HI RISE RECYCLING SYSTEMS INC, DEF 14A, 1996-06-18

HI RISE RECYCLING SYSTEMS INC
DEF 14A, 1996-06-18
SPECIAL INDUSTRY MACHINERY, NEC

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SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [X]
Filed by a party other than the registrant [_]

Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

HI-RISE RECYCLING SYSTEMS, INC.
(Name of Registrant as Specified in Its Charter)

HI-RISE RECYCLING SYSTEMS, INC.
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid: $125

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date Filed:

<PAGE>

HI-RISE RECYCLING SYSTEMS, INC.

16255 N.W. 54TH AVENUE, MIAMI, FLORIDA 33014

-------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 16, 1996

-------------------

To the Shareholders of Hi-Rise Recycling Systems, Inc.:

NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders
(the "Annual Meeting") of Hi-Rise Recycling Systems, Inc., a Florida corporation
(the "Company"), will be held at 11:30 a.m., local time, on Tuesday, July 16,
1996, at the offices of the law firm of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel located at Citicorp Center, 153 E. 53rd Street, 35th Floor, New
York, New York for the following purposes:

(1) To elect five members to the Company's Board of Directors to
hold office until the Company's 1997 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;

(2) To consider and vote upon a proposal to approve the adoption
of the Company's 1996 Stock Option Plan and the reservation of
1,000,000 shares of Common Stock for issuance pursuant to the
1996 Stock Option Plan;

(3) To consider and vote upon a proposal to approve the adoption
of the Company's 1996 Directors' Stock Option Plan and the
reservation of 150,000 shares of Common Stock for issuance
pursuant to the 1996 Directors' Stock Option Plan; and

(4) To transact such other business as may properly come before
the Annual Meeting and any and all adjournments or
postponements thereof.

All shareholders are cordially invited to attend; however, only
shareholders of record at the close of business on June 14, 1996 are entitled to
vote at the Annual Meeting or any adjournments thereof.

By Order of the Board of Directors

DONALD ENGEL
CO-CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Miami, Florida
June 17, 1996

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.

<PAGE>

1996 ANNUAL MEETING OF SHAREHOLDERS
OF
HI-RISE RECYCLING SYSTEMS, INC.

---------------------

PROXY STATEMENT

---------------------

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Hi-Rise Recycling Systems, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), for use at the 1996 Annual
Meeting of Shareholders of the Company to be held at 11:30 a.m., local time, on
Tuesday, July 16, 1996, at the offices of the law firm of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel located at Citicorp Center, 153 E. 53rd Street,
New York, New York, or at any adjournment(s) or postponement(s) thereof (the
"Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders.

The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is June 17, 1996. Shareholders should
review the information provided herein in conjunction with the Company's 1995
Annual Report to Shareholders, which accompanies this Proxy Statement. The
Company's principal executive offices are located at 16255 N.W. 54th Avenue,
Miami, Florida 33014, and its telephone number is (305) 624-9222.

INFORMATION CONCERNING PROXY

The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.

The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.

PURPOSES OF THE MEETING

At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:

(1) The election of five members to the Company's Board of
Directors to serve until the Company's 1997 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;

(2) A proposal to approve the adoption of the Company's 1996 Stock
Option Plan (the "1996 Stock Option Plan") and the reservation
of 1,000,000 shares of Common Stock for issuance pursuant to
the 1996 Stock Option Plan;

(3) A proposal to approve the adoption of the Company's 1996
Directors' Stock Option Plan (the "1996 Directors Option
Plan") and the reservation of 150,000 shares of Common Stock
for issuance pursuant to the 1996 Directors Option Plan; and

<PAGE>

(4) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.

Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) FOR the election of the five nominees for director named
below, (b) FOR the proposal to approve the adoption of the 1996 Stock Option
Plan and the reservation of 1,000,000 shares of Common Stock for issuance
pursuant to the 1996 Stock Option Plan and (c) FOR the proposal to approve the
adoption of the 1996 Directors Option Plan and the reservation of 150,000 shares
of Common Stock for issuance pursuant to the 1996 Directors Option Plan. In the
event a shareholder specifies a different choice by means of the enclosed proxy,
his or her shares will be voted in accordance with the specification so made.

The Board of Directors does not know of any other matters that may be
brought before the Annual Meeting nor does it foresee or have reason to believe
that proxy holders will have to vote for substitute or alternate nominees. In
the event that any other matter should come before the Annual Meeting or any
nominee is not available for election, the persons named in the enclosed proxy
will have discretionary authority to vote all proxies not marked to the contrary
with respect to such matters in accordance with their best judgment.

OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The Board of Directors has set the close of business on June 14, 1996,
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of, and to vote at, the Annual Meeting. As of the
Record Date, there were 5,982,771 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter submitted to shareholders
for approval at the Annual Meeting. Shareholders do not have the right to
cumulate their votes for directors.

The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The affirmative vote of a majority of the shares of
Common Stock present and voting at the Annual Meeting is required to approve (i)
the proposal to approve the adoption of the 1996 Stock Option Plan and the
reservation of 1,000,000 shares of Common Stock for issuance pursuant to the
1996 Stock Option Plan and (ii) the proposal to approve the adoption of the 1996
Directors Option Plan and the reservation of 150,000 shares of Common Stock for
issuance pursuant to the 1996 Directors Option Plan. Any other matter that may
be submitted to a vote of the shareholders will be approved if the number of
shares of Common Stock voted in favor of the matter exceeds the number of shares
voted in opposition to the matter, unless such matter is one for which a greater
vote is required by law or by the Company's Articles of Incorporation or Bylaws.
If less than a majority of outstanding shares entitled to vote are represented
at the Annual Meeting, a majority of the shares so represented may adjourn the
Annual Meeting to another date, time or place, and notice need not be given of
the new date, time or place if the new date, time or place is announced at the
meeting before an adjournment is taken.

Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote for purposes of determining
the outcome of any matter submitted to the shareholders for a vote, but will not
be counted as votes cast "for" or "against" any given matter.

A broker or nominee holding shares registered in its name, or in the
name of its nominee, which are beneficially owned by another person and for
which it has not received instructions as to voting from the beneficial

<PAGE>

owner, may have discretion to vote the beneficial owner's shares with respect to
the election of directors and other matters addressed at the Annual Meeting. Any
such shares which are not represented at the Annual Meeting either in person or
by proxy will not be considered as shares present at the Annual Meeting, and
will not be considered to have cast votes on any matters addressed at the Annual
Meeting.

A list of shareholders entitled to vote at the Annual Meeting will be
available at the Company's offices, 16255 N.W. 54th Avenue, Miami, Florida
33014, for a period of ten days prior to the Annual Meeting and at the Annual
Meeting itself for examination by any shareholder.

SECURITY OWNERSHIP

The following table sets forth, as of the Record Date, based on
information obtained from the persons named below, the number of shares of
Common Stock of the Company which were beneficially owned by (i) each person
known by the Company to be the owner of more than 5% of the outstanding shares
of Common Stock, (ii) each director of the Company, (iii) the Company's Named
Executive Officer (as defined below) and (iv) all directors and executive
officers of the Company as a group:

AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF OF BENEFICIAL OUTSTANDING
BENEFICIAL OWNER(1) OWNERSHIP(2) SHARES OWNED
- -------------------------------------------- ----------------- -------------

Donald Engel ............................... 50,000(3) *

Mark D. Shantzis ........................... 734,575(4) 12.2%

Warren Adelson ............................. 789,012(5) 12.6%

Ira S. Merritt ............................. 1,000(6) *

Joel M. Pashcow ............................ --(7) --

All directors and executive officers as
a group (6 persons) ..................... 1,596,549(8) 25.3%

- ------------------------------

* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial
owners identified above is 16255 N.W. 54th Avenue, Miami, Florida
33014.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options or
warrants. Each beneficial owner's percentage ownership is determined by
assuming that options or warrants that are held by such person (but not
those held by any other person) and that are exercisable within 60 days
have been exercised. Unless otherwise noted, the Company believes that
all persons named in the table have sole voting and investment power
with respect to all shares of Common Stock beneficially owned by them.
(3) Does not include 500,000 shares of Common Stock issuable upon the
exercise of options granted under the 1996 Stock Option Plan, subject
to shareholder approval of such plan. Upon shareholder approval of the
1996 Stock Option Plan, all of such options will be presently
exercisable.
(4) Includes (i) 639,575 shares beneficially owned by Mr. Shantzis and Mora
Shantzis, his spouse, as joint tenants with rights of survivorship,
(ii) 60,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock granted under
the Company's 1993 Stock Option Plan (the "1993 Stock Option Plan"),
(iii) 5,000 shares of Common Stock held by Mr. Shantzis as custodian
under the Uniform Gifts to Minors Act for certain of his minor nieces
and nephews and

<PAGE>

(iv) 30,000 shares of Common Stock beneficially owned by Recycling
Education Foundation, of which Mora Shantzis is the a director. Does
not include 40,000 shares of Common Stock issuable upon the exercise of
options granted under the 1993 Stock Option Plan, which options are not
presently exercisable.
(5) Includes (i) 10,000 shares of Common Stock issuable upon the exercise
of presently exercisable options to purchase Common Stock granted under
the Company's 1993 Directors' Stock Option Plan (the "1993 Directors
Option Plan"), (ii) 5,000 shares of Common Stock issuable upon the
exercise of presently exercisable options to purchase Common Stock
granted to Mr. Adelson in June 1995 and (iii) 250,000 shares of Common
Stock issuable upon the exercise of warrants, which warrants are
currently exercisable.
(6) Does not include (i) 5,000 shares of Common Stock issuable upon the
exercise of options granted under the 1993 Directors Option Plan, which
options are not currently exercisable and (ii) 20,000 shares of Common
Stock issuable upon the exercise of options granted under the 1996
Directors Option Plan, subject to shareholder approval of such plan.
(7) Does not include (i) 5,000 shares of Common Stock issuable upon the
exercise of options granted under the 1993 Directors Option Plan, which
options are not currently exercisable and (ii) 20,000 shares of Common
Stock issuable upon the exercise of options granted under the 1996
Directors Option Plan, subject to shareholder approval of such plan.
(8) Includes (i) 17,962 shares of Common Stock which were issued to Harriet
Oestreicher, Seymour Oestreicher's wife, in connection with the
Company's acquisition of IDC Systems, Inc. ("IDC"), and (ii) 4,000
shares of Common Stock issuable upon the exercise of presently
exercisable options to purchase Common Stock granted to Seymour
Oestreicher under the 1993 Stock Option Plan. Does not include (i) an
aggregate of 10,590 shares of Common Stock issuable to Mrs. Oestreicher
in two equal annual installments commencing in February 1997 and (ii)
16,000 shares of Common Stock issuable upon the exercise of options
granted to Seymour Oestreicher under the 1993 Stock Option Plan, which
options are not presently exercisable. See notes (2) through (7) above.

