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EXHIBIT 10.27
 
COLLATERAL AGREEMENT
 
COLLATERAL AGREEMENT, dated as of August 31, 2008, by and among GENERAL
ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation (“Borrower”), GENERAL
ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation (“GEM-DE”), GENERAL
ENVIRONMENTAL MANAGEMENT OF RANCHO CORDOVA LLC, a California limited liability
company (“GEMRC”), GEM MOBILE TREATMENT SERVICES, INC., a California corporation
(“GEMMTS”), GEM 6 ACQUISITIONS CORPORATION, a Delaware corporation (“GEM 6”),
and any and all Additional Grantors who may become a party to this Agreement
from time to time (the Borrower, GEM-DE, GEMRC, GEMMTS, GEM 6 and such
Additional Grantors are each hereinafter referred to as a “Grantor” and
collectively as the “Grantors”), and CVC CALIFORNIA, LLC (the “Secured Party”)
as Lender under the Revolving Credit and Term Loan Agreement of even date
herewith (as amended, modified, supplemented and/or restated from time to time,
the “Loan Agreement”) by and between the Borrower and the Secured Party.
 
STATEMENT OF PURPOSE
 
Pursuant to the Loan Agreement, the Secured Party is making and may hereafter
from time to time make Loans to the Borrower in the aggregate principal amount
of up to $13,500,000 at any time outstanding, upon the terms and subject to the
conditions set forth therein.
 
It is a condition precedent to the obligation of the Secured Party to make the
Loans to the Borrower under the Loan Agreement that the Grantors shall have
executed and delivered this Agreement to the Secured Party.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, and to induce the
Secured Party to enter into the Loan Agreement and make the Loans to the
Borrower thereunder, each Grantor hereby agrees with the Secured Party, as
follows:
 
ARTICLE I

 
DEFINED TERMS
 
Section 1.1.  Terms Defined in the Uniform Commercial Code
 
(a)         The following terms when used in this Agreement shall have the
meanings assigned to them in the UCC (as defined in Section 1.2 below) as in
effect from time to time:  “Account”, “Account Debtor”, “Authenticate”,
“Certificated Security”, “Chattel Paper”; “Commercial Tort Claim”, “Deposit
Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Farm Products”
“Fixture”, “General Intangible”, “Instrument”, “Inventory”, “Investment Company
Security”, “Investment Property”, “Issuer”, “Letter of Credit Rights”,
“Proceeds”, “Record”, “Registered Organization”, “Security”, “Securities
Entitlement”, “Securities Intermediary”, “Securities Account”, “Supporting
Obligation”, “Tangible Chattel Paper”, and “Uncertificated Security”.
 
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(b)         Terms defined in the UCC and not otherwise defined herein or in the
Loan Agreement shall have the meaning assigned in the UCC as in effect from time
to time.
 
Section 1.2.       Definitions.  The following terms when used in this Agreement
shall have the meanings assigned to them below:
 
“Additional Grantor” means each Subsidiary of the Borrower which hereafter
becomes a Grantor pursuant to Section 7.15 hereof and Section 5.11 of the Loan
Agreement.
 
“Agreement” means this Collateral Agreement, as amended, restated, supplemented
or otherwise modified from time to time.
 
“Applicable Insolvency Laws” means all Applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 547, 548 and 550 and
other “avoidance” provisions of Title 11 of the United States Code, as amended
or supplemented).
 
“Assignment of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C.
Section 15, 31 U.S.C.  Section 3737, and 31 U.S.C. Section 3727), including all
amendments thereto and regulations promulgated thereunder.
 
“Collateral” has the meaning assigned thereto in Section 2.1.
 
“Collateral Account” means any collateral account established by the Secured
Party as provided in Section 5.2.
 
“Control” means the manner in which “control” is achieved under the UCC with
respect to any Collateral for which the UCC specifies a method of achieving
“control”.
 
“Controlled Depository” has the meaning assigned thereto in Section 4.6(a).
 
“Copyrights” means collectively, all of the following of any Grantor: (a) all
copyrights, rights and interests in copyrights, works protectable by copyright,
copyright registrations and copyright applications anywhere in the world,
(b) all reissues, extensions, continuations (in whole or in part) and renewals
of any of the foregoing, (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing, (d) the right to sue for past,
present and future infringements of any of the foregoing, and (e) all rights
corresponding to any of the foregoing throughout the world.
 
“Copyright Licenses” means any written agreement naming any Grantor as licensor
or licensee, granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and sell
materials derived from any Copyright.
 
“Effective Endorsement and Assignment”  means, with respect to any specific type
of Collateral, all such endorsements, assignments and other instruments of
transfer reasonably requested by the Secured Party with respect to the Security
Interest granted in such Collateral, and in each case, in form and substance
satisfactory to the Secured Party.
 
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“Government Contract” means a contract between any Grantor and an agency,
department or instrumentality of the United States or any state, municipal or
local Governmental Authority located in the United States or all obligations of
any such Governmental Authority arising under any Account now or hereafter owing
by any such Governmental Authority, as account debtor, to any Grantor.
 
“Grantors” has the meaning set forth in the preamble of this Agreement.
 
“Guarantors” means the collective reference to each Person executing a guaranty
of the Obligations.
 
“Guaranty Agreement” means any guaranty of the Obligations in effect from time
to time.
 
“Intellectual Property” means collectively, all of the following of any Grantor:
(a)  all systems software, applications software and internet rights, including,
without limitation, screen displays and formats, internet domain names, web
sites (including web links), program structures, sequence and organization, all
documentation for such software, including, without limitation, user manuals,
flowcharts, programmer’s notes, functional specifications, and operations
manuals, all formulas, processes, ideas and know-how embodied in any of the
foregoing, and all program materials, flowcharts, notes and outlines created in
connection with any of the foregoing, whether or not patentable or
copyrightable, (b) concepts, discoveries, improvements and ideas, (c) any useful
information relating to the items described in clause (a) or (b), including
know-how, technology, engineering drawings, reports, design information, trade
secrets, practices, laboratory notebooks, specifications, test procedures,
maintenance manuals, research, development, manufacturing, marketing,
merchandising, selling, purchasing and accounting, (d) Patents and Patent
Licenses, Copyrights and Copyright Licenses, Trademarks and Trademark Licenses,
and (e) other licenses to use any of the items described in the foregoing
clauses (a), (b), (c) and (d) or any other similar items of such Grantor
necessary for the conduct of its business.
 
“Issuer” means any issuer of any Investment Property or Partnership/LLC
Interests (including, without limitation, any Issuer as defined in the UCC).
 
“Loan Agreement” shall have the meaning assigned thereto in the preamble of this
Agreement.
 
Obligations” means, with respect to the Borrower, the meaning assigned to such
term in the Loan Agreement, and with respect to each Guarantor, the obligations
of such Guarantor under its Guaranty Agreement, and with respect to all
Grantors, all liabilities and obligations of the Grantors hereunder.
 
“Partnership/LLC Interests” means, with respect to any Grantor, the entire
partnership, membership interest or limited liability company interest, as
applicable, of such Grantor in each partnership, limited partnership or limited
liability company owned thereby, including, without limitation, such Grantor’s
capital account, its interest as a partner or member, as applicable, in the net
cash flow, net profit and net loss, and items of income, gain, loss, deduction
and credit of any such partnership, limited partnership or limited liability
company, as applicable, such Grantor’s interest in all distributions made or to
be made by any such partnership, limited partnership or limited liability
company, as applicable, to such Grantor and all of the other economic rights,
titles and interests of such Grantor as a partner or member, as applicable, of
any such partnership, limited partnership or limited liability company, as
applicable, whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership or limited
liability company, as applicable, by separate agreement or otherwise.
 
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“Patents” means collectively, all of the following of any Grantor: (a) all
patents, rights and interests in patents, patentable inventions and patent
applications anywhere in the world, (b) all reissues, extensions, continuations
(in whole or in part) and renewals of any of the foregoing, (c) all income,
royalties, damages or payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing, (d) the right to sue for past, present and future infringements of
any of the foregoing, and (e) all rights corresponding to any of the foregoing
throughout the world.
 
“Patent License” means all agreements now or hereafter in existence, whether
written or oral, providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a Patent.
 
