EXHIBIT 10.23
THIS WARRANT WAS ORIGINALLY ISSUED ON OCTOBER 28, 1998 AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO A SECURITIES
PURCHASE AGREEMENT DATED AS OF OCTOBER 28, 1998 AMONG HI-RISE RECYCLING SYSTEMS,
INC., GENERAL ELECTRIC CAPITAL CORPORATION, NATIONSBANK, NATIONAL ASSOCIATION
AND KEY CORPORATE CAPITAL INC. A COPY OF THE SECURITIES PURCHASE AGREEMENT WILL
BE FURNISHED WITHOUT CHARGE BY HI-RISE RECYCLING SYSTEMS, INC. TO THE HOLDER
HEREOF UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: October 28, 1998 Certificate No. 1
FOR VALUE RECEIVED, HI-RISE RECYCLING SYSTEMS, INC., a Florida
corporation (the "Company"), hereby grants to GE Capital Corporation, a New York
corporation ("Holder"), or its permitted transferees and assigns the right to
purchase from the Company at any time after the Date of Issuance (as defined
below) a total of 1,000,158 Warrant Shares (as defined herein) at a price per
share of $1.50 (the "Initial Exercise Price"). This Warrant is one of a series
of warrants issued pursuant to the terms of the Securities Purchase Agreement,
dated as of October 28, 1998 (the "Securities Purchase Agreement"), among the
Company, General Electric Capital Corporation ("GE Capital"), NationsBank,
National Association ("NationsBank"), and Key Corporate Capital Inc. ("Key").
Certain capitalized terms used herein are defined in Section 9 hereof. The
amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
SECTION 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time and from time to time during
the period commencing on the Date of Issuance through and including the 10th
anniversary of the Date of Issuance (the "Exercise Period"). Notwithstanding the
foregoing, the Holder must purchase a minimum of 10,000 Warrant Shares each time
it chooses to purchase Warrant Shares, except to purchase the remaining Warrant
Shares available to it.
1B. EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
Time"):
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder,
an Assignment or Assignments in the form set forth in EXHIBIT I hereto
evidencing the assignment of this Warrant to the Purchaser; and
(d) a check payable to the Company in an amount
equal to the product of the Exercise Price (as defined below) multiplied by the
number of Warrant Shares being purchased upon such exercise (the "Aggregate
Exercise Price").
(ii) Certificates for Warrant Shares purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within three
(3) business days after the date of the Exercise Time together with any cash
payable in lieu of a fraction of a share pursuant to Section 14 hereof. Unless
all of the purchase rights represented by this Warrant have been exercised, the
Company shall prepare a new warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not been
exercised and shall, within such five-day period, deliver such new warrant to
the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares (other than transfer taxes payable because the holder of the
Warrant Shares is other than the Registered Holder).
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which
interferes with the timely exercise of this Warrant. The Company shall from time
to time take all such action as may be necessary to assure that the par value
per share of the unissued Warrant Shares acquirable upon exercise of this
Warrant is at all times equal to or less than the Exercise Price then in effect.
In the event that the Company fails to comply with its obligations set forth in
the foregoing sentence, the Purchaser may (but shall not be obligated to)
purchase Warrant Shares hereunder at par value, and the Company shall be
obligated to reimburse the Purchaser for the aggregate amount of consideration
paid in connection with such exercise in excess of the Exercise Price then in
effect.
(vi) The Company shall assist and cooperate with the
Registered Holder or any Purchaser required to make any governmental filings or
obtain any governmental approvals prior to or in connection with any exercise of
this Warrant (including, without limitation, making any filings required to be
made by the Company).
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
Change of Control, Organic Change (as defined below) or other transaction
affecting the Company, such exercise may at the election of the Registered
Holder be conditioned upon the consummation of such transaction, in which case
such exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock solely for the purpose
of issuance upon the exercise of this Warrant, the maximum number of Warrant
Shares issuable upon the exercise of this Warrant. All Warrant Shares which are
so issuable shall, when issued and upon the payment of the applicable Exercise
Price, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Company shall take all such actions as may be
necessary to ensure that all such Warrant Shares may be so issued without
violation by the Company of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or automated quotation system
upon which shares of Common Stock or other securities constituting Warrant
Shares may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance) and shall cause
such Warrant Shares to be listed on such exchange or automated quotation system.
