Document:

ex10-43.htm

    
      

      

    

    Exhibit
10.43

     

     

    STOCK
PURCHASE AGREEMENT

    

    This
Stock Purchase Agreement is dated as of November 6, 2009 (this “Agreement”), by and among
General Environmental Management, Inc., a Nevada corporation (“GEM”) and GEM Environmental
Management, Inc. a Nevada corporation (“Purchaser”) and United States
Environmental Response, LLC, a California limited liability company (“USER” or “Seller”). The
parties may sometimes be referred to herein as the “Parties”.

     

    RECITALS

     

    A.          USER
owns all of the issued and outstanding shares (the “CLW Shares”) of California
Living Waters, Incorporated, a California corporation (“CLW”) and CLW owns all of the
issued and outstanding shares (the “SCWW Shares”) of Santa Clara
Waste Water Company, a California corporation (“SCWW”), subject to any
existing security interest held by National Bank of California in the SCWW
Shares;

     

    B.           Purchaser
is a wholly owned subsidiary of GEM; and

     

    C.          Seller
desires to sell the CLW Shares to the Purchaser and the Purchaser desires to
purchase the Shares from Seller for the Purchase Price (as defined hereinafter)
and on the other terms and conditions of this Agreement;

     

    NOW,
THEREFORE, in consideration of the mutual promises set forth herein, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Parties hereto hereby agree as follows:

     

    1.           
 Definitions.

     

    1.1         Defined
Terms.  For all purposes of this Agreement, the following terms
shall have the respective meanings set forth in this Section 1 (such definitions
to be equally applicable to both the singular and plural forms of the terms
herein defined):

     

    (a)
“Action” has the meaning
as set forth in Section 4.14.

     

    (b)
“ADO Note” means that certain
promissory note dated August 4, 2004 in the principal amount of $1,000,000 in
the form set forth in Schedule 4.8(a).

     

    (c)
“Receiving Agent” has the meaning
ascribed to such term in the Security Agreement.

     

    (d)
“Balance Sheet Date” has
the meaning as set forth in Section 4.6(a)(iii).

     

    (e)
“Benefit Plans” has the
meaning as set forth in Section 4.15(a).

     

    (f)
“Code” means the
Internal Revenue Code of 1986, as amended or superseded through the date
hereof.

     

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    (g)
“Contracts” has the
meaning as set forth in Section 4.19(a).

     

    (h)
“Claims Period” has the
meaning as set forth in Section 7.1(b).

     

    (i)
“Closing” means the sale
and purchase of the Shares, as further described in Section 2.2
hereof.  “Closing
Date” means the date of the Closing, as further described in Section 2.2
hereof.

     

    (j)
“Closing Net Working Capital
Schedule” has the meaning as set forth in Section 2.3

    

    (k)
“CLW Shares” is defined
in Recital A.

     

    (l)
“Corporate Guarantee”
has the meaning as set forth in Section 3.2(b).

     

    (m)
“Damages” has the
meaning as set forth in Section 7.2(a).

     

    (  )
“Debt Retirement
Default” is defined in section 6.3(b).

     

    (n)
“due inquiry” has the
meaning as set forth in Section 4.

     

    (o) “Environmental Laws” shall mean
all applicable laws, statutes, regulations, rules, ordinances, decrees, orders
and agreements, which purport to regulate the generation, processing,
production, storage, treatment, transport or Release (as defined below) of
Hazardous Materials to the environment, or impose requirements, conditions or
restrictions relating to environmental protection, management, planning,
reporting or notice or public or employee health and safety.

     

    (p)
“ERISA” has the meaning
as set forth in Section 4.15(a).

     

    (q)
“Excluded Claims” has
the meaning as set forth in Section 7.1(b).

     

    (r)
“Financial Statements”
has the meaning as set forth in Section 4.6(a).

     

     (t)
“Governmental Entity”
has the meaning as set forth in Section 4.14.

     

    (u)
“Hazardous Material(s)”
shall mean any substance, exclusive of all substances that Santa Clara Waste
Water Company is permitted to receive and treat,  that is:
(i) defined as a hazardous substance, hazardous material, hazardous waste,
biohazardous materials, pollutant, toxic substance, pesticide, contaminant or
words of similar import under any Environmental Law, (ii) a petroleum
hydrocarbon, including crude oil or any fraction thereof, (iii) hazardous,
toxic, corrosive, flammable, explosive, infectious, radioactive, carcinogenic or
a reproductive toxicant, or (iv) any otherwise non-hazardous material regulated
pursuant to any California Environmental or other law.

     

    (v) “Indebtedness” means, as of a
specified date, with respect to a Person (i) all indebtedness created, assumed
or incurred in any manner by such Person representing

     

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    money
borrowed (including by the issuance of debt securities), (ii) all indebtedness
for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business), and (iii) all
obligations of such Person on or with respect to then outstanding letters of
credit, bankers’ acceptances and other extensions of credit whether or not
representing obligations for borrowed money.

     

    (w)
“Intellectual Property
Rights” has the meaning as set forth in Section 4.11.

     

    (x)
“Interim Results of
Operations” has the meaning as set forth in Section
4.6(a)(iv).

     

    (y)
“Knowledge” has the
meaning as set forth in Section 4.

     

    (z)
“Material Adverse
Effect” has the meaning as set forth in Section 4.7(g).

     

    (aa)  “Net Working Capital Deficiency
Amount” is defined in Section 2.3.

     

    (bb) “Notes” is defined in Section
2.2(i). “Note One”
through “Note Five” are
defined in Section 2.2(b) through (f).