“Perfection Certificate” means (a) the perfection certificate dated as of the
date hereof, substantially in the form of Exhibit A attached hereto, and
otherwise in form and substance satisfactory to the Secured Party, and duly
certified by an authorized officer of the Borrower, and (b) a perfection
certificate in form and substance satisfactory to the Secured Party, delivered
by each Additional Grantor at the time that such Additional Grantor becomes a
party hereto, which shall be duly certified by an authorized officer of such
Additional Grantor.
 
“Secured Party” has the meaning assigned thereto in the preamble of this
Agreement.
 
“Securities Act” means the Securities Act of 1933, including all amendments
thereto and regulations promulgated thereunder.
 
“Security Interests” means the liens and security interests granted pursuant to
Article II.
 
“Subsidiary Issuer” means any Issuer of Investment Property or any
Partnership/LLC Interests, which is a direct or indirect Subsidiary of any
Grantor.
 
“Trademarks” means collectively, all of the following of any Grantor: (a) all
trademarks, rights and interests in trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on which any of the
foregoing have appeared or appear, all registrations and recordings thereof, and
all applications in connection therewith anywhere in the world, (b) all
reissues, extensions, continuations (in whole or in part) and renewals of any of
the foregoing, (c) all income, royalties, damages and payments now or hereafter
due and/or payable under any of the foregoing or with respect to any of the
foregoing, including, without limitation, damages or payments for past or future
infringements of any of the foregoing, (d) the right to sue for past, present
and future infringements of any of the foregoing, and (e) all rights
corresponding to any of the foregoing throughout the world.
 
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“Trademark License” means any agreement now or hereafter in existence, whether
written or oral, providing for the grant by or to any Grantor of any right to
use any Trademark.
 
“UCC” means the Uniform Commercial Code as in effect in the State of New York,
as amended or modified from time to time.
 
“Vehicles” means all cars, trucks, trailers, and other vehicles covered by a
certificate of title under the laws of any state, all tires and all other
appurtenances to any of the foregoing.
 
Section 1.3.      Other Definitional Provisions.  Terms defined in the Loan
Agreement and not otherwise defined herein shall have the meanings assigned
thereto in the Loan Agreement. The words “hereof,” “herein”, “hereto” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.  The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.  Where
the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.  The word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless
otherwise specified.
 
ARTICLE II
 
SECURITY INTEREST
 
Section 2.1.       Grant of Security Interest.
 
(a)         Each Grantor hereby grants, pledges and collaterally assigns to the
Secured Party a security interest in all of such Grantor’s right, title and
interest in the following property now owned or at any time hereafter acquired
by such Grantor or in which such Grantor now has or at any time in the future
may acquire any right, title or interest, and wherever located or deemed located
(collectively, the “Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations:
 
                                           (i)          all Accounts;
 
                                           (ii)         all cash and currency;
 
                                           (iii)        all Chattel Paper;
 
                                           (iv)        all Commercial Tort
Claims;
 
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                                           (v)         all Deposit Accounts;
 
                                           (vi)        all Documents;
 
                                           (vii)       all Equipment;
 
                                           (viii)      all Fixtures;
 
                                           (ix)        all General Intangibles
(including, without limitation, any and all indemnification claims against the
Seller under the Acquisition Agreement);
 
                                           (x)         all Instruments;
 
                                           (xi)        all Intellectual
Property;
 
                                           (xii)       all Inventory;
 
                                           (xiii)      all Investment Property;
 
                                           (xiv)      all Letter of Credit
Rights;
 
                                           (xv)       all Vehicles;
 
                                           (xvi)      all other personal
property not otherwise described above;
 
                                           (xvii)     all books and records
pertaining to the Collateral; and
 
                           (xviii)    to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing and all collateral
security and Supporting Obligations (as now or hereafter defined in the UCC)
given by any Person with respect to any of the foregoing.
 
(b)         Notwithstanding clause (a) of this Section 2.1, to the extent that,
at any time, the grant of a security interest in any contract rights would,
notwithstanding Sections 9-407 and 9-408 of the UCC or other applicable law,
cause a breach of the subject Contract permitting the conterparty thereto to
terminate such Contract under applicable law, such contract rights shall not at
such time be part of the Collateral (but the proceeds thereof and any Supporting
Obligations therefor shall be part of the Collateral).  Each Grantor shall use
all commercially reasonable efforts to obtain any necessary consents or waivers
required in order for such Grantor to grant the Security Interests in any
affected Contract.
 
Section 2.2.      Grantors Remain Liable.  Anything herein to the contrary
notwithstanding: (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Secured Party of any of the
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, (c)
the Secured Party shall have no obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder, and (d) the Secured Party shall have no liability in
contract or tort for any Grantor’s acts or omissions.
 
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ARTICLE III
 
REPRESENTATIONS AND WARRANTIES
 
To induce the Secured Party to enter into the Loan Agreement and to make the
Loans to the Borrower thereunder, each Grantor hereby represents and warrants to
the Secured Party that:
 
Section 3.1.      Existence.  Each Grantor is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, has the requisite power and authority to own, lease and operate its
properties and to carry on its business as now being and hereafter proposed to
be conducted and is duly qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization other than in any such
jurisdiction where failure to so qualify would not reasonably be expected to
have a Material Adverse Effect.
 
Section 3.2.      Authorization of Agreement; No Conflict.  Each Grantor has the
right, power and authority and has taken all necessary corporate or other
organizational action to authorize the execution, delivery and performance of,
this Agreement.  This Agreement has been duly executed and delivered by the duly
authorized officers of each Grantor and this Agreement constitutes the legal,
valid and binding obligation of the Grantors enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor relief laws from
time to time in effect which affect the enforcement of creditors’ rights in
general, and general limitations on the availability of equitable remedies.  The
execution, delivery and performance by the Grantors of this Agreement will not,
by the passage of time, the giving of notice or otherwise, violate any material
provision of any Applicable Law or any Contract material to the business of any
Grantor and will not result in the creation or imposition of any Lien, other
than the Security Interests, upon or with respect to any property or revenues of
any Grantor.
 
Section 3.3.     Consents.  No approval, consent, exemption, authorization or
other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against any Grantor or any Subsidiary Issuer
of this Agreement, except (i) as may be required by laws affecting the offering
and sale of securities generally, (ii) filings with the United States Copyright
Office and/or the United States Patent and Trademark Office, and (iii) filings
under the UCC and/or the Assignment of Claims Act.
 
Section 3.4.  Perfected Priority Liens.  The Security Interests granted pursuant
to this Agreement (a) constitute valid security interests in all of the
Collateral in favor of the Secured Party, as collateral security for the
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor, and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except to the extent of any priority accorded under
Applicable Law to any Permitted Liens.  Upon the filing of financing statements
in the jurisdiction of formation of the respective Grantors reflected in the
respective Perfection Certificates, and the filing of appropriate collateral
assignments with the United States Copyright Office and the United States Patent
and Trademark Office, the Security Interests will be perfected first priority
security interests (subject only to the exceptions noted in the immediately
preceding sentence) in all Collateral in which a security interest can be
perfected by means of filing; and upon delivery to the Secured Party of the
certificates representing the Collateral consisting of Certificated Securities,
the Security Interests will be perfected first priority security interests in
such Collateral.
 
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Section 3.5.     Title; No Other Liens.  Except for the Security Interests, each
Grantor owns each item of the Collateral free and clear of any and all Liens or
claims other than Permitted Liens.  No financing statement under the UCC of any
state which names a Grantor as debtor or other public notice with respect to all
or any part of the Collateral is on file or of record in any public office,
except such as have been filed in favor of the Secured Party pursuant to this
Agreement or in respect of Permitted Liens.  No Collateral is in the possession
or Control of any Person asserting any claim thereto or security interest
therein, except that (a) the Secured Party or its designee may have possession
or Control of Collateral as contemplated hereby, (b) a depositary bank may have
Control of a Deposit Account owned by a Grantor at such depositary bank and a
Securities Intermediary may have Control over a Securities Account owned by a
Grantor at such Securities Intermediary, in each case subject to the terms of
any Deposit Account control agreement or Securities Account control agreement,
as applicable and to the extent required by Section 4, in favor of the Secured
Party, and (c) a bailee, consignee or other Person may have possession of
Collateral as contemplated by, and so long as, the applicable Grantors have
complied to the satisfaction of the Secured Party with the applicable provisions
of Section 4.
 
Section 3.6.       State of Organization; Location of Inventory, Equipment and
Fixtures; Other Information.
 
(a)         The exact legal name of each Grantor is as set forth in its
Perfection Certificate.
 
