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EXHIBIT 10.29
 

STOCK PURCHASE
AGREEMENT

ISLAND ENVIRONMENTAL SERVICES, INC.

 
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LIST OF EXHIBITS AND SCHEDULES
 
EXHIBITS

Exhibit A:
Promissory Note in favor of SELLERS in the Amount of $1,062,500

Exhibit A-1
Promissory Note in favor of NCT in the Amount of $187,500

Exhibit B:
Corporate Guarantee of GEM Nevada for $1,062,500 Note

Exhibit B-1
Corporate Guarantee of GEM Nevada for $187,500 Note

Exhibit C:
Form of Contingent Promissory Notes

Exhibit D:
Form of Corporate Guarantee of GEM Nevada for Contingent Notes

Exhibit E:
Employment Agreement

Exhibit F:
Agreement Not to Compete

Exhibit G:
Premises Lease

 
SCHEDULES*
 
Schedule 3:
EBITDA Calculation Methodology

 
Schedule 3-A
Examples of Calculation of Accelerated Note Payments and Contingent Earn-Out

 
Schedule 16(g):
List of Policies of Liability and Other Forms of Insurance Held by ISLAND

 
Schedule 16(h):
Material Contracts

 
Schedule 16(i)
List of Pending Actions

 
Schedule 15(l)
Leased Assets

 
Schedule 16(q)
Certain Financial Information

 
Schedule 16(r):
Financial Statements

 
Schedule 16(y):
List of Permits, Licenses, Franchises, and Other Authorizations Held by Island
Environmental Services, Inc.

_____________________
* Note the schedules correspond to Section numbers in the Stock Purchase
Agreement.
 
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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into
effective as of August 31, 2008, by and among ISLAND ENVIRONMENTAL SERVICES,
INC., a California corporation (“ISLAND”), RANDY COSTALES (“RANDY”), GLORIA D.
COSTALES (“DODIE”), each in their individual capacities, (RANDY and DODIE are
sometimes collectively referred to herein as “SELLERS”), NCF CORPORATION, a
Florida not-for-profit corporation, not individually but solely in its capacity
as Trustee of NCF CHARITABLE TRUST, a Florida wholly charitable trust and tax
exempt organization classified as a public charity (“NCT”) and GENERAL
ENVIRONMENTAL MANAGEMENT, INC. a Delaware corporation (“GEM” or “BUYER”).

Introduction

RANDY, DODIE and NCT collectively own Ten Thousand (10,000) shares (the
“Shares”) of the common stock of ISLAND, which Shares represent all of ISLAND’s
issued and outstanding stock.  GEM desires to acquire all of the Shares on the
terms and conditions set forth herein.   ISLAND owns and operates a waste
removal business at leased premises located at 2490 W. Pomona Blvd., Pomona,
CA  91768 (the “Premises”).

Terms

NOW, THEREFORE, in consideration of the covenants and conditions contained
herein, the parties hereto agree as follows:
 
1.
Purchase of the Shares

 
At the Closing, as defined in Section 9 herein, SELLERS and NCT shall deliver to
BUYER their respective stock certificates issued by ISLAND collectively
representing all of the Shares. SELLERS and NCT shall have duly executed either
the Stock Power of Assignment on the back of said certificates or an Assignment
Separate from Certificate in a form acceptable to BUYER for the purposes of
causing the Shares to be transferred to BUYER.
 
2.
Purchase Price and Purchase Price Adjustment. 

 
In consideration for the sale and delivery of the Shares, BUYER hereby agrees to
pay a total purchase price of $3,500,000.00 (the "Purchase Price") to SELLERS
and NCT, payable as follows:

 
(a)
BUYER shall pay SELLERS the sum of $1,912,500.00 at Closing by check or wire
transfer of readily available funds.

 
(b)
BUYER shall pay NCT the sum of $337,500.00 at Closing by check or wire transfer
of readily available funds.

 
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(c)
The balance of the Purchase Price shall be paid pursuant to the terms of two (2)
Promissory Notes of BUYER (each, a “Note” and collectively, the “Notes”) the
first of which shall be payable to SELLERS in the amount of $1,062,500.00 and
the second of which shall be payable to NCT in the amount of $187,500.00.  The
Notes shall bear interest at eight percent (8%) with interest only payments
payable quarterly and the entire balance of interest and principal shall be all
due and payable thirty six (36) months after the Closing.  The Notes shall have
a Due on Sale clause relative to any sale of all or substantially all of the
assets or stock of BUYER or BUYER’s parent, GENERAL ENVIRONMENTAL MANAGEMENT,
INC., a Nevada corporation (“GEM NEVADA”), or BUYER’s sale of ISLAND stock to an
entity in which BUYER or its affiliates do not have a controlling interest.  The
Notes shall provide that there shall be a partial principal payment at the end
of the Contingent Period (as defined in Section 3 below) of up to (i) $637,500
with respect to the Note in favor of the SELLERS and (ii) $112,500 with respect
to the Note in favor of NCT.  The Notes shall be guaranteed by GEM NEVADA.  The
Note in favor of SELLERS shall be in the form of Exhibit A attached hereto and
GEM NEVADA’s Guarantee of such Note shall be in the form of Exhibit B attached
hereto.  The Note in favor of NCT shall be in the form of Exhibit A-1 attached
hereto and GEM NEVADA’s Guarantee of such Note shall be in the form of Exhibit
B-1 attached hereto.

3.
Accelerated Note Payment and Contingent Earn-Out

 
As additional consideration for the sale and delivery of the Shares (i) SELLERS
shall be entitled to an accelerated payment of up to $637,500 of the balance
owing under the $1,062,500 Note, (ii) NCT shall be entitled to an accelerated
payment of up to $112,500 of the balance owing under the $187,500 Note (each of
the accelerated payments described in the forgoing clauses (i) and (ii), an
“Accelerated Note Payment” and together, the “Accelerated Note Payments”) and
(iii) SELLERS and NCT shall be entitled to a contingent earn-out payment (the
“Contingent Earn-Out”) of up to an aggregate amount of $3,750,000 as set forth
in this Section 3.  The Accelerated Note Payments and the Contingent Earn-Out
shall be payable to SELLERS and NCT upon the recapture by ISLAND of EBITDA (as
defined below) in excess of $1,100,000 during the twelve (12) month period
following the Closing (the “Contingent Period”).  The amount of the Contingent
Earn-Out payable to SELLERS and NCT (if any) shall be calculated by multiplying
the EBITDA Recapture Percentage (as defined below) by $3,750,000 (it being
understood that in no event shall the EBITDA Recapture Percentage exceed 100%)
and the amount of the Accelerated Note Payments payable to SELLERS and NCT (if
any) shall be calculated as follows:
 
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(a)
If the amount of the Contingent Earn-Out is zero then (i) the amount of the
Accelerated Note Payment payable to SELLERS shall be $637,500 and (ii) the
amount of the Accelerated Note Payment payable to NCT shall be $112,500.

 
(b)
If the amount of the Contingent Earn-Out is between zero and $3,750,000 then (i)
the amount of the Accelerated Note Payment payable to SELLERS shall be equal to
eight-five percent (85%) of the aggregate Accelerated Amount (as defined below)
and (ii) the amount of the Accelerated Note Payment payable to NCT shall be
equal to fifteen percent (15%) of the aggregate Accelerated Amount.

 
(c)
If the Contingent Earn-Out is $3,750,000 then the amount of the Accelerated Note
Payments shall be zero.

For purposes of this Agreement, (A) the term “EBITDA” shall mean the dollar
figure calculated pursuant to the accounting methods, principals and assumptions
described in Schedule 3 to this Agreement (B) the term “EBITDA Recapture
Percentage” shall mean the quotient (expressed as a percent) calculated by
dividing (1) the result obtained by subtracting $1,100,000 from ISLAND’s EBITDA
for the Contingent Period by (2) $1,400,000 and (C) the term “Accelerated
Amount” shall mean the dollar amount calculated by (1) subtracting the EBITDA
Recapture Percentage from one hundred percent (100%) and (2) multiplying such
resulting percentage by $750,000.  Several examples of the calculation of the
Accelerated Note Payments and the Contingent Earn-Out are set forth in Schedule
3-A attached to this Agreement.

It is understood and agreed that the recapture by ISLAND of EBITDA for purposes
of the Contingent Earn-Out will be calculated by utilizing existing ISLAND
customer accounts and lines of business.  To further ensure an accurate and fair
determination of the Contingent Earn-Out (if any) payable to SELLERS, BUYER
covenants that during the Contingent Period it will operate ISLAND and its
business substantially as conducted by SELLERS prior to the Closing and will not
transfer any ISLAND customer accounts, assets, lines of business or other
material aspects of such business to any of its affiliates or use any of its
affiliates to perform services for any existing ISLAND customer which services
could otherwise have been performed by ISLAND under one or more of the lines of
business engaged in by ISLAND immediately prior to the Closing; provided,
however that the foregoing shall not prevent BUYER from permitting any of its
affiliates from using any ISLAND assets to provide services such affiliates’
customers where such assets are not otherwise being used by ISLAND.
 
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No later than ninety (90) days following the end of the Contingent Period, BUYER
shall deliver to SELLERS and NCT, in writing, BUYER’s calculation (based on the
procedures described in Schedule 3 hereto) of the amount (if any) of the
Accelerated Note Payments and the Contingent Earn-Out payable to SELLERS and
NCT.  SELLERS (individually and on behalf of NCT) shall have the right to review
BUYER’s calculation, and the books and records of BUYER and its affiliates
related thereto, for a period of ninety (90) days following the receipt of such
calculation to verify and confirm the accuracy thereof.  If after such review
SELLERS agree with BUYER’s calculation, SELLERS shall promptly notify BUYER and
NCT of such agreement and the Accelerated Note Payments and the Contingent
Earn-Out shall be paid as set forth below in accordance with such
calculation.  If after such review SELLERS disagree with BUYER’s calculation,
SELLERS shall promptly provide BUYER and NCT with a statement indicating the
basis for such disagreement and SELLERS and BUYER shall meet and confer in an
effort to resolve such disagreement in good faith.