The Company shall not take any action which would cause the number of authorized
but unissued Warrant Shares to be less than the number of such shares required
to be reserved hereunder for issuance upon exercise of the Warrant.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are at the time of exercise of this Warrant convertible into or
exchangeable for any other stock or securities of the Company, the Company
shall, at the Purchaser's option and upon surrender of this Warrant by such
Purchaser as provided above together with any notice, statement or payment
required to effect such conversion or exchange of Warrant Shares, deliver to
such Purchaser (or
as otherwise specified by such Purchaser) a certificate or certificates
representing the stock or securities into which the Warrant Shares issuable by
reason of such conversion are convertible or exchangeable, registered in such
name or names and in such denomination or denominations as such Purchaser has
specified.
(x) The Company shall not, and shall not permit its
Subsidiaries to, directly or indirectly, by any action (including, without
limitation, reincorporation in a jurisdiction other than Florida, amending its
certificate of incorporation or through any Organic Change, issuance or sale of
securities, recapitalization, reclassification of shares or any other voluntary
action) avoid or seek to avoid the observance or performance of any of terms of
this Warrant or impair or diminish its value (except for any action which
ratably affects all Warrant Shares and shares of Common Stock), but shall at all
times in good faith assist in the carrying out of all such terms of this
Warrant. Without limiting the generality of the foregoing, the Company shall (a)
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant and (b) except as set
forth in this Section 1B, not undertake any reverse stock split, combination,
reorganization or other reclassification of its capital stock which would have
the effect of causing a material portion of the purchase rights represented
hereby to become exercisable for less than one share of Common Stock.
1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in EXHIBIT I hereto, except that if the Warrant Shares are
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order
to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (as so adjusted, the "Exercise Price"), and the number of Warrant
Shares obtainable upon exercise of this Warrant shall be subject to adjustment
from time to time, each as provided in this Section 2.
2A. CERTAIN ACQUISITIONS. If and when on or after the Date of Issuance
the Company engages in a business combination transaction, whether by way of
stock purchase, merger, asset purchase or otherwise, with either of the
companies set forth on EXHIBIT III hereto or issues Common Stock as described in
EXHIBIT III, then immediately upon the consummation of any such transaction or
issuance, the number of Warrant Shares obtainable upon exercise of this Warrant
shall be increased so that this Warrant shall entitle the Registered Holder to
purchase that number of Warrant Shares which shall bear the same proportion to
the Fully Diluted Common Stock of the Company immediately after any such
transaction or issuance as the
proportion of that number of Warrant Shares in effect immediately prior to any
such transaction or issuance bore to the Fully Diluted Common Stock of the
Company immediately prior to such transaction or issuance. This adjustment shall
be made separately for each such transaction and issuance. For the purposes
hereof, "Fully Diluted Common Stock" as of a specified time shall mean the
aggregate of all outstanding shares of Common Stock as of such time plus all
shares of Common Stock issuable upon the exercise or conversion of securities
exercisable for, or convertible into, shares of Common Stock of the Company
which securities are outstanding or issuable at such time.
2B. ADJUSTMENT TO EXERCISE PRICE. If and whenever on or after the Date
of Issuance the Company issues or sells, or in accordance with Section 2C is
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Exercise Price in effect immediately prior to the time
of such issue or sale, then immediately upon such issue or sale or deemed issue
or sale the Exercise Price shall be reduced to the Exercise Price determined by
dividing (i) the sum of (1) the product derived by multiplying the Exercise
Price in effect immediately prior to such issue or sale by the number of shares
of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus
(2) the consideration, if any, received by the Company upon such issue or sale,
by (ii) the number of shares of Common Stock Deemed Outstanding immediately
after such issue or sale.
Notwithstanding anything in this Agreement to the contrary, there will
be no adjustment pursuant to this Section 2B for any issuance or deemed issuance
of Common Stock (i) issued in connection with the business combination
transactions described in Section 2A above or Section 1.1 (b) of the Securities
Purchase Agreement, (ii) pursuant to exercise of stock options, warrants and
other rights to acquire Common Stock described in Schedule 3.2 of the Securities
Purchase Agreement (as such number of shares is proportionately adjusted for
subsequent stock splits, combinations of shares and stock dividends affecting
the Common Stock), in each case pursuant to the terms thereof as in effect on
the date hereof, and (iii) pursuant to the Company's stock option plans
described in Schedule 3.2 of the Securities Purchase Agreement.