     

    (cc)
“Environmental Site”
means any of the properties or facilities now orafter August 2, 2004, owned or
leased by USER, CLW, or SCWW.

     

    (dd)
“Legal Requirement” has
the meaning as set forth in Section 4.4.

     

    (ee)
“Ordinary Course” has
the meaning as set forth in Section 4.6(b).

     

    (ff)
“Organizational
Documents” has the meaning as set forth in Section 4.4.

     

    (gg)
“Permits” has the
meaning as set forth in Section 4.16(a).

     

    (hh)
“Person” means any
individual, corporation, partnership, limited liability company, limited
liability partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental authority or other
entity.

     

    (ii)
“Policies” has the
meaning as set forth in Section 4.12.

     

    (jj)
“Property Information”
has the meaning as set forth in Section 4.11.

     

    (kk)
“Purchaser’s Disclosure
Schedule” has the meaning as set forth in Section 5.

     

    (ll)
“Purchaser Indemnitees”
has the meaning as set forth in Section 7.2(a).

     

    (mm)
“Purchase Price” is
defined in Section 2.2.

     

    (nn) “Release”
shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the
environment
(including the abandonment or discarding of barrels, containers and other
receptacles containing any Hazardous Material).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (oo)
“Review Period” has the
meaning as set forth in Section 2.3.

     

    (pp)
“SCWW Shares” has the
meaning as set forth in Recital A.

     

    (qq)
“Securities Act” means
the Securities Act of 1993, as amended.

     

    (rr)
“Seller Indemnitees” has
the meaning as set forth in Section 7.2(b).

     

    (ss)
“Seller’s Note” has the
meaning as set forth in Section 2.2(a).

     

    (tt)
“Seller’s Agreements”
has the meaning as set forth in Section 5.1.

     

    (uu)
“Seller’s Disclosure
Schedule” has the meaning as set forth in Section 4.

     

    (vv)
“Statement of
Objections” has the meaning as set forth in Section 2.3.

     

    (ww)
“Security Agreement” has
the meaning as set forth in Section 3.2(c).

     

    (  )  “Stock Transfer Recission
Time” is
defined in Section 6.3(b).

     

    (xx)
“Tax Returns” has the
meaning as set forth in Section 4.25(a).

     

    (yy)
“Taxes” has the meaning
as set forth in Section 4.25(a).

     

    (zz)
“Termination Date” has
the meaning as set forth in Section 7.1(b).

     

    (aaa) “Warrants” has the meaning as
set forth in Section 2.2(ii).

     

    2.           
 Closing. 

     

    2.1           Closing. The purchase and sale of
the Shares in exchange for the Purchase Price shall be consummated at a closing
(the “Closing”) on
November 6, 2009; provided, however, notwithstanding any other provision herein,
the parties agree that the Closing shall be deemed to be effective as of 5:00 PM
(PST),  October 31, 2009 and all references herein to the “Closing Date” shall
mean  October 31, 2009, unless the context requires
otherwise.  

     

    Subject
to the terms contained herein, and the satisfaction of the conditions set forth
in Section 3.2 of this Agreement, at the Closing: (i) Seller shall sell and
deliver to Purchaser the CLW Shares; and (ii) Purchaser shall deliver to Seller
the Purchase Price as defined hereinafter, in the following terms and
conditions.

     

    2.2           Consideration. At
Closing, Seller will deliver to the Purchaser, GEM’s subsidiary, the CLW Shares,
free and clear of any Liens.  In exchange therefor, and at the
Closing, Purchaser will cause GEM to deliver:

     

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    (i) six
promissory notes (individually a "Note" and collectively, the
"Notes") in the
aggregate principal amount of $9,003,000, as set forth below in Section 2.2 (a)
through (f) of this Section 2.2, to USER as principal and as "Receiving Agent" as such term
is defined in the Security Agreement, and (ii) Warrants (the "Warrants") to purchase 425,000
shares of GEM common stock in the form of the Warrants attached hereto a Exhibit
2.2(i)(A) and (B).  The Notes and the Warrants are sometimes referred
to herein collectively as the “Purchase
Price”.  The Notes are to be issued as follows:

     

    (a) a
$2,000,000 promissory note payable to the order of Seller (the “Seller’s Note”) executed in
the precise form set forth on Exhibit 2.2(i)(a) hereto.

    

    (b) a
$1,700,000 promissory note payable to the order of Seller's designee, Forney
Family Unitrust (“Note
One”) executed in the precise form set forth on Exhibit 2.2(i)(b)
hereto.

    

    (c) a
$1,100,000 promissory note payable to the order of Seller's designee, Nuestros
Suenos, S.A., a Guatemalan sociedad anonima (“Note Two”) executed in the
precise form set forth on Exhibit 2.2(i)(c) hereto.

    

    (d) a
$425,000 promissory note payable to the order of Seller's designee, Charles
Mundy (“Note Three”)
executed in the precise form set forth on Exhibit 2.2(i)(d) hereto.

    

    (e) a
$1,600,000 promissory note payable to the order of Seller's designee, Gary S.
Edwards (“Note Four”)
executed in the precise form set forth on Exhibit 2.2(i)(e) hereto.