ELECTION OF DIRECTORS; NOMINEES

The Company's Articles of Incorporation provide that the number of
directors constituting the Company's Board of Directors shall be at least one,
with the exact number of directors to be fixed from time to time in the manner
provided in the Company's Bylaws. The Company's Bylaws provide that the number
of directors shall be fixed from time to time by resolution of the Board of
Directors within the limits specified by the Company's Articles of
Incorporation. The Board of Directors has fixed at five the number of directors
that will constitute the Board of Directors for the ensuing year. Each director
elected at the Annual Meeting will serve for a term expiring at the Company's
1997 Annual Meeting of Shareholders or when his successor has been duly elected
and qualified.

Each of the current members of the Board of Directors has been
nominated by the Company to be reelected as a director at the Annual Meeting.
The Board of Directors has no reason to believe that any nominee will refuse or
be unable to accept election; however, in the event that one or more nominees
are unable to accept election or if any other unforeseen contingencies should
arise, each proxy that does not direct otherwise will be voted for the remaining
nominees, if any, and for such other persons as may be designated by the Board
of Directors.

<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

NAME AGE POSITION
- ------------------------ ----------- ---------------------------------------

Donald Engel............ 63 Co-Chairman of the Board of Directors
and Chief Executive Officer

Mark D. Shantzis........ 43 Co-Chairman of the Board of Directors
and President

Seymour Oestreicher..... 72 Vice President - Distribution
Development

Warren Adelson.......... 54 Director

Ira S. Merritt.......... 56 Director

Joel M. Pashcow......... 52 Director

DONALD ENGEL has been Co-Chairman of the Board of Directors and Chief
Executive Officer of the Company since March 1996. Prior to joining the Company,
Mr. Engel was a private investor. From June 1991 to June 1993, Mr. Engel served
as a consultant to Bear Stearns & Co., Inc. From March 1985 to June 1991, Mr.
Engel served as a consultant to Drexel Burnham Lambert where he had been
managing director since 1978. Mr. Engel has served as a director of
multi-national companies such as Revlon Group, Inc., Triangle Industries, Inc.,
and Uniroyal Chemical, Inc.

MARK D. SHANTZIS founded the Company in 1990 and served as its Chairman
of the Board of Directors and Chief Executive Officer from inception until March
1996. Mr. Shantzis has been Co-Chairman of the Board of Directors and President
of the Company since March 1996. Mr. Shantzis has been Chairman, President and
Chief Executive Officer of Equidebt Financial Group, Inc., a company engaged in
providing real estate development, management and financial services, since
February 1984. Mr. Shantzis is the inventor of the Company's Hi-Rise Recycling
System.(TM)

SEYMOUR OESTREICHER has been Vice President - Distribution Development
of the Company since March 1995. Mr. Oestreicher was a founder and has been
Chairman of IDC, a company engaged in selling, installing and servicing trash
compaction systems which was acquired by the Company in 1995, since its
formation in 1987. Mr. Oestreicher was a founder and served as Chairman and
President of International Dynetics Corp., a company engaged in the design,
manufacture and installation of trash compaction systems, from 1969 until 1986.
At IDC and International Dynetics Corp., Mr. Oestreicher oversaw the design,
manufacture and sale of refuse compactors and specialized electro-hydraulic
waste handling equipment primarily in New York, New Jersey and Connecticut, with
distribution worldwide. From January 1951 to June 1969, he was Vice President of
AMF, Inc., with responsibility for operations and sales in its International
Electrical Products Division.

WARREN ADELSON has been a director of the Company since May 1993. Mr.
Adelson has been President of Adelson Galleries, a New York art gallery, since
January 1990. From 1974 to January 1990, Mr. Adelson was Vice President of Coe
Kerr Gallery, a New York City art gallery.

JOEL M. PASHCOW has been a director of the Company since March 1996.
Mr. Pashcow has been the Chairman of the Board of Directors of RPS Realty Trust,
a New York Stock Exchange commercial property REIT, since February 1988 and has
served as its President since March 1996. Mr. Pashcow has served as a

<PAGE>

member of the Board of Governors of the Real Estate Securities and Syndication
Institute and as a director and member of the executive committee of the
National Realty Committee.

IRA S. MERRITT has been a director of the Company since March 1996.
Since his semi-retirement in 1990, Mr. Merritt, a licensed certified public
accountant, has been engaged in selling residential real estate in Boca Raton,
Florida. From 1988 to 1990, Mr. Merritt was employed by the Sidney Kohl Company,
a Florida real estate company, where he established the firm's property
management division. From 1982 to 1988, Mr. Merritt was the Executive Vice
President and Chief Financial Officer of Hanover Companies, Inc. From 1975 to
1982, Mr. Merritt was the senior partner of Merritt, Levy and Cohen, an
accounting firm specializing in the real estate industry.

ELECTION OF EXECUTIVE OFFICERS AND DIRECTORS

The Company's officers are elected annually by the Board of Directors
and serve at the discretion of the Board of Directors. The Company's directors
hold office until the next annual meeting of shareholders and until their
successors have been duly elected and qualified.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the year ended December 31, 1995, the Company's Board of
Directors held four meetings and took certain actions by written consent. During
1995, no director attended fewer than 75 percent of the aggregate of (i) the
number of meetings of the Board of Directors held during the period he served on
the Board of Directors, and (ii) the number of meetings of committees of the
Board of Directors held during the period he served on such committees.

The only committees of the Board of Directors are the Audit Committee
and the Compensation Committee. The Board of Directors does not have a
nominating or similar committee.

Messrs. Shantzis and Merritt are the current members of the Audit
Committee, which committee held one meeting during the year ended December 31,
1995. The duties and responsibilities of the Audit Committee include (a)
recommending to the Board of Directors the appointment of the Company's auditors
and any termination of engagement, (b) reviewing the plan and scope of audits,
(c) reviewing the Company's significant accounting policies and internal
controls and (d) having general responsibility for all related auditing matters.

Messrs. Pashcow and Merritt are the current members of the Compensation
Committee, which committee held two meetings during the year ended December 31,
1995. The Compensation Committee reviews and approves the compensation of the
Company's executive officers and administers the Company's 1993 Stock Option
Plan. The Compensation Committee will also administer the Company's 1996 Stock
Option Plan, if such plan is approved by the Company's shareholders.

ADDITIONAL INFORMATION CONCERNING DIRECTORS

The Company pays non-employee directors an annual fee of $10,000 and
reimburses all directors for their expenses in connection with their activities
as directors of the Company. Directors of the Company who are also employees of
the Company do not receive additional compensation for their services as
directors. In addition, non-employee directors of the Company's Compensation
Committee and Audit Committee receive $1,000 per meeting.

Previously, non-employee directors were eligible to receive options
under the Company's 1993 Directors Option Plan. Subject to shareholder approval
of the 1996 Directors Option Plan, non-employee directors will be eligible to
receive options under the Company's 1996 Directors Option Plan. During 1995, the
Company granted options under the 1993 Directors Option Plan to purchase 2,500
shares of Common Stock to each of

<PAGE>

Warren Adelson and David Friedman, a former director of the Company, as
non-employee directors. In addition, the Company has, subject to shareholder
approval of the 1996 Directors Option Plan, granted options to purchase 20,000
shares of Common Stock to each of Ira S. Merritt and Joel M. Pashcow as
non-employee directors under such plan. The 1993 Directors Option Plan will
terminate effective upon the approval of the 1996 Directors Option Plan by the
Company's shareholders.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's outstanding Common Stock, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are required
by SEC regulation to furnish the Company with copies of all such reports they
file.

To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written or oral representations that
no other reports were required for such persons, during the fiscal year ended
December 31, 1995, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent (10%) beneficial owners were
complied with, except for the late filing by (i) Warren Adelson, a director of
the Company, of a Form 5 relating to the grant of options to purchase 5,000
shares of Common Stock in June 1995 in consideration for his serving on the
Company's Compensation Committee and options to purchase 2,500 shares of Common
Stock in June 1995 under the Company's 1993 Directors Option Plan, and (ii)
David Friedman, a former director of the Company, of a Form 5 relating to the
grant of options to purchase 2,500 shares of Common Stock in June 1995 under the
Company's 1993 Directors Option Plan.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth, for the years ended December 31, 1993,
1994 and 1995, the aggregate compensation awarded to, earned by or paid to Mark
D. Shantzis (the "Named Executive Officer"), who served as Chief Executive
Officer of the Company during each of such years. No other executive officer of
the Company received compensation in excess of $100,000 during such years. The
Company did not grant any restricted stock awards or stock appreciation rights
or make any long-term incentive plan payouts during such years.