2C. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Section 2B, the following shall be
applicable:
(1) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner grants or sells any Options and the price per share for which Common
Stock is issuable upon the exercise of such options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such Options,
is less than the Exercise Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Option or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph, the
"price per share for which Common Stock is issuable" shall be determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the granting or sale of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon
exercise of all such options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made when Convertible Securities are actually issued
upon the exercise of such Options or when Common Stock is actually issued upon
the exercise of such Options or the conversion or exchange of such Convertible
Securities.
(2) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any
manner issues or sells any Convertible Securities (other than pursuant to the
Company's stock option plans described in Schedule 3.2 to the Securities
Purchase Agreement), and the price per share for which Common Stock is issuable
upon conversion or exchange thereof is less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such Convertible securities
for such price per share. For the purposes of this paragraph, the "price per
share for which Common Stock is issuable" shall be determined by dividing (i)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (ii) the total maximum number of Shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Exercise Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Exercise Price had been or
are to be made pursuant to other provisions of this Section 2, no further
adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Stock changes at any time, the Exercise Price in effect at the time of such
change shall be immediately adjusted to the Exercise Price which would have been
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional consideration
or conversion rate, as the case may be, at the time initially granted, issued or
sold. For purposes of this Section 2C, if the terms of any Option or Convertible
Security which was outstanding as of the Date of Issuance of this Warrant are
changed in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such change; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased.
(4) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Exercise Price then in effect hereunder shall be adjusted
immediately to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. For purposes of this Section 2C, the expiration or termination of
any Option or Convertible Security which was outstanding as of the Date of
Issuance shall not cause the Exercise Price hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or Convertible
Security caused it to be deemed to have been issued after the Date of Issuance.
(5) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Company therefor (net of discounts, commissions
and related expenses). If any Common Stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the fair value of
such consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Company shall be the Fair
Market Value thereof as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving company, the
amount of consideration therefor shall be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Option or Convertible Security, as the case
may be. The fair value of any consideration other than cash and securities shall
be determined jointly by the Company and Holders representing a majority of the
holders of the series of Warrants issued pursuant to the Securities Purchase
Agreement. If such parties are unable to reach agreement within a reasonable
period of time, the Holders representing a majority of the holders of the series
of Warrants issued pursuant to the Securities Purchase Agreement may, upon a
reasonable good faith determination by such Holder that an appraisal is
necessary, request in a timely manner that the fair value of such consideration
be determined by an independent appraiser experienced in valuing such type of
consideration jointly selected by the Company and the Registered Holder of this
Warrant. The determination of such appraiser shall be final and binding upon the
parties, and the fees and expenses of such appraiser shall be borne by the
Company.
(6) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction
in which no specific consideration is allocated to such Option by the parties
thereto, the Option shall be deemed to have been issued for a consideration of
$.01.
(7) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(8) RECORD DATE. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
2D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the number of Warrant Shares for which this Warrant
shall be exercisable shall be proportionately increased and the Exercise Price
in effect immediately prior to such subdivision shall be proportionately
reduced, and if the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the number of Warrant Shares for which this Warrant
shall be exercisable shall be proportionately reduced and the Exercise Price in
effect immediately prior to such combination shall be proportionately increased.
2E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction in
each case which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change". Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
reasonably satisfactory to the Registered Holder of this Warrant) to ensure that
such Registered Holder of this Warrant shall thereafter have the right to
acquire and receive upon exercise hereof, in lieu of or addition to (as the case
may be) the Warrant Shares immediately theretofore acquirable and receivable
upon exercise of this Warrant, such shares of stock, securities or assets as
such holder would have received in connection with such Organic Change if such
holder had exercised its Warrants immediately prior to such Organic Change. In
each such case, the Company shall also make appropriate provision (in form and
substance reasonably satisfactory to the Registered Holder of this Warrant) to
insure that the provisions of this Section 2 and Section 5 hereof shall
thereafter be
applicable to the Warrants (including, in the case of any such Organic Change in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such Organic Change and a corresponding immediate
adjustment in the number of Warrant Shares acquirable and receivable upon
exercise of the Warrants, if the value so reflected is less than the Fair Market
Value of the Common Stock in effect immediately prior to such Organic Change).