(b)        Each Grantor is a Registered Organization organized under the laws of
the jurisdiction identified for such Grantor in its Perfection Certificate.  The
taxpayer identification number and Registered Organization number of each
Grantor is as set forth for such Grantor in its Perfection Certificate.
 
(c)        All Collateral consisting of Inventory, Equipment and Fixtures
(whether now owned or hereafter acquired) is (or will be) located at the
locations specified in the Perfection Certificates.
 
(d)        The mailing address, chief place of business, chief executive office
and office where each Grantor keeps its books and records relating to the
Accounts, Documents, General Intangibles, Instruments and Investment Property in
which it has any interest is located at the locations specified for such Grantor
in its Perfection Certificate.  No Grantor has any other places of business.  No
Grantor does business nor has done business during the past five years under any
trade name or fictitious business name except as disclosed for such Grantor in
its Perfection Certificate.  Except as disclosed in its Perfection Certificate,
no Grantor has acquired assets from any Person, other than assets acquired in
the ordinary course of such Grantor’s business, during the past five years.
 
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Section 3.7.     Accounts.  Each existing Account constitutes, and each
hereafter arising Account will constitute, the legally valid and binding
obligation of the applicable Account Debtor.  The amount represented by each
Grantor to the Secured Party as owing by each Account Debtor is, or will be, the
correct amount actually and unconditionally owing, except for normal cash
discounts and allowances in the ordinary course of business where
applicable.  No Account Debtor has any defense, set-off, claim or counterclaim
against any Grantor that can be asserted against the Secured Party, whether in
any proceeding to enforce Secured Party’s rights in the Collateral or otherwise,
except defenses, set-offs, claims or counterclaims that are not, in the
aggregate, material to the value of the Accounts.  None of the Accounts is, nor
will any hereafter arising Account be, evidenced by a promissory note or other
Instrument, other than a check, that has not been pledged and delivered to the
Secured Party in accordance with the terms hereof.
 
Section 3.8.      Chattel Paper.  As of the date hereof, the Borrower does not
hold any Chattel Paper.
 
Section 3.9.      Commercial Tort Claims.  As of the date hereof, the Borrower
does not hold any Commercial Tort Claims except as described in its Perfection
Certificate; and, upon becoming aware at any time and from time to time of any
further Commercial Tort Claims, the Grantors shall notify the Secured Party
thereof in accordance with Section 4.4.
 
Section 3.10.    Deposit Accounts.  As of the date hereof, all Deposit Accounts
(including, without limitation, cash management accounts that are Deposit
Accounts) owned by the Borrower are listed in its Perfection Certificate.
 
Section 3.11.    Intellectual Property.  None of the Intellectual Property owned
by any Grantor is the subject of any written licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor, except as would
not reasonably be expected to have a Material Adverse Effect.
 
Section 3.12.    Inventory.  Collateral consisting of Inventory is of good and
merchantable quality, free from any material defects, and has, to the knowledge
of each Grantor, been manufactured in accordance with the requirements of the
Fair Labor Standards Act and all other Applicable Law.  To the knowledge of each
Grantor, none of such Inventory is subject to any licensing, Patent, Trademark,
trade name or Copyright with any Person that restricts any Grantor’s ability to
manufacture and/or sell such Inventory.
 
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Section 3.13.     Investment Property; Partnership/LLC Interests.
 
(a)        As of the date hereof, all Investment Property (including, without
limitation, Securities Accounts and cash management accounts that are Investment
Property) and all Partnership/LLC Interests owned by the Borrower are listed in
its Perfection Certificate.
 
(b)        All Investment Property and all Partnership/LLC Interests issued by
any Subsidiary Issuer to any Grantor (i) have been duly and validly issued and,
if applicable, are fully paid and nonassessable, (ii) are beneficially owned as
of record by such Grantor, and (iii) represent the percentage ownership of all
classes of the capital stock or equity interests of such Subsidiary Issuer as
set forth in such Grantor’s Perfection Certificate.
 
(c)        None of the Partnership/LLC Interests (i) are traded on a securities
exchange or in securities markets, (ii) by their terms expressly provide that
they are Securities governed by Article 8 of the UCC, or (iii) are Investment
Company Securities.
 
Section 3.14.    Instruments.  As of the date hereof, the Borrower does not hold
any Instruments and is not named a payee of any promissory note or other
evidence of indebtedness.
ARTICLE IV
COVENANTS
 
Until the Obligations shall have been indefeasibly paid in full and the
Revolving Credit Commitment has been terminated, unless express written consent
has been obtained from the Lender, the Grantors covenant and agree that:
 
Section 4.1.       Maintenance of Perfected Security Interest; Further
Information.
 
(a)         Each Grantor shall maintain the Security Interest created by this
Agreement as a perfected Security Interest having at least the priority
described in Section 3.4 and shall defend such Security Interest against the
claims and demands of all Persons whomsoever.
 
(b)        Each Grantor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith as the
Secured Party may reasonably request, all in reasonable detail.
 
Section 4.2.       Maintenance of Insurance.
 
(a) Each Grantor will maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Collateral against loss by fire, explosion,
theft, fraud and such other casualties, including business interruption, as may
be reasonably satisfactory to the Secured Party in amounts and with deductibles
at least as favorable as those generally maintained by businesses of similar
size engaged in similar activities, and (ii) insuring such Grantor and the
Secured Party against liability for hazards, risks and liability to persons and
property relating to the Collateral, in amounts and with deductibles at least as
favorable as those generally maintained by businesses of similar size engaged in
similar activities, such policies to be in such form and having such coverage as
may be reasonably satisfactory to the Lender.
 
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(b)        All such insurance (other than workers’ compensation) shall (i) name
the Secured Party as loss payee (to the extent covering risk of loss or damage
to tangible property) and as an additional insured as its interests may appear
(to the extent covering any other risk), (ii) provide that no cancellation shall
be effective until at least thirty (30) days after receipt by the Secured Party
of written notice thereof, and (iii) be reasonably satisfactory in all other
respects to the Secured Party.
 
(c)         Upon the request of the Secured Party, each Grantor shall deliver to
the Secured Party periodic information from a reputable insurance broker with
respect to the insurance referred to in this Section 4.2.
 
Section 4.3.       Changes in Locations; Changes in Name or Structure.  No
Grantor will, except upon fifteen (15) days’ prior written notice to the Secured
Party and delivery to the Secured Party of (a) all additional financing
statements (executed if necessary for any particular filing jurisdiction) and
other instruments and documents reasonably requested by the Secured Party to
maintain the validity, perfection and priority of the Security Interests, and
(b) if applicable, a written supplement to its Perfection Certificate:
 
                           (i)          permit any Deposit Account to be held by
or at a depositary bank other than the depositary bank that held such Deposit
Account as of the date hereof as set forth in the Perfection Certificate;
 
                           (ii)         permit any of the Inventory, Equipment
or Fixtures to be kept at a location other than those listed in the Perfection
Certificate, except as otherwise permitted hereunder;
 
                           (iii)       permit any Investment Property (other
than Certificated Securities delivered to the Secured Party pursuant to Section
4.5) to be held by a Securities Intermediary;
 
                           (iv)       change its jurisdiction of organization or
the location of its chief executive office from that identified in the
Perfection Certificate; or
 
                           (v)        change its name, identity or corporate or
organizational structure to such an extent that any financing statement filed by
the Secured Party in connection with this Agreement would become misleading.
 
Section 4.4.       Required Notifications.  Each Grantor shall promptly notify
the Secured Party, in writing, of: (a) any Lien (other than the Security
Interests or Permitted Liens) on any of the Collateral, (b) the occurrence of
any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the Security Interests,
(c) any Collateral which, to the knowledge of such Grantor, constitutes a
Government Contract, and (d) the acquisition or ownership by such Grantor of any
(i) Commercial Tort Claim, (ii) Deposit Account, or (iii) Investment
Property after the date hereof.
 
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Section 4.5.       Delivery Covenants
 
.  Each Grantor will deliver and pledge to the Secured Party all Certificated
Securities, Partnership/LLC Interests evidenced by a certificate, negotiable
Documents, Instruments, and Tangible Chattel Paper owned or held by such
Grantor, in each case, together with an Effective Endorsement and Assignment and
all Supporting Obligations, as applicable, unless such delivery and pledge has
been waived in writing by the Secured Party.
 
Section 4.6.       Control Covenants.
 