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#)
- ------------------------------------------------ ----------- ------------------- ------------------------
<S> <C> <C> <C>
Mark D. Shantzis 1993 $ 67,472(2)(3) 100,000(4)
Chairman of the Board of Directors and 1994 156,857(3) -0-
Chief Executive Officer (1) 1995 171,987(3) -0-

<FN>
- ------------------------------

(1) In March 1996, Mr. Shantzis was elected Co-Chairman of the Board and President of the Company.
(2) In lieu of compensation to Mr. Shantzis prior to the Company's initial public offering, the Company paid
$20,032 to Equidebt Financial Group, Inc. in 1993.
(3) In addition, Mr. Shantzis received a monthly car allowance of $750.
(4) Represents options granted under the Company's 1993 Stock Option Plan to purchase 100,000 shares
of Common Stock at an exercise price of $5.00 per share.
</FN>
</TABLE>

<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with Donald Engel,
effective as of March 25, 1996, which provides for the employment of Mr. Engel
as Co-Chairman of the Board of Directors and Chief Executive Officer of the
Company. Such employment agreement provides for an annual base salary of
$180,000 subject to annual increases in accordance with the Consumer Price
Index. The employment agreement requires Mr. Engel to devote his full time,
energies and efforts to the affairs of the Company. Mr. Engel has agreed that
during the term of his employment agreement and for a period of five years
thereafter, he will not compete or engage in a business competitive with any
recycling or solid-waste disposal business in which the Company or its
subsidiaries or affiliates then engages and which operates within any state in
which the Company conducts business. The employment agreement provides that Mr.
Engel or the Company may terminate such agreement upon ten days notice. Upon the
termination of the employment agreement, Mr. Engel will be entitled to receive
any unpaid salary and accrued bonus through the date of termination.

The Company has also entered into a three-year employment and
consulting agreement with Mark D. Shantzis, effective as of March 25, 1996,
which provides for the employment of Mr. Shantzis as Co-Chairman of the Board of
Directors and President of the Company. The initial term of the employment and
consulting agreement will be automatically extended for successive one year
terms unless either party gives notice of its intent not to extend the term at
least six months prior to its expiration date (three months in the case of any
extension period after the initial term). Such agreement provides for an annual
base salary of $180,000 subject to annual increases in accordance with the
Consumer Price Index. Mr. Shantzis has agreed that during the term of his
employment and consulting agreement and for a period of one year thereafter, he
will not consult, compete or engage in or own in excess of 5% of any entity
which engages in the business of providing mechanical multi-story recycling and
which operates within any state in which the Company conducts business. The
employment and consulting agreement provides that Mr. Shantzis or the Company
may terminate such agreement upon thirty days notice. Upon the termination of
Mr. Shantzis' employment and consulting relationship with the Company, Mr.
Shantzis will be entitled to receive any unpaid salary and bonus, if any,
accrued through the date of termination and a lump sum severance payment in the
amount of the base salary that would have been paid by the Company to Mr.
Shantzis through the scheduled end of the then current term of the employment
and consulting agreement.

STOCK OPTION PLANS

In July 1993, the Company adopted the 1993 Stock Option Plan pursuant
to which 350,000 shares of Common Stock were reserved for issuance to officers
and other key employees and to certain other persons who are employed or engaged
by the Company. In 1995, the number of shares of Common Stock reserved for
issuance under the 1993 Stock Option Plan was increased by 150,000 shares to
500,000 shares. Under the 1993 Stock Option Plan, options are designated as
"incentive stock options" or "non-qualified options" within the meaning of the
Internal Revenue Code of 1986, as amended. The purpose of the 1993 Stock Option
Plan is to encourage stock ownership by persons instrumental to the success of
the Company, in order to give them a greater personal interest in the Company's
business. In general, the exercise price of any stock option granted to an
eligible employee may not be less than 100% of the fair market value of the
shares underlying such option on the date of the grant, unless such employee
owns more than 10% of the outstanding Common Stock, in which case the exercise
price of any incentive stock may not be less than 110% of such fair market
value. In general, the term of each option and the manner in which it may be
exercised is determined by the Board of Directors, provided, that no option may
be exercisable more than ten years after the date of grant and, in the case of
an incentive stock option granted to an eligible employee owning more than 10%
of the outstanding Common Stock, no more than five years. Payment for shares
purchased upon exercise of any option may be in cash or in shares of the
Company's Common Stock. Options are not transferable, except upon the death of
an optionee. In general, the unexercised portion of an option granted to an
employee under the 1993 Stock Option Plan shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of: (i)
three months after the date on which the employee's employment is terminated for
any reason other than for

<PAGE>

Cause (as defined in the 1993 Stock Option Plan), mental or physical disability
or death; (ii) immediately upon the termination of the employee's employment for
Cause; (iii) one year after the date on which the employee's employment is
terminated by reason of the employee's mental or physical disability or (iv)(A)
one year after the date of termination of the employee's employment by reason of
the death of the employee or (B) three months after the date of the employee's
death if such death occurs during the one year period following the employee's
termination as a result of mental or physical disability. As of December 31,
1995, 313,107 options have been granted and are outstanding under the 1993 Stock
Option Plan at an average price of $5.68 per share. In addition, as of December
31, 1995, options to purchase 1,333 shares of Common Stock which had been
granted under the 1993 Stock Option Plan had been exercised.

In July 1993, the Company also adopted the 1993 Directors Option Plan
pursuant to which 50,000 shares of Common Stock have been reserved for issuance.
Only non-employee directors are eligible to receive options under the 1993
Directors Option Plan. The 1993 Directors Option Plan provides for an automatic
grant of an option to purchase 5,000 shares of Common Stock upon a person's
election as a director of the Company and an automatic grant of 2,500 shares of
Common Stock upon such person's re-election as a director of the Company. The
Company has granted to Warren Adelson options to purchase 5,000 shares of Common
Stock under the 1993 Directors Option Plan at an exercise price equal to $5.00
per share, options to purchase 2,500 shares of Common Stock at an exercise price
equal to $6.06 per share and options to purchase 2,500 shares of Common Stock at
an exercise price of $8.25 per share. In addition, in March 1996, the Company
granted to each of Messrs. Merritt and Pashcow options under the 1993 Directors
Option Plan to purchase 5,000 shares of Common Stock at an exercise price of
$4.00 per share. As set forth above, effective upon the approval of the 1996
Directors Option Plan by the Company's shareholders, the 1993 Directors Option
Plan will terminate.

As more fully described herein, in March 1996, the Board of Directors
adopted, subject to shareholder approval, the 1996 Stock Option Plan pursuant to
which 1,000,000 shares of Common Stock are to be reserved for issuance to
officers and other key employees and to certain other persons who are employed
or engaged by the Company. The purpose of the 1996 Stock Option Plan is to
encourage stock ownership by persons instrumental to the success of the Company,
in order to give them a greater personal interest in the Company's business. The
terms and provisions of the 1996 Stock Option Plan are substantially similar to
those of the 1993 Stock Option Plan. In connection with the adoption of the 1996
Stock Option Plan, the Company's Compensation Committee granted to Donald Engel,
the Company's Co-Chairman of the Board of Directors and Chief Executive Officer,
subject to shareholder approval of the 1996 Stock Option Plan, options to
purchase 500,000 shares of Common Stock at an exercise price of $4.00 per share.
Such options were to vest over a five-year period with vesting to accelerate in
the event that the price of the Common Stock increased to $6.00 per share. On
May 22, 1996, the closing price of the Common Stock was $6.50, and accordingly,
the options granted to Mr. Engel vested, subject to shareholder approval of the
1996 Stock Option Plan. In addition, in March 1996, the Board of Directors
adopted, subject to shareholder approval, the 1996 Directors Option Plan
pursuant to which 150,000 shares are to be reserved for issuance. Only
non-employee directors are eligible to receive options under the 1996 Directors
Option Plan. The 1996 Directors Option Plan provides for an automatic grant of
an option to purchase 20,000 shares of Common Stock upon a person's election as
a director of the Company and an automatic grant of 1,000 shares of Common Stock
upon such person's re-election as a director of the Company. The Company has
granted to each of Messrs. Pashcow and Merritt, subject to shareholder approval
of the 1996 Directors Option Plan, options to purchase 20,000 shares of Common
Stock under the 1996 Directors Option Plan at an exercise price of $4.00 per
share. See "Proposal to Approve the Adoption of the 1996 Stock Option Plan and
the Reservation of 1,000,000 Shares of Common Stock for Issuance Pursuant to the
1996 Stock Option Plan" and "Proposal to Approve the 1996 Directors Option Plan
and the Reservation of 150,000 Shares of Common Stock for Issuance Pursuant to
the 1996 Directors Option Plan."

OPTION/SAR GRANT TABLE

No options or stock appreciation rights were granted to the Named
Executive Officer during the fiscal year ended December 31, 1995.

<PAGE>

AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE

The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officer as of December 31,
1995. No stock options were exercised by the Named Executive Officer during the
year ended December 31, 1995. No stock appreciation rights have been granted or
are outstanding.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON VALUE OPTIONS AT FY-END (#) FY-END ($)
EXERCISE REALIZED ------------------------------- ---------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Mark D. Shantzis -0- -0- 40,000 60,000 $150,000(1) $225,000(1)

<FN>
- ---------------
(1) The closing bid price for the Company's Common Stock as reported on
NASDAQ on December 29, 1995 was $8.75. Value is calculated by
multiplying (i) the difference between $8.75 and the option price of
$5.00 by (ii) the number of shares of Common Stock underlying the
option.
</FN>
</TABLE>

CERTAIN TRANSACTIONS

In March 1992, the Company acquired substantially all of the assets of
Events, Etc., of which Mora M. Shantzis was the sole shareholder and director.
Mora M. Shantzis is the wife of Mark D. Shantzis, the Company's Co-Chairman of
the Board and President and a principal shareholder of the Company. Prior to its
acquisition by the Company, Events, Etc. marketed environmental and recycling
related products and accessories through catalog sales. The Company continues to
market these products through its Modern Recycling Solutions catalog. In
connection with this acquisition, the Company issued a promissory note in the
principal amount of $24,000 (the aggregate investment that had been made by Mora
M. Shantzis) which bore interest at the rate of 10% per annum commencing March
26, 1992 and continuing through March 25, 1994, at which time the entire accrued
interest became due. Principal and interest became payable in monthly
installments of $2,000 commencing April 1994. The Company completed payment of
this note in April 1995.