The Company shall not effect any such Organic Change unless, prior to the
consummation thereof, the successor entity (if other than the Company) resulting
from such Organic Change assumes by written instrument (in form and substance
reasonably satisfactory to the Registered Holder of this Warrant) the obligation
to deliver to such Registered Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Registered Holder may be
entitled to acquire.
2F. CERTAIN EVENTS. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features other than pursuant to
the stock option plans described in Schedule 3.2 of the Securities Purchase
Agreement), then the Company's Board of Directors shall make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares obtainable
upon exercise of this Warrant so as to protect the rights of the Registered
Holder of this Warrant; and provided further that no such adjustment shall
increase the Exercise Price as otherwise determined pursuant to this Section 2
or decrease the number of Warrant Shares issuable upon conversion of any
Warrant.
2G. NOTICES. (i) Promptly after any adjustment of the Exercise Price,
the Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at least 20
days prior to the date on which any Organic Change shall take place. (iii) The
Company shall also give written notice to the Registered Holder at least 20 days
prior to the date on which any Organic Change, dissolution or liquidation shall
take place.
SECTION 3. NOTICES OF RECORD DATE. In case the Company shall take a
record of all holders of its Common Stock (or other stock or securities at the
time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive
any right to subscribe for or purchase any shares of any class or any other
securities, or to receive any other right, then, and in each such case, the
Company will mail or cause to be mailed to the Registered Holder of this Warrant
a notice specifying, as the case may be, the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, and the time, if
any is to be fixed. Such notice shall be mailed by nationally recognized
overnight courier at least ten (10) days prior to the earlier of the record date
and the effective date for the event specified in such notice, provided that the
failure to mail such notice shall not affect the legality or validity of any
such action.
SECTION 4. [Intentionally Omitted].
SECTION 5. NO VOTING RIGHTS; LIMITATION OF LIABILITY. This Warrant
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 6. TRANSFERABILITY. Subject to the transfer conditions referred
to in the legend endorsed hereon, this Warrant and all rights hereunder,
including without limitation the rights described in Sections 8A and 8B hereof
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of EXHIBIT II hereto) at the principal office of the Company; provided, however
that the rights described in Section 8B hereof shall cease to be transferable
(i) upon any sale of such Warrant Shares to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act or (ii) when a registration
statement with respect to the sale of such Warrant Shares shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement. Notwithstanding the
foregoing, any transfer must relate to a minimum of 50,000 Warrant Shares or
such lesser amount as may then be owned by the transferring Holder. The Warrant
Shares shall also be subject to certain transfer restrictions and each
certificate for Warrant Shares purchased upon exercise of this Warrant shall
bear a legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON ___________ THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IN RESPECT OF WHICH THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO SUCH EFFECT OR
OTHERWISE IN ACCORDANCE WITH THE SECURITIES PURCHASE
AGREEMENT, DATED AS OF OCTOBER 28, 1998, BETWEEN THE ISSUER
(THE "COMPANY") AND THE PURCHASERS NAMED THEREIN. A COPY OF
SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
SECTION 7. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues Warrants pursuant to the Securities Purchase Agreement shall be
deemed to be the "Date of Issuance" regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued. All Warrants representing portions
of the rights hereunder are referred to herein as the "Warrants."
SECTION 8. OPTIONAL REDEMPTION
8A. OPTIONAL REDEMPTION OF WARRANTS.