(a)         Each Grantor shall instruct (and otherwise use its reasonable
efforts to cause) (i) each depositary bank holding a Deposit Account owned by
such Grantor, and (ii) each Securities Intermediary holding any Investment
Property owned by such Grantor, to execute and deliver a control agreement,
sufficient to provide the Secured Party with Control of such Deposit Account or
Investment Property, and otherwise in form and substance reasonably satisfactory
to the Secured Party (any such depositary bank executing and delivering any such
control agreement, a “Controlled Depositary”, and any such Securities
Intermediary executing and delivering any such control agreement, a “Controlled
Intermediary”).  In the event any such depositary bank or Securities
Intermediary refuses to execute and deliver such control agreement, the Secured
Party, in its sole discretion, may require the applicable Deposit Account and
Investment Property to be transferred to the Secured Party or a different
Controlled Depositary or Controlled Intermediary, as applicable, reasonably
selected by the Grantor and reasonably satisfactory to the Secured Party, which
agrees to execute and deliver such control agreement.
 
(b)         Each Grantor will take such actions and deliver all such agreements
as are requested by the Secured Party to provide the Secured Party with Control
of all Letter of Credit Rights and Electronic Chattel Paper owned or held by
such Grantor, including, without limitation, with respect to any such Electronic
Chattel Paper, by having the Secured Party identified as the assignee of the
Record(s) pertaining to the single authoritative copy thereof.
 
(c)         If any Collateral (other than Collateral specifically subject to the
provisions of Section 4.6(a) and Section 4.6(b)) exceeding in value $5,000 in
the aggregate (such Collateral exceeding such amount, the “Excess Collateral”)
is at any time in the possession or control of any consignee, warehouseman,
bailee (other than a carrier transporting Inventory to a purchaser in the
ordinary course of business), processor, or any other third party, such Grantor
shall notify in writing such Person of the Security Interests created hereby,
shall use its reasonable efforts to obtain such Person’s written agreement in
writing to hold all such Collateral for the Secured Party’s account subject to
the Secured Party’s instructions, and shall cause such Person to issue and
deliver to the Secured Party warehouse receipts, bills of lading or any similar
documents relating to such Collateral to the Secured Party together with an
Effective Endorsement and Assignment; provided that if such Grantor is not able
to obtain such agreement and cause the delivery of such items, the Secured
Party, in its sole discretion, may require such Excess Collateral to be moved to
another location specified by the Secured Party.  Further, each Grantor shall
perfect and protect such Grantor’s ownership interests in all Inventory stored
with a consignee against creditors of the consignee by filing and maintaining
financing statements against the consignee reflecting the consignment
arrangement filed in all appropriate filing offices, providing any written
notices required to notify any prior creditors of the consignee of the
consignment arrangement, and taking such other actions as may be appropriate to
perfect and protect such Grantor’s interests in such inventory under Section
2-326, Section 9-103, Section 9-324 and Section 9-505 of the UCC or
otherwise.  All such financing statements filed pursuant to this Section 4.6(c)
shall be assigned, on the face thereof, to the Secured Party.
 
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Section 4.7.      Filing Covenants.  Pursuant to Section 9-509 of the UCC and
any other Applicable Law, each Grantor authorizes the Secured Party to file or
record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Secured Party determines appropriate to
perfect the Security Interests of the Secured Party under this Agreement.  Such
financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of Collateral that describes
such property in any other manner as the Secured Party may determine, in its
sole discretion, is necessary, advisable or prudent to ensure the perfection of
the Security Interest in the Collateral granted herein, including, without
limitation, describing such property as “all assets” or “all personal
property.”  Further, a photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.  Each
Grantor hereby authorizes, ratifies and confirms all financing statements and
other filing or recording documents or instruments filed by Secured Party prior
to the date of this Agreement.
 
Section 4.8.       Accounts.
 
(a)        Other than in the ordinary course of business consistent with its
past practice, no Grantor will (i) grant any extension of the time of payment of
any Account, (ii) compromise or settle any Account for less than the full amount
thereof, (iii) release, wholly or partially, any Account Debtor, (iv) allow any
credit or discount whatsoever on any Account, or (v) amend, supplement or modify
any Account in any manner that could adversely affect the value thereof.
 
(b)        Each Grantor will deliver to the Secured Party a copy of each
material demand, notice or document received by such Grantor that questions or
calls into doubt the validity or enforceability of any material Account.
 
(c)        The Secured Party shall have the right to make test verifications of
the Accounts in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Secured Party may require in connection with such test verifications.  From
time to time (but not more frequently than once in any six (6) month period,
except for reasonable cause or unless an Event of Default is then continuing),
upon the Secured Party’s reasonable request and at the expense of the Grantors,
the Grantors shall cause independent public accountants or others satisfactory
to the Secured Party to furnish to the Secured Party reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
 
(d)        Upon request of the Secured Party at any time, each Grantor shall
direct its Account Debtors (including by means of appropriate direction on all
invoices) to remit all payments on such Grantor’s Accounts to a lockbox or
blocked account at a Controlled Depository, which account shall be swept by the
Secured Party on a weekly (or more frequent) basis, with collected funds in such
account applied to the outstanding Advances or made available to such Grantor.
 
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Section 4.9.       Intellectual Property.
 
(a)        Within five (5) Business Days after the last day of each fiscal
quarter in which any Grantor shall identify and/or confirm the existence of any
registered Intellectual Property owned or claimed to be owned by such Grantor,
such Grantor shall notify the Secured Party of the particulars thereof
(including the name or title of the subject Intellectual Property, the filing
office in which any filings may have been made in respect thereof, and the
filing date and registration number of each such filing), and shall execute and
deliver to the Grantor, for filing, any and all such collateral assignments as
the Secured Party may reasonably request in order to confirm and/or perfect the
Security Interests in such Intellectual Property.
 
(b)        Except as could not reasonably be expected to have a Material Adverse
Effect, each Grantor (either itself or through licensees) (i) will continue to
use each registered Trademark (owned by such Grantor) and Trademark for which an
application (owned by such Grantor) is pending, to the extent reasonably
necessary to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) will maintain products and services offered under
such Trademark at a level substantially consistent with the quality of such
products and services as of the date hereof, (iii) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby such Trademark could reasonably be expected to become invalidated or
impaired in any way, (iv) will not do any act, or knowingly omit to do any act,
whereby any issued Patent owned by such Grantor would reasonably be expected to
become forfeited, abandoned or dedicated to the public, (v) will not (and will
not permit any licensee or sublicensee thereof to) do any act or knowingly omit
to do any act whereby any registered Copyright owned by such Grantor or
Copyright for which an application is pending (owned by such Grantor) could
reasonably be expected to become invalidated or otherwise impaired, and (vi)
will not (either itself or through licensees) do any act whereby any material
portion of the Copyrights may fall into the public domain.
 
(c)         Each Grantor will notify the Secured Party promptly if it knows, or
has reason to know, that any application or registration relating to any
material Intellectual Property owned by such Grantor may become forfeited,
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor’s ownership of, or the validity of, any
material Intellectual Property owned by such Grantor or such Grantor’s right to
register the same or to own and maintain the same.
 
(d)        Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Secured Party within five (5) Business Days after the last day of
the fiscal quarter in which such filing occurs.  Upon request of the Secured
Party, such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Secured Party may
reasonably request to evidence the Secured Party’s security interest in any
material Copyright, Patent or Trademark and the goodwill and General Intangibles
of such Grantor relating thereto or represented thereby.
 
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(e)        Each Grantor will take all reasonable and necessary steps, in such
Grantor’s reasonable business judgment and at such Grantor’s sole cost and
expense, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the material Intellectual
Property, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
 
(f)         In the event that any material Intellectual Property owned by a
Grantor is infringed, misappropriated or diluted by a third party, the
applicable Grantor shall (i) at such Grantor’s sole cost and expense, take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property, and (ii) if such
Intellectual Property is of material economic value, promptly notify the Secured
Party after it learns of such infringement, misappropriation or dilution.
 
Section 4.10.      Investment Property; Partnership/LLC Interests.
 
(a)        Without the prior written consent of the Lender, no Grantor will
(i) vote to enable, or take any other action to permit, any Subsidiary Issuer to
issue any Investment Property or Partnership/LLC Interests, except for those
additional Investment Property or Partnership/LLC Interests that will be subject
to the Security Interest granted herein in favor of the Secured Party, or
(ii) enter into any agreement or undertaking restricting the right or ability of
such Grantor or the Secured Party to sell, assign or transfer any Investment
Property or Partnership/LLC Interests or Proceeds thereof.  The Grantors will
defend the right, title and interest of the Secured Party in and to any
Investment Property and Partnership/LLC Interests against the claims and demands
of all Persons whomsoever.
 