In the event BUYER and SELLERS are unable to resolve a disagreement with respect
to the Accelerated Note Payments and the Contingent Earn-Out within thirty (30)
days following the date of SELLERS’ objection, the amount of the Accelerated
Note Payments and the Contingent Earn-Out shall be determined an independent
firm of certified public accountants as is mutually agreeable to SELLERS and
BUYER (the “Contingent Earn-Out Referee”).  If issues in dispute are submitted
to the Contingent Earn-Out Referee for resolution, (i) each party shall furnish
to the Contingent Earn-Out Referee such work papers and other documents and
information relating to the disputed issues as the Contingent Earn-Out Referee
may request and are available to that party, and shall be afforded the
opportunity to present to the Contingent Earn-Out Referee any material relating
to the determination and to discuss the determination with the Contingent
Earn-Out Referee; (ii) the determination by the Contingent Earn-Out Referee of
amount of the Accelerated Note Payments and the Contingent Earn-Out, as set
forth in a notice delivered to both parties by the Contingent Earn-Out Referee,
will be binding and conclusive on the parties; and (iii) the fees and expenses
of the Contingent Earn-Out Referee for such determination shall be paid by the
parties based upon the degree to which the Contingent Earn-Out Referee accepts
the respective positions of the parties.  For example, if SELLERS contend that
the adjustment owed is $300, BUYER contends that the adjustment owed is $100 and
the Contingent Earn-Out Referee determines that the adjustment owed is $150,
then SELLERS shall pay 75% (300-150 / 300-100) of the Contingent Earn-Out
Referee’s fees and expenses and BUYER shall pay 25% (150-100 / 300-100) of the
Contingent Earn-Out Referee’s fees and expenses.  Other than the expense of
retaining the Contingent Earn-Out Referee, each party shall bear its own
expenses in, as applicable, preparing and reviewing the calculation of the
amount of the Accelerated Note Payment and the Contingent Earn-Out.
 
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The parties acknowledge and agree that, other than its right to receive any
Accelerated Note Payment or any portion of the Contingent Earn-Out as determined
in accordance with this Section 3, NCT shall have no rights or responsibilities
with respect to, and shall have no role in connection with, the determination of
the amount of any such Accelerated Note Payment or Contingent Earn-Out and that
SELLERS shall for all purposes represent NCT’s interests in such
determination.  Any agreement or consent by SELLERS as to the final amount of
any Accelerated Note Payment or Contingent Earn-Out shall be final and binding
upon NCT and NCT shall have no responsibility for (and SELLERS shall indemnify
NCT from and against) any fees and expenses of the Contingent Earn-Out Referee
for which SELLERS may be deemed responsible pursuant to the preceding paragraph.

Upon the final determination of the amount of the Accelerated Note Payments and
the Contingent Earn-Out, BUYER shall make the following payments to SELLERS and
NCT:

 
(x)
BUYER shall pay the Accelerated Note Payments to SELLERS and NCT by certified
funds check or wire transfer of immediately available funds and, following
SELLERS’ and NCT’s receipt of such payments, the outstanding principal amount of
the Notes described in Sections 2(b) and 2(c) above shall be reduced by the
amount of the applicable payment;

 
(y)
BUYER shall pay the Contingent Earn-Out to SELLERS and NCT as follows:

 
(i)
A cash payment (to be paid by certified funds check or wire transfer of
immediately available funds) in an aggregate amount equal to the result obtained
by subtracting (A) the aggregate amount of the Accelerated Note Payments payable
to SELLERS and NCT under clause (x) above from (B) $750,000.  The amount of any
cash payment payable pursuant to this Section 3(y)(i) shall be paid eighty-five
percent (85%) to SELLERS and fifteen percent (15%) to NCT.

 
(ii)
The remainder pursuant to the terms of a promissory note issued by BUYER to each
of SELLERS and NCT (the each, a “Contingent Note” and, together, the
“Contingent Notes”) in substantially the form attached hereto as Exhibit C.  The
aggregate amount payable to SELLERS and NCT pursuant to the Contingent Notes
shall be paid eighty-five percent (85%) to SELLERS and fifteen percent (15%) to
NCT.  The Contingent Notes (if any) shall include the following terms:

 
(A)
Each Contingent Note shall bear interest at eight percent (8%) per year with
interest only payments payable quarterly;

 
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(B)
The entire balance of principal and interest under each Contingent Note shall
all be due and payable thirty six (36) months after the end of the Contingent
Period.

 
(C)
The Contingent Notes shall each have a Due on Sale clause relative to any sale
of all or substantially all of the assets or stock of GEM NEVADA or BUYER or the
sale of ISLAND stock to an entity in which BUYER or its affiliates do not
possess a controlling interest.

 
(D)
The Contingent Notes shall each be guaranteed by GEM NEVADA and each such
Guarantee shall be in the form of Exhibit D attached hereto.

 
4.
Cash/Vehicles to SELLERS

 
Notwithstanding any other provision of this Agreement, at or prior to the
Closing, SELLERS shall have the right to cause ISLAND to make a distribution to
SELLERS of all cash in ISLAND’s existing cash and broker accounts; provided that
SELLERS shall cause there to be a general ledger book balance of at least one
hundred thousand dollars ($100,000.00) in ISLAND’S general ledger cash accounts
as of the Closing to cover ISLAND’s normal required operating capital needs
following the Closing.  In addition, at or prior to the Closing, SELLERS shall
have the right to cause ISLAND to transfer title and distribute to SELLERS the
Lexus vehicle and the vehicle commonly known as the “old Suburban” used by
SELLERS in the operation of ISLAND’s business.

5.
Liabilities

 
SELLERS represent and warrant that ISLAND has no liabilities, obligations or
commitments related to its business, assets or properties except (a) liabilities
described in this Agreement or the schedules and exhibits hereto, (b)
liabilities reflected on the balance sheet contained in the Financial Statements
(as defined in Section 16(r) below), (c) liabilities incurred in the ordinary
course of business since the date of the balance sheet described in clause (b)
of this Section 5 and (d) liabilities incurred in connection with the
transactions contemplated by this Agreement.  BUYER acknowledges and agrees that
ISLAND shall continue to be responsible for and BUYER shall cause ISLAND to pay
when due all liabilities described in the foregoing clauses (a)-(d).
 
6.
Leased Premises

 
SELLERS and BUYER agree that in connection with the Closing ISLAND shall enter
into a new lease agreement (the “Lease”) with SELLERS or their affiliate with
respect to the Premises.  The Lease shall be in substantially the form attached
as Exhibit G hereto.  ISLAND’s performance under the Lease shall be guaranteed
by BUYER and GEM NEVADA pursuant to the form of Lease Guarantee attached to the
Lease.
 
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7.
Closing of Corporate Books for Accounting and Tax Purposes

 
SELLERS and BUYER agree that ISLAND’s books shall be closed as of the date of
Closing and, pursuant to Section 1.1368-1(g)(2)(i) of the Internal Revenue Code
Regulations, SELLERS and ISLAND shall elect to treat the tax year as if it
consisted of two separate years, the first of which will end on the date of
Closing and the second of which shall commence on the day after the Closing date
and will end on December 31, 2008. SELLERS, jointly and severally (but not NCT),
shall be responsible for all state and federal tax liability incurred prior to
the Closing including taxes incurred as a result of the first short year and
BUYER shall be responsible for the tax incurred as a result of the second short
year. The first short year tax data shall be made according to generally
accepted accounting principles and in the manner previously utilized in
preparing ISLAND’s Federal and California State Income Tax Returns by SELLERS’
Certified Public Accountant, Silva & Silva (“CPA SILVA”).  SELLERS (and not NCT)
shall pay the fees for CPA SILVA in connection with the preparation of tax data
for the first short year (i.e. the portion of the 2008 calendar prior to the
Closing date).  The second short year tax data and the 2008 tax return of ISLAND
(which shall include the first short year tax data exactly as presented by CPA
SILVA) shall be the responsibility of BUYER; provided that SELLERS shall have
the right to review and approve ISLAND’s 2008 tax return prior to filing.

From and after the Closing, BUYER shall not, and shall not permit ISLAND to,
take any action which could increase the SELLERS’ liability for
taxes.  Additionally, neither BUYER nor any of its affiliates shall, or shall
permit ISLAND to, amend, re-file or otherwise modify any tax return relating in
whole or in part to ISLAND with respect to any taxable year or period beginning
before the Closing date without the prior written consent of SELLERS which
consent may not be unreasonably withheld by SELLERS .
 
8.
Intentionally Omitted

 
 
9.
Closing

 
The Closing of the Purchase and Sale of the Shares (the “Closing”) shall take
place at the offices of Bohm, Matsen, Kegel & Aguilera, LLP, 695 Town Center
Drive, Suite 700, Costa Mesa, California (or at such other place as the parties
may mutually agree) at 10:00 a.m. local time and shall be effective August 31,
2008.  The effective date of the Closing may be postponed to a later time and
date by mutual agreement of the parties.  If the effective date of the Closing
is postponed, all references to the Closing date in this Agreement shall refer
to the postponed date.

 
(a)
Documents to be Delivered by SELLERS and NCT to BUYER at Closing.

 
(1)
At the Closing, SELLERS will deliver to BUYER the following documents:

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(A)
Stock Certificates for the Shares held by SELLERS free and clear of all liens
claims charges, restrictions, equities or encumbrances of any kind which
Certificates shall be accompanied by duly executed stock powers or assignments
separate from certificate in form reasonably satisfactory to BUYER;

 
(B)
The corporate records and documentation described in Section 11 of this
Agreement;

 
(C)
The written resignations of RANDY and DODIE from their positions as officers and
directors of ISLAND;

 
(D)
The Agreement Not to Compete (in the form attached hereto as Exhibit F) executed
by RANDY and DODIE; and

 
(E)
Such other certificates and documents executed by SELLERS as BUYER or their
counsel may reasonably request.

 
(2)
At the Closing, NCT will deliver to BUYER the following documents:

 
(A)
Stock Certificates for the Shares held by NCT free and clear of all liens claims
charges, restrictions, equities or encumbrances of any kind arising by, under or
through NCT, which Certificates shall be accompanied by duly executed stock
powers or assignments separate from certificate in form reasonably satisfactory
to BUYER; and

 
(B)
Such other certificates and documents executed by NCT as BUYER or their counsel
may reasonably request.

 
 
(b)
Documents and Payments to be Delivered by BUYER to SELLERS and NCT.