(i) At any time and from time to time during the
period through and including the 10th anniversary of the Date of Issuance (the
"Redemption Period") and commencing (1) after the first to occur of (A) a Change
of Control of the Company, other than one resulting from a Secondary Public
Offering (as hereinafter defined); or (B) the earlier of (x) the termination by
the Borrowers of any Commitment (other than the Acquisition Loan Commitment) (as
such terms are defined in that certain Credit Agreement, dated as of the date
hereof (the "Credit Agreement"), among the Company, the other parties named as
Borrowers thereto, GE Capital, NationsBank, and Key and the other parties which
may from time to time be Lenders thereunder, and GE Capital, as Administrative
Agent, and NationsBank, National Association, as Revolver Agent) under the
Credit Agreement, and (y) the date upon which the aggregate amount of permanent
reductions in the outstanding principal balance of the Loans made pursuant to
the Credit Agreement (other than mandatory prepayments as described in Section
1.3(b) and Section 1.3(d) of the Credit Agreement or permanent reductions made
as a result of scheduled payments of principal of the Loans) equals or exceeds
$10,000,000.00; or (C) upon an event of default by the Company pursuant to the
Credit Agreement and/or (2) upon the occurrence of (A) the registration of the
Common Stock of the Company under the Securities Act pursuant to a public
offering of the Company's securities for cash through a nationally recognized
underwriter, pursuant to which public offering the Company is able to raise net
proceeds of at least $5,000,000 at a price per share of not less than $1.50
("Secondary Public Offering"), or (B) the adoption by the Company of an employee
stock ownership plan pursuant to which Common Stock will be issued to such plan
or a trust pursuant to such plan for the benefit of employees, officers, or
directors of the Company the Company shall, at the option of the Registered
Holder of this Warrant, which option shall be exercised by delivering written
notice (the "Warrant Redemption Notice") to the Company at least 20 days prior
to the date designated by such holder for redemption of all or a portion of the
Warrant (the "Warrant Redemption Date"), redeem from such Registered Holder all
or a portion of the Warrant as to which such option shall have been exercised
(the "Redemption Warrants"), at a price per Redemption Warrant equal to the Fair
Market Value of the Redemption Warrants (the "Warrant Redemption Price").
(ii) If the funds of the Company legally
available for redemption of the Redemption Warrant on the Warrant Redemption
Date are insufficient to redeem all of the Redemption Warrant, those funds which
are legally available shall be used to redeem the maximum possible number of
such Redemption Warrant. At any time thereafter when additional funds of the
Company become legally available for the redemption of the Redemption Warrant,
such funds shall be used, within 10 days after the end of the fiscal quarter in
which such funds become legally available, to redeem the balance of the
Redemption Warrant.
(iii) Within 10 days following receipt of the
Warrant Redemption Notice, the Company shall acknowledge its receipt of such
notice and shall notify the holder having given such notice of the time and
place of redemption and the Warrant Redemption Price.
(iv) Unless there shall have been a default in
payment of the Warrant Redemption Price, the Redemption Warrant shall not, from
and after such Warrant Redemption Date, be deemed to be outstanding. Without
limiting any rights of the holders of Redemption Warrant which are set forth in
this Warrant or are otherwise available under law, any Redemption Warrant which
the Company has become obligated to redeem on any Warrant Redemption Date but
which it has not redeemed shall continue to have all of the powers and rights
which such Redemption Warrant had prior to such Warrant Redemption Date, until
the aggregate Warrant Redemption Price for such Redemption Warrant has been paid
in full. Notwithstanding the foregoing, no such redemption shall affect any
rights which a holder of Warrant Shares may have under Section 8B hereof.
(v) Upon receipt by the Company of a Warrant
Redemption Notice from the Registered Holder upon the occurrence of an event
described in Section 8A(i)(2)(A) or (B) above, the Company shall be obligated to
redeem from the Registered Holder all of the Redemption Warrant prior to
redeeming any other outstanding securities issued by the Company, provided, that
any warrants issued pursuant to the Securities Purchase Agreement shall be
redeemed pro rata on the basis of the number of such warrants held by the
holders thereof.
8B. OPTIONAL REDEMPTION OF WARRANT SHARES.
(i) At any time and from time to time during
the Redemption Period, the Company shall, at the option of each holder of
Warrant Shares, which option shall be exercised by delivering written notice
(the "Warrant Shares Redemption Notice") to the
Company at least 20 days prior to the date designated by such holder for
redemption of the Warrant Shares (the "Warrant Shares Redemption Date"), redeem
from such holder of the Warrant Shares all of the Warrant Shares as to which
such option shall have been exercised (the "Redemption Warrant Shares"), at a
price per Redemption Warrant Share equal to the Fair Market Value thereof (the
"Warrant Share Redemption Price").