    

    (f) a
$2,178,000 promissory note payable to the order of Seller's designee, Douglas
B. Edwards (“Note Five”)
executed in the precise form set forth on Exhibit 2.2(i)(f) hereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    2.3    Closing
Net Working Capital. 
The
Purchase Price payable hereunder shall be subject to an adjustment following the
Closing Date in accordance with this Section 2.3 if and to the extent that
SCWW’s Closing Net Working Capital Amount shall be less than $250,000. The
Seller, CLW and SCWW shall cause SCWW's cash balances as of the Closing Date to
be at least $400,000 less the $200,000 Seller’s receipt of cash referred to in
this Section. “Closing
Net Working Capital Amount” means the aggregate net working capital
(current assets less cash less current liabilities) of the Company, taken
together, immediately upon completion of the Closing. If the Closing Net Working
Capital Amount is less than $250,000 (hereinafter, the “Net
Working Capital Deficiency Amount”), GEM shall be entitled to adjust the
Seller’s Note (with effect on the amount of the first Installment thereon) for
the Net Working Capital Deficiency Amount.  The Closing Balance Sheet
at October 31, 2009 (the "Closing Balance Sheet") shall be prepared in
accordance with GAAP; for purpose of the Closing Balance Sheet, GAAP excludes
the cash required to service long term debt, which long term debt currently is
characterized as a current liability of approximately $300,000 on SCWW’s
balance
sheet.  Prior to Closing, SCWW shall have paid to Seller $200,000 in
cash from the accounts of SCWW. As soon as reasonably practicable, but in no
event later than 60 days after the Closing Date, the Purchaser will deliver to
Seller a schedule (the “Closing
Net Working Capital Schedule”) which shall include a calculation of the
Closing Net Working Capital Amount.  Upon receipt of Purchaser’s
calculation of the Closing Net Working Capital Amount, Seller shall be permitted
during the succeeding forty-five (45) day period (the “Review
Period”) full access at all reasonable times to the books and records of
the Company as Seller may reasonably request for the purpose of reviewing
Purchaser’s calculation of the Closing Net Working Capital Amount.  On
or prior to the last day of the Review Period, Seller may object to Purchaser’s
calculation of the Closing Net Working Capital Amount by delivering to Purchaser
a written statement setting forth a reasonable basis for such objection (a
“Statement
of Objections”).  If Seller fails to deliver a Statement of
Objections within the Review Period, Purchaser’s calculation of the Closing Net
Working Capital Amount shall be deemed to have been accepted by the
Parties.  If Seller delivers a Statement of Objections within the
Review Period, Seller and Purchaser shall negotiate in good faith to resolve
such objections, and, if the same are so resolved, the calculation of the
Closing Net Working Capital Amount, with such changes to the Closing Net Working
Capital Amount as have been agreed in writing by Seller and Purchaser, shall be
final and binding.  If Seller and Purchaser shall fail to reach an
agreement with respect to the matters set forth in the Statement of Objections,
then such matters shall, not later than fifteen (15) days after Seller or
Purchaser affirmatively terminated discussions in writing with respect to such
Statement of Objections, be submitted for resolution to an independent auditor
as agreed by the Purchaser and the Seller.  The determination made by
the independent auditor shall be final, binding and conclusive on the
parties.  The fees and expenses of the auditor shall be borne equally
by Purchaser and Seller.

     

    The
Seller hereby acknowledges and agrees that the Purchase Price (as such amounts
may be adjusted pursuant to the terms of this Agreement, and the other
consideration provided pursuant to the terms of this Agreement) shall constitute
the full consideration for the CLW Shares.

    

    3.           
 Conditions to Closing.

    

    3.1           Conditions to Purchaser’s
Obligation to Close.  The Purchaser’s obligation to deliver the
Notes and the Warrants and to perform any other action at the Closing shall be
subject to conditions precedent or concurrent, as follows:

    

    (a) 
the delivery to Purchaser of: (i) the CLW stock certificate representing all of
the issued and outstanding CLW Shares; and (ii) appropriate stock powers
executed by USER and transferring those shares from USER to the
Purchaser;

     

    (b) 
the delivery to Purchaser of: (i)  the resignation of all directors
and officers of CLW; and (ii) the resignation of all officers and the directors
of SCWW, all effective upon
GEM’s sale of its base business, elimination of all ComVest debt except the
Mobile Treatment Services related debt, and payment of the first installment of
the Seller’s Note;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (c) the
delivery of agreements in the forms separately agreed between SCWW and each of
(i) Southern California Management Services, Inc., (ii) M&C Mundy
Enterprises, Inc., and (iii) Burning Rubber, Inc., pursuant to which each of
Southern California Management Services, Inc., M&C Mundy Enterprises, Inc.,
and Burning Rubber, Inc. shall have, with the consent of SCWW acknowledged on
each such agreement, terminated their respective management agreements with
SCWW;

     

    (d) the
delivery of duly executed employment agreements between GEM and Douglas B.
Edwards, in the form as separately agreed to by the Parties
thereto;

     

    (e)  the
delivery of duly executed employment agreements, between SCWW as employer and
each of Charles Mundy, Marlene Faltemier, and Gary S. Edwards, in the forms as
separately agreed by the Parties;

     

    (f)
delivery of copies of all consents and approvals (including, but not limited to,
regulatory approvals, if any) and USER internal approvals required to be
obtained by Seller in connection with the consummation of the transactions
contemplated hereunder.

     

    (g)
delivery of certified copies of Seller's, CLW's and SCWW's Articles of
Incorporation (or, with respect to Seller, Articles of Organization)
and  certificates of “Good Standing”, each issued by the office of the
Secretary of State of the State of California, dated as of a date no later than
October 21, 2009 and of each jurisdiction, if any, in which any of such entities
is qualified to do business as a foreign corporation, dated reasonably prior to
the Closing Date, stating that the subject entity is duly formed or qualified
and in good standing in such jurisdiction.