(b)        If any Grantor shall become entitled to receive or shall receive (i)
any Certificated Securities (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the
ownership interests of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Investment Property, or otherwise in
respect thereof, or (ii) any sums paid upon or in respect of any Investment
Property upon the liquidation or dissolution of any Issuer, such Grantor shall
accept the same as the agent of the Secured Party, hold the same in trust for
the Secured Party, segregated from other funds of such Grantor, and promptly
deliver the same to the Secured Party in accordance with the terms hereof.
 
Section 4.11.     Equipment.  Each Grantor will maintain each item of Equipment
in good working order and condition (reasonable wear and tear and obsolescence
excepted), and in accordance with any manufacturer’s manual and/or
recommendations, and will as quickly as practicable provide all maintenance,
service and repairs necessary for such purpose and will promptly furnish to the
Secured Party a statement respecting any material loss or damage to any of the
Equipment, except for such obsolete or worn-out machinery or equipment which
such Grantor has determined, in its reasonable business judgment, to be no
longer useful or desirable for its use in the Business Operations.
 
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Section 4.12.     Vehicles.  Upon the request of the Secured Party at any time
and from time to time, any and all applications for certificates of title or
ownership indicating the Secured Party’s first priority Lien on the Vehicle
covered by such certificate, and any other necessary documentation, shall be
filed in each office in each jurisdiction which the Secured Party shall deem
reasonably advisable to perfect its Liens on the Vehicles.  Prior thereto, each
certificate of title or ownership relating to each Vehicle shall be maintained
by the applicable Grantor in accordance with Applicable Law to reflect the
ownership interest of such Grantor.
 
Section 4.13.     Further Assurances.  Upon the request of the Secured Party and
at the sole expense of the Grantors, each Grantor will promptly and duly execute
and deliver, and have recorded, such further instruments and documents and take
such further actions as the Secured Party may reasonably request for the purpose
of obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, (a) the collateral
assignment of any Contract, (b) with respect to Government Contracts, collateral
assignment agreements and notices of collateral assignment, in form and
substance reasonably satisfactory to the Secured Party, duly executed by the
subject Grantor in compliance with the Assignment of Claims Act (or analogous
state Applicable Law), and (c) all applications, certificates, instruments,
registration statements, and all other documents and papers the Secured Party
may reasonably request and as may be required by law in connection with the
obtaining of any consent, approval, registration, qualification, or
authorization of any Person deemed necessary or appropriate for the effective
exercise of any rights under this Agreement.
 
ARTICLE V
 
REMEDIAL PROVISIONS
 
Section 5.1.       General Remedies.  If an Event of Default shall occur and be
continuing, the Secured Party may exercise, in addition to all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC or any other Applicable Law.  Without
limiting the generality of the foregoing, the Secured Party, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk.  The Secured Party may
disclaim any warranties of title, possession and quiet enjoyment.  The Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and
released.  Each Grantor further agrees, at the Secured Party’s request, to
assemble the Collateral and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at such Grantor’s
premises or elsewhere.  To the extent permitted by Applicable Law, each Grantor
waives all claims, damages and demands it may acquire against the Secured Party
arising out of the exercise by it of any rights hereunder except to the extent
any such claims, damages, or demands result solely from the gross negligence or
willful misconduct of the Secured Party.  If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least ten (10) days before such sale or
other disposition.
 
Section 5.2.       Specific Remedies.
 
(a)         The Secured Party hereby authorizes each Grantor to collect its
Accounts; provided, that, the Secured Party may curtail or terminate such
authority at any time after the occurrence and during the continuance of an
Event of Default.
 
(b)         Upon the occurrence and during the continuance of an Event of
Default:
 
                           (i)          the Secured Party may communicate with
Account Debtors of any Account subject to a Security Interest and upon the
request of the Secured Party, each Grantor shall notify (such notice to be in
form and substance satisfactory to the Secured Party) its Account Debtors and
parties to the Contracts subject to a Security Interest that such Accounts and
the Contracts have been assigned to the Secured Party;
 
                           (ii)        each Grantor shall forward to the Secured
Party, on the last Business Day of each week, deposit slips related to all cash,
money, checks or any other similar items of payment received by the Grantor
during such week, and, if requested by the Secured Party, copies of such checks
or any other similar items of payment, together with a statement showing the
application of all payments on the Collateral during such week and a collection
report with regard thereto, in form and substance satisfactory to the Secured
Party.
 
                           (iii)        whenever any Grantor shall receive any
cash, money, checks or any other similar items of payment relating to any
Collateral (including any Proceeds of any Collateral), such Grantor agrees that
it will, within one (1) Business Day of such receipt, deposit all such items of
payment into the Collateral Account or in a Deposit Account at Controlled
Depositary; and until such Grantor shall deposit such cash, money, checks or any
other similar items of payment in the Collateral Account or in a Deposit Account
at a Controlled Depositary, such Grantor shall hold such cash, money, checks or
any other similar items of payment in trust for the Secured Party and as
property of the Secured Party, separate from the other funds of such Grantor,
and the Secured Party shall have the right to transfer or direct the transfer of
the balance of each Deposit Account to the Collateral Account.  All such
Collateral and Proceeds of Collateral received by the Secured Party hereunder
shall be held by the Secured Party in the Collateral Account as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 5.4.
 
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                           (iv)       the Secured Party shall have the right to
receive any and all cash dividends, payments or distributions made in respect of
any Investment Property or Partnership/LLC Interests or other Proceeds paid in
respect of any Investment Property or Partnership/LLC Interests, and any or all
of any Investment Property or Partnership/LLC Interests shall be registered in
the name of the Secured Party or its nominee, and the Secured Party or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such Investment Property or Partnership/LLC Interests, at any
meeting of shareholders, partners or members of the relevant Issuers, and
(B) any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Investment Property or
Partnership/LLC Interests as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Investment Property or Partnership/LLC Interests upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate,
partnership or company structure of any Issuer or upon the exercise by any
Grantor or the Secured Party of any right, privilege or option pertaining to
such Investment Property or Partnership/LLC Interests, and in connection
therewith, the right to deposit and deliver any and all of the Investment
Property or Partnership/LLC Interests with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Secured Party may determine), all without liability except to account for
property actually received by it; but the Secured Party shall have no duty to
any Grantor to exercise any such right, privilege or option and the Secured
Party shall not be responsible for any failure to do so or delay in so
doing.  In furtherance thereof, each Grantor hereby authorizes and instructs
each Issuer with respect to any Collateral consisting of Investment Property and
Partnership/LLC Interests to (i) comply with any instruction received by it from
the Secured Party in writing that (A) states that an Event of Default has
occurred and is continuing, and (B) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) except as otherwise expressly permitted hereby, pay any dividends,
distributions or other payments with respect to any Investment Property or
Partnership/LLC Interests directly to the Secured Party; and
 
                           (v)        the Secured Party shall be entitled to
(but shall not be required to):  (A) proceed to perform any and all obligations
of the applicable Grantor under any Contract and exercise all rights of such
Grantor thereunder as fully as such Grantor itself could, (B) do all other acts
which the Secured Party may deem necessary or proper to protect its Security
Interest granted hereunder, provided such acts are not inconsistent with or in
violation of the terms of the Loan Agreement or Applicable Law, and (C) sell,
assign or otherwise transfer any Contract constituting Collateral, subject,
however, to the prior approval of each other party to such Contract, to the
extent required under the Contract.
 
                           (c)        Unless an Event of Default shall have
occurred and be continuing and the Secured Party shall have given notice to the
relevant Grantor of the Secured Party’s intent to exercise its corresponding
rights pursuant to Section 5.2(b), each Grantor shall be permitted to receive
all cash dividends, payments or other distributions made in respect of any
Investment Property and Partnership/LLC Interests, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in the Loan Agreement, and to exercise all
voting and other corporate, company or partnership rights with respect to any
Investment Property and Partnership/LLC Interests; provided, that no vote shall
be cast or other corporate, company or partnership right exercised or other
action taken which, in the Secured Party’s reasonable judgment, would impair the
Collateral or which would result in a Default or Event of Default under any
provision of the Loan Agreement, this Agreement or any other Loan Document.
 