(ii) If the funds of the Company legally
available for redemption of the Redemption Warrant Shares on the Warrant Shares
Redemption Date are insufficient to redeem all of the Redemption Warrant Shares,
those funds which are legally available shall be used to redeem the maximum
possible number of such Redemption Warrant Shares. At any time thereafter when
additional funds of the Company become legally available for the redemption of
the Redemption Warrant Shares, such funds shall be used, within 10 days after
the end of the fiscal quarter in which such funds become legally available, to
redeem the balance of the Redemption Warrant Shares.
(iii) Within 10 days following receipt of the
Warrant Shares Redemption Notice, the Company shall acknowledge its receipt of
such notice and shall notify the holder having given such notice of the time and
place of redemption and the Warrant Share Redemption Price.
(iv) Unless there shall have been a default in
payment of the Warrant Share Redemption Price, the Redemption Warrant Shares
shall not, from and after such Warrant Shares Redemption Date, be deemed to be
outstanding. Without limiting any rights of the holders of Redemption Warrant
Shares which are set forth in this Warrant or are otherwise available under law,
any Redemption Warrant Shares which the Company has become obligated to redeem
on any Warrant Share Redemption Date but which it has not redeemed shall
continue to have all of the powers and rights which such Redemption Warrant
Shares had prior to such Warrant Share Redemption Date, until the aggregate
Warrant Share Redemption Price for such Redemption Warrant Shares have been paid
in full. No such redemption shall affect any rights which a holder of Warrants
may have under Section 8A or this Section 8B.
(v) Upon receipt by the Company of a Warrant
Redemption Notice from the Registered Holder upon the occurrence of an event
described in Section 8A(i)(2)(A) or (B) above, the Company shall be obligated to
redeem from the Registered Holder all of the Redemption Warrant Shares prior to
redeeming any other outstanding securities issued by the Company, provided, that
any shares issued upon the exercise of warrants issued pursuant to the
Securities Purchase Agreement shall be redeemed pro rata on the basis of the
number of such shares held by the holders thereof.
8C. LIMITATIONS ON RIGHTS OF REDEMPTION. Notwithstanding
anything herein to the contrary, (i) each redemption right provided by Sections
8A and 8B of this Agreement shall expire if the Warrant Redemption Notice or the
Warrant Share Redemption Notice relating to a
particular event that commences a Redemption Period is not delivered to the
Company within 90 days after the earlier of (a) the date due notice of any such
event is given to the Holder and/or (b) any public announcement of the event
that commences a Redemption Period (any such 90 day period, a "Redemption Notice
Period"), and (ii) the Fair Market Value shall be determined on the date of the
event that commences a Redemption Period. In any event the Company shall give
the Holder prompt Notice of any event commencing a Redemption Period.
SECTION 9. DEFINITIONS. The following terms have the meanings set
forth below:
"Change of Control" shall have the meaning ascribed to such term in the
Credit Agreement.
"Closing Date" shall have the meaning ascribed to such term in the
Credit Agreement.
"Common Stock" means the Company's Common Stock, $.01 par value per
share, or any securities into which such Common Stock is hereafter converted,
reclassified or exchanged.
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Sections 2C(1) and
2C(2) hereof.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"Fair Market Value" of any security means the highest of: (i) the
market value of the security based on the average of the closing prices of such
security's sales on all securities exchanges or automated quotation system on
which such security may at the time be listed or included, or, if there has been
no sales on any such exchange or reported on such quotation system on any day,
the average of the highest bid and lowest asked prices on all such exchanges or
reported at the end of such day, or, if on any day such security is not so
listed or included in any such quotation system, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the third day immediately prior to the day as of which "Fair
Market Value" is being determined and the 20 consecutive business days prior to
such day; PROVIDED HOWEVER, that if such security is an Option or a Convertible
Security, and such security is at any time not listed on any securities exchange
or quoted in any such quotation system or the over-the-counter market, the "Fair
Market Value" of such security shall be calculated on the basis of "Fair Market
Value" of underlying shares of Common Stock, less any consideration which would
be payable if the holder of such Option or Convertible Security had exercised,
exchanged or converted such Option or Convertible Security on the date of
determination of the "Fair Market Value"; or (ii) the pro rata share of the book
value of the Company (as determined in accordance with generally
accepted accounting principles by reference to the Company's most recent
regularly prepared balance sheet) attributable to such security (assuming the
exercise or conversion thereof, as appropriate); or (iii) the fair value thereof
determined by an appraiser which shall be an investment bank of nationally
recognized standing experienced in valuing securities, which appraiser shall be
jointly selected by the Company and the Registered Holder of this Warrant,