     

    (h)
delivery to Purchaser of a certificate dated as of the Closing Date and signed
on its behalf by the manager of the Seller to the effect that, as to
Seller:  (A)  its Articles of Organization and its Operating
Agreement (collectively in this subsection “Organizational Documents”) attached
to the certificate are true and complete; (B) its Organizational Documents
have been in full force and effect in the form attached from and after the date
of the adoption of the resolutions referred to in clause (C) below and no
amendment to such Organizational Documents has occurred from and after the date
of the last amendment, if any, annexed thereto; and (C) the resolutions of the
manager of the Seller attached to the certificate and authorizing the actions
taken in connection with the transactions contemplated hereby were duly adopted
by all necessary limited liability company actions, remain in full force and
effect, and have not been amended, rescinded or modified. 

     

    (i)           delivery
by CLW to the Purchaser of a certificate by the Secretary of CLW (i) as to the
pre-Closing names of the members of the board of directors of CLW and the names
and signature specimens of all of the elected officers of CLW; (ii) that
attached to that
certificate is the corporate minute book of CLW, the stock register of which is
to show the CLW Shares registered to the Purchaser as holder of record; (iii)
that attached thereto are the signed instruments by which each of CLW’s
directors and officers shall have irrevocably tendered their respective
resignations from office, all effective upon GEM’s sale of its base business,
elimination of all ComVest debt except the Mobile Treatment Services related
debt, and payment of the first installment of the Seller’s Note;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (j)
delivery by SCWW to the Purchaser of a certificate by the Secretary of SCWW (i)
as to the pre-Closing names of the members of the board of directors of SCWW and
the names and signature specimens of all of the elected officers of SCWW; (ii)
that attached to that certificate is the corporate minute book of SCWW, the
stock register of which is to show the SCWW Shares registered to CLW as holder
of record; (iii) that attached thereto are the signed instruments by which each
of SCWW’s directors and officers shall have irrevocably tendered their
respective resignations from office, all effective upon GEM’s sale of its base
business, elimination of all ComVest debt except the Mobile Treatment Services
related debt, and payment of the first installment of the Seller’s
Note;.

     

    (k) concurrently
with the Closing, Seller shall deliver to the Purchaser an opinion letter of
Seller’s counsel, dated the Closing Date and otherwise in form and substance as
set forth on Exhibit 3.1(k) hereto.

     

    3.2           Conditions to Seller’s
Obligation to Close.  The Seller’s obligation to deliver the
CLW Shares and to perform any other action at the Closing shall be subject to
conditions precedent or concurrent, as follows:

     

    (a)
[INTENTIONALLY LEFT BLANK]

     

    (b)
Delivery by GEM to USER, as principal and as Agent for Note Holders (as defined
in the Notes), the joint and several unconditional corporate guarantee of GEM
and Purchaser (“Corporate
Guaranty”), precisely in the form of Exhibit 3.2(a) hereto, which
guarantees the timely payment of the Notes ; and a separate guaranty of the
Notes by CLW (the “CLW
Guaranty”), in a form to be agreed by the Parties.

     

    (c)
Delivery by the Purchaser and CLW to USER, as principal and as Agent for the
Note Holders (as defined in the Notes), of: (i) the Security Agreement precisely
in the form set forth on Exhibit 3.2(b) hereto (“Security Agreement”), by
which, inter alia, Purchaser pledges the CLW Shares as security for the payment
of the Notes and (ii) the stock certificates of CLW with duly executed stock
powers.

    

    (d) 
Delivery by GEM to the Seller of a certificate dated as of the Closing Date and
signed on its behalf by the Secretary of GEM to the effect that, as to
GEM:  (A) its Articles of Incorporation and its Bylaws
(collectively in this subsection, “Organizational Documents”)
have been in full force and effect, and have not been amended or rescinded on or
after the date of the adoption of the resolutions referred to in clause
(B) below; (B) the resolutions of the board of directors of GEM attached to
the certificate and authorizing the actions taken in connection with the
transactions contemplated hereby were duly adopted, remain in full force and
effect, and have not been amended or rescinded; and (C) signature specimens of
its CEO and its Secretary.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (e)
Delivery by Purchaser to the Seller of a certificate dated as of the Closing
Date and signed on its behalf by the Secretary of the Purchaser to the effect
that, as to the Purchaser: (A) its Certificate of Incorporation and its
Bylaws (collectively in this subsection, “Organizational Documents”) have been
in full force and effect, and have not been amended or rescinded on or after the
date of the adoption of the resolutions referred to in clause (B) below;
(B) the resolutions of the board of directors of Purchaser attached to the
certificate and authorizing the actions taken in connection with the
transactions contemplated hereby were duly adopted, remain in full force and
effect, and have not been amended or rescinded; and (C) signature specimens of
its CEO and its Secretary.

     

    (f)  Delivery
by Purchaser and GEM of an opinion letter by the Lund LAW Group, acting as
Purchaser and GEM’s counsel, dated the Closing Date and otherwise in form and
substance as set forth on Exhibit 3.2(e), hereto.