 
 
(1)
At the Closing BUYER will deliver to SELLERS the following documents and
payments:

 
(A)
The $1,912,500.00 cash payment described in Section 2(a) of this Agreement,
which amount shall be paid by certified funds check or wire transfer of
immediately available funds;

 
(B)
The original of the Note for $1,062,500.00 (in the form attached as Exhibit A)
properly executed by BUYER;

 
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(C)
The properly executed Corporate Guarantee of GEM NEVADA (in the form attached as
Exhibit B) with respect to the $1,062,500 Note;

 
(D)
A cash payment in an amount equal to the balance of all accounts payable of
BUYER to ISLAND as of the Closing Date (less the amount of any accounts
receivable owing by ISLAND to BUYER as of such date), which amount shall be paid
by certified funds check or wire transfer of immediately available funds;

 
(E)
The Employment Agreement between ISLAND and RANDY (in the form attached as
Exhibit E) properly executed by ISLAND;

 
(F)
The Lease for the Premises (in the form attached has Exhibit G) properly
executed by ISLAND;

 
(G)
The Guarantee of BUYER and GEM NEVADA with respect to the Lease (in the form
attached to the Lease) properly executed by BUYER and GEM NEVADA; and

 
(H)
Such other certificates and documents as SELLERS and or their counsel may
reasonably request.

 
 
(2)
At the Closing BUYER will deliver to NCT the following documents and payments:

 
(A)
The $337,500.00 cash payment described in Section 2(b) of this Agreement, which
amount shall be paid by certified funds check or wire transfer of immediately
available funds;

 
(B)
The original of the Note for $187,500.00 (in the form attached as Exhibit A-1)
properly executed by BUYER;

 
(C)
The original of the properly executed Corporate Guarantee of GEM NEVADA (in the
form attached as Exhibit B-1) with respect to the $187,500 Note; and

 
(D)
Such other certificates and documents as NCT and or its counsel may reasonably
request.

 
10.
Due Diligence

 
BUYER shall have until 5:00 p.m., Pacific Daylight Time, on August 31, 2008 (the
"Due Diligence Period"), to approve or disapprove, in its sole and absolute
discretion, all material facts relating to ISLAND which BUYER may discover in
the course its review and investigation of ISLAND, its assets, business and
operations.
 
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The Due Diligence Period shall commence upon the execution of this
Agreement.  BUYER’S failure to disapprove in writing of any information
discovered by BUYER in the course of its due diligence investigation prior to
the expiration of the Due Diligence Period shall be deemed its approval thereof
for purpose of this Agreement.  If BUYER disapproves of any of said information
before the expiration of the Due Diligence Period, then this Agreement shall
terminate.
 
11.
Records

 
At the Closing, SELLERS shall turn over all corporate files and records and the
business files and records of ISLAND, including the original Minute Book, Stock
Certificate Book and other relevant corporate documentation, and all Federal and
State Income Tax Returns of ISLAND.  SELLERS shall have the right to retain
copies of such records, files and documents and, from and after the Closing,
SELLERS shall retain the right to have access and inspection rights with respect
to such records and documents for any reasonable purpose including the defending
of any claim with respect to SELLERS' indemnity and any issue dealing with
Federal or California Income Tax.  Such right of access and inspection shall be
upon reasonable notice to ISLAND during reasonable business hours.
 
12.
Resignation of Officers

 
At the Closing, SELLERS shall provide ISLAND with the written resignations of
RANDY and DODIE as officers and Directors of ISLAND.
 
13.
Employment Agreement

 
Effective immediately after the Closing, BUYER will cause ISLAND to enter in to
an Employment Agreement with RANDY in substantially the form of Exhibit E
attached hereto.
 
14.
Employees and Employee Benefit Plans

 
At the Closing, ISLAND shall retain its current employees in substantially the
same manner as they are currently employed.  Except in the case of the Island
Environmental Services, Inc. Profit Sharing Plan dated January 1, 1999, as
amended (the “Profit Sharing Plan”), following the Closing, BUYER shall cause
ISLAND’s current 401k plan, medical plan, insurance and other employee benefit
plans (collectively, the “ISLAND Plans”) to be integrated into BUYER’S current
substantially similar plans.  As of or as soon as practicable following the
Closing, BUYER shall cause RANDY and DODIE to be removed as administrators of
all ISLAND Plans and BUYER agrees indemnify and hold RANDY and DODIE harmless
from any and all Losses (as defined in Section 19(a) below) they may incur as a
result of the administration or integration of such plans into BUYER’s plans
following the Closing.  With respect to the Profit Sharing Plan, the parties
acknowledge and agree that such plan shall be terminated effective as of or as
soon as practicable following the Closing and that BUYER shall use its
commercially reasonable efforts to permit any ISLAND employee who so desires to
roll such employee’s cash balance in such plan into a similar tax-deferred plan
administered by BUYER (if any).
 
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15.
Operation of the Business Pending Closing

 
Pending the Closing, SELLERS shall continue to operate the Business in its
normal and ordinary course and in substantially the same manner as SELLERS are
presently conducting it.
 
16.
Representations and Warranties of SELLERS, ISLAND and NCT

 
 
SELLERS and ISLAND represent, warrant and agree as set forth in the following
Sections 16(a)-(ab).  NCT represents, warrants and agrees as set forth in the
following Sections 16(ac)–(af).

 
(a)
ISLAND is a corporation duly organized, validly existing and in good standing
under the laws of the State of California, and all of the shares of the
outstanding stock of ISLAND have been duly authorized and validly
issued.  ISLAND has the corporate power and authority to carry on its business
and to own or lease its property as and in the places where such business is now
conducted and such properties are now owned, leased or operated and ISLAND is
duly qualified to do business and is in good standing in California.

 
(b)
The authorized capital stock of ISLAND consists of one hundred thousand
(100,000) shares of common stock, without par value, ten thousand (10,000)
shares of which have been validly issued and are outstanding as specified
previously herein.

 
(c)
ISLAND does not have any commitments for issuance or sale of shares under
options, warrants or other rights.  Other than as described in Section 5 of this
Agreement, at the Closing hereof, ISLAND had no undisclosed liabilities,
absolute or contingent.  With respect to the contracts and agreements described
in Section 16(h) below, ISLAND is not and will not be subject to any claims
resulting from price redetermination or from renegotiation with respect to
amounts paid prior to the date of this Agreement for work completed under any
such agreement prior to such date.

 
(d)
RANDY is the lawful owner of three thousand seven hundred (3,700) of the Shares,
DODIE is the lawful owner of four thousand eight hundred (4,800) of the Shares
and NCT is the lawful owner of one thousand five hundred (1,500) of the
Shares.  Each of RANDY and DODIE (i) has full power and authority to transfer
all right, title and interest in and to the Shares held by them without the
consent of any other person and (ii) will transfer to BUYER valid title to such
Shares, free and clear of all liens, equities, encumbrances and claims of every
kind.

 
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(e)
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in a violation or breach of any
agreement to which either SELLER is a party or by which the Shares held by
either SELLER are bound or give rise to any right in any third party to
terminate or modify any contract by which any of the Shares are bound.

 
(f)
Neither of the SELLERS is engaged in or a party to, or has reasonable basis to
anticipate, any legal action or other proceeding before any court or
administrative agency in connection with his or her Shares or the transactions
contemplated by this Agreement.

 
(g)
Attached hereto as Schedule 16(g) is a list of the policies of liability and
other forms of insurance held by ISLAND relative to its business
operations.  Such policies will be outstanding and duly in force at the
Closing.  Complete copies of each such policy have been or will prior to the
Closing be made available to BUYER.  SELLERS have no reason to believe that any
such policy will be cancelled or subject to a material modification prior to the
scheduled expiration thereof.

 
(h)
Schedule 16(h) attached hereto lists all of the contracts and agreements to
which ISLAND is a party and which fall into the following categories:

 
(i)
Contracts or agreements involving the performance of services by ISLAND of an
amount or value in excess of $100,000 annually;

 
(ii)
Contracts or agreements involving the payment by ISLAND to any other party of
more than $25,000 annually, unless terminable by ISLAND on not more than ninety
(90) days prior written notice;

 
(iii)
Real property or equipment lease contracts or agreements;

 
(iv)
Contracts or agreements with employees of ISLAND (including employment
agreements, agreements relating to bonus or profit sharing obligations and
agreements that provide for the payment of bonus or severance upon termination);

 
(v)
Contracts or agreements under which ISLAND is obligated to make any capital
expenditure; and

 
(vi)
Contracts or agreements relating to any indebtedness of the business.

 
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(i)
Except as listed in Schedule 16(i) attached hereto, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of SELLERS,
threatened against or affecting ISLAND, at law, or in equity or admiralty, or
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign.  ISLAND is not in default with respect to any order, writ, injunction
or decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.

 
(j)
To the knowledge of SELLERS, ISLAND has complied in all material respects with
all laws, regulations and judicial or administrative tribunal orders applicable
to its business, except where any lack of such compliance has not had and is not
reasonably likely to result in a material adverse change with respect to ISLAND.

 
(k)
All federal, state or local tax obligations of any nature whatsoever required to
be paid by ISLAND on or before the date of this Agreement have been duly paid or
are being contested in good faith by ISLAND and/or the SELLERS.  Any contested
obligations have been disclosed to BUYER.  Moreover, all federal, state and
local tax returns required to be filed by ISLAND as of the date of this
Agreement have been duly filed.

 
(l)
Except for the leased assets described in Schedule 16(l), ISLAND has good and
marketable title to all of the properties and tangible and intangible assets
used by it in the conduct of its business, in each case free and clear of all
liens, encumbrances, security interests and claims.

 
(m)
ISLAND is not liable as guarantor, surety or endorser with respect to the
obligation of any other person or persons.

 
(n)
ISLAND has no equity investments in any other business entities or subsidiaries.

 
(o)
Intentionally Omitted.

 
(p)
The execution and performance of this Agreement will not conflict with, or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets or outstanding stock of ISLAND
pursuant to any corporate charter, by-law, indenture, mortgage or lease, or any
other material agreement or instrument to which ISLAND or any of its
shareholders is a party or by which it is bound.  The execution and carrying out
of this Agreement will not violate any provision of applicable law.

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(q)
To the knowledge of SELLERS, the financial information regarding the Company
listed in Schedule 16(q) (which financial information has been previously
provided to BUYER) were prepared in good faith and are accurate in all material
respects as of the date produced by or for SELLERS.