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Section 5.3.       Private Sale.
 
(a)         Each Grantor recognizes that the Secured Party may be unable to
effect a public sale of any or all Collateral consisting of Securities which
have not been registered for resale under the Securities Act (“Restricted
Securities Collateral”), by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof.  Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall not by reason thereof be deemed not to have
been made in a commercially reasonable manner.  The Secured Party shall be under
no obligation to delay a sale of any of the Restricted Securities Collateral for
the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
 
(b)         Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Restricted Securities Collateral valid and binding and in
compliance with any and all other Applicable Laws.
 
Section 5.4.       Application of Proceeds.  At such intervals as may be agreed
upon by the Borrower and the Secured Party, or, if an Event of Default shall
have occurred and be continuing, at any time at the Secured Party’s election,
the Secured Party may apply all or any part of the Collateral or any Proceeds of
the Collateral in payment in whole or in part of the Obligations (after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Secured Party
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements) in accordance with Section 2.05 of the Loan Agreement.  Any
balance of such Proceeds remaining after payment in full of the Obligations
shall be paid over to the Grantors, or to whomever else may be lawfully entitled
to receive the same. Only after (a) the payment by the Secured Party of any
other amount required by any provision of law, including, without limitation,
Section 9-610 and Section 9-615 of the UCC, and (b) the payment in full of the
Obligations, shall the Secured Party account for the surplus, if any, to any
Grantor, or to whomever else may be lawfully entitled to receive the same.
 
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Section 5.5.       Waiver, Deficiency.  Each Grantor hereby waives, to the
extent permitted by Applicable Law, all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in force under any
Applicable Law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof.  Each Grantor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the
fees and disbursements of any attorneys employed by the Secured Party to collect
such deficiency.
 
ARTICLE VI
 
THE SECURED PARTY
 
Section 6.1.       Secured Party’s Appointment as Attorney-In-Fact.
 
(a)         Each Grantor hereby irrevocably constitutes and appoints the Secured
Party and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Secured Party the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following upon the occurrence and during the continuance of an Event of Default:
 
                          (i)           in the name of such Grantor or its own
name, or otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys due
under any Account or Contract subject to a Security Interest or with respect to
any other Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Secured
Party for the purpose of collecting any and all such moneys due under any
Account or Contract subject to a Security Interest or with respect to any other
Collateral whenever payable;
 
                           (ii)         in the case of any Intellectual
Property, execute and deliver, and have recorded, any and all agreements,
instruments, documents and papers as the Secured Party may request to evidence
the Secured Party’s security interest in such Intellectual Property and the
goodwill and General Intangibles of such Grantor relating thereto or represented
thereby;
 
                           (iii)        pay or discharge taxes and Liens levied
or placed on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof,
 
                           (iv)       execute, in connection with any sale
provided for in this Agreement, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral; and
 
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                           (v)        (A) direct any party liable for any
payment under any of the Collateral to make payment of any and all moneys due or
to become due thereunder directly to the Secured Party or as the Secured Party
shall direct; (B) ask or demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (E) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral;
(F) settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Secured Party may
deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), for such term or terms, on such conditions, and in such manner, as
the Secured Party shall in its sole discretion determine; and (H) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes, and do, at the Secured Party’s
option and such Grantor’s expense, at any time, or from time to time, all acts
and things which the Secured Party deems necessary to protect, preserve or
realize upon the Collateral and the Secured Party’s Security Interests therein
and to effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
 
(b)         If any Grantor fails to perform or comply with any of its agreements
contained herein, the Secured Party, at its option, but without any obligation
so to do, may perform or comply, or otherwise cause performance or compliance,
with such agreement in accordance with the provisions of Section 6.1(a).
 
(c)         The expenses of the Secured Party incurred in connection with
actions taken pursuant to the terms of this Agreement shall be deemed to be
Loans under the Loan Agreement and shall, together with interest thereon at the
rate(s) in effect from time to time pursuant to the Term Note, from the date of
payment by the Secured Party to the date reimbursed by the Grantors, be payable
by the Grantors (jointly and severally) to the Secured Party on demand.
 
(d)         Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof in accordance with Section 6.1(a).  All
powers, authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
Security Interests created hereby are released.
 
Section 6.2.       Duty of Secured Party.  The Secured Party’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal
with it in the same manner as the Secured Party deals with similar property for
its own account.  Neither the Secured Party nor any of its officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.  The powers conferred on the
Secured Party hereunder are solely to protect the Secured Party’s interests in
the Collateral and shall not impose any duty upon the Secured Party to exercise
any such powers.  The Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
 
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ARTICLE VII
 
MISCELLANEOUS
 
Section 7.1.      Amendments in Writing.  None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 9.04 of the Loan Agreement.
 
Section 7.2.       Notices.  All notices, requests and demands to or upon the
Secured Party or any Grantor hereunder shall be effected in the manner provided
for in Section 9.06 of the Loan Agreement.
 
Section 7.3.       No Waiver by Course of Conduct, Cumulative Remedies.  The
Secured Party shall not by any act (except by a written instrument pursuant to
Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default.  No failure to exercise, nor any delay in exercising on the part of the
Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by the Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Secured Party would otherwise have on any future
occasion.  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
 
Section 7.4.       Enforcement Expenses, Indemnification.
 
(a)         The Grantors agree (jointly and severally) to pay or reimburse the
Secured Party on demand for all of its costs and expenses incurred in connection
with enforcing or preserving any rights under this Agreement and the other Loan
Documents (including, without limitation, in connection with any workout,
restructuring, bankruptcy or other similar proceeding), including, without
limitation, the reasonable fees and disbursements of counsel to the Secured
Party.
 
(b)        The Grantors agree (jointly and severally) to pay, and to save the
Secured Party harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
similar taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions contemplated
by this Agreement.  For clarity, the foregoing does not include net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed by
federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of the Lender or its members.
 
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(c)         The Grantors agree (jointly and severally) to pay, and to save the
Secured Party harmless from any and all liabilities, obligations, losses,
damages, penalties, costs and expenses in connection with actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement to the extent any Grantor would be required to do so pursuant
to Section 9.02 of the Loan Agreement.
 
(d)         The agreements in this Section 7.4 shall survive repayment of the
Obligations and the termination of this Agreement and/or any other Loan
Documents.
 
Section 7.5.       Waiver of Jury Trial; Preservation of Remedies.
 
(a)         EACH GRANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
 
(b)        The parties hereto preserve, without diminution, certain remedies
that such Persons may employ or exercise freely, either alone, in conjunction
with or during a dispute.  Each such Person shall have and hereby reserves the
right to proceed in any court of proper jurisdiction or by self-help to exercise
or prosecute the following remedies, as applicable:  (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted in the Loan Documents or under Applicable Law or by judicial
foreclosure and sale, including a proceeding to confirm the sale, (ii) all
rights of self-help including peaceful occupation of property and collection of
rents, set-off, and peaceful possession of property, (iii) obtaining provisional
or ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a judgment by confession of
judgment.  Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
dispute.
 
Section 7.6.       Successors and Assigns.  This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of
each Grantor (and shall bind all Persons who become bound as a Grantor to this
Agreement), the Secured Party and their successors and assigns; provided, that
no Grantor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of all holders of
Obligations.
 
Section 7.7.       Set-Off.  Each Grantor hereby irrevocably authorizes the
Secured Party at any time and from time to time during the continuance of an
Event of Default, without notice to such Grantor, any such notice being
expressly waived by each Grantor, to set off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Secured Party (or any agent of the
Secured Party) to or for the credit or the account of such Grantor, or any part
thereof in such amounts as the Secured Party may elect, against and on account
of the obligations and liabilities of such Grantor to the Secured Party
hereunder and claims of every nature and description of the Secured Party
against such Grantor, in any currency, whether arising hereunder, under the Loan
Agreement, any other Loan Document or otherwise, as the Secured Party may elect,
whether or not the Secured Party has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured.  The
Secured Party shall notify such Grantor promptly of any such set-off and the
application made by the Secured Party of the proceeds thereof; provided, that
the failure to give such notice shall not affect the validity of such set-off
and application.  The rights of the Secured Party under this Section 7.7 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Secured Party may have.
 
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Section 7.8.      Counterparts.  This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
 
Section 7.9.       Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
 
Section 7.10.     Section Headings.  The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
 
Section 7.11.     Integration.  This Agreement and the other agreements,
instruments and documents referred to herein represent the agreement of the
Grantors and the Secured Party with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Secured Party relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other agreements, instruments and
documents referred to herein.
 