     

    4.           Representations and
Warranties of Seller.  As an inducement to Purchaser to enter
into this Agreement and to consummate the transactions contemplated herein and
except as set forth in the disclosure schedule delivered by Seller on the date
hereof (the “Seller’s
Disclosure Schedule”), the Seller to its Knowledge (as defined below)
hereby represents and warrants to Purchaser and GEM, in all Material respects as
set forth in subsections 4.1 through 4.26.  The Seller’s Disclosure
Schedule shall not be deemed adequate to disclose an exception to a
representation or warranty made herein, unless the Seller’s Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail, provided that: (i) “Financial Statements”
means, as to SCWW, SCWW’s balance sheet and income statement as prepared by SCWW
and does not mean or include: (A) any adjustments thereto prepared by GEM or (B)
any pro forma projections or forward looking statements; and (ii) the Disclosure
Schedule shall be deemed to identify as exceptions with reasonable
particularity, and describes the relevant facts in reasonable
detail.  The Seller’s Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.  “Knowledge” when applied to the
Seller means: with respect to any matter in question, that Seller has no actual
knowledge of such matter and due inquiry would reveal no knowledge, materially
contrary to any material representation. For this purpose, “due inquiry” means reasonable
review of files and other information in the possession of USER’s manager; and
(ii) reasonable inquiry of employees of the Seller, CLW and SCWW who have
primary responsibilities pertinent to such inquiry and access to information in
the possession of the Seller, CLW or SCWW, respectively, responsive
thereto.

     

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

     

    4.1           Title to
Shares.  

     

    (a)           
CLW is a wholly owned subsidiary of USER. All of CLW’s outstanding equity
interests were duly authorized, validly issued and are fully paid and
non-assessable.  There are no existing options, warrants, rights,
calls or commitments of any character relating to the equity interests of the
CLW. There are no outstanding securities, obligations or instruments convertible
into or exchangeable for equity interests of CLW and no commitments to issue
such securities, obligations or instruments.  No Person has any right
of first refusal, preemptive right, subscription right or similar right with
respect to any equity interests of CLW.  Seller represents and
warrants that such Seller has good and marketable title to the Shares, and will
convey to Purchaser at the Closing good and marketable title to the Shares, free
and clear of any and all Liens other than may exist with National Bank of
California as secured party as disclosed on Schedule 4.1(a).

     

    (b)           Other
than CLW and its wholly owned subsidiary, SCWW, the Seller does not have any
direct or indirect subsidiaries.  For purposes of this Agreement, a
direct or indirect subsidiary of the Seller means any corporation, trust,
general or limited partnership, limited liability company, limited liability
partnership, firm, Seller or other business enterprise which is controlled by
the Seller through direct ownership of the stock, equity or other interests of
such business enterprise or indirectly through the ownership of stock, equity or
other interests in one (1) or more other business enterprises which
are connected with the Seller by means of one (1) or more chains of
business enterprises that are connected by ownership of stock or other
proprietary interests.

     

    4.2           Organization, Good Standing
and Authority.  Seller, CLW and SCWW have been duly organized
and validly exist as: (a) limited liability company in good standing under the
laws of the State of California, (b) a corporation organized under the laws of
the State of California, and (c) a corporation organized under the laws of the
State of California, respectively, with full corporate power and authority to
own, operate and lease their respective properties and to conduct their
businesses as currently conducted.  Seller, CLW and SCWW have full
company power and authority to do and perform all acts and things to be done by
each of them under this Agreement and the documents, instruments and agreements
executed in connection herewith by the Seller and the performance of its
obligations hereunder has been, to the extent necessary, duly and properly
authorized and no other action or approval by the Seller, CLW and SCWW or any
other Person, except as set forth or described on Schedule 4.2, is
necessary for the execution, delivery or performance of this Agreement by the
Seller.

     

    4.3           Execution and
Delivery.  Except as set forth on Schedule 4.3, all consents,
approvals, authorizations and orders necessary for the execution, delivery and
performance by the Seller of this Agreement have been duly and lawfully
obtained, and the Seller has full right, power, authority and capacity to
execute, deliver and perform this Agreement.  This Agreement has been
duly executed and delivered by the Seller and constitutes legal, valid and
binding agreements of the Seller enforceable against the Seller in accordance
with its terms in all material respects, except that enforceability may
be

     

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    limited
by the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors.

     

    4.4           No
Conflicts.  The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(a) except as set forth on Schedule 4.4, conflict
with or result in any material breach or violation of any term or provision of,
or constitute a material default under (with or without notice or passage of
time, or both), or otherwise give any Person a basis for accelerated or
increased rights or termination or nonperformance under, any indenture,
mortgage, deed of trust, loan or credit agreement, lease, license or other
agreement or instrument to which the Seller is a party or by which such Person
is bound or affected or to which any of the property or assets of such Person is
bound or affected, (b) result in any material violation of the provisions
of the organizational documents (the “Organizational Documents”) of
the Seller, CLW or SCWW, or of any applicable statute, law, ordinance, rule,
regulation, permit, order, writ, judgment, injunction, decree or award, whether
foreign or domestic (“Legal
Requirement”); or (c) result in the creation or imposition of any
Lien upon any property or asset of the Seller, CLW or SCWW.  Except
for this Agreement, Seller, CLW and SCWW have no legal obligation, absolute or
contingent, to any other Person to sell any capital stock of CLW or SCWW, the
business of the CLW or SCWW, or any or all of the assets of CLW or SCWW, or to
effect any merger, consolidation or other reorganization of CLW or SCWW or to
enter into any agreement with respect thereto.

     

    4.5           Corporate
Records.  The copies or originals of the Organizational
Documents of CLW and SCWW’s minute books and stock records previously delivered
to Purchaser are true, complete and correct in all material
respects.  SCWW and CLW have, in accordance with good business
practices, maintained substantially complete and accurate books and records, and
substantially correct records of all its material corporate
proceedings.