valued on the basis of a sale of the Company as a whole in an arms-length
transaction between a willing buyer and the Company as a willing seller, neither
acting under compulsion (and in each case, without any discount or reduction for
any illiquidity or other inability to sell such security, or the fact that such
security represents a minority interest in the Company or may be subject to
redemption, conversion or exchange by the Company), and the Company shall pay
the fees and expenses of such appraiser; PROVIDED, HOWEVER, that if such
security is not listed on any securities exchange or quoted in any such
quotation system or over-the-counter market, then "Fair Market Value" of such
security means the highest of the value determined by the calculation provided
for in (ii) and (iii). Notwithstanding anything herein to the contrary, prior to
commencing any appraisal provided for in (iii), Holders representing a majority
of the Registrable Securities demanding redemption shall provide written notice
to the Company requesting such an appraisal no later than the last day of the
applicable Redemption Holder Period. Any delays in the performance of the
Company's obligations under this Agreement that are caused by such appraisal
shall not result in any liability or claims whatsoever upon the Company by the
Holder provided that the Company is diligently causing such appraisal to be
effected. The Company shall give the Holder prompt notice of the names of
holders of other warrants issued under the Securities Purchase Agreement
demanding redemption and the number of such Warrants and shares of Common Stock
of the Company as to which redemption is so sought promptly. There shall be no
more than one appraisal for each event that requires a determination of the Fair
Market Value which appraisal shall be binding on all Holders demanding
redemption during a Redemption Period commenced by such event.
"Holders" means GE Capital, NationsBank and Key and any successor in
interest thereto.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities other than rights, warrants or
options referred to in Sections 2A or 2B above.
"Person" means an individual, a partnership (including a limited
partnership), a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
"Registered Holder" means GE Capital Corporation with respect to any
security or such other holder of such security as reflected in the records of
the Company or any securities registrar maintained in the ordinary course.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" shall have the meaning ascribed to such term in the Credit
Agreement.
"Warrant Shares" means shares of the Company's Common Stock issuable
upon exercise of the Warrant; provided, that if the securities issuable or
issued upon exercise of the Warrants are issued by an entity other than the
Company or there is a change in the class of securities so issuable, then the
term "Warrant Shares" shall mean shares of the security issuable upon exercise
of the Warrants if such security is issuable in shares, or shall mean the
equivalent units in which such security is issuable if such security is not
issuable in shares. Once issued such securities shall cease to be Warrant Shares
(i) when a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement or (ii)
upon any sale of such securities to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act.
SECTION 10. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of an indemnity reasonably satisfactory to the
Company (provided that if the Registered Holder is the original holder of this
Warrant, a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 11. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (c) when delivered, if hand-delivered by messenger, all of which
shall be addressed (i) if to the Company at its principal executive offices and
(ii) if to a Registered Holder, at such Registered Holder's address as it
appears in the records of the Company (unless otherwise indicated by any such
Registered Holder) or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice.
SECTION 12. AMENDMENT AND WAIVER. No amendment, modification or waiver
will be binding or effective with respect to any provision of this Warrant
without the prior written consent of the Registered Holder of this Warrant.
SECTION 13. WARRANT REGISTER. The Company shall maintain at its
principal executive offices a register for the registration of transfer of
Warrants. Upon the surrender of any certificate representing Warrants at such
place, the Company will, at the request of the record holder of such
certificate, execute and deliver (at the Company's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
Warrant Shares represented by the surrendered certificate. Each such new
certificate will be registered in such name and will represent such number of
Warrant Shares as is requested by the holder of the surrendered certificate and
will be substantially identical in form to the surrendered certificate.
SECTION 14. FRACTIONS OF SHARES. If any fractional interest in a
Warrant Share would, except for the provisions of this subparagraph, be
delivered upon any exercise of the Warrant, at the request of the Registered
Holder the Company, in lieu of delivering the fractional share therefor, shall
pay an amount to the Registered Holder thereof equal to the Fair Market Value of
such fractional interest as of the date of exercise.
SECTION 15. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
HI-RISE RECYCLING SYSTEMS, INC.
By: /s/
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Name:
Title:
Attest: /s/
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Name:
Title:
