted for subsequent stock splits, combinations of shares and stock dividends affecting the Common Stock), in each case pursuant to the terms thereof as in effect on the date hereof, and (iii) pursuant to the Company's stock option plans described in Schedule 3.2 of the Securities Purchase Agreement. 2C. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Exercise Price under Section 2B, the following shall be applicable: (1) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than the Exercise Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Option or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon exercise of all such options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Exercise Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (2) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any manner issues or sells any Convertible Securities (other than pursuant to the Company's stock option plans described in Schedule 3.2 to the Securities Purchase Agreement), and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the Exercise Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible securities for such price per share. For the purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by -5- dividing (i) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the total maximum number of Shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Exercise Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Exercise Price had been or are to be made pursuant to other provisions of this Section 2, no further adjustment of the Exercise Price shall be made by reason of such issue or sale. (3) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Exercise Price in effect at the time of such change shall be immediately adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2C, if the terms of any Option or Convertible Security which was outstanding as of the Date of Issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; provided that no such change shall at any time cause the Exercise Price hereunder to be increased. (4) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE SECURITIES. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Exercise Price then in effect hereunder shall be adjusted immediately to the Exercise Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued. For purposes of this Section 2C, the expiration or termination of any Option or Convertible Security which was outstanding as of the Date of Issuance shall not cause the Exercise Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the Date of Issuance. (5) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor (net of discounts, commissions and related expenses). If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company shall be the Fair Market Value thereof as of the date of receipt. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving company, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net -6- assets and business of the non-surviving entity as is attributable to such Common Stock, Option or Convertible Security, as the case may be. The fair value of any consideration other than cash and securities shall be determined jointly by the Company and Holders representing a majority of the holders of the series of Warrants issued pursuant to the Securities Purchase Agreement of this Warrant. If such parties are unable to reach agreement within a reasonable period of time, the Holders representing a majority of the holders of the series of Warrants issued pursuant to the Securities Purchase Agreement of this Warrant may, upon a reasonable good faith determination by such Holder that an appraisal is necessary, request in a timely manner that the fair value of such consideration be determined by an independent appraiser experienced in valuing such type of consideration jointly selected by the Company and the Registered Holder of this Warrant. The determination of such appraiser shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be borne by the Company. (6) INTEGRATED TRANSACTIONS. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the Option shall be deemed to have been issued for a consideration of $.01. (7) TREASURY SHARES. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock. (8) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. 2D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the number of Warrant Shares for which this Warrant shall be exercisable shall be proportionately increased and the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the number of Warrant Shares for which this Warrant shall be exercisable shall be proportionately reduced and the Exercise Price in effect immediately prior to such combination shall be proportionately increased. 2E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change". Prior to the consummation of any Organic Change, the Company shall make -7- appropriate provision (in form and substance reasonably satisfactory to the Registered Holder of this Warrant) to ensure that such Registered Holder of this Warrant shall thereafter have the right to acquire and receive upon exercise hereof, in lieu of or addition to (as the case may be) the Warrant Shares immediately theretofore acquirable and receivable upon exercise of this Warrant, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had exercised its Warrants immediately prior to such Organic Change. In each such case, the Company shall also make appropriate provision (in form and substance reasonably satisfactory to the Registered Holder of this Warrant) to insure that the provisions of this Section 2 and Section 5 hereof shall thereafter be applicable to the Warrants (including, in the case of any such Organic Change in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Exercise Price to the value for the Common Stock reflected by the terms of such Organic Change and a corresponding immediate adjustment in the number of Warrant Shares acquirable and receivable upon exercise of the Warrants, if the value so reflected is less than the Fair Market Value of the Common Stock in effect immediately prior to such Organic Change). The Company shall not effect any such Organic Change unless, prior to the consummation thereof, the successor entity (if other than the Company) resulting from such Organic Change assumes by written instrument (in form and substance reasonably satisfactory to the Registered Holder of this Warrant) the obligation to deliver to such Registered Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Registered Holder may be entitled to acquire. 