Section 7.12.    Governing Law.  This Agreement shall be governed by, construed,
interpreted and enforced in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of law (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law).
 
Section 7.13.     Consent to Jurisdiction.  Each Grantor hereby irrevocably
consents to the personal jurisdiction of all courts (state and/or federal)
located or sitting in New York County, New York, as well as to the jurisdiction
of all courts to which an appeal may be taken from such courts, in any action,
claim or other proceeding arising out of any dispute in connection with this
Agreement, the Loan Agreement, the Notes and the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations.  Each Grantor hereby irrevocably consents to the service of a
summons and complaint and other process in any action, claim or proceeding
brought by the Secured Party in connection with this Agreement, the Loan
Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, by registered or certified mail, return
receipt requested, in the manner specified in Section 9.06 of the Loan
Agreement.  Nothing in this Section 7.13 shall affect the right of the Secured
Party to serve legal process in any other manner permitted by Applicable Law or
affect the right of the Secured Party to bring any action or proceeding against
any Grantor or its properties in the courts of any other jurisdictions.
 
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Section 7.14.      Acknowledgements.
 
(a)         Each Grantor hereby acknowledges that:  (i) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement, (ii) the
Secured Party has no fiduciary relationship with or duty to any Grantor arising
out of or in connection with the Loan Agreement, this Agreement or any of the
other Loan Documents, and the relationship between the Grantors (on the one
hand) and the Secured Party (on the other hand) in connection herewith or
therewith is solely that of debtor and creditor, and (iii) no joint venture is
created hereby or otherwise exists by virtue of the transactions contemplated
hereby.
 
(b)         Each Issuer party to this Agreement acknowledges receipt of a copy
of this Agreement and agrees to be bound thereby and to comply with the terms
thereof insofar as such terms are applicable to it.  Each Issuer agrees to
provide such notices to the Secured Party as may be necessary to give full
effect to the provisions of this Agreement.
 
Section 7.15.     Additional Grantors.  Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 5.11 of the
Loan Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of a joinder agreement (with a
Perfection Certificate and/or other appropriate disclosure schedules respecting
such Additional Grantor) in form and substance satisfactory to the Secured
Party.
 
Section 7.16.      Releases.
 
(a)         At such time as the Obligations shall have been indefeasibly paid in
full and the Revolving Credit Commitment has been terminated, the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Secured Party and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors.  At the request and sole
expense of any Grantor following any such termination, the Secured Party shall
deliver to such Grantor any Collateral held by the Secured Party hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
 
(b)         If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Loan Agreement,
then the Secured Party, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral.
 
[Signature Page to Follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Collateral Agreement to
be executed by their duly authorized officers, all as of the day and year first
written above.
 

      GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation            
 
 
By:  
 
 
 
   
Timothy J. Koziol
Chief Executive Officer
 

 

      GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation            
 
 
By:  
 
 
 
   
Timothy J. Koziol
Chief Executive Officer
 

 

      GENERAL ENVIRONMENTAL MANAGEMENT, INC., Of RANCHO CORDOVA LLC            
 
 
By:  
 
 
 
   
Timothy J. Koziol
Manager
 

 

      GEM MOBILE TREATMENT SERVICES, INC.            
 
 
By:  
 
 
 
   
Timothy J. Koziol
Chief Executive Officer
 

 

      GEM 6 ACQUISITIONS CORPORATION            
 
 
By:  
 
 
 
   
Timothy J. Koziol
President
 

 

      GEMCVC CALIFORNIA, LLC            
 
 
By:  
 
 
 
   
Name: Gary E. Jaggard
Title: Managing Director
 

 
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EXHIBIT A
to
Collateral Agreement
 
Dated as of August 31, 2008
 
This Perfection Certificate is being rendered to ComVest Capital, LLC (the
“Secured Party”) by General Environmental Management Inc (“GEVI”) and its
subsidiaries (each a “Grantor” and collectively the “Grantors”), pursuant to
that certain Collateral Agreement dated as of August 31, 2008 by and among the
Secured Party and the Grantors (as amended, modified, supplemented and/or
restated from time to time, the “Collateral Agreement”).  Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to them in the
Collateral Agreement.
 
Each Grantor hereby certifies to the Secured Party that as of the Closing Date:
 
SECTION 1.  Identification Information.
 
(a)  The jurisdiction of incorporation, organization or formation of each
Grantor and the date of such incorporation, organization or formation is as
follows:
 
The exact legal name of each Borrower as it appears on its certificate of
formation is:
 
General Environmental Management, Inc. a Nevada Corporation  (1)
 
General Environmental Management, Inc. a Delaware Corporation (1)
 
General Environmental Management of Rancho Cordova, LLC  (2)
 
GEM Mobile Treatment Services Inc. (1)

 
The following is the type of business entity for each Borrower (check as
applicable and specify for which Borrower):
 
(1)
       
corporation (indicate any sub-chapter S election)
 
limited partnership
 
general partnership

 
(2)
     
limited liability company
 
other (please specify)
 

Schedule A lists the date of organization, jurisdiction of organization,
organizational identification number and federal tax identification number for
each Borrower.  Each Borrower is in good standing under the jurisdictions
applicable to such Borrower as set forth on Schedule A.
 
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(b)         The location of the chief executive office of each Grantor is as
follows:
                       
                              3191 Temple Ave., Suite 250, Pomona, CA 91768

(c)         The exact legal name of each Grantor as it appears in its
Certificate of Incorporation or other Organic Document is as follows:  See 1(a)
 
(d)        Except as set forth herein, (i) no Grantor has changed its identity
or organizational structure in any way within the past five years, and (ii) no
Person has merged or consolidated with or into any Grantor and no Person has
liquidated into or transferred all or substantially all of its assets to any
Grantor in any way within the past year.
 
Since the date of formation, the following Grantors have made or entered into
the following mergers, acquisitions, consolidations, reorganizations, changes in
state of incorporation or formation, or other changes in organizational form
affecting such Borrower:
 
Acquisition of the assets of Firestone Environmental Services, Inc. dba Prime
Environmental Services, Inc. and Firestone Associates, Inc. dba Firestone Energy
Co.
 
Acquisition of 100% of the membership interest of PCI of California, LLC
 
Acquisition of the assets of EnVectra , Inc.
 
General Environmental Management, Inc., a Delaware Corporation is the successor
to Hazpak Environmental Services, Inc.
 
General Environmental Management, Inc. a Delaware Corporation (GEM) affected a
merger with an Ultronics Corporation merger subsidiary where GEM was the
surviving entity.  Ultronics, the parent, then changed its name to General
Environmental Management, Inc. a Nevada Corporation.
 
Acquisition of 100% of the stock of  K2M Mobile Treatment Services Inc.

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(e)         The following is a list of all other names (including trade names or
similar appellations) used by any Grantor at any time during the past five
years:
 
Date
Borrower’s Current Name
Borrower’s Prior Name
March 16, 2005
General Environmental Management, Inc. a Nevada Corporation
Ultronics Corporation
February 14, 2003
General Environmental Management, Inc. a Delaware Corporation
Lighthouse Environmental, Inc.
August 17, 2006
GEM Mobile Treatment Services Inc.
K2M Mobile Treatment Services Inc.

(f)          The taxpayer identification number of each Grantor is as follows:
See Schedule A
 
(g)         The registered organization identification number of each Grantor is
as follows:  See Schedule B
 
SECTION 2.      Current Locations.
 
(a)         The following are the only locations at which any Grantor maintains
any books or records relating to any Accounts:
 
Grantor 
Mailing Address 
County and State
General Environmental Management, Inc. a Delaware Corporation
3191 Temple Ave.
Suite 250
Pomona, CA 91768

 
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(b)         The following are all the locations not identified above where any
Grantor maintains any Inventory or Equipment:
 
Grantor
Mailing Address
Activity & Assets
Owner, Landlord, Processor, Warehouse or Cosignee
 
General Environmental Management, Inc. a Delaware Corporation
 
11155 Jersey Blvd.
Unit G
Rancho Cucamonga, CA  91730
 
Waste management
 
 
Leased
 
 
General Environmental Management, Inc. a Delaware Corporation
 
7821 S. 198th st.
Kent, WA 98148
 
Waste management
 
 
Leased
 
 
General Environmental Management, Inc. a Delaware Corporation
 
6180 Egret Court, Suite B
Benecia, CA 94510
 
Waste management
 
Leased
 
General Environmental Management of Rancho Cordova, LLC
 
11855 White Rock Road.
Rancho Cordova, CA  95742
 
Waste management
 
Owned
 
General Environmental Management, Inc. a Delaware Corporation
 
3191 Temple Ave.
Suite 250
Pomona, CA 91768
 
Corporate office
Computers and office furniture
 
Leased
 
GEM Mobile Treatment Services Inc.
 