During the year ended December 31, 1993, the Company paid Equidebt
Financial Group, Inc., an affiliate of Mr. Shantzis, $20,032 in lieu of
compensation to Mr. Shantzis.

During the years ended December 31, 1993, 1994 and 1995, product
development expenses of $44,400, $20,000 and $22,500, respectively, were paid to
Tekmar Inc. ("Tekmar"), a company owned by the wife of Byron M. Blank, a former
Vice President of the Company. At December 31, 1994 and 1995, the Company had a
note receivable from Tekmar in the amount of $32,847 and $28,647, respectively.
The note bears interest at 5.5% and is due 180 days after demand for repayment
by the Company. As of the date hereof, the Company has not demanded repayment of
such note and does not anticipate that it will demand repayment in the
foreseeable future.

In February 1995, the Company, through its newly-formed wholly-owned
subsidiary IDC Acquisition Sub, Inc., acquired all of the outstanding capital
stock of IDC, a New York corporation organized in November 1987 of which Harriet
Oestreicher owned 47.5% of the outstanding capital stock. Mrs. Oestreicher is
the wife of Seymour Oestreicher, the Company's Vice President - Distribution
Development. Pursuant to the acquisition, the Company agreed to pay $500,000 in
cash, of which $366,667 has been paid and $133,333 is payable in two equal
annual installments, with interest at the rate of 5.5% per annum, in February of
1997 and 1998. In

<PAGE>

connection with the acquisition, the Company issued 26,667 shares of Common
Stock to the former shareholders of IDC and agreed to issue additional shares of
Common Stock in three equal amounts annually, commencing in February 1996. In
April 1996, an aggregate of 11,148 additional shares of Common Stock were issued
to the former shareholders of IDC, of which Harriet Oestreicher received 5,295
shares.

The Company has entered into a two-year employment agreement with
Seymour Oestreicher effective as of February 23, 1995, which provides for the
employment of Mr. Oestreicher as its Vice President - Distribution Development.
In May 1996, the Company exercised its option to extend the term of Mr.
Oestreicher's employment for an additional year. Such employment agreement
provides for an annual base salary of $45,000. Mr. Oestreicher has agreed not to
compete or engage in a business competitive with the Company's current or
anticipated business (including those previously conducted by IDC) during the
term of his employment agreement and for a period of five years thereafter.

The Company has entered into a two-year consulting agreement with
Harriet Oestreicher, effective as of February 23, 1995, which provides for the
employment of Mrs. Oestreicher as a consultant to IDC. The consulting agreement
provides for an annual fee of $55,000 and terminates upon Mr. Oestreicher
ceasing to be an employee of IDC. Mrs. Oestreicher has agreed not to compete or
engage in a business competitive with the Company's current or anticipated
business (including those previously conducted by IDC) during the term of her
consulting agreement and for a period of five years thereafter.

In 1988, Harriet Oestreicher loaned $50,000 to IDC for working capital
purposes. The Company repaid this loan in February 1995, together with interest
at the rate of 10% per annum.

In May 1995, Mark D. Shantzis and Warren Adelson, the Company's
principal shareholders, reimbursed the Company with respect to a litigation
settlement in the amount of $400,000 by contributing 36,129 shares and 15,484
shares, respectively, of Common Stock to the capital of the Company.

In March 1996, the Company entered into an employment agreement with
Donald Engel, the Company's Co-Chairman of the Board of Directors and Chief
Executive Officer, and an employment and consulting agreement with Mark D.
Shantzis, the Company's Co-Chairman of the Board of Directors and President. See
"Executive Compensation - Employment Agreements" above for a description of
these agreements.

PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 STOCK OPTION PLAN
AND THE RESERVATION OF 1,000,000 SHARES OF COMMON STOCK
FOR ISSUANCE PURSUANT TO THE 1996 STOCK OPTION PLAN

In March 1996, the Board of Directors adopted, subject to approval by
the Company's shareholders, the 1996 Stock Option Plan pursuant to which
1,000,000 shares of Common Stock are to be reserved for issuance to officers and
other key employees and to certain other persons who are employed or engaged by
the Company. The benefits provided by the 1996 Stock Option Plan are intended to
supplement those provided by the Company's 1993 Stock Option Plan. The text of
the 1996 Stock Option Plan, as approved by the Company's Board of Directors, is
attached hereto as Exhibit A. The material features of the 1996 Stock Option
Plan are discussed below, but the description is subject to, and is qualified in
its entirety by, the full text of the 1996 Stock Option Plan, as amended.

The purpose of the 1996 Stock Option Plan is to encourage stock
ownership by persons whose efforts and judgment are instrumental to the success
of the Company, in order to give them a greater personal interest in the
Company's business. In furtherance of this purpose, the 1996 Stock Option Plan
authorizes (a) the granting of incentive or non-qualified stock options to
purchase Common Stock to employees of the Company or its subsidiaries, including
directors and officers who are regular employees of the Company (48 persons),
(b) the provision of loans for the purpose of financing the exercise of options
and the amount of taxes payable in

<PAGE>

connection therewith and (c) the use of already owned Common Stock as payment of
the exercise price for options granted under the 1996 Stock Option Plan (such
provisions being at times referred to herein as the "Stock Swap").

Approval of the 1996 Stock Option Plan by the Company's shareholders is
one of the conditions of Rule 16b-3, a rule promulgated by the Securities and
Exchange Commission (the "SEC") that provides an exemption from the operation of
the "short-swing profit" recovery provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with respect to the
acquisition of options, the use of the Stock Swap and certain transactions by
officers and directors of the Company.

The 1996 Stock Option Plan provides that it shall be administered by a
committee consisting of two or more disinterested directors designated by the
Board of Directors, or in the absence of such a committee the full Board of
Directors (in either case, the "Committee"). For purposes of the 1996 Stock
Option Plan, a disinterested director is a director who is not, during the one
year prior to his service as an administrator of the 1996 Stock Option Plan, or
during such service, granted or awarded options pursuant to the 1996 Stock
Option Plan. The Committee in its sole discretion, determines the persons to be
awarded options, the number of shares subject thereto and the exercise price and
other terms thereof. In making this determination, the Committee has the
authority to consult with and receive recommendations from officers and other
personnel of the Company and its subsidiaries with regard to these matters. In
addition, the Committee has full power and authority to construe and interpret
the 1996 Stock Option Plan, and the acts of the Committee are final, conclusive
and binding upon all interested parties, including the Company, its
shareholders, its officers and employees, recipients of grants under the 1996
Stock Option Plan and all persons or entities claiming by or through such
persons. The Company's Compensation Committee will administer the 1996 Stock
Option Plan.

Options are intended to be granted primarily to those persons who
possess a capacity to contribute significantly to the successful performance of
the Company. Because persons to whom grants of options are to be made are to be
determined from time to time by the Committee, in its discretion, it is
impossible at this time to indicate the precise number, name or positions of
persons who will receive options or the number of shares for which options will
be granted to any such employee, except to the extent already granted subject to
shareholder approval of the 1996 Stock Option Plan.

Assuming shareholder approval of the 1996 Stock Option Plan, an
aggregate of 1,000,000 shares of Common Stock (subject to adjustment as
discussed below) will be reserved for issuance upon exercise of options granted
under the 1996 Stock Option Plan. In connection with the Board of Directors'
adoption of the 1996 Stock Option Plan, the Committee granted to Donald Engel,
the Company's Co-Chairman of the Board of Directors and Chief Executive Officer,
subject to shareholder approval of the 1996 Stock Option Plan, options to
purchase 500,000 shares of Common Stock at an exercise price of $4.00 per share.
Such options were to vest in equal installments over a five-year period with
vesting to accelerate in the event that the price of the Common Stock increased
to $6.00 per share. On May 22, 1996, the closing price of the Common Stock was
$6.50 and accordingly, subject to shareholder approval of the 1996 Stock Option
Plan, the options granted to Mr. Engel vested.

The shares acquired upon exercise of options granted under the 1996
Stock Option Plan will be authorized and unissued shares of Common Stock. The
Company's shareholders will not have any preemptive rights to purchase or
subscribe for the shares reserved for issuance under the 1996 Stock Option Plan.
If any option granted under the 1996 Stock Option Plan should expire or
terminate for any reason other than having been exercised in full, the
unpurchased shares subject to that option will again be available for purposes
of the 1996 Stock Option Plan.

<PAGE>

The following table sets forth as of June 10, 1996, certain information
regarding options granted to Donald Engel, the Company's Co-Chairman of the
Board of Directors and Chief Executive Officer, under the 1996 Stock Option
Plan, subject to shareholder approval of such plan. No other executive officer,
director or employee of the Company has been granted options under the 1996
Stock Option Plan.

<TABLE>
<CAPTION>
NUMBER OF EXERCISE VALUE OF
SHARES SUBJECT PRICE PER OPTIONS AT
NAME AND POSITION TO OPTIONS SHARE JUNE 10, 1996(1)
- ----------------------------------------------------- ---------------------- ----------------- ----------------------
<S> <C> <C> <C>
Donald Engel 500,000 $4.00 $875,000
Co-Chairman of the Board and
Chief Executive Officer

<FN>
- --------------------
(1) The closing price of the Common Stock on June 10, 1996 was $5.75 per
share. Value is calculated by multiplying (a) the difference between
$5.75 and the option exercise price by (b) the number of shares of
Common Stock underlying the option.
</FN>
</TABLE>

TERMS AND CONDITIONS

All options granted under the 1996 Stock Option Plan are, and shall be,
evidenced by a written agreement between the Company and the grantee. Such
agreements do or shall contain such terms and conditions, consistent with the
1996 Stock Option Plan, relating to the grant, the time or times of exercise and
other terms of the options as the Committee prescribes.

Under the 1996 Stock Option Plan, the option price per share for
incentive stock options may not be less than the fair market value of the
underlying shares on the date of grant. For purposes of the 1996 Stock Option
Plan and subject to the Committee's sole discretion to determine otherwise in a
fair and uniform manner, the term "fair market value" shall mean the closing
price of the Common Stock on the business day immediately preceding the date of
grant. For the purpose of determining fair market value, the closing price of
the Common Stock on any business day shall be (i) if such Common Stock is listed
or admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such exchange
or reporting system, as reported in any newspaper of general circulation, (ii)
if the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Common Stock on such system, or
(iii) if neither clause (i) or (ii) is applicable, the mean between the high bid
and low asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Stock on at least five of the ten
preceding days.

The exercise price of an option may be paid in cash, by certified check
or official bank check, by money order, with already owned shares of Common
Stock having a fair market value equal to the exercise price, or by a
combination of the foregoing. The 1996 Stock Option Plan also authorizes the
Company, on an individual basis or pursuant to a general program established in
connection with the plan, to make loans to optionees to enable them to exercise
their options. Such loans must (i) provide for full recourse to the optionee,
(ii) bear interest at a rate no less than the prime rate of interest of the
Company's principal lender, and (iii) be collateralized by the pledge of the
shares of Common Stock purchased. Proceeds from the sale of Common

<PAGE>

Stock pursuant to the exercise of options will be added to the general funds of
the Company to be used for general corporate purposes.

The use of already owned shares of Common Stock applies to payment for
the exercise of an option in a single transaction and to the "pyramiding" of
already owned shares in successive, simultaneous option exercises. In general,
pyramiding permits an option holder to start with as little as one share of
Common Stock and exercise an entire option to the extent then exercisable (no
matter what the number of shares subject thereto). By utilizing already owned
shares of Common Stock, no cash (except for fractional share adjustments) is
needed to exercise an option. Consequently, the optionee would receive Common
Stock equal in value to the spread between the fair market value of the shares
subject to the option and the exercise price of the option.

No option granted under the 1996 Stock Option Plan is assignable or
transferable, other than by will or by the laws of descent and distribution.
During the lifetime of an optionee, an option is exercisable only by such
optionee. The expiration date of an option will be determined by the Committee
at the time of the grant, but in no event will an option be exercisable after
the expiration of ten years from the date of grant. An option may be exercised
at any time or from time to time or only after a period of time or in
installments, as the Committee determines. The Committee may in its sole
discretion accelerate the date on which any option may be exercised.

The unexercised portion of any option granted to an employee under the
1996 Stock Option Plan shall automatically be terminated (a) three months after
the date on which the optionee's employment is terminated for any reason other
than (i) Cause (as defined in the 1996 Stock Option Plan); (ii) mental or
physical disability; or (iii) death; (b) immediately upon the termination of the
optionee's employment for Cause; (c) one year after the date on which the
optionee's employment is terminated by reason of mental or physical
disabilities; or (d) one year after the date on which the optionee's employment
is terminated by reason of the death of the employee; or one year after the date
on which the optionee shall die if such death shall occur during the one year
period following the termination of the optionee's employment by reason of
mental or physical disability.

To prevent dilution of the rights of a holder of an option, the 1996
Stock Option Plan provides for adjustment of the number of shares for which
options may be granted, the number of shares subject to outstanding options and
the exercise price of outstanding options in the event of any increase or
decrease in the number of issued and outstanding shares through the declaration
of a stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of shares. Provisions governing the effect
upon options of a merger, consolidation or other reorganization of the Company
are also included in the 1996 Stock Option Plan.

No option may be granted under the 1996 Stock Option Plan after March
25, 2006. The Board of Directors may amend, suspend or terminate the 1996 Stock
Option Plan at any time, provided that such amendment may not adversely affect
the rights of an optionee under an outstanding option without the affected
optionee's written consent. In addition, the Board of Directors may not amend
the 1996 Stock Option Plan to (a) without first obtaining shareholder approval,
increase the number of shares of Common Stock reserved for issuance or change
the class of persons eligible to receive options, (b) permit the granting of
options that expire beyond the maximum ten-year period or (c) extend the
termination date of the 1996 Stock Option Plan.

FEDERAL INCOME TAX CONSEQUENCES

The 1996 Stock Option Plan is not qualified under the provisions of
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and is not subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

<PAGE>

NON-QUALIFIED STOCK OPTIONS. On exercise of a nonqualified stock option
granted under the Plan, an optionee (other than an officer or director of the
Company) will recognize ordinary income equal to the excess, if any, of the fair
market value on the date of exercise of the option of the shares of Common Stock
acquired on exercise over the exercise price. That income will be subject to the
withholding of Federal income tax. The optionee's tax basis in those shares will
be equal to their fair market value on the date of exercise of the option, and
the optionee's holding period for those shares will begin on that date.

An officer or director of the Company or any other person to whom the
short-swing profit recovery provisions of section 16(b) of the Exchange Act
apply in connection with an option under the 1996 Stock Option Plan (a
"Reporting Person") generally will not recognize ordinary income until the
earlier of the expiration of the six month period after the exercise of an
option and the first day on which a sale at a profit of shares acquired on
exercise of the option would not subject the Reporting Person to suit under
section 16(b) of the Exchange Act. The amount of ordinary income will equal the
excess, if any, of the fair market value of the shares on the date the income is
recognized over the exercise price of the option. A Reporting Person, however,
is entitled under section 83(b) of the Code to elect to recognize ordinary
income on the date of exercise of the Option, in which case the amount of income
will be equal to the excess, if any, of the fair market value of the shares on
that date over the exercise price of the option. A section 83(b) election must
be made within 30 days after exercising an option.

If an optionee pays for shares of Common Stock on exercise of an option
by delivering shares of the Company's Common Stock, the optionee will not
recognize gain or loss on the shares delivered, even if their fair market value
at the time of exercise differs from the optionee's tax basis in them. The
optionee, however, otherwise will be taxed on the exercise of the option in the
manner described above as if he had paid the exercise price in cash. If a
separate identifiable stock certificate is issued for that number of shares
equal to the number of shares delivered on exercise of the option, the
optionee's tax basis in the shares represented by that certificate will be equal
to his tax basis in the shares delivered, and his holding period for those
shares will include his holding period for the shares delivered. The optionee's
tax basis and holding period for the additional shares received on exercise of
the option will be the same as if the optionee had exercised the option solely
in exchange for cash.

The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the optionee,
provided that amount constitutes an ordinary and necessary business expense for
the Company and is reasonable in amount, and either the employee includes that
amount in income or the Company timely satisfies its reporting requirements with
respect to that amount.

INCENTIVE STOCK OPTIONS. The 1996 Stock Option Plan provides for the
grant of stock options that qualify as "incentive stock options" as defined in
section 422 of the Code. Under the Code, an optionee generally is not subject to
tax upon the grant or exercise of an incentive stock option. In addition, if the
optionee holds a share received on exercise of an incentive stock option for at
least two years from the date the option was granted and at least one year from
the date the option was exercised (the "Required Holding Period"), the
difference, if any, between the amount realized on a sale or other taxable
disposition of that share and the holder's tax basis in that share will be
long-term capital gain or loss.

If, however, an optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if any,
of the fair market value of the share on the date the incentive stock option was
exercised over the exercise price. If, however, the Disqualifying Disposition is
a sale or exchange on which a loss, if realized, would be recognized for Federal
income tax purposes, and if the sales proceeds are less than the fair market
value of the share on the date of exercise of the option, the amount of ordinary
income the optionee recognizes will not exceed the gain, if any, realized on the
sale. If the amount realized on a Disqualifying Disposition exceeds the fair
market value of the

<PAGE>

share on the date of exercise of the option, that excess will be short-term or
long-term capital gain, depending on whether the holding period for the share
exceeds one year.

An optionee who exercises an incentive stock option by delivering
shares of Common Stock acquired previously pursuant to the exercise of an
incentive stock option before the expiration of the Required Holding Period for
those shares is treated as making a Disqualifying Disposition of those shares.
This rule prevents "pyramiding" the exercise of an incentive stock option (that
is, exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without the
imposition of current income tax.

For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of Common Stock acquired on exercise of an
incentive stock option exceeds the exercise price of that option generally will
be an item of adjustment included in the optionee's alternative minimum taxable
income for the year in which the option is exercised. If, however, there is a
Disqualifying Disposition of the share in the year in which the option is
exercised, there will be no item of adjustment with respect to that share. If
there is a Disqualifying Disposition in a later year, no income with respect to
the Disqualifying Disposition is included in the optionee's alternative minimum
taxable income for that year. In computing alternative minimum taxable income,
the tax basis of a share acquired on exercise of an incentive stock option is
increased by the amount of the item of adjustment taken into account with
respect to that share for alternative minimum tax purposes in the year the
option is exercised.

The Company is not allowed an income tax deduction with respect to the
grant or exercise of an incentive stock option or the disposition of a share
acquired on exercise of an incentive stock option after the Required Holding
Period. However, if there is a Disqualifying Disposition of a share, the Company
is allowed a deduction in an amount equal to the ordinary income includible in
income by the optionee, provided that amount constitutes an ordinary and
necessary business expense for the Company and is reasonable in amount, and
either the employee includes that amount in income or the Company timely
satisfies its reporting requirements with respect to that amount.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 STOCK OPTION PLAN AND THE
RESERVATION OF 1,000,000 SHARES OF COMMON STOCK FOR ISSUANCE PURSUANT TO THE
1996 STOCK OPTION PLAN.