     

    4.6           Financial Statements;
Undisclosed Liabilities.

     

    (a)           Schedule 4.6(a) contains
a true and correct copy of the following financial statements (collectively, the
“Financial Statements”):
(i)  the unaudited balance sheets of the SCWW and CLW as of December 31,
2007 and December 31 2008; (ii) the unaudited statements of income and cash
flows of CLW and SCWW for the fiscal years ended December 31, 2007 and
December 31, 2008; (iii) the internally prepared, unaudited balance
sheets of the CLW and SCWW as of August 31, 2009 (the “Balance Sheet Date”); and
(iv) the internally prepared, unaudited statement of income of CLW and SCWW
for the eight (8) months ended August 31, 2009 (the “Interim Results of
Operations”)

     

    (b)           CLW
and SCWW do not have any material liabilities or obligations of any nature
(whether absolute, accrued, contingent, unmatured, unaccrued, unliquidated,
unasserted, conditional or otherwise), except for liabilities or obligations
(i) reflected or reserved against on the August 31, 2009 Balance Sheets: or
(ii) incurred in the Ordinary

     

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    Course of
business from and after the date of the August 31, 2009.  Balance
Sheets, (iii) disclosed on the Seller’s Disclosure Schedule: or
(iv) under customer contracts which are not in default.  As used
herein, “Ordinary
Course” shall mean matters occurring in the ordinary course of business
in a manner and scope consistent with the past operations of the Seller and
which do not involve material breaches of contract or material violations of any
Legal Requirement.

     

    4.7           Absence of Certain
Changes.  Since the Balance Sheet Date, except as disclosed in
Schedule 4.7, CLW and
SCWW have operated their respective businesses in the Ordinary Course and have
not:

     

    (a)
issued any capital stock or other equity interests of CLW or SCWW or options or
rights to acquire capital stock or other similar rights of the CLW or SCWW,
redeemed or repurchased any outstanding shares of capital stock or other equity
interests of CLW or SCWW, declared, set aside or paid any dividend or
distribution on any shares of capital stock or other equity interests of CLW or
SCWW, merged with any other entity or purchased or acquired capital stock or
other interest in any other entity, purchased or otherwise acquired all or
substantially all of the business or assets of any other Person, or transferred
or sold a substantial portion of each of CLW's or SCWW's business or assets to
any Person;

     

    (b)
incurred any debts or liabilities (absolute, accrued, contingent or otherwise),
other than current liabilities incurred in the Ordinary Course;

     

    (c) been
subjected to or permitted a Lien upon or otherwise encumbered any of their
assets, except any Lien for taxes not yet due;

     

    (d) sold,
transferred, licensed or leased any of their rights, assets or properties except
in the Ordinary Course;

     

    (e)
discharged or satisfied any Lien other than a Lien securing, or paid any
obligation or liability other than, current liabilities shown on the Balance
Sheet and current liabilities incurred from and after the Balance Sheet Date, in
each case in the Ordinary Course;

     

    (f)
canceled or compromised any debt owed to or by or claim of or against them, or
waived or released any right of material value other than in the Ordinary
Course;

     

    (g) made
or suffered any change or effect, which (individually or in the aggregate) has
had, or may reasonably be expected to have, a Material Adverse Effect (“Material Adverse Effect” means
any material adverse effect on or change with respect to the businesses,
financial condition, properties, profitability, or operations of CLW or
SCWW);

     

    (h) made
any change in its accounting methods, principles or practices;

     

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (i) paid,
or agreed to pay, any increase in compensation payable or to become payable
(including any bonus or commission formula) of any kind to any employee,
officer, director or consultant;

     

    (j)
entered into any transaction with the Seller or any Affiliate of
Seller;

     

    (k)
failed to renew or obtain an adequate replacement of any insurance policies
material to their respective businesses;

     

    (l) taken
any action (covertly or overtly) which would be reasonably expected to cause the
termination of any customer Contract; or

     

    (m)
entered into any agreement or otherwise obligated each of CLW or SCWW to do any
of the foregoing.

     

    4.8           Property;
Encumbrances.  Except as set forth on Schedule 4.8(a), Each of CLW
and SCWW have good, valid and marketable title to all their tangible personal
property free and clear of all liens.  SCWW owns the real property as
set forth in Schedule
4.8(b).  Schedule 4.8(c) contains
a list of all tangible personal property owned by CLW and SCWW or held by CLW or
SCWW pursuant to leases or licenses which, individually, have a cost,
replacement value or fair market value in excess of $5,000.  The
leases and licenses listed on Schedules 4.8(b) and
(c) are in full
force and effect without any material default, waiver or indulgence thereunder
by CLW or SCWW or, to the Knowledge of the Seller, by any other party
thereto.  True and complete copies of all leases and licenses listed
on Schedules
4.8(b) and (c) have been provided to
Purchaser.

     

    4.9           Condition of Personal
Property.  All personal property owned by CLW and SCWW and all
personal property held by the CLW and SCWW pursuant to personal property leases
or licenses are in good operating condition and not in need of any significant
repair or replacement, subject to ordinary wear and tear, and have been
operated, serviced and maintained in the Ordinary Course.