 
(r)
SELLERS have delivered to BUYER an internally prepared unaudited balance sheet
as of December 31, 2007, a related unaudited statement of income for the
calendar year ending December 31, 2007, and an unaudited interim statement of
income for the six months ending June 30, 2008  (referred to herein as the
“Financial Statements”).  To the knowledge of SELLERS, the Financial Statements
are complete in all material respects as of the respective dates and for the
respective periods above stated, are in accordance with the books and records of
ISLAND, have been prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present the financial position of
ISLAND as of the dates thereof and the results of operations for the periods
indicated.  [Copies of the Financial Statements are attached hereto as Schedule
16(r)].

 
(s)
Except as required by or disclosed in this Agreement and its exhibits and
schedules, since June 30, 2008 (the “Balance Sheet Date”) (i) there has been no
material adverse change in or to the business of ISLAND or to its operations,
earning, prospects, liabilities or relationships with suppliers, distributors or
customers, (ii) ISLAND has not entered into or performed any material
transaction other than in the ordinary course of business and consistent with
past practices and (iii) ISLAND has not cancelled, terminated, amended or
granted a waiver of any material agreement or of any rights or claims of ISLAND
arising thereunder.

 
(t)
Intentionally Omitted.

 
(u)
SELLERS have no knowledge of any fact that is reasonably likely to result in a
material adverse change with respect to ISLAND or its business, operations,
assets, or financial condition.

 
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(v)
To the knowledge of SELLERS, the business of ISLAND as currently conducted does
not violate in any material respect, and as conducted during the five years
prior to the date hereof did not violate in any material respect any applicable
law, ordinance, rule, prohibition or regulation relating, respectively, to air
quality, water quality, or noise pollution, or the production, storage, labeling
or disposition of any wastes or of hazardous or toxic substances (collectively,
“Environmental Laws”), or the health, safety or environmental conditions on,
beneath, or about any of the properties used, owned, or leased by
ISLAND.  ISLAND has timely filed all required reports, obtained all required
data, documentation and records under any applicable Environmental Laws.  To the
knowledge of SELLERS, with respect to the operation of ISLAND’s business there
has been no unreported release of any Hazardous Material in violation of any
applicable Environmental Laws or Licenses, including any “Hazardous Wastes,”
“Hazardous Substances,” “Hazardous Materials,” “Pollutants,” “Toxic Substance,”
“Solid Wastes” or “Contaminants” (as such terms are defined in any applicable
Environmental Laws, including but not limited to the Comprehensive Environmental
Response, Compensation an Liability Act of 1980, as amended (“CERCLA”); the
Hazardous Materials Transportation Act; the Resource Conservation and Recovery
Act; and the Toxic Substances Control Act; from any storage tanks, surface
impoundments, septic tanks, pits, sumps or lagoons or any other location at the
Premises.  Except as set forth above, such inventories and wastes, if any, were
stored or disposed of in accordance with applicable laws and regulations and in
a manner such that there was no release of any such chemicals into the
environment which could cause the incurrence of material clean-up or other
response costs under CERCLA or any other applicable laws or regulations.  ISLAND
has not received any notice from any governmental agency or private or public
entity advising it that it is or may be responsible, or potentially responsible,
for response costs with respect to a release, a threatened release or clean-up
of materials produced by, or resulting from, any business, commercial or
industrial activities, operations, or processes, including but not limited to
Hazardous Wastes, Hazardous Substances, Hazardous Materials, Toxic Substances,
Solid Wastes, Pollutants or Contaminants.  To the knowledge of SELLERS, there is
no asbestos or asbestos-containing material that requires current abatement or
encapsulation under Environmental Laws at the Premises.

 
 
(w)
No Environmental Remediation.  Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will result in the
requirement that ISLAND conduct any removal, response, or remediation activities
pursuant to any applicable Environmental Law or under any permit issued to
ISLAND.

 
(x)
Environmental Reports.  SELLERS have made available to BUYER copies of any
environmental assessment or audit reports or other similar studies or analyses
relating to the Premises which reports have been prepared by, or on behalf of,
or are otherwise in the possession of SELLERS.

 
(y)
Permits.  Set forth on Schedule 16(y) is a list of all permits, licenses,
franchises or other authorizations held by ISLAND as of the date of this
Agreement.  To knowledge of SELLERS, such permits, licenses, franchises and
other authorizations constitute all such authorizations as are necessary for the
operation of ISLAND’s business as presently conducted.  To knowledge of SELLERS,
ISLAND is not in default under, or in violation of the terms of, any such
authorization.  To the knowledge of Sellers, all such permits, licenses,
franchises and other authorizations will remain in effect after the sale of the
Shares to BUYER.

 
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(z)
Labor Controversies.  ISLAND is not a party to any collective bargaining
agreement.  There are not any controversies between ISLAND and any of its
employees which might reasonably be expected to materially adversely affect the
conduct of its business, or any unresolved labor union grievances or unfair
labor practice or labor arbitration proceedings pending or, to the knowledge of
SELLERS, threatened relating to ISLAND’s business and, to the knowledge of
SELLERS, there are not any organizational efforts presently being made or
threatened involving any of ISLAND’s employees.  ISLAND has not received notice
of any claim that it has not complied with any laws relating to the employment
of labor, including any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination and employment safety, or that ISLAND is
liable for any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing.

 
(aa)
Intellectual Property.  The term “Intellectual Property” includes all patents
and patent applications, trademarks, service marks, trade names, trademark,
service mark and trade name registrations (and applications therefore),
copyrights, trade secrets, inventions, know-how and formulations (and all
licenses for any of the foregoing).  ISLAND has no registered copyrights,
trademarks, or service marks.  To the knowledge of SELLERS, ISLAND’s
Intellectual Property is sufficient to conduct its business as presently
conducted and its rights under such Intellectual Property will not be altered,
limited or impaired by the sale of the Shares under this Agreement.  None of the
past or present employees, officers, directors, shareholders or affiliates of
ISLAND has any rights in any such Intellectual Property.  ISLAND has not granted
any outstanding license or other rights to Intellectual Property owned by or
licensed to it, and is not liable, and has not made any contracts or arrangement
whereby it may become liable, to any person for any royalty or other
compensation for the use of any Intellectual Property.  To the knowledge of
SELLERS, ISLAND’s business, as presently conducted, does not infringe any
Intellectual Property rights of others, and ISLAND has not been charged or
threatened to be charged with any such infringement.  Specifically, SELLERS
acknowledge that the trade name “Island Environmental Services” is a valuable
asset of ISLAND and agree not to use that name or any similar name in an
environmental waste management related business so long as BUYER operates
ISLAND’s business under that trade name.

 
(ab)
No Powers of Attorney.  ISLAND does not have any powers of attorney or
comparable delegations of authority outstanding.

 
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(ac)
NCT is a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida and is the sole Trustee of NCF Charitable Trust
(the “TRUST”) on whose behalf NCT holds its Shares.  The TRUST is a wholly
charitable trust duly organized, validly existing and in good standing under the
laws of the State of Florida.

 
(ad)
Effective August 29, 2008, NCT received one thousand five hundred (1,500) of the
Shares as a gift from RANDY and, to its knowledge, is the lawful owner of such
Shares as of the date of this Agreement.  NCT (i) has full power and authority
to transfer all of its right, title and interest in and to the Shares held by it
without the consent of any other person and (ii) will transfer to BUYER all of
its title to such Shares, free and clear of all liens, equities, encumbrances
and claims of every kind arising by, under or through NCT.

 
(ae)
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in a violation or breach of any
agreement to which NCT is a party or, to the knowledge of NCT, by which the
Shares held by NCT are bound or give rise to any right in any third party to
terminate or modify any contract by which any of the Shares are bound.

 
(af)
NCT is not engaged in or a party to, nor does NCT have any reasonable basis to
anticipate, any legal action or other proceeding before any court or
administrative agency in connection with the Shares held by it or the
transactions contemplated by this Agreement.

 
17.
Interim Covenants and Agreements of SELLERS

 
 
SELLERS hereby covenant and agree that from and after the date of execution
hereof, to and including the Closing, except as otherwise permitted or required
by this Agreement, SELLERS shall not, without the prior written consent of BUYER
(which consent shall not be unreasonably withheld), cause ISLAND to:

 
(a)
Dispose of any of its properties or assets or waive any of its rights except in
the ordinary course of business;

 
(b)
Fail to keep ISLAND's property and assets insured consistent with its prior
practice.

 
(c)
Suffer or incur any liabilities or encumbrances except in the ordinary course of
business.

 
(d)
Fail to keep the business assets of ISLAND in good repair and order (subject to
ordinary wear and tear).

 
(e)
Amend the Articles of Incorporation or Bylaws of ISLAND.

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(f)
Change the authorized capital of ISLAND or the equity ownership of ISLAND or
grant any options, warrants, puts, calls, conversion rights or commitments
relating to the equity interests of ISLAND.

 
(g)
Declare or pay any dividend of ISLAND or indirectly purchase, redeem, or
otherwise acquire or retire for value or issue any shares of stock of ISLAND.

 
(h)
Enter into any contract or commitment or incur or agree to incur any liability
or make any capital expenditures in excess of an aggregate of Fifty Thousand
Dollars ($50,000.00).

 
(i)
Increase the compensation payable or to become payable to any officer, director,
stockholder, employee, consultant or agent, or make any bonus or management fee
payable to any such person other than in connection with any regularly schedule
annual employment and/or salary reviews and in amounts consistent with past
practice.

 
(j)
Create, assume, or permit to exist any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired.

 
(k)
Sell, assign, lease or otherwise transfer or dispose of any property or
equipment other than in the ordinary course of business.

 
(l)
Merge or consolidate or agree to merge or consolidate with or into any other
corporation or entity.

 
(m)
Breach or permit a breach of, amend or terminate any material agreement, or any
permit (excluding violations cited by inspection), license or other agreement or
right to which Company is a party.

 
(n)
Enter into any other transaction outside the ordinary course of its business or
otherwise prohibited hereunder.

 
(o)
SELLERS further agree to use their commercially reasonable efforts to prevent
from occurring any other action or omission, or series of actions or omissions,
by ISLAND or by RANDY and DODIE that would cause a warranty of the SELLERS
contained in this Agreement to be untrue on the Closing Date.

 
18.
Representations, Warranties and Covenants of BUYER

 
 
BUYER represents and warrants to SELLERS and agrees as follows:

 
(a)
BUYER is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all corporate right, power and
authority to enter into and perform this Agreement and any other Agreements
contemplated by this Agreement.

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(b)
The execution, delivery and performance by BUYER of this Agreement have been
duly authorized by all necessary corporate action.  This Agreement has been duly
executed and delivered by BUYER and constitutes a valid and binding agreement of
BUYER enforceable against BUYER in accordance with its terms.

 
(c)
The execution, delivery and performance by BUYER of this Agreement and the
consummation by BUYER of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental authority other than any
applicable requirements of the Securities and Exchange Act of 1934.

 
(d)
The execution, delivery and performance by BUYER of this Agreement and the
consummation of the transactions contemplated hereby do not, and will not, (i)
contravene or conflict with BUYER’s charter documents, (ii) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of BUYER, (iii) violate any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to BUYER, GEM NEVADA or any of their respective affiliates
(iv) constitute a default under (or an event which with notice, the lapse of
time or both would become a default) under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of BUYER,
GEM NEVADA or any of their respective affiliates or to a loss of any benefit to
which BUYER, GEM NEVADA or any of their respective affiliates is entitled to
under any provision of any agreement, contract or other instrument binding upon
BUYER, GEM NEVADA or their respective affiliates.

 
(e)
There is no action, suit, claim, proceeding or other legal process pending or,
to the knowledge of BUYER, threatened against or BUYER, GEM NEVADA or any of
their respective affiliates that could adversely affect or restrict the ability
of BUYER to fully consummate the transactions contemplated by this Agreement or
that in any manner draws into question the validity of this Agreement.

 
(f)
Prior to the Closing, BUYER shall have (or shall have secured firm commitments
to receive as of the Closing) sufficient funding to pay the portion of the
Purchase Price payable at Closing in accordance with the terms of this
Agreement.

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(g)
Investment for Own Account.  BUYER represents to SELLERS and NCT that the shares
to be received by it will be acquired for investment for its own account, not as
a nominee or agent, and not with a view to the sale or distribution of any part
thereof, and that BUYER has no present intention of selling, granting
participation in, or otherwise distributing the same, but subject nevertheless
to any requirement of law that the disposition of property shall at all times be
within its control.  By executing this Agreement, BUYER further represents that
it does not have any contract, undertaking, agreement, or arrangement with any
person to sell, transfer, or grant participation to any such person, or to any
third person, with respect to any of the shares.

 
(h)
Investor Experience. BUYER represents to SELLERS and NCT that it is experienced
in evaluating, investing in and acquiring companies such as ISLAND, is able to
fend for itself in the transactions contemplated by this Agreement, has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of investment, and has the ability to bear the
economic risks of the investment.

 
(i)
Personal Guarantees of SELLERS.  BUYER acknowledges that SELLERS have previously
executed certain personal guarantees in connection with their ownership of
ISLAND and the operation its business (collectively, the “Seller Personal
Guarantees”).  Prior to and following the Closing, SELLERS shall have the right
to terminate any or all of the Seller Personal Guarantees at any time to the
extent permitted by the Seller Personal Guarantees. BUYER agrees indemnify and
hold SELLERS harmless from any and all Losses (as defined in Section 19(a)
below) they may incur with respect to the Seller Personal Guaranties following
the Closing.  In addition, for any time period following the Closing during
which any Seller Personal Guarantee is in effect, BUYER shall not (and BUYER
shall not permit ISLAND to) undertake or accept any further advance on any line
of credit or other obligation secured by any Seller Personal Guarantee without
the prior written consent of SELLERS.

 
19.
Indemnification.

 
 
(a)
By SELLERS.  In addition to any indemnification obligations on the part of
SELLERS set forth elsewhere in this Agreement, SELLERS, jointly and severally,
agree to indemnify and hold BUYER harmless from any and all claims, demands,
actions, losses or liabilities including, without limitation, reasonable
attorneys’ fees and costs (collectively, “Losses”) arising out of or resulting
from (i) any breach of any representation or warranty made by SELLERS herein or
(ii) any breach or default in the performance by SELLERS of any covenant or
agreement of SELLERS contained herein.

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(b)
By NCT.  NCT hereby agrees to indemnify and hold BUYER harmless from any and all
Losses arising out of or resulting from (i) any breach of any representation or
warranty made by NCT herein or (ii) any breach or default in the performance by
NCT of any covenant or agreement of NCT contained herein.

 
(c)
By BUYER.  In addition to any indemnification obligations on the part of BUYER
set forth elsewhere in this Agreement, BUYER hereby agrees to indemnify and hold
SELLERS and NCT harmless from any and all Losses arising out of or resulting
from (i) any breach of any representation or warranty made by BUYER herein or
(ii) any breach or default in the performance by BUYER of any covenant or
agreement of BUYER contained herein.

 
(d)
Separate Obligations of SELLERS and NCT.  Notwithstanding any other provision of
this Agreement, BUYER acknowledges and agrees that (i) NCT received title its
Shares effective August 29, 2008 pursuant to a charitable gift from RANDY, (ii)
NCT does not currently, and never has had, any direct or indirect role in the
operation of ISLAND or its business, (iii) the respective representations,
warranties and covenants of SELLERS and NCT under this Agreement are in all
cases being made severally and not jointly and any liability for any breach of
such representations, warranties and covenants shall be several not joint with
respect to SELLERS and NCT, (iv) in the event of any breach of any
representation, warranty or covenant by either SELLERS or NCT, BUYER shall look
solely to the breaching party for indemnification pursuant to this Section 19
and (v) NCT’s liability, if any, for Losses under this Agreement shall be
limited to, and BUYER covenants that it shall not seek recovery from NCT for any
amounts in excess of, the aggregate cash amount actually paid by BUYER to NCT
under this Agreement (including amounts paid under the $187,500 Note issued to
NCT pursuant to Section 2(c) above) in connection with BUYER’s purchase of NCT’s
Shares.  

 
(e)
Survival of Representations, Warranties and Covenants.  The rights of the
parties to assert a claim under clause (i) of Section 19(a), clause (i) of
Section 19(b) or clause (i) of Section 19(c) above shall survive for a period of
twelve (12) months following the Closing and thereafter shall terminate and
expire; provided that rights with respect to any claim asserted in writing prior
to the expiration of such twelve (12) month period shall continue until such
claim has been finally settled, decided or adjudicated; and provided further
that rights with respect to any claim under clause (ii) of Section 19(a), clause
(ii) of Section 19(b) or clause (ii) of Section 19(c) in connection with a
covenant or agreement to be performed after the Closing shall survive until such
covenant or agreement has been fully performed.

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(f)
Limitation on Liability.

 
(1)
As Between SELLERS and BUYER.  The SELLERS shall not have any obligation to
indemnify BUYER, nor shall the BUYER have any obligation to indemnify SELLERS
pursuant to this Section 19 until the aggregate Losses for which the indemnified
party is entitled to indemnity exceed $35,000 (the “Deductible Amount”)
whereupon the indemnifying party shall be liable only to the extent that such
Losses exceed the Deductible Amount.  In addition, the maximum liability of the
indemnifying party to indemnify the indemnified party with respect to any claim
for indemnification of Losses under this Agreement shall not exceed the Purchase
Price.

 
(2)
As Between NCT and BUYER.  With respect to any claim for indemnity pursuant to
this Section 19 as between NCT and BUYER, the maximum liability of the
indemnifying party to indemnify the indemnified party with respect to any claim
for indemnification of Losses under this Agreement shall not exceed the
aggregate cash amount actually paid by BUYER to NCT under this Agreement
(including amounts paid under the $187,500 Note issued to NCT pursuant to
Section 2(c) above) in connection with BUYER’s purchase of NCT’s Shares.

 
(g)
Claims for Indemnification.  All claims for indemnification under Sections
19(a), 19(b) and 19(c) above shall be handled in accordance with the procedures
set forth in Schedule 19(g) attached hereto.

 
(h)
Computation of Losses.  Notwithstanding anything in this Agreement to the
contrary, the amount of any Losses otherwise payable under Sections 19(a), (b)
or (c) to an indemnified party shall be reduced by the amount of net insurance
proceeds actually received by such indemnified party (giving effect to
deductibles or self insured or co-insurance payments made) as compensation for
the damage or Losses caused by the act, omission, fact or circumstance giving
rise to the Losses.

 
(i)
Exclusive Remedy.  From and after the Closing, the rights and remedies of the
parties under this Section 19 are the sole and exclusive rights and remedies of
the parties with respect to any dispute arising out of this Agreement.  EACH
PARTY HEREBY WAIVES RELEASES AND DISCHARGES ALL RIGHTS TO ALL PUNITIVE, SPECIAL,
EXEMPLARY OR CONSEQUENTIAL, DIRECT OR INDIRECT OR OTHER DAMAGES, HOWEVER
CHARACTERIZED, WHETHER IN CONTRACT OR IN TORT, AT LAW OR IN EQUITY, OTHER THAN
THOSE EXPRESSY SET FORTH UNDER THIS SECTION 19.

 
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20.
Agreement Not to Compete

 
As part of the consideration herein rendered and as an express condition
precedent thereto, SELLERS, jointly and severally, shall enter into an Agreement
Not to Compete for a duration of five (5) years from the date of the Closing in
the form of Exhibit F attached hereto.  BUYER acknowledges that NCT shall have
no obligation to enter into, and shall not be subject to the terms of, any such
Agreement not to Compete.

21.
Transition

 
Following the Closing, SELLERS will not take any action that is designed or
intended to have the effect of discouraging any customer or business associate
of ISLAND from maintaining the same business relationships with ISLAND after the
Closing that it maintained with ISLAND before the Closing and SELLERS will refer
all customer inquiries they receive relating to the business to BUYER.  Further,
SELLERS agree that for a period of ninety (90) days following the Closing,
SELLERS will reasonably assist BUYER, at BUYER’s request, with the orderly
transition of the operations of ISLAND from SELLERS to BUYER, including, without
limitation, recommendations, advice and interaction with customers and potential
customers of ISLAND and BUYER, and governmental agencies.
 