PROPOSAL TO APPROVE THE 1996 DIRECTORS OPTION PLAN
AND THE RESERVATION OF 150,000 SHARES OF COMMON STOCK
FOR ISSUANCE PURSUANT TO THE 1996 DIRECTORS OPTION PLAN

The Company's Board of Directors has unanimously adopted, subject to
approval by the Company's shareholders, the 1996 Directors Option Plan and the
reservation of 150,000 shares of Common Stock for issuance pursuant to such
plan. The text of the 1996 Directors Option Plan, as approved by the Company's
Board of Directors, is attached hereto as Exhibit B. The material features of
the 1996 Directors Option Plan are discussed below, but the description is
subject to, and is qualified in its entirety by, the full text of the 1996
Directors Option Plan.

The purpose of the 1996 Directors Option Plan is to attract and retain
nonemployee directors by providing additional incentives and to encourage stock
ownership in the Company by such persons. Prior to the adoption of the 1996
Directors Option Plan, options had been granted and are outstanding for 25,000
of the 50,000 shares available for issuance pursuant to options granted under
the 1993 Directors Option Plan. Accordingly, with only approximately 25,000
shares available for option grants under the 1993 Directors Option Plan, a
principal purpose of the 1996 Directors Option Plan is to provide additional
shares for which options can

<PAGE>

be granted and thereby allow the Company to grant additional options under the
1996 Directors Option Plan in furtherance of the purposes described above. The
1996 Directors Option Plan is to be administered by the Company's Board of
Directors who shall have the authority to adopt those rules and regulations and
make those determinations not inconsistent with the terms of the plan that are
necessary or desirable for the implementation and administration thereof.

An aggregate of 150,000 shares of Common Stock have been reserved for
issuance upon exercise of options granted under the 1996 Directors Option Plan.
The shares acquired upon exercise of options granted under the 1996 Directors
Option Plan will be authorized and unissued shares of Common Stock. The
Company's shareholders will not have any preemptive rights to purchase or
subscribe for the shares reserved for issuance under the 1996 Directors Option
Plan. If any option granted under the 1996 Directors Option Plan should expire
or terminate for any reason other than having been exercised in full, the
unpurchased shares subject to that option will again be available for the grant
of additional options. The Company has granted to each of Messrs. Pashcow and
Merritt, subject to shareholder approval of the 1996 Directors Option Plan,
options to purchase 20,000 shares of Common Stock under such plan at an exercise
price of $4.00 per share.

The following table sets forth as of June 10, 1996, certain information
regarding options granted to each of Joel M. Pashcow and Ira S. Merritt,
directors of the Company, under the 1996 Directors Option Plan. No other
director of the Company has been granted options under the 1996 Directors Option
Plan.

<TABLE>
<CAPTION>
EXERCISE VALUE OF
NUMBER OF SHARES PRICE PER OPTIONS AT
NAME AND POSITION SUBJECT TO OPTIONS SHARE JUNE 10, 1996(1)
- ------------------------------------ ------------------------- -------------------- -------------------------
<S> <C> <C> <C>
Joel S. Pashcow, Director 20,000 $4.00 $35,000

Ira S. Merritt, Director 20,000 $4.00 $35,000

<FN>
- --------------------

(1) The closing price of the Common Stock on June 10, 1996 was $5.75 per
share. Value is calculated by multiplying (a) the difference between
$5.75 and the option exercise price by (b) the number of shares of
Common Stock underlying the option.
</FN>
</TABLE>

ELIGIBILITY

Any person who is a member of the Company's Board of Directors and who
is not an employee, full-time or part-time, of the Company or its subsidiaries
is eligible to receive grants of options under the 1996 Directors Option Plan
(each an "Eligible Director").

TERMS AND CONDITIONS

Pursuant to the 1996 Directors Option Plan, each Eligible Director
shall receive the grant of an option to purchase 20,000 shares of Common Stock
on the date such individual is first elected as a member of the Company's Board
of Directors. Thereafter, each Eligible Director shall receive an annual grant
of an option to purchase 1,000 shares of Common Stock on the date of each annual
meeting of the Company's shareholders subsequent to such Eligible Director's
election as a director of the Company, beginning with the first such annual
meeting following election that occurs after December 31, 1996. Upon the grant
of options, the Company and

<PAGE>

each Eligible Director shall enter into an option agreement, which agreement
shall specify, among other things, the grant date and the exercise price.

The exercise price of any option granted pursuant to the 1996 Directors
Option Plan shall be the "Fair Market Value" of the Common Stock underlying such
option at the close of business on the date of grant of such option unless the
Board of Directors shall determine otherwise in a fair and uniform manner. "Fair
Market Value" on any date of reference shall be the closing price of the Common
Stock on the business day immediately preceding such date of grant. For purposes
of determining Fair Market Value, the closing price of the Common Stock on any
business day shall be (i) if such Common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of the Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Common Stock on such system, or (iii) if
neither clause (i) or (ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least five of the ten preceding
days.

Options granted under the 1996 Directors Option Plan are not
exercisable until after six months following their grant to an Eligible
Director. Thereafter, such options shall be exercisable in full for a period of
ten years from the date of grant. No option granted under the 1996 Directors
Option Plan is assignable or transferable, other than by will or by the laws of
descent and distribution. During the lifetime of an optionee, an option is
exercisable only by such optionee.

Under the 1996 Directors Option Plan, an option is deemed exercised
when (i) the Company has received written notice of such exercise in accordance
with the terms of the option (as set forth in the option agreement); (ii) full
payment of the aggregate option price of the shares as to which the option is
exercised has been made; and (iii) arrangements that are satisfactory to the
Board of Directors, in its sole discretion, have been made for the payment to
the Company of the amount that is necessary for the Company to withhold in
accordance with applicable Federal or state tax withholding requirements.

Shares of Common Stock purchased upon the exercise of options must be
paid for in cash, by certified or official bank check or personal check, by
money order, with already owned shares of Common Stock, or a combination of the
above. If paid in whole or in part with shares of already owned Common Stock,
the value of the shares surrendered is deemed to be their Fair Market Value on
the date the option is exercised. Proceeds from the sale of Common Stock
pursuant to the exercise of options will be added to the general funds of the
Company to be used for general corporate purposes.

Pursuant to the 1996 Directors Option Plan, if an optionee ceases to be
a director for any reason other than for cause, which includes removal as a
result of acts of (i) fraud or intentional misrepresentation or (ii)
embezzlement, misappropriation or conversion of assets or opportunities of the
Company or any subsidiary, the unexercised portion of the optionee's options
shall terminate three months following such termination. If an optionee is
removed for cause, the unexercised portion of such optionee's options shall
terminate immediately upon such termination. If an optionee's employment is
terminated by reason of the optionee's death, the unexercised portion of the
optionee's options shall terminate twelve months after the optionee's death.

<PAGE>

FEDERAL INCOME TAX CONSEQUENCES OF THE 1996 DIRECTORS OPTION PLAN

The 1996 Directors Option Plan is not qualified under the provisions of
Section 401(a) of the Code, nor is it subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended. All options granted
under the 1996 Directors Option Plan will be non-qualified stock options.

On exercise of an option, a director generally will recognize ordinary
income on the earlier of (i) the expiration of the six month period after the
exercise of the option and (ii) the first day on which a sale at a profit of
shares acquired on exercise of the option would not subject the director to
liability under Section 16(b) of the Exchange Act. The amount of ordinary income
will equal the excess, if any, of the fair market value of the shares on the
date the income is recognized over the exercise price of the option. The
director, however, is entitled under section 83(b) of the Code to elect to
recognize ordinary income on the date of exercise of the option, in which case
the amount of income will be equal to the excess, if any, of the fair market
value of the shares on that date over the exercise price of the option. A
section 83(b) election must be made within 30 days after exercising an option.
The income recognized by the director will be subject to the withholding of
Federal income tax. The director's tax basis in the shares of Common Stock
acquired on exercise of any option will be the fair market value of those shares
used in determining the amount of ordinary income recognized by the director.
The director's holding period for those shares will begin on the date of
exercise of the option.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 DIRECTORS OPTION PLAN AND THE
RESERVATION OF 150,000 SHARES OF COMMON STOCK FOR ISSUANCE UNDER THE 1996
DIRECTORS OPTION PLAN.

OTHER BUSINESS; REPRESENTATIVES OF THE COMPANY'S AUDITORS

The Board of Directors knows of no other business to be brought before
the Annual Meeting. If, however, any other business should properly come before
the Annual Meeting, the persons named in the accompanying proxy will vote
proxies as in their discretion they may deem appropriate, unless they are
directed by a proxy to do otherwise.

Representatives of Coopers & Lybrand LLP, the Company's independent
auditors, are not expected to be present at the Annual Meeting, and,
accordingly, will not be available to respond to shareholder inquiries.

<PAGE>

INFORMATION CONCERNING SHAREHOLDER PROPOSALS

Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1997 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's principal executive offices
no later than February 19, 1997.

By Order Of The Board of Directors

DONALD ENGEL
CO-CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

Miami, Florida
June 17, 1996

<PAGE>

EXHIBIT A

---------------------------------------

HI-RISE RECYCLING SYSTEMS, INC.
1996 STOCK OPTION PLAN

---------------------------------------

1. PURPOSE. The purpose of this Plan is to advance the interests of
HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation (the "Company"), and its
Subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide management services and upon whose
efforts and judgment the success of the Company and its Subsidiaries is largely
dependent, through the encouragement of stock ownership in the Company by such
persons.

2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

(c) "Committee" shall mean the committee appointed by the
Board pursuant to Section 13(a) hereof, or, if such committee is not appointed,
the Board.

(d) "Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.

(e) "Company" shall mean Hi-Rise Recycling Systems, Inc., a
Florida corporation.

(f) "Director" shall mean a member of the Board.

(g) "Disinterested Person" shall mean a Director who is not,
during the one year prior to his or her service as an administrator of this
Plan, or during such service, granted or awarded equity securities pursuant to
this Plan or any other plan of the Company or any of its affiliates, except
that:

(i) participation in a formula plan meeting the
conditions in paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the
Securities Exchange Act shall not disqualify a Director from being a
Disinterested Person;

(ii) participation in an ongoing securities
acquisition plan meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3
promulgated under the Securities Exchange Act shall not disqualify a Director
from being a Disinterested Person; and

(iii) an election to receive an annual retainer
fee in either cash or an equivalent amount of securities, or partly in cash and
partly in securities, shall not disqualify a Director from being a Disinterested
Person.

(h) "Effective Date" shall mean March 25, 1996.

(i) "Fair Market Value" of a Share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Committee in its sole
discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be (i) if the Common Stock is listed or admitted
for trading on any United States national securities exchange, or if actual

A-1

<PAGE>

transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on such system or, if sales prices are not
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days.

(j) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Internal Revenue Code.

(k) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.

(l) "Non-Employee Director" shall mean a member of the Board
who is not an employee of the Company or a Subsidiary.

(m) "Non-Qualified Stock Option" shall mean an Option that is
not an Incentive Stock Option.

(n) "Officer" shall mean the Company's Chairman of the Board,
President, Chief Executive Officer, principal financial officer, principal
accounting officer, any vice-president of the Company in charge of a principal
business unit, division or function (such as sales, administration or finance),
any other officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function" does not include policy-making functions that are not
significant. If pursuant to Item 401(b) of Regulation S-K (17 C.F.R. Section
229.401(b)) the Company identifies a person as an "executive officer," the
person so identified shall be deemed an "Officer" even though such person may
not otherwise be an "Officer" pursuant to the foregoing provisions of this
paragraph.

(o) "Option" (when capitalized) shall mean any option granted
under this Plan.

(p) "Option Agreement" means the agreement between the Company
and the Optionee for the grant of an option.

(q) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.

(r) "Parent" means a "parent corporation" as defined in
Section 424(e) and (g) of the Code.

(s) "Plan" shall mean this Stock Option Plan for the Company.

(t) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

(u) "Share" shall mean a share of Common Stock.

(v) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

A-2

<PAGE>

3. SHARES AVAILABLE FOR OPTION GRANTS. The Committee may grant to
Optionees from time to time Options to purchase an aggregate of up to One
Million (1,000,000) Shares from the Company's authorized and unissued Shares. If
any Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.

4. INCENTIVE AND NON-QUALIFIED OPTIONS.

(a) An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Qualified Stock Option as determined by the Committee at
the time of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or Non-Qualified Stock Option. All Incentive Stock
Options shall be granted within 10 years from the effective date of this Plan.

(b) Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Section
422(b) of the Code are exercisable for the first time by any individual during
any calendar year (under all plans of the Company and its parent and subsidiary
corporations), exceeds $100,000.

5. CONDITIONS FOR GRANT OF OPTIONS.

(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law. Optionees
shall be those persons selected by the Committee from the class of all regular
employees of the Company or its Subsidiaries, including Directors and Officers
who are regular employees, but excluding Non-Employee Directors. Any person who
files with the Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Option under this Plan shall not be
eligible to receive any Option under this Plan for the duration of such waiver.

(b) In granting Options, the Committee shall take into
consideration the contribution the person has made to the success of the Company
or its Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) prescribing the date or dates on which the Option becomes exercisable, (ii)
providing that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both, or (iii)
relating an Option to the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more favorable
to an Optionee than those expressly permitted herein.

(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company or its
Subsidiaries.

(d) Notwithstanding any other provision of this Plan, an
Incentive Stock Option shall not be granted to any person owning directly or
indirectly (through attribution under Section 424(d) of the Code) at the date of
grant, stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or of its parent or subsidiary, as defined in
Section 424 of the Code, at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.

(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, Options may not be granted to
an Officer or Employee Director unless the grant of

A-3

<PAGE>

such Options is authorized by, and all of the terms of such Options are
determined by, a Committee that is appointed in accordance with Section 13 of
this Plan and all of whose members are Disinterested Persons.

(f) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Director, Officer or employee may not exceed 30% of the total
number of Options available for grant under the Plan.

6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shall the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.

7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. Unless further limited
by the Committee in any Option, the option price of any Shares purchased shall
be paid in cash, by certified or official bank check, by money order, with
Shares or by a combination of the above; provided further, however, that the
Committee in its sole discretion may accept a personal check in full or partial
payment of any Shares. If the exercise price is paid in whole or in part with
Shares, the value of the Shares surrendered shall be their Fair Market Value on
the date the Option is exercised. The Company in its sole discretion may, on an
individual basis or pursuant to a general program established in connection with
this Plan, lend money to an Optionee, guarantee a loan to an Optionee, or
otherwise assist an Optionee to obtain the cash necessary to exercise all or a
portion of an Option granted hereunder or to pay any tax liability of the
Optionee attributable to such exercise. If the exercise price is paid in whole
or part with the Optionee's promissory note, such note shall (i) provide for
full recourse to the maker, (ii) be collateralized by the pledge of the Shares
that the Optionee purchases upon exercise of such Option, (iii) bear interest at
the prime rate of the Company's principal lender, and (iv) contain such other
terms as the Board in its sole discretion shall reasonably require. No Optionee
shall be deemed to be a holder of any Shares subject to an Option unless and
until a stock certificate or certificates for such Shares are issued to such
person(s) under the terms of this Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 10 hereof.

8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.

(a) The expiration date of an Option shall be determined by
the Committee at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.

(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable:

(i) if there occurs any transaction (which
shall include a series of transactions occurring within 60 days or occurring
pursuant to a plan), that has the result that shareholders of the Company
immediately before such transaction cease to own at least 51 percent of the
voting stock of the Company or of any entity that results from the participation
of the Company in a reorganization, consolidation, merger, liquidation or any
other form of corporate transaction;

A-4

<PAGE>

(ii) if the shareholders of the Company shall
approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is subsequently
abandoned); or

(iii) if the shareholders of the Company shall
approve a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).

(c) The Committee may in its sole discretion accelerate the
date on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.

9. TERMINATION OF OPTION PERIOD.

(a) The unexercised portion of any Option shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of the following:

(i) three months after the date on which the
Optionee's employment is terminated for any reason other than by reason of (A)
Cause, which, solely for purposes of this Plan, shall mean the termination of
the Optionee's employment by reason of the Optionee's wilful misconduct or gross
negligence, (B) a mental or physical disability as determined by a medical
doctor satisfactory to the Committee, or (C) death;

(ii) immediately upon the termination of the
Optionee's employment for Cause;

(iii) twelve months after the date on which the
Optionee's employment is terminated by reason of a mental or physical disability
(within the meaning of Section 22(e) of the Code) as determined by a medical
doctor satisfactory to the Committee;

(iv) (A) twelve months after the date of
termination of the Optionee's employment by reason of death of the employee, or
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one year period specified in Subsection 9(a)(iii) hereof.

(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections 8(b)(ii) or
(iii) hereof, any Option that remains unexercised on such date. Such
cancellation notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
approval of such corporate transaction.

10. ADJUSTMENT OF SHARES.

(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:

(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and

(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.

A-5

<PAGE>

(b) Unless otherwise provided in any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(ii) or (iii) hereof so
as to preserve but not increase benefits under the Plan.

(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under the Plan.

(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.

11. TRANSFERABILITY OF OPTIONS AND SHARES. Each Option shall provide
that such Option shall not be transferable by the Optionee otherwise than by
will or the laws of descent and distribution, and each Option shall be
exercisable during the Optionee's lifetime only by the Optionee.

12. ISSUANCE OF SHARES.

(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.

(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Committee may require such agreements or
undertakings as the Committee may deem necessary or advisable to facilitate
compliance with any applicable law or regulation including, but not limited to,
the following:

(i) a representation and warranty by the
Optionee to the Company, at the time any Option is exercised, that he is
acquiring the Shares to be issued to him for investment and not with a view to,
or for sale in connection with, the distribution of any such Shares; and

(ii) a representation, warranty and/or agreement
to be bound by any legends endorsed upon the certificate(s) for such Shares that
are, in the opinion of the Committee, necessary or appropriate to facilitate
compliance with the provisions of any securities laws deemed by the Committee to
be applicable to the issuance and transfer of such Shares.

13. ADMINISTRATION OF THE PLAN.

(a) The Plan shall be administered by a committee appointed by
the Board (the "Committee") which shall be composed of two or more Directors,
each of whom shall be Disinterested Persons to the extent required by Section
5(e) hereof. The membership of the Committee shall be constituted so as to
comply at all times with the applicable requirements of Rule 16b-3 promulgated
under the Securities Exchange

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<PAGE>

Act. The Committee shall serve at the pleasure of the Board and shall have the
powers designated herein and such other powers as the Board may from time to
time confer upon it.

(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan or any Option shall be final and conclusive.

(c) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.

14. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.

15. INTERPRETATION.

(a) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee may from time to time adopt rules and regulations
under, and amend, the Plan in furtherance of the intent of the foregoing.

(b) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under Section 422 of the Code. If any provision of the Plan should be
held invalid for the granting of Incentive Stock Options or illegal for any
reason, such determination shall not affect the remaining provisions hereof, but
instead the Plan shall be construed and enforced as if such provision had never
been included in the Plan.

(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.

(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.