     

    4.10         Condition of Real
Property.  No condemnation proceeding is pending or, to the
Knowledge of the Seller, threatened, which would impair the occupancy, use or
value of any of the Real Property. CLW and SCWW have the exclusive right to use
and occupy the Real Property either by ownership thereof or pursuant to the
terms of the real property leases listed on Schedule 4.8(b), and all
material permits required to have been issued or appropriate to enable the Real
Property to be lawfully occupied and used for all of the purposes for which it
is currently occupied and used have been lawfully issued and are in full force
and effect. Except as set forth on Schedule 4.10, SCWW has
not subleased, assigned or transferred any of its rights with respect to the
Real Property, nor entered into any agreement to do so.  There are no
outstanding notices of any uncorrected written violations of applicable
building, safety, fire or housing ordinances with respect to the Real
Property.

    
 

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

     

    4.11         Intellectual Property and
Proprietary Rights.  Schedule 4.11(a) contains
a true and complete list of all patents, patent applications, trade names,
trademarks, service marks, trademark and service mark registrations and
applications, copyright registrations and applications, software source code and
grants of a license or right to CLW and  SCWW with respect to any of
the foregoing, owned or claimed to be owned by the CLW or SCWW and used or
proposed to be used by CLW or SCWW in the conduct of their businesses, whether
registered or not (collectively, the “Intellectual Property
Rights”), except as to customary “off the shelf” software used in the
Ordinary Course, including, without limitation, Microsoft Windows and Office
programs, etc.  CLW or SCWW own and have the unrestricted right to use
the Intellectual Property Rights and every trade secret, know-how, process,
discovery, development, design, technique, customer and supplier list, marketing
and purchasing strategy, invention, process, confidential data and/or other
information (collectively, “Proprietary Information”) used
in their businesses, free and clear of any right, equity or claim of
others.  Since the Balance Sheet Date, neither CLW nor SCWW has sold,
transferred, assigned, licensed or subjected to any Lien any Intellectual
Property Right or Proprietary Information or any interest therein. No
Intellectual Property Right or Proprietary Information conflicts with, infringes
on or otherwise violates any rights of others or is subject to any pending or,
to the Knowledge of the Seller, threatened litigation or other adverse claim of
infringement by any other Person.

     

    4.12          Insurance.  Schedule 4.12 contains a true
and complete list (including the name of the insurer, policy number, coverage
amount, deductible amount, premium amount and expiration date) of all insurance
policies and bonds and self insurance arrangements currently in force that cover
or purport to cover risks or losses to or associated with CLW's or SCWW's
business, operations, premises, properties, assets, employees, agents and
directors. The insurance policies, bonds and arrangements described on Schedule 4.12 (the “Policies”) are in full force
and effect.  No facts or circumstances exist that would cause CLW or
SCWW to be unable to renew its existing insurance coverage as and when the same
shall expire (and to continue to be able to obtain additional bonding for new
projects as required), in either case upon terms at least as favorable as those
currently in effect, other than possible increases in premiums that do not
result from any act or omission of CLW or SCWW.  CLW or SCWW is not in
material breach of or in material default under any of the Policies, has not
received any written notice of pending or threatened cancellation of any Policy,
and no claim or coverage under any Policy is currently being
disputed.

     

    4.13         Indebtedness.  CLW
or SCWW has no material liability or obligation for Indebtedness other than as
set forth on Schedule
4.13(a) and true and complete copies of all material instruments and
documents, if any, evidencing, creating, securing or otherwise relating to such
Indebtedness have been delivered to Purchaser.  No event has occurred
and no condition has become known to the Seller that constitutes or, with notice
or passage of time, or both, would constitute a material default or termination
under any instrument or document relating to or evidencing such
Indebtedness.  

     

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

     

    4.14          Judgments;
Litigation.  Except as set forth on Schedule 4.14, there is
no (a) material, outstanding judgment, order, decree, award, stipulation or
injunction of any local, state, federal or foreign court, government or
governmental department, commission, instrumentality, board, agency or authority
(“Governmental Entity”)
against the Seller, CLW or SCWW, or their properties, assets or businesses,
(b) material action, suit, arbitration, hearing, inquiry, proceeding,
complaint, charge or investigation, whether civil, criminal or administrative
(“Action”), by or before
any Governmental Entity or arbitrator or any appeal from any of the foregoing
pending or, to the Seller’s Knowledge, threatened, against CLW or SCWW or its
properties, assets or business, or (c) to the Seller’s Knowledge, fact or
circumstance which is reasonably likely to lead to the instigation of any Action
by or against CLW or SCWW.

     

    4.15          Employee Benefit
Plans.

     

    (a)           Schedule 4.15(a) contains a
true and complete list of each current material written current employment,
bonus, deferred compensation, incentive compensation, membership interest
purchase, membership interest option, membership interest appreciation right or
other membership interest-based incentive, severance, change-in-control, or
termination pay, hospitalization or other medical, disability, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to for the employees of CLW and
SCWW (the “Benefit
Plans”).  Schedule 4.15(a) identifies
each of the Benefit Plans that is an “employee welfare benefit plan,” or
“employee pension benefit plan” as such terms are defined in Sections
3(1) and 3(2) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”).  The
Sellers have delivered or made available to the Purchaser true and complete
copies of all material documents in its possession in connection with each
Benefit Plan.

     

    (b)           Each
of the Benefit Plans has been operated and administered in all material respects
in accordance with its terms and with applicable laws, rules and regulations,
including but not limited to ERISA and the Code (except for violations or
failures which are not reasonably likely to result in a Material Adverse Effect)
and neither CLW or SCWW nor any trade or business, whether or not incorporated,
that together with CLW or SCWW would be deemed a “single employer” under Section
414 of the Code is subject to any material Liability, including additional
contributions, fines, taxes, penalties, or retroactive premiums or similar
adjustments with respect to any Benefit Plan.  Each Benefit Plan
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified (or there is
additional time available to request such a determination).  To the
Knowledge of the Seller, no event or condition has occurred or is expected to
occur that would materially adversely affect the qualified status of any such
Benefit Plan subsequent to such determination.