22.
Conditions to Obligations of BUYER

 
The obligation of BUYER to proceed with the Closing under this Agreement is
subject to the satisfaction, on or prior to the Closing, of each of the
following conditions, each of which may be waived by BUYER:

 
(a)
All the terms, covenants and conditions of this Agreement to be complied with
and performed by SELLERS and NCT on or before the Closing shall have been fully
complied with and performed in all material respects;

 
(b)
Prior to the expiration of the Due Diligence Period, BUYER shall not have
formally objected in writing to any matters of due diligence set forth in
Section 10 herein;

 
(c)
The representations and warranties of each of SELLERS and NCT contained herein
shall be correct in all material respects on and at the Closing with the same
effect as though all such representations and warranties had been made on and as
of that date;

 
(d)
SELLERS shall have delivered to BUYER the documents described in Section 9(a)(1)
of this Agreement along with such other documents or instruments as in the
reasonable opinion of BUYER may be necessary or desirable to effectuate the
transaction provided for in this Agreement; and

 
(e)
NCT shall have delivered to BUYER the documents described in Section 9(a)(2) of
this Agreement along with such other documents or instruments as in the
reasonable opinion of BUYER may be necessary or desirable to effectuate the
transaction provided for in this Agreement.

 
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23.
Conditions to Obligations of SELLERS and NCT

 
The obligation of SELLERS and NCT to proceed with the Closing under this
Agreement is subject to the satisfaction, on or prior to the Closing, of each of
the following conditions, each of which may be waived by SELLERS and NCT:

 
(a)
All the terms, covenants and conditions of this Agreement to be complied with
and performed by BUYER on or before the Closing Date shall have been fully
complied with and performed in all material respects;

 
(b)
The representations and warranties made by BUYER herein shall be correct in all
material respects, on and at the Closing, with the same force and effect as
though such representations and warranties had been made at the Closing;

 
(c)
BUYER shall have delivered to SELLERS the documents and payments described in
Section 9(b)(1) of this Agreement along with such other documents or instruments
as in the reasonable opinion of SELLERS may be necessary or desirable to
effectuate the transaction provided for in this Agreement; and

 
(d)
BUYER shall have delivered to NCT the documents and payments described in
Section 9(b)(2) of this Agreement along with such other documents or instruments
as in the reasonable opinion of NCT may be necessary or desirable to effectuate
the transaction provided for in this Agreement.

 
24.
Termination

 
This Agreement and the transactions contemplated herein may be terminated at any
time prior to Closing:

 
(a)
By the mutual written consent of SELLER and BUYER;

 
(b)
By BUYER if there has been a breach of any representation, warranty, covenant or
agreement of SELLERS or NCT that has had or is reasonably likely to result in a
material adverse effect on the ability of SELLERS or NCT to consummate the
transactions contemplated hereby; provided that, as applicable, SELLERS or NCT
will have ten (10) days after receiving notice from BUYER thereof to cure such
breach;

 
(c)
By SELLERS if there has been a breach of any representation, warranty, covenant
or agreement of BUYER that has had or is reasonably likely to result in a
material adverse effect on the ability of BUYER to consummate the transactions
contemplated hereby; provided that BUYER will have ten (10) days after receiving
notice from SELLERS thereof to cure such breach; or

26

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(d)
By either BUYER or SELLERS if the sale and purchase of the Shares contemplated
by this Agreement shall not have been consummated on or before September 30,
2008; provided, however that the right to terminate this Agreement under this
Section 24(d) shall not be available to any party whose breach of any obligation
under this Agreement has been the cause of, or resulted in, the failure of such
transaction to occur before such date.

The termination of this Agreement pursuant to this Section 24 shall terminate
all obligations of the parties hereunder and this Agreement shall become void
and have no effect without any liability on the part of any party.
 
25.
Additional Deliveries

 
After the Closing, the SELLERS and NCT will execute and deliver such additional
instruments as BUYER or its counsel may reasonably request in order to carry out
the transactions contemplated by this Agreement, and BUYER will execute and
deliver such additional instruments as SELLERS or its counsel may reasonably
request in order to carry out the transactions contemplated by this Agreement.
 
26.
Legal Fees

 
In the event it becomes necessary for any of the parties to this Agreement to
engage legal counsel to enforce the terms of this Agreement or sue for damages
hereunder, then the prevailing party shall be entitled to reasonable attorneys'
fees and court costs actually expended.
 
27.
Notices

 
All notices, requests and other communications hereunder shall be in writing and
shall be deemed to have been given only if mailed, certified return receipt
requested, or if sent by Federal Express or other well recognized private
courier ("Courier") or if personally delivered to, or if sent by fax with the
original thereof sent by Courier to:
 
 
SELLER:
RANDY COSTALES & GLORIA D. COSTALES

 
19970 Golden Baugh Drive

 
Covina, CA 91724

 
With a copy to:
THOMAS F. MORRISON, Esq.

 
Garrett DeFrenza Stiepel LLP

 
695 Town Center Drive, Suite 500

 
Costa Mesa, CA 92626

 
Fax (714) 384-4320

 
27

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NCT:
NCF CHARITABLE TRUST

 
1408 North Westshore Blvd., Suite 504

 
Tampa, FL  33607

 
With a copy to:
NATIONAL CHRISTIAN CHARITABLE FOUNDATION, INC.

 
11625 Rainwater Dr., Suite 500

 
Alpharetta, GA  30009

 
Attn:  General Counsel

 
 
BUYER:
GENERAL ENVIRONMENTAL MANAGEMENT, INC.

 
Attn: TIM KOZIOL

 
3191 Temple Ave., Suite 250

 
Pomona, CA 91768

 
Fax: 909-444-9900

 
With a copy to:
PATRICK LUND, Esq.

 
Bohm, Matsen, Kegel & Aguilera, LLP

 
695 Town Center Drive, #700

 
Costa Mesa, CA 92626

 
Fax (714) 384-6501

 
All notices, requests and other communications shall be deemed received on the
date of acknowledgment or other evidence of actual receipt in the case of
certified mail, Courier delivery or personal delivery or, in the case of fax
delivery, upon the date of fax receipt provided that the original is delivered
within two (2) business days thereafter.  Any party hereto may designate
different or additional parties for the receipt of notice, pursuant to notice
given in accordance with the foregoing.
 
28.
Certain Definitions.  

 
The following terms shall have the following meanings when used in this
Agreement:

 
(a)
The term “affiliate” when used with respect to a person or entity shall any
other person or entity controlling, controlled by or under common control with
the indicated person or entity.

 
(b)
The term “control” (including when used in a correlative form such as
“controlling,” “controlled by,” or “under common control with”), when used with
respect to any person or entity means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
person or entity, whether through the ownership of voting securities or other
ownership interest, by contract or otherwise.

28

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(c)
The term “material adverse change” when used with respect to ISLAND shall mean
any change, effect, circumstance or event that is materially adverse to the
business, assets, operations or financial condition of ISLAND other than as a
result of (i) changes, conditions or events that are generally applicable to the
industry in which ISLAND conducts business, (ii) seasonal fluctuations in the
performance of ISLAND or (iii) the effects including, without limitation,
effects on relations and business with customers, suppliers and employees, of
any of the transactions contemplated by this Agreement.

 
(d)
The term “to the knowledge of” when used (i) with respect to SELLERS shall mean
to the actual knowledge of either RANDY or DODIE after reasonable investigation
and (ii) with respect to NCT shall mean to the actual knowledge of NCT with no
duty of investigation.

 
29.
Successors and Assigns

 
This Agreement is binding on and inures to the benefit of the parties, their
executors, administrators, personal representatives and successors and assigns;
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto.
 
30.
Applicable Law; Jurisdiction

 
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California.  Any action or proceeding seeking to
enforce any provision of, or based on any matter arising in connection with,
this Agreement or the transactions contemplated hereby may be brought against
any of the parties only in any state or federal court located in Orange County,
California and each of the parties hereby consents to the exclusive jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.
 
31.
Entire Agreement

 
This Agreement and the exhibits and schedules hereto contains and constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements or understandings between the
parties hereto relating to such subject matter.  ISLAND, SELLERS, and BUYER
hereby expressly agree that there are no direct or indirect agreements, options
or clandestine arrangements of any kind between the parties hereto or any
associates or relatives of the parties, nor do there exist any representations
or warranties by either party other than as stated herein.
 
32.
Covenant of Cooperation and Fair Dealing

 
The parties agree to cooperate in promptly and properly executing any and all
documents or making any and all requests for documents, clearances, etc. in
order to accomplish the consummation of this Agreement.
 
29

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33.
Amendments and Waivers

 
This Agreement cannot be altered or amended except pursuant to an instrument in
writing signed by all of the parties hereto.  No failure or delay by any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall nay single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
granted hereunder.
 
34. 
Counterparts

 
This Agreement may be executed in multiple counterparts, each of which shall be
binding against the party executing it and considered as an original.

[Remainder of Page Intentionally Left Blank – Signature Page Follows]
 
 
 
 
 
 
 
30

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[Signature Page to Stock Purchase Agreement]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first written above.
 

SELLERS:    
NCT:
                 
NCF CORPORATION, not individually but solely in its capacity as Trustee of NCF
CHARITABLE TRUST
                     
 
  By:
 
 
RANDY COSTALES, an individual
  Name:
 
 
 
  Title:
 
 

 
 
   
 
 
GLORIA D. COSTALES, an individual
   
 
 
 
   
 
 

 
ISLAND:
                   
ISLAND ENVIRONMENTAL SERVICES INC., a California Corporation
                    By:
 
   
 
   
RANDY COSTALES, President
   
 
 

 
 
BUYER:
                   
GENERAL ENVIRONMENTAL MANAGEMENT, INC. a Delaware Corporation
                    By:
 
   
 
   
TIMOTHY J. KOZIOL, Chairman and Chief Executive Officer
   
 
 

 
31

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UNDERTAKING OF GEM NEVADA
 
The undersigned, General Environmental Management, Inc., a Nevada corporation,
(“GEM NEVADA”) hereby agrees to be responsible (as though it were a primary
obligor and not a guarantor) for and indemnify SELLERS against any Losses (as
defined in Section 19(a) of this Agreement) they may incur as a result of the
breach by BUYER of any of its representations, warranties or covenants under
this Agreement to the same extent as if GEM NEVADA were the “BUYER” hereunder.