16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee may from
time to time amend, suspend or terminate the Plan or any Option; provided,
however, that, except to the extent provided in Section 10 hereof, no such
amendment may, without approval by the shareholders of the Company, (a)
materially increase the benefits accruing to participants under the Plan, (b)
materially increase the number of securities which may be issued under the Plan,
or (c) materially modify the requirements as to eligibility for participation in
the Plan; and provided further, that, except to the extent provided in Sections
9 and 10 hereof, no such amendment, suspension or termination of the Plan or any
Option issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.

17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the Effective Date.

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<PAGE>

EXHIBIT B

HI-RISE RECYCLING SYSTEMS, INC.

-----------------------------------

DIRECTORS STOCK OPTION PLAN

------------------------------------

1. PURPOSE. The purpose of this Plan is to advance the interests of
HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation, by providing an
additional incentive to attract and retain nonemployee directors through the
encouragement of stock ownership in the Company by such persons.

2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:

a. "Board" shall mean the Company's Board of Directors.

b. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

c. "Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.

d. "Company" shall refer to HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation.

e. "Director" shall mean a member of the Board.

f. "Eligible Director" means any person who is a member of the
Board and who is not an employee, full time or part time, of the Company or its
subsidiaries. For purposes of this Plan, a director who does not receive regular
compensation from the Company or its subsidiaries, other than directors' fees
and reimbursement for expenses, shall not be considered to be an employee of the
Company, even if such director is an officer of a subsidiary of the Company.

g. "Fair Market Value" of a Share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Board in its sole
discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be (i) if the Common Stock is listed or admitted
for trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on such system or, if sales prices are not
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days.

h. "Initial Grant Date" means the later of (i) March 25, 1996,
and (ii) the date on which a person is elected as a member of the Board.

i. "Option" (when capitalized) shall mean any option granted
under this Plan.

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<PAGE>

j. "Option Agreement" shall mean the agreement between the
Company and the Optionee for the grant of an option.

k. "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.

l. "Parent" shall mean a "parent corporation" as defined in
Section 425(e) and (g) of the Code.

m. "Plan" shall mean this Directors Stock Option Plan for the
Company.

n. "Share(s)" shall mean a share or shares of the Common
Stock.

o. "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

3. SHARES AND OPTIONS. Subject to Section 9 of this Plan, the Company
may grant to Optionees from time to time Options to purchase an aggregate of up
to One Hundred and Fifty Thousand (150,000) shares from the Company's authorized
and unissued Shares. If any Option granted under the Plan shall terminate,
expire, or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares.

4. GRANTS OF OPTIONS.

a. On the Initial Grant Date, each Eligible Director shall
receive the grant of an Option to purchase 20,000 Shares.

b. Each Eligible Director shall receive an annual grant of an
Option to purchase 1,000 Shares on each Annual Meeting Date, beginning with the
first Annual Meeting Date after the Initial Grant Date for each such Eligible
Director.

c. Upon the grant of each Option, the Company and the Eligible
Director shall enter into an Option Agreement, which shall specify the grant
date and the exercise price and shall include or incorporate by reference the
substance of this Plan and such other provisions consistent with this Plan as
the Board may determine.

5. EXERCISE PRICE. The exercise price per Share of any Option shall be
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.

6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. The exercise price of
any Shares purchased shall be paid in cash, by certified or official bank check
or personal check, by money order, with Shares or by a combination of the above.
If the exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value on the date the Option is
exercised. No Optionee shall be deemed to be a holder of any Shares subject to
an Option unless and until a stock certificate or certificates for such Shares
are issued to such person(s) under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which

B-2

<PAGE>

the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 9 hereof.

7. EXERCISE SCHEDULE FOR OPTIONS. Each Option granted hereunder shall
not be exercisable until after six months following the date of grant of the
Option to the Eligible Director. Thereafter, such option shall be exercisable in
full. The expiration date of an Option shall be 10 years from the date of grant
of the Option.

8. TERMINATION OF OPTION PERIOD.

a. The unexercised portion of any Option shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of the following:

i. three months after the date on which the
Optionee ceases to be a Director for any reason other than by reason of (A)
"Cause" (which, for purposes of this Plan, shall mean the removal of the
Optionee as a Director by reason of any act of (1) fraud or intentional
misrepresentation, or (2) embezzlement, misappropriation, or conversion of
assets or opportunities of the Company or any Subsidiary), or (B) death;

ii. immediately upon the removal of the
Optionee as a Director for Cause;

iii. one year after the date the Optionee ceases
to be a Director by reason of death of the Optionee;

b. The Board in its sole discretion may, by giving written
notice ("Cancellation Notice"), cancel any Option that remains unexercised on
the date of the consummation of any corporate transaction:

i. if the shareholders of the Company shall
approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is subsequently
abandoned); or

ii. if the shareholders of the Company shall
approve a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).

Any Cancellation Notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
shareholder approval of such corporate transaction.

9. ADJUSTMENT OF SHARES.

a. If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:

i. appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and

ii. appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.

b. Subject to the specific terms of any Option, the Board may
change the terms of Options outstanding under this Plan, with respect to the
exercise price or the number of Shares subject to the Options,

B-3

<PAGE>

or both, when, in the Board's sole discretion, such adjustments become
appropriate by reason of a corporate transaction described in Subsections
8(b)(i) or (ii) hereof.

c. Except as otherwise expressly provided herein, the issuance
by the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
a direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of the
Shares then subject to outstanding Options granted under the Plan.

d. Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.

10. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.

11. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:

a. a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and

b. a representation, warranty and/or agreement to be bound by
any legends that are, in the opinion of the Board, necessary or appropriate to
comply with the provisions of any securities law deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.

12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan.

13. INTERPRETATION. If any provision of the Plan should be held invalid
or illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by the laws of the State of
Florida. Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of this Plan. Any reference to the masculine,
feminine, or neuter gender shall be a reference to such other gender as is
appropriate.

14. TERM OF PLAN; AMENDMENT AND TERMINATION OF THE PLAN.

a. This Plan shall become effective upon its adoption by the
Board, and shall continue in effect until all Options granted hereunder have
expired or been exercised, unless sooner terminated under the provisions
relating thereto. No Option shall be granted after 10 years from the date of the
Board's adoption of this Plan.

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<PAGE>

b. The Board may from time to time amend the Plan or any
Option; PROVIDED, HOWEVER, that, without approval by the Company's shareholders,
no such amendment shall (i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the number of Shares or
other securities reserved for issuance upon the exercise of Options, (iii)
materially modify the requirements as to eligibility for participation under the
Plan or (iv) otherwise involve any other change or modification requiring
shareholder approval under Rule 16b-3 of the Securities Act of 1933, as amended;
and, PROVIDED, FURTHER, that, except to the extent otherwise specifically
provided in Section 8, no amendment or suspension of the Plan or any Option
issued hereunder shall substantially impair any Option previously granted to any
Optionee without the consent of such Optionee.

c. Notwithstanding anything else contained herein, the
provisions of this Plan which govern the number of Options to be awarded to
nonemployee directors, the exercise price per share under each such Option, when
and under what circumstances an Option will be granted and the period within
which each Option may be exercised, shall not be amended more than once every
six months (even with shareholder approval), other than to conform to changes to
the Code, or the rules promulgated thereunder, and under the Employee Retirement
Income Security Act of 1974, as amended, or the rules promulgated thereunder, or
with rules promulgated by the Securities and Exchange Commission.

d. The Board, without further approval of the Company's
shareholders, may at any time terminate or suspend this Plan. Any such
termination or suspension of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been terminated or suspended. No Option may be granted while the Plan is
suspended or after it is terminated. The rights and obligations under any Option
granted to any Optionee while this Plan is in effect shall not be altered or
impaired by the suspension or termination of this Plan without the consent of
such Optionee.

15. RESERVATION OF SHARES. The Company, during the term of the Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

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<PAGE>

HI-RISE RECYCLING SYSTEMS, INC.
16255 N.W. 54TH AVENUE
MIAMI, FLORIDA 33014

THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS

COMMON STOCK

The undersigned holder of Common Stock of Hi-Rise Recycling Systems,
Inc., a Florida corporation (the "Company"), hereby appoints Donald Engel and
Mark D. Shantzis, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated below, all of the shares of Common
Stock of the Company that the undersigned is entitled to vote at the 1996 Annual
Meeting of Shareholders of the Company, to be held on Tuesday, July 16, 1996, at
11:30 a.m., local time, at the offices of the law firm of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel located at Citicorp Center, 153 E. 53rd Street,
New York, New York, or at any adjournment(s) or postponement(s) thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN PROPOSAL (1) BELOW AND THE OTHER PROPOSALS SET FORTH
BELOW.

Proposal 1. Election of Donald Engel, Mark D. Shantzis, Warren Adelson, Ira S.
Merritt and Joel M. Pashcow as directors of the Company.

[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s) (if any).

[ ] VOTE WITHHELD from all nominees.

Proposal 2. Proposal to approve the adoption of the Company's 1996 Stock
Option Plan and the reservation of 1,000,000 shares of Common
Stock for issuance pursuant to the 1996 Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Proposal 3. Proposal to approve the adoption of the Company's 1996
Directors' Stock Option Plan and the reservation of 150,000 shares
of Common Stock for issuance pursuant to the 1996 Directors' Stock
Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting, and
any adjournments or postponements thereof.

(SEE REVERSE SIDE)

<PAGE>

(CONTINUED FROM OTHER SIDE)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" ALL OF THE PROPOSALS.

The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1995 Annual Report to
Shareholders.

Dated: _________________________________ , 1996

_________________________________________________
(Signature)

_________________________________________________
(Signature if held jointly)

IMPORTANT: Please sign exactly as your name
appears hereon and mail it promptly even though
you may plan to attend the meeting. When shares
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.

PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND
PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO
POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.