     

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

     

    4.16         Permits,
Licenses, Etc.

     

    (a) CLW
and SCWW each possess, and each is in material compliance with, all material
franchises, licenses, permits, certificates, authorizations, rights and other
approvals of Governmental Entities necessary to: (i) occupy, maintain,
operate and use the Real Property as it is currently used and proposed to be
used, (ii) conduct its business as currently conducted and as proposed to
be conducted, and (iii) maintain and operate all Permits and Licenses
(collectively the “Permits”).  Schedule 4.16(a) contains
a true and complete list of all Permits.  Each Permit has been
lawfully and validly issued and is in full force and effect, and no proceeding
is pending or, to the Seller’s Knowledge, threatened with respect to the
revocation, suspension or limitation of any Permit.  The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in the revocation,
suspension, limitation or adverse modification of any Permit and, except as set
forth in Schedule
4.16(a), no Permit will require the consent of its issuing authority to,
or as a result of the consummation of, the transactions contemplated
hereby.

     

    (b) The
Seller has not been notified or presently has no reason to believe any of the
Permits will not be renewed in the Ordinary Course upon its
expiration.  Neither CLW nor SCWW is in material breach of, nor has it
received any claim or assertion (in writing or otherwise) that the Seller has
materially breached any of the terms or conditions of any Permit.

     

    (c)  CLW
and SCWW have made all material required registrations and filings with and
submissions to all applicable Governmental Entities relating to the operations
of CLW and SCWW as currently conducted and as proposed to be conducted. All such
registrations, filings and submissions were in compliance with all Legal
Requirements and other requirements when filed, no material deficiencies have
been asserted by any such applicable Governmental Entities with respect to such
registrations, filings or submissions and no facts or circumstances exist which
would indicate that a material deficiency may be asserted by any such authority
with respect to any such registration, filing or submission.

     

    4.17         Environmental
Matters.  Except as
listed herein or as set forth in the Environmental reports previously delivered
in writing to the Purchaser by its consultants:

     

    (a) CLW
or SCWW, since the commencement of their businesses,  has been in
substantial compliance with all applicable Environmental Laws and all Licenses
applicable to the Environmental Sites and the Assets and Properties, except with
respect to same as have been previously resolved to the satisfaction of the
relevant government agency;

     

    (b) there
has been no unreported Release of any Hazardous Material or otherwise regulated
material or waste pursuant to any California Environmental or other law
in material violation of any applicable Environmental Laws or Licenses by CLW,
SCWW, or any of its Affiliates from any storage tanks, surface impoundments,
septic tanks, pits, sumps or lagoons or any other location at any Environmental
Site in which Hazardous Materials are being or have been treated, stored or
transported during SCWW's ownership of any Environmental Site;

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (c)  there
are no Environmental Claims pending or, to the Knowledge of the Seller,
threatened against CLW or SCWW relating to an Environmental Site and there are
no circumstances that can reasonably be expected to form the basis of any such
Environmental Claim;

     

    (d)  to
the Knowledge of the Seller, there is no asbestos or asbestos-containing
material that requires current abatement or encapsulation under Environmental
Laws at an Environmental Site;

     

    (e)  to
the Knowledge of the Seller, and except to the extent of closure obligations
with respect to any Environmental Site, CLW and SCWW have no actual or alleged
Liability under any Environmental Law at an Environmental Site; 

     

    (f)  to
the Knowledge of the Seller, upon transfer of the Permits at Closing, CLW and
SCWW have all Permits that will be necessary to enable Purchaser to conduct its
business after the Closing in the same manner as the business is being conducted
on the date hereof;

     

    (g)  the
Seller has provided Purchaser with copies of any environmental assessment or
audit reports or other similar studies or analyses relating to any Real Estate
prepared by, or on behalf of, or otherwise in the possession of the Seller, CLW
or SCWW; and

     

    (h)  neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby will require any removal, response, or remediation pursuant
to any Environmental Law or any permit issued to CLW or SCWW.

     

    4.18         Consents.  Schedule 4.18 sets forth all
material consents, authorizations and approvals of, and all filings, notices and
registrations with, any Person to, or as a result of the consummation of, the
transactions contemplated hereby that are necessary in connection with the
operations and business of CLW or SCWW as currently conducted and as proposed to
be conducted or are required to be obtained or made by the CLW or
SCWW.  All such consents and filings have been obtained or made or
will be obtained or made by the Seller, CLW and SCWW prior to the
Closing.

     

    4.19         Material Contracts; No
Defaults. 

     

    (a)         Schedule 4.19 contains a
true and complete list and description of all material contracts, agreements,
understandings, arrangements and commitments, written or oral, of CLW and SCWW
(the “Contracts”) by
which they or their properties, rights or assets are bound that:

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (i)           involve
consideration with a value of $50,000 in the aggregate or more over its term
(other than Ordinary Course customer contracts);

     

    (ii)         cannot
be terminated by CLW or SCWW on less than 90 days’ notice without penalty or
payment of damages exceeding $10,000 in each case.

     

    (iii)        evidence
or provide for Indebtedness;

     

    (iv)        guarantee
the performance, liabilities or obligations of any other entity;

     

    (v)         restrict
in any material respect the ability of the CLW or SCWW to conduct any business
activities;

     

    (vi)        involve,
as parties thereto, CLW or SCWW or any