GENERAL ENVIRONMENTAL MANAGEMENT, INC. a Nevada Corporation

            By: 
 
   
 
  Name:
 
   
 
  Title: 
 
   
 
 

 
 
32

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EXHIBIT A

Promissory Note in the Amount of $1,062,500

(Attached hereto)
 
33

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

 
EXHIBIT A-1

Promissory Note in the Amount of $187,500

(Attached hereto)
 
34

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

 
EXHIBIT B

Corporate Guaranty of GEM Nevada for the $1,062,500 Note

(Attached hereto)
 
35

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

 
EXHIBIT B-1

Corporate Guaranty of GEM Nevada for the $187,500 Note

(Attached hereto)
 
36

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

EXHIBIT C

Form of Contingent Promissory Note

(Attached hereto)
 
37

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

 
EXHIBIT D

Form of Guaranty of GEM Nevada for Contingent Note

(Attached hereto)
 
38

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

 
EXHIBIT E

Employment Agreement

(Attached hereto)
 
39

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

 
EXHIBIT F

Agreement Not to Compete

(Attached hereto)
 
40

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

EXHIBIT G

Premises Lease

[Attached hereto]
 
41

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Schedule 3

EBITDA Calculation Methodology

EBITDA.  “EBITDA” shall mean all Earnings Before Interest, Taxes, Depreciation,
and Amortization of Island Environmental Services, Inc. as defined by Generally
Accepted Accounting Principles (GAAP), consistently applied.

Exclusions from EBITDA will include the following:

Revenue, costs, and expenses from new customers and/or new service offerings on
existing customer accounts obtained after the closing date. New divisions,
departments, geographies, regions or affiliates of existing customer accounts
will not be considered ‘new’ accounts nor will any prospective customer that
prior to closing has been provided a sales quote by Island for that quoted
business.

Any costs, expenses, or overhead allocations from GEM, its subsidiaries,
affiliates, or shareholders, including closing costs related to the purchase of
Island.
 
42

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Schedule 3-A

Examples of Calculation of Accelerated Note Payments and Contingent Earn-Out

Example #1
a.           Assumption: EBITDA Recapture Percentage = 0%
b.           Amounts Due:
 
(i)
Accelerated Note Payment = $750,000 to be split 85%/15% between SELLER and NCT
(see Section 3(a) of the Agreement).

 
(ii)
Contingent Earn-Out = $0.00

 
Example #2

a.           Assumption:  EBITDA Recapture Percentage = 25%
b.           Amounts Due:
 
(i)
Accelerated Note Payment = $562,500 (.75 x $750,000) to be split 85%/15% between
SELLER and NCT.

 
(ii)
Contingent Earn-Out = $937,500 (.25 x $3,750,000) payable to SELLERS and NCT as
follows:

 
(A)
Cash Payment of $187,500 ($750,000 - $562,500) to be split 85%/15% between
SELLER and NCT

 
(B)
Contingent Notes in the aggregate amount of $750,000 ($937,500 - $187,500) to be
split 85%/15% between SELLER and NCT

 
Example #3
a.           Assumption:  EBITDA Recapture Percentage = 50%
b.           Amounts Due:
 
(i)
Accelerated Note Payment = $375,000 (.50 x $750,000) to be split 85%/15% between
SELLER and NCT.

 
(ii)
Contingent Earn-Out = $1,875,000 (.50 x $3,750,000) payable to SELLERS and NCT
as follows:

 
(A)
Cash Payment of $375,000 ($750,000 - $375,000) to be split 85%/15% between
SELLER and NCT

 
(B)
Contingent Notes in the aggregate amount of $1,500,000 ($1,875,000 - $375,000)
to be split 85%/15% between SELLER and NCT

 
Example #4
a.           Assumption:  EBITDA Recapture Percentage = 75%
b.           Amounts Due:
 
(i)
Accelerated Note Payment = $187,500 (.25 x $750,000) to be split 85%/15% between
SELLER and NCT.

 
(ii)
Contingent Earn-Out = $2,812,500 (.75 x $3,750,000) payable to SELLERS and NCT
as follows:

 
(A)
Cash Payment of $562,500 ($750,000 - $187,500) to be split 85%/15% between
SELLER and NCT

 
(B)
Contingent Notes in the aggregate amount of $2,250,000 ($2,812,500 - $562,500)
to be split 85%/15% between SELLER and NCT

[Exhibit Continues on Next Page]
 
43

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

 
Example #5
a.           Assumption:  EBITDA Recapture Percentage = 100%
b.           Amounts Due:
 
(i)
Accelerated Note Payment = $0 (0 x $750,000)

 
(ii)
Contingent Earn-Out = $3,750,000 (1.0 x $3,750,000) payable to SELLERS and NCT
as follows:

 
(A)
Cash Payment of $750,000 ($750,000 - $0) to be split 85%/15% between SELLER and
NCT

 
(B)
Contingent Notes in the aggregate amount of $3,000,000 ($3,750,000 - $750,000)
to be split 85%/15% between SELLER and NCT

 
44

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Schedule 16(g)

Policies of Insurance

Company Name
Insurance Type
Start Date
End Date
Amount Covered
Zurich American Insurance Company
General Liability
3/15/2008
3/15/2009
$2,000,000.00
Zurich American Insurance Company
Automobile Liability  & Physical Damage
3/15/2008
3/15/2009
$1,200,000.00
Steadfast Insurance Company
Excess Liability
3/15/2008
3/15/2009
$4,000,000.00
General Star Insurance Company
Commercial Property
3/15/2008
3/15/2009
$880,000.00
Zurich American Insurance Company
California Workers' Compensation
12/31/2007
12/31/2008
$1,000,000.00
Steadfast Insurance Company
Professional Environmental Consultant's Liability
3/15/2008
3/15/2009
$1,000,000.00
HCC Surety Group
Bidder's Bonds
7/09/2008
10/01/2008
$10,000.00
Arch Insurance Company
Bidder's Bonds
3/21/2008
 
10% of Bid
American Contractors Indemnity Company
Bidder's Bonds
7/09/2008
 
$10,000.00
American Contractors Indemnity Company
ERISA Bond
11/27/2007
11/27/2010
$150,000.00
Economy Bonds & Insurance Services
Contractors Bond
10/02/2007
11/01/2010
$12,500.00
American Contractors Indemnity Company
Bond of Qualifying Individual
10/02/2007
10/02/2009
$10,000.00
American Contractors Indemnity Company
Waste Tire Hauler Bond
11/02/2005
Yearly
$10,000.00

45

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Schedule 16(h)

Material Contracts

Customer Contracts:

Customer Name
Contract Number
Start Date
End Date
Contract Value
Anaheim, City Of
MA 106 400372
03/01/2008
02/28/2009
Per Unit
Beverly Hills, City of
99-08
06/23/2008
12/19/2008
$111,114.00
Caltrans
07A2046 A01
07/17/2008
09/12/2008
$2,498,000.00
Caltrans
12a1118
12/01/2007
11/30/2010
$58,100.00
Caltrans
07A2226
09/01/2007
06/30/2009
$363,800.00
The Dial Corporation
4750003847
01/01/2008
12/31/2008
$15,600.00
Los Angeles County: Internal Services Dept.
PO-15-32000
08/04/2008
06/30/2009
$318,000.00
Los Angeles County Sheriff
DPO-SH-36505732-2
07/17/2008
 
$87,500.00
Los Angeles County Sheriff
DPO-SH-36505734
07/01/2008
06/30/2009
$19,500.00
Orineco
 
11/9/2006
11/9/2008
 

Vendor Contracts:

Vendor Name
Start Date
End Date
Contract Service
Penske Truck Leasing
01/01/2008
N/A
Leased Vehicles
Arch Insurance Company
06/30/2006
N/A
Bond Services
Jack Doheny Companies
01/01/2008
N/A
Short Term Rental of Vehicles
Athens Services
03/31/2007
N/A
Trash Service
GSM Insurance Services
03/01/2008
N/A
Insurance Broker Services
Airgas
02/19/2008
N/A
Dry Ice
California Drug Testing Associates
03/24/2008
N/A
Drug/Alcohol Testing Program
HCC Surety Group
07/09/2008
08/31/2008
Bond Services
Recycle Service Agreement
05/06/2005
N/A
Disposal Services
MB Trucking
09/14/2004
N/A
Trucking Subcontractor
Zamora Trucking
09/26/2007
N/A
Trucking Subcontractor

[Schedule continues on next page]
 
46

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Vendor Name
Start Date
End Date
Contract Service
Southbound Transportation
09/18/2007
N/A
Trucking Subcontractor
GoDaddy
01/15/2005
N/A
Email Services
Hasler Mailing Systems and Solutions
10/26/2005
12/31/2008
Postage Meter
Paetec Communications
10/22/2004
N/A
Phone Services and T1 LAN Line
@Road
11/19/2004
N/A
GPS Service in Trucks
ADP
05/18/2005
N/A
Payroll Services
U.S. Health Works
07/13/2006
N/A
Health Exam Services
Baker Tanks
06/22/2006
N/A
Truck Rentals
Benefit Consulting Group
11/10/2006
N/A
Benefits Administration Profit Sharing Plan
Occuscreen
03/15/2007
N/A
Employment Screening
Cintas
02/01/2007
N/A
Uniform Rental
Haney's Landscape Maintenance
08/28/2007
N/A
Lawn Maintenance
Citistreet
04/30/2008
N/A
401.K Administration
GE Capital
06/20/2008
06/20/2010
Copier Machines

 
Agreements with Employees:

ISLAND has in place at-will employee agreements in standard form with all of its
employees, copies of which have been made available to BUYER.

ISLAND also has in place agreements for bonuses for the following employees:

A.  Margaret Hoyos, 5% of net profits on Caltrans Projects
B.  Juan Rivers, 5% of net profits on Caltrans and construction projects

See Section 16(l) regarding equipment leases
 
47

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Schedule 16(i)

Pending Actions

1.  In process of audit by L.A. County Tax Assessor’s Office – 57lL (Busines
Property)

2.  Worker’s Comp Claims Still Open:

A.  Eric Rogers  – DOI 1/17/06 – Back Injury
B.  Todd Gireth – DOI 8/15/07 – Hernia Repair
C.  Roger Suits  – DOI 8/21/07  -  Back Injury
 
48

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Schedule 16(l)

Leased Assets

1.  2006 Freightliner (Unit #99) – Leased from Penske

2.  3 Konica Copiers – Leased from GE Capital

3.  Postage Meter – Leased from Hassler
 
49

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Schedule 16(q)

Certain Financial Information
 
1.
Schedules included in IES 12-31-07 binder which includes balance sheets, income
statements, reconciliations of EBITDA and supporting financial data.

