SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
HI-RISE RECYCLING SYSTEMS, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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(Title of Class of Securities)
428396 10 5
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(CUSIP Number)
NANCY E. BARTON
GENERAL ELECTRIC CAPITAL CORPORATION
260 LONG RIDGE ROAD
(203) 357-4000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
OCTOBER 28, 1998
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(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.
<PAGE>
SCHEDULE 13D
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CUSIP No.428396 10 5
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
GENERAL ELECTRIC CAPITAL CORPORATION IRS # 13-1500700
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d)
or 2(e) [x]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, USA
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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
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW
(11) EXCLUDES CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.3%
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 22
<PAGE>
SCHEDULE 13D
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CUSIP NO. 428396 10 5
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1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS
GENERAL ELECTRIC CAPITAL SERVICES, INC. IRS #06-11095031
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d)
or 2(e) |X|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, USA
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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-
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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.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Disclaimed. See 11
above.
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14 TYPE OF REPORTING PERSON
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 22
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 428396 10 5
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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]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* (See Instructions)
Not Applicable
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d)
or 2(e) [x]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, USA
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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.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* |_|
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Disclaimed. See 11 above.
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 22
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
>
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
<PAGE>
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
<PAGE>
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.
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
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
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
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
<PAGE>
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
</TABLE>
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
<PAGE>
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.
<PAGE>
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 -
<PAGE>
(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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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.
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<PAGE>
(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")
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<PAGE>
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.
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<PAGE>
"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 -
<PAGE>
(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.]
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<PAGE>
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 -
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
<PAGE>
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
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<PAGE>
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-
<PAGE>
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;
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(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
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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,
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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
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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.
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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
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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.]
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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."
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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
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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.
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(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.
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"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.
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"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
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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
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<PAGE>
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: __________________________
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<PAGE>
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: ___________________________
___________________________
___________________________
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