2F. CERTAIN EVENTS. If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features other than pursuant to the stock option plans described in Schedule 3.2 of the Securities Purchase Agreement), then the Company's Board of Directors shall make an appropriate adjustment in the Exercise Price and the number of Warrant Shares obtainable upon exercise of this Warrant so as to protect the rights of the Registered Holder of this Warrant; and provided further that no such adjustment shall increase the Exercise Price as otherwise determined pursuant to this Section 2 or decrease the number of Warrant Shares issuable upon conversion of any Warrant. 2G. NOTICES. (i) Promptly after any adjustment of the Exercise Price, the Company shall give written notice thereof to the Registered Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Company shall give written notice to the Registered Holder at least 20 days prior to the date on which any Organic Change shall take place. (iii) The Company shall also give written notice to the Registered Holder at least 20 days prior to the date on which any Organic Change, dissolution or liquidation shall take place. SECTION 3. NOTICES OF RECORD DATE. In case the Company shall take a record of all holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of any class or any other securities, or to receive any other right, then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, and the time, if any is -8- to be fixed. Such notice shall be mailed by nationally recognized overnight courier at least ten (10) days prior to the earlier of the record date and the effective date for the event specified in such notice, provided that the failure to mail such notice shall not affect the legality or validity of any such action. SECTION 4. [Intentionally Omitted]. SECTION 5. NO VOTING RIGHTS; LIMITATION OF LIABILITY. This Warrant shall not entitle the Registered Holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such Registered Holder for the Exercise Price of Warrant Shares acquirable by exercise hereof or as a stockholder of the Company. SECTION 6. TRANSFERABILITY. Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder, including without limitation the rights described in Sections 8A and 8B hereof are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment (in the form of EXHIBIT II hereto) at the principal office of the Company; provided, however that the rights described in Section 8B hereof shall cease to be transferable (i) upon any sale of such Warrant Shares to the public pursuant to Rule 144 (or any successor provision) under the Securities Act or (ii) when a registration statement with respect to the sale of such Warrant Shares shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement. Notwithstanding the foregoing, any transfer must relate to a minimum of 50,000 Warrant Shares or such lesser amount as may then be owned by the transferring Holder. The Warrant Shares shall also be subject to certain transfer restrictions and each certificate for Warrant Shares purchased upon exercise of this Warrant shall bear a legend substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON ___________ THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT IN RESPECT OF WHICH THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO SUCH EFFECT OR OTHERWISE IN ACCORDANCE WITH THE SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 28, 1998, BETWEEN THE ISSUER (THE "COMPANY") AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE." -9- SECTION 7. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Warrants shall represent such portion of such rights as is designated by the Registered Holder at the time of such surrender. At the request of the Registered Holder (pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged for one or more Warrants to purchase Common Stock. The date the Company initially issues Warrants pursuant to the Securities Purchase Agreement shall be deemed to be the "Date of Issuance" regardless of the number of times new certificates representing the unexpired and unexercised rights formerly represented by this Warrant shall be issued. All Warrants representing portions of the rights hereunder are referred to herein as the "Warrants." SECTION 8. OPTIONAL REDEMPTION 8A. OPTIONAL REDEMPTION OF WARRANTS. (i) At any time and from time to time during the period through and including the 10th anniversary of the Date of Issuance (the "Redemption Period") and commencing (1) after the first to occur of (A) a Change of Control of the Company, other than one resulting from a Secondary Public Offering (as hereinafter defined); or (B) the earlier of (x) the termination by the Borrowers of any Commitment (other than the Acquisition Loan Commitment) (as such terms are defined in that certain Credit Agreement, dated as of the date hereof (the "Credit Agreement"), among the Company, the other parties named as Borrowers thereto, GE Capital, NationsBank, and Key and the other parties which may from time to time be Lenders thereunder, and GE Capital, as Administrative Agent, and NationsBank, National Association, as Revolver Agent) under the Credit Agreement, and (y) the date upon which the aggregate amount of permanent reductions in the outstanding principal balance of the Loans made pursuant to the Credit Agreement (other than mandatory prepayments as described in Section 1.3(b) and Section 1.3(d) of the Credit Agreement or permanent reductions made as a result of scheduled payments of principal of the Loans) equals or exceeds $10,000,000.00; or (C) upon an event of default by the Company pursuant to the Credit Agreement and/or (2) upon the occurrence of (A) the registration of the Common Stock of the Company under the Securities Act pursuant to a public offering of the Company's securities for cash through a nationally recognized underwriter, pursuant to which public offering the Company is able to raise net proceeds of at least $5,000,000 at a price per share of not less than $1.50 ("Secondary Public Offering"), or (B) the adoption by the Company of an employee stock ownership plan pursuant to which Common Stock will be issued to such plan or a trust pursuant to such plan for the benefit of employees, officers, or directors of the Company the Company shall, at the option of the Registered Holder of this Warrant, which option shall be exercised by delivering written notice (the "Warrant Redemption Notice") to the Company at least 20 days prior to the date designated by such holder for redemption of all or a portion of the Warrant (the "Warrant Redemption Date"), redeem from such Registered Holder all or a portion of the Warrant as to which such option shall have been exercised (the "Redemption Warrants"), at a price per Redemption Warrant equal to the Fair Market Value of the Redemption Warrants (the "Warrant Redemption Price"). (ii) If the funds of the Company legally available for redemption of the Redemption Warrant on the Warrant Redemption Date are insufficient to redeem all of the -10- edemption Warrant, those funds which are legally available shall be used to redeem the maximum possible number of such Redemption Warrant. At any time thereafter when additional funds of the Company become legally available for the redemption of the Redemption Warrant, such funds shall be used, within 10 days after the end of the fiscal quarter in which such funds become legally available, to redeem the balance of the Redemption Warrant. (iii) Within 10 days following receipt of the Warrant Redemption Notice, the Company shall acknowledge its receipt of such notice and shall notify the holder having given such notice of the time and place of redemption and the Warrant Redemption Price. (iv) Unless there shall have been a default in payment of the Warrant Redemption Price, the Redemption Warrant shall not, from and after such Warrant Redemption Date, be deemed to be outstanding. Without limiting any rights of the holders of Redemption Warrant which are set forth in this Warrant or are otherwise available under law, any Redemption Warrant which the Company has become obligated to redeem on any Warrant Redemption Date but which it has not redeemed shall continue to have all of the powers and rights which such Redemption Warrant had prior to such Warrant Redemption Date, until the aggregate Warrant Redemption Price for such Redemption Warrant has been paid in full. Notwithstanding the foregoing, no such redemption shall affect any rights which a holder of Warrant Shares may have under Section 8B hereof. (v) Upon receipt by the Company of a Warrant Redemption Notice from the Registered Holder upon the occurrence of an event described in Section 8A(i)(2)(A) or (B) above, the Company shall be obligated to redeem from the Registered Holder all of the Redemption Warrant prior to redeeming any other outstanding securities issued by the Company, provided, that any warrants issued pursuant to the Securities Purchase Agreement shall be redeemed pro rata on the basis of the number of such warrants held by the holders thereof. 8B. OPTIONAL REDEMPTION OF WARRANT SHARES. (i) At any time and from time to time during the Redemption Period, the Company shall, at the option of each holder of Warrant Shares, which option shall be exercised by delivering written notice (the "Warrant Shares Redemption Notice") to the Company at least 20 days prior to the date designated by such holder for redemption of the Warrant Shares (the "Warrant Shares Redemption Date"), redeem from such holder of the Warrant Shares all of the Warrant Shares as to which such option shall have been exercised (the "Redemption Warrant Shares"), at a price per Redemption Warrant Share equal to the Fair Market Value thereof (the "Warrant Share Redemption Price"). (ii) If the funds of the Company legally available for redemption of the Redemption Warrant Shares on the Warrant Shares Redemption Date are insufficient to redeem all of the Redemption Warrant Shares, those funds which are legally available shall be used to redeem the maximum possible number of such Redemption Warrant Shares. At any time thereafter when additional funds of the Company become legally available for the redemption of the Redemption Warrant Shares, such funds shall be used, within 10 days after the end of the fiscal quarter in which such funds become legally available, to redeem the balance of the Redemption Warrant Shares. -11- (iii) Within 10 days following receipt of the Warrant Shares Redemption Notice, the Company shall acknowledge its receipt of such notice and shall notify the holder having given such notice of the time and place of redemption and the Warrant Share Redemption Price. (iv) Unless there shall have been a default in payment of the Warrant Share Redemption Price, the Redemption Warrant Shares shall not, from and after such Warrant Shares Redemption Date, be deemed to be outstanding. Without limiting any rights of the holders of Redemption Warrant Shares which are set forth in this Warrant or are otherwise available under law, any Redemption Warrant Shares which the Company has become obligated to redeem on any Warrant Share Redemption Date but which it has not redeemed shall continue to have all of the powers and rights which such Redemption Warrant Shares had prior to such Warrant Share Redemption Date, until the aggregate Warrant Share Redemption Price for such Redemption Warrant Shares have been paid in full. No such redemption shall affect any rights which a holder of Warrants may have under Section 8A or this Section 8B. (v) Upon receipt by the Company of a Warrant Redemption Notice from the Registered Holder upon the occurrence of an event described in Section 8A(i)(2)(A) or (B) above, the Company shall be obligated to redeem from the Registered Holder all of the Redemption Warrant Shares prior to redeeming any other outstanding securities issued by the Company, provided, that any shares issued upon the exercise of warrants issued pursuant to the Securities Purchase Agreement shall be redeemed pro rata on the basis of the number of such shares held by the holders thereof. 8C. LIMITATIONS ON RIGHTS OF REDEMPTION. Notwithstanding anything herein to the contrary, (i) each redemption right provided by Sections 8A and 8B of this Agreement shall expire if the Warrant Redemption Notice or the Warrant Share Redemption Notice relating to a particular event that commences a Redemption Period is not delivered to the Company within 90 days after the earlier of (a) the date due notice of any such event is given to the Holder and/or (b) any public announcement of the event that commences a Redemption Period (any such 90 day period, a "Redemption Notice Period"), and (ii) the Fair Market Value shall be determined on the date of the event that commences a Redemption Period. In any event the Company shall give the Holder prompt Notice of any event commencing a Redemption Period. SECTION 9. DEFINITIONS. The following terms have the meanings set forth below: "Change of Control" shall have the meaning ascribed to such term in the Credit Agreement. "Closing Date" shall have the meaning ascribed to such term in the Credit Agreement. "Common Stock" means the Company's Common Stock, $.01 par value per share, or any securities into which such Common Stock is hereafter converted, reclassified or exchanged. "Common Stock Deemed Outstanding" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 2C(1) and 2C(2) hereof. -12- "Convertible Securities" means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock. "Fair Market Value" of any security means the highest of: (i) the market value of the security based on the average of the closing prices of such security's sales on all securities exchanges or automated quotation system on which such security may at the time be listed or included, or, if there has been no sales on any such exchange or reported on such quotation system on any day, the average of the highest bid and lowest asked prices on all such exchanges or reported at the end of such day, or, if on any day such security is not so listed or included in any such quotation system, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the third day immediately prior to the day as of which "Fair Market Value" is being determined and the 20 consecutive business days prior to such day; PROVIDED HOWEVER, that if such security is an Option or a Convertible Security, and such security is at any time not listed on any securities exchange or quoted in any such quotation system or the over-the-counter market, the "Fair Market Value" of such security shall be calculated on the basis of "Fair Market Value" of underlying shares of Common Stock, less any consideration which would be payable if the holder of such Option or Convertible Security had exercised, exchanged or converted such Option or Convertible Security on the date of determination of the "Fair Market Value"; or (ii) the pro rata share of the book value of the Company (as determined in accordance with generally accepted accounting principles by reference to the Company's most recent regularly prepared balance sheet) attributable to such security (assuming the exercise or conversion thereof, as appropriate); or (iii) the fair value thereof determined by an appraiser which shall be an investment bank of nationally recognized standing experienced in valuing securities, which appraiser shall be jointly selected by the Company and the Registered Holder of this Warrant, valued on the basis of a sale of the Company as a whole in an arms-length transaction between a willing buyer and the Company as a willing seller, neither acting under compulsion (and in each case, without any discount or reduction for any illiquidity or other inability to sell such security, or the fact that such security represents a minority interest in the Company or may be subject to redemption, conversion or exchange by the Company), and the Company shall pay the fees and expenses of such appraiser; PROVIDED, HOWEVER, that if such security is not listed on any securities exchange or quoted in any such quotation system or over-the-counter market, then "Fair Market Value" of such security means the highest of the value determined by the calculation provided for in (ii) and (iii). Notwithstanding anything herein to the contrary, prior to commencing any appraisal provided for in (iii), Holders representing a majority of the Registrable Securities demanding redemption shall provide written notice to the Company requesting such an appraisal no later than the last day of the applicable Redemption Holder Period. Any delays in the performance of the Company's obligations under this Agreement that are caused by such appraisal shall not result in any liability or claims whatsoever upon the Company by the Holder provided that the Company is diligently causing such appraisal to be effected. The Company shall give the Holder prompt notice of the names of holders of other warrants issued under the Securities Purchase Agreement demanding redemption and the number of such Warrants and shares of Common Stock of the Company as to which redemption is so sought promptly. There shall be no more than one appraisal for each event that requires a determination of the Fair Market Value which appraisal shall be binding on all Holders demanding redemption during a Redemption Period commenced by such event. -13- "Holders" means GE Capital, NationsBank and Key and any successor in interest thereto. "Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities other than rights, warrants or options referred to in Sections 2A or 2B above. "Person" means an individual, a partnership (including a limited partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Registered Holder" means GE Capital Corporation with respect to any security or such other holder of such security as reflected in the records of the Company or any securities registrar maintained in the ordinary course. "Securities Act" means the Securities Act of 1933, as amended. "Subsidiary" shall have the meaning ascribed to such term in the Credit Agreement. "Warrant Shares" means shares of the Company's Common Stock issuable upon exercise of the Warrant; provided, that if the securities issuable or issued upon exercise of the Warrants are issued by an entity other than the Company or there is a change in the class of securities so issuable, then the term "Warrant Shares" shall mean shares of the security issuable upon exercise of the Warrants if such security is issuable in shares, or shall mean the equivalent units in which such security is issuable if such security is not issuable in shares. Once issued such securities shall cease to be Warrant Shares (i) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement or (ii) upon any sale of such securities to the public pursuant to Rule 144 (or any successor provision) under the Securities Act. SECTION 10. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing this Warrant, and in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company (provided that if the Registered Holder is the original holder of this Warrant, a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the same rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. SECTION 11. NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or -14- delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (c) when delivered, if hand-delivered by messenger, all of which shall be addressed (i) if to the Company at its principal executive offices and (ii) if to a Registered Holder, at such Registered Holder's address as it appears in the records of the Company (unless otherwise indicated by any such Registered Holder) or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. SECTION 12. AMENDMENT AND WAIVER. No amendment, modification or waiver will be binding or effective with respect to any provision of this Warrant without the prior written consent of the Registered Holder of this Warrant. SECTION 13. WARRANT REGISTER. The Company shall maintain at its principal executive offices a register for the registration of transfer of Warrants. Upon the surrender of any certificate representing Warrants at such place, the Company will, at the request of the record holder of such certificate, execute and deliver (at the Company's expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of Warrant Shares represented by the surrendered certificate. Each such new certificate will be registered in such name and will represent such number of Warrant Shares as is requested by the holder of the surrendered certificate and will be substantially identical in form to the surrendered certificate. SECTION 14. FRACTIONS OF SHARES. If any fractional interest in a Warrant Share would, except for the provisions of this subparagraph, be delivered upon any exercise of the Warrant, at the request of the Registered Holder the Company, in lieu of delivering the fractional share therefor, shall pay an amount to the Registered Holder thereof equal to the Fair Market Value of such fractional interest as of the date of exercise. SECTION 15. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated as of the date hereof. HI-RISE RECYCLING SYSTEMS, INC. By: /s/ BRADLEY ALAN HACKER ---------------------- Name: Bradley Alan Hacker Title: Chief Financial Officer Attest: /s/ J. GARY MCALPIN ------------------------- Name: J. Gary McAlpin Title: Chief Operating Officer -15- EXHIBIT I TO STOCK PURCHASE WARRANT ASSIGNMENT FOR VALUE RECEIVED, _____________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. ____) with respect to the number of the Warrant Shares covered thereby set forth below, unto: Names of Assignee: ____________________________ ____________________________ Address: ____________________________ ____________________________ ____________________________ No. of Shares: ____________________________ Dated: ________________________ Signature: __________________________ __________________________ Witness: __________________________ -16- EXHIBIT II TO STOCK PURCHASE WARRANT EXERCISE AGREEMENT To: __________________________ Dated: _______________________ The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No._____), hereby agrees to subscribe for the purchase of ____________ Warrant Shares covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant. Signature: _________________________ Address: ___________________________ ___________________________ ___________________________ -17- -----END PRIVACY-ENHANCED MESSAGE-----