2.
Schedules included in IES 9-30-06 binder which includes balance sheets, income
statements, reconciliations of EBITDA and supporting financial data.

3.
Schedules included in IES 12-31-06 binder which includes balance sheets, income
statements, reconciliations of EBITDA and supporting financial data.

4.
Schedules included in IES 9-30-05 binder which includes balance sheets, income
statements, reconciliations of EBITDA and supporting financial data.

5.
Check Register for pay date 01/14/05

6.
Payroll Register for pay date 01/13/06

7.
Payroll Register for pay date 01/12/07

8.
Vacation schedules12/2004 through 07/2008

9.
Balance Sheet at 03/31/08

10.
Balance Sheet and Income Statement at 05/31/08

11.
Balance Sheet and Income Statement at 06/30/08

12.
Balance Sheet and Income Statement at 07/31/08

13.
Trial balance from 01/01/08 – 03/31/08

14.
Accounts Receivable Aging Detail Report at 03/31/08

15.
Income Statement by month for FYE 12/31/07

16.
Income Statement by month for FYE 12/31/06

17.
Reviewed Financial Statement at 12/31/07

18.
Equipment List at 04/01/08

19.
Accounts Payable Journal from 03/01/08 – 03/31/08

20.
Account Balance Statement for profit sharing plan from 10/01/06 – 09/30/07

21.
Fixed Asset Detail at 12/31/06

22.
Balance Sheet, Income Statement, Trial Balance, Payroll Accrual, Vacation
Accrual, Fixed Asset Detail, AR Aging Summary, AP Aging Summary for FYE 12/31/05

23.
Balance Sheet, Income Statement, Trial Balance, Payroll Accruals for FYE
12/31/06

24.
Income Statement, Balance Sheet, Trial Balance at 09/30/07

25.
Balance Sheet, Income Statement, Trial Balance at 09/30/06

26.
Balance Sheet, Income Statement at 09/30/04

27.
Island Stormwater Services Income Statement at 09/30/06

28.
Balance Sheet, Income Statement at 09/30/03

29.
Property Tax form 571L for 2008

30.
Vendor information on K-Pure Waterworks, Pacific Resource Recovery, Rain for
Rent, and US Ecology & Remedy Environmental

31.
AR & AP Aging Detail at 07/31/08

32.
Fixed Asset GL Transaction Register at 07/2008

 
50

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Schedule 16(r)

Financial Statements

[Attached hereto]
 
51

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Schedule 16(y)

Permits, Licenses, Franchises, etc.

Name of Permitting/Licensing Agency
Expiration Date
ENVIRONMENTAL PROTECTIVE AGENCY IDENTIFICATION NUMBER
N/A
MOTOR CARRIER PERMIT
N/A
HAZARDOUS MATERIALS CERTIFICATE OF REGISTRATION
06/30/09
U.S. DOT IDENTIFICATION #465272
N/A
U.S. DOT MOTOR CARRIER SAFETY RATING CERTIFICATE OF ACHIEVEMENT
N/A
STATE OF CALIFORNIA, DEPT OF TOXIC SUBSTANCES CONTROL
10/31/08
METROPOLITAN TRANSPORTATION AUTHORITY
12/11/09
WMBE CLEARING HOUSE - CITY OF LOS ANGELES
01/24/09
COUNTY OF LOS ANGELES - OFFICE OF AFFIRMATIVE ACTION COMPLIANCE
11/29/09
STATE OF CALIFORNIA CERTIFICATION OF STATUS
02/28/09
CALIFORNIA HIGHWAY PATROL - HAZARDOUS MATERIAL TRANSPORTATION
03/31/09
CALIFORNIA STATE BOARD OF EQUALIZATION - SELLER'S PERMIT
N/A
CITY OF LOS ANGELES - TAX REGISTRATION CERTIFICATE
N/A
CALIFORNIA STATE BOARD OF EQUALIZATION USE FUEL TAX PERMIT
N/A
INTERNATIONAL FUEL TAX AGREEMENT
12/31/08
DEPARTMENT OF FOOD & AGRICULTURE
12/31/08
CITY OF POMONA
06/30/08
CITY OF FULLERTON
04/01/09
CITY OF INGLEWOOD
12/31/08
STATE OF CALIFORNIA DEPARTMENT OF INDUSTRIAL RELATIONS
11/29/09
STATE OF CALIFORNIA DEPARTMENT OF INDUSTRIAL RELATIONS
11/29/09
LOS ANGELES COUNTY FIRE DEPARTMENT
12/31/08
NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION, INC.
06/30/09
CITY OF RENO
02/28/09
DEPARTMENT OF GENERAL SERVICES OFFICE OF SMALL BUSINESS CERTIFICATION AND
RESOURCES
07/31/09
ALLIANCE FOR UNIFORM HAZMAT TRANSPORTATION PERMIT
12/31/08
METROPOLITAN TRANSPORTATION AUTHORITY
10/12/08
CALIFORNIA DRUG TESTING ASSOCIATES
12/31/08
UTAH DEPT. OF TRANSPORTATION
UNKNOWN
ARKANSAS HAZARDOUS WASTE TRANSPORTATION PERMIT
01/05/09
CALIFORNIA UNIFIED CERTIFICATION PROGRAM (MTA-CERT DBE/MBE)
06/01/08
CITY OF RIVERSIDE
06/21/09
GENERAL ENGINEERING A. CONTRACTORS STATE LICENSE BOARD
10/31/08

 
52

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STATE OF CALIFORNIA, DEPT. OF  TOXIC SUBSTANCE CONTROL (TTU)
06/12/09
STATE WATER RESOURCES CONTROL BOARD DIV. OF WATER QUALITY
N/A
COUNTY OF LOS ANGELES DEPT. OF HEALTH SERVICES
06/30/08
COUNTY OF LOS ANGELES DEPT. OF HEALTH SERVICES
06/30/08
ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY
12/31/07
STATE OF NEW MEXICO TAXATION & REVENUE DEPT.
12/31/08
CALIFORNIA INTEGRATED WASTE MANAGEMENT BOARD
12/31/08
OREGON DEPARTMENT OF TRANSPORTATION
12/31/08
CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD
08/01/08
CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD
08/01/08
LOS ANGELES COUNTY FIRE DEPT. – CUPA
12/11/08
LICENSED CONTRACTOR’S INSURANCE AGENCY
10/02/09
CITY OF SANTA FE SPRINGS
07/31/08
US DEPT. OF  TRANSPORTATION MOTOR CARRIER PERMIT – FEDERAL
N/A
U.S. DEPT. OF TRANSPORTATION (PIPELINE & HAZARDOUS MATERIALS SAFETY
ADMINISTRATION)
04/30/09
COUNTY OF LOS ANGELES, DEPARTMENT OF HEALTH SERVICES
06/28/08
COUNTY OF LOS ANGELES, DEPARTMENT OF PUBLIC HEALTH
04/28/08
BOND SERVICES OF CALIFORNIA
11/02/08
STATE OF CALIFORNIA, SECRETARY OF STATE
02/29/08
DIESEL AIR FLEET SERVICE
06/09/08
UNIFORM INTERMODAL INTERCHANGE & FACILITIES ACCESS AGREEMENT (UIIA)
11/15/08
COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY
12/31/08
COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY
12/31/08
COUNTY OF RIVERSIDE, COMMUNITY HEALTH AGENCY DEPT. OF ENVIRONMENTAL HEALTH
12/31/08
SANTA ANA WATERSHED PROJECT AUTHORITY (SAWPA)
05/27/10

 
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Schedule 19(g)

Indemnification Claim Procedures

Claims for Indemnity.  Whenever a claim for Losses shall arise for which one
party the (the “Indemnified Party”) shall be entitled to indemnification
hereunder, the Indemnified Party shall notify the other party (the “Indemnifying
Party”) in writing describing the claim and the basis therefor; provided
however, that the failure to give notice shall not affect the right of the
Indemnified Party to indemnification hereunder except to the extent that such
failure prejudices the ability of the Indemnifying Party to defend any
claim.  The right of the Indemnified Party to indemnification, as set forth in
this notice, shall be deemed agreed to by the Indemnifying Party unless, within
thirty (30) days after the mailing of such notice, the Indemnifying Party shall
notify the Indemnified Party in writing that it disputes the right of the
Indemnified Party to indemnification.  If the Indemnified Party shall be duly
notified of such dispute, the parties shall attempt to settle and compromise the
same.

Defense of Claims.  Upon receipt by the Indemnifying Party of a notice from the
Indemnified Party with respect to any claim of a third party against the
Indemnified Party, and acknowledgment by the Indemnifying Party (whether after
resolution of a dispute or otherwise) of the Indemnified Party’s right to
indemnification hereunder with respect to such claim, the Indemnifying Party
shall assume the defense of such claim with counsel reasonably satisfactory to
the Indemnified Party and the Indemnified Party shall cooperate to the extent
reasonably requested by the Indemnifying Party in defense or prosecution
thereof, provided that the Indemnified Party is reimbursed by the Indemnifying
Party for its costs in connection with such cooperation.  If the Indemnifying
Party shall acknowledge the Indemnified Party’s right to indemnification and
elect to assume the defense of such claim, the Indemnified Party shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party, unless there is,
under applicable standards of conduct, a conflict on any significant issue
between Indemnifying Party and the Indemnified Party that makes it improper for
one counsel to represent both parties, in which case the reasonable fees and
expenses of such counsel shall be at the expense of the Indemnifying Party.  If
the Indemnifying Party has assumed the defense of any claim against the
Indemnified Party, the Indemnifying Party shall have the right to settle any
claim for which indemnification has been sought and is available hereunder;
provided that, to the extent that such settlement requires the Indemnified Party
to take, or prohibits the Indemnified Party from taking, any action or purports
to obligate the Indemnified Party, then the Indemnifying Party shall not settle
such claim without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.  If the Indemnifying Party does not
assume the defense of a third party claim and disputes the Indemnified Party’s
right to indemnification, the Indemnifying Party shall have the right to
participate in the defense of such claim through counsel of its choice, at the
Indemnifying Party’s expense, and the Indemnified Party shall have control over
the litigation and authority to resolve such claim subject to this Schedule
19(e).
 
 
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