1196 E. Willow st.
Signal Hill, CA
 
Water Treatment Services
 
Lessee
 
GEM Mobile Treatment Services Inc.
 
5514 John Martin Road, Baytown, TX
 
Water Treatment Services
 
Lessee

 
SECTION 3.      Deposit Accounts and Securities Accounts.  The Grantors maintain
the following Deposit Accounts:
 
                                            See Schedule C
 
               SECTION 4.      Securities and Investment Property.  The Grantors
hold the following securities (including, without limitation, shares or equity
interests in subsidiaries) and Investment Property:
 
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Grantor
Name of Subsidiary
Address
No. of Shares and Interest
Type of Operation
 
General Environmental Management, Inc. a Delaware Corporation
 
General Environmental Management of Rancho Cordova, LLC
 
3191 Temple Ave.
Suite 250
Pomona, CA 91768
 
100%
 
Consolidation and transfer of hazardous waste
 
General Environmental Management, Inc. a Nevada Corporation
 
General Environmental Management, Inc. a Delaware Corporation
 
3191 Temple Ave.
Suite 250
Pomona, CA
 
100%
 
Corporate Holding company
 
General Environmental Management, Inc. a Delaware Corporation
 
GEM Mobile Treatment Services, Inc.
 
3191 Temple Ave.
Suite 250
Pomona, CA
 
100%
 
Water Treatment Services

SECTION 5.      Patents.The Grantors are the registered owners of the following
Patents:
 
Grantor
Application or Patent No.
Country
Issue or Filing Date
Expiration Date
Title
GEM
US 6846422 B2
US
Jan. 25, 2005
2015
Sludge Stripping Process System

 
SECTION 6.      Trademarks.  The Grantors are the registered owners of the
following Trademarks:
 
Grantor
Description
Registration/Application No.
Date
GEM
Logo in process
N/A
11/2007

 
SECTION 7.      Copyrights.  The Grantors are the registered owners of the
following Copyrights:
 
Grantor
Description
Registration/Application No.
Date
N/A
     

 
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SECTION 8.      Commercial Tort Claims.  On the date hereof, the Grantors hold
the following Commercial Tort Claims:  None
 
SECTION 9.      Unusual Transactions.  Other than as set forth below, all
Accounts have been originated by the Grantors and all Inventory and Equipment
have been acquired by the Grantors in the ordinary course of business from
Persons in the business of selling goods of such kind.  None
 
SECTION 10.    Reliance.  The undersigned acknowledge that the Secured Party is
entitled to rely and has, in fact, relied on the information contained herein,
and any successor or assign of the Secured Party is entitled to rely on the
information contained herein.
 
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IN WITNESS WHEREOF, each Grantor has executed this Perfection Certificate as of
the date first above written.
 

     
GENERAL ENVIRONMENTAL MANAGEMENT, INC.
a Nevada corporation
           
 
 
By:  
 
 
 
   
Name:Brett M. Clark
 
 
   
Title:  Executive Vice President Finance – Chief Financial Officer
 

 
 
 
By:  
 
 
 
   
Name:  Timothy J. Koziol
 
 
   
Title: Chairman of the Board and Chief Executive Officer
 

 

     
General Environmental Management, Inc.
a Delaware Corporation
           
 
 
By:  
 
 
 
   
Name: Brett M. Clark
 
 
   
Title:  Executive Vice President Finance – Chief Financial Officer
 

 
 
 
By:  
 
 
 
   
Name:  Timothy J. Koziol
 
 
   
Title: Chairman of the Board and Chief Executive Officer
 

 

     
General Environmental Management of Rancho Cordova, LLC
           
 
 
By:  
 
 
 
   
Name: Brett M. Clark
 
 
   
Title:  Manager
 

 
 
 
By:  
 
 
 
   
Name:  Timothy J. Koziol
 
 
   
Title:  Executive Vice President Finance – Chief Financial Officer
 

 

     
GEM Mobile Treatment Services Inc.
           
 
 
By:  
 
 
 
   
Name: Brett M. Clark
 
 
   
Title:  Executive Vice President Finance – Chief Financial Officer
 

 
 
 
By:  
 
 
 
   
Name:  Timothy J. Koziol
 
 
   
Title:  Executive Vice President Finance – Chief Financial Officer
 

 
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Schedule A
 
Borrower Name
Date of Organization
Jurisdiction of Organization
Organizational Identification Number
Federal Tax Identification Number
 
General Environmental Management, Inc. a Nevada Corporation
 
3/14/1990
 
Nevada
 
 
87-0485313
 
General Environmental Management, Inc. a Delaware Corporation
 
2/7/2003
 
Delaware
 
 
68-0541179
 
General Environmental Management of Rancho Cordova, LLC
 
2/17/2000
 
California
 
 
42-1693717
 
GEM Mobile Treatment Services Inc.
 
March 15, 1994
 
California
 
 
95-4581335

 
 
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Schedule B
 
Location of Executive Offices
 
General Environmental Management, Inc., a Nevada corporation
Type:  Corporation
State Organizational number:  C2199-1990
State of Incorporation:  Nevada
Federal Identification Number:  87-0485313
Chief Executive Office:
3191 Temple Ave, Suite 250
Pomona, CA 91768

Locations of Collateral
 
General Environmental Management, Inc., a Nevada corporation
Type:  Corporation
State Organizational number:  C2199-1990
State of Incorporation:  Nevada
Federal Identification Number:  87-0485313
Chief Executive Office:
3191 Temple Ave, Suite 250
Pomona, CA 91768

General Environmental Management, Inc., a Delaware corporation
Type:  Corporation
State Organizational number:  3623485
State of Incorporation:  Delaware
Federal Identification Number:  68-0541179
Chief Executive Office:
3191 Temple Ave, Suite 250
Pomona, CA 91768
Other locations:
Rancho Cucamonga (SoCal):
11155 Jersey Blvd. Unit G
Rancho Cucamonga, CA  91730
Benicia (NorCal) Office:
6180 Egret Court, Suite B
Benecia, CA 94510
Kent (NorWest) Office:
7821 S. 198TH Street
Kent, WA 98032
Santee (San Diego):
10020 Prospect Ave.
Suite A-1
Santee, CA 92072
 
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General Environmental Management of Rancho Cordova LLC, a California limited
liability company
Type:  Limited Liability Company
State Organizational number:  200004810063
State of Incorporation:  California
Federal Identification Number:  42-1693717
Chief Executive Office:
3191 Temple Ave, Suite 250
Pomona, CA 91768
Other locations:
GEM Rancho Cordova LLC:
11855 White Rock Road.
Rancho Cordova, CA  95742
 
GEM Mobile Treatment Services, Inc., a California corporation
Type:  Corporation
State Organizational number:  C1871081
State of Incorporation:  California
Federal Identification Number:  95-4581335
Chief Executive Office:
3191 Temple Ave, Suite 250
Pomona, CA 91768
Other locations:
Long Beach (SoCal) Facility:
1196 East Willow
Signal Hill, CA 90755
Texas (Central) Facility :
5428 John Martin Road
Baytown, TX 77521
 
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Schedule C
(Bank Accounts, Lockboxes and P.O. Boxes)
 
Borrower
 
Name, Address, Phone and Fax No. of Bank and Bank Contact
 
Type of Account
 
General Environmental Management, Inc. (DE)
 
 
Wells Fargo – Yen Yi
433 N. Camden Drive Suite 505
Beverly Hills, CA 90210
310-285-5889 p         310-278-6344 f
 
 
General Operating Account
Payroll Account
Restricted Deposit Account
Medical Ins. Operating Act.
Investment Operating Act.
Lockbox
 
General Environmental Management of Rancho Cordova LLC
 
 
Same
 
 
General Operating Account
Payroll Account
 
General Environmental Management  - GEM
 
 
Same
 
 
General Operating Account
Payroll Account
Lockbox

 
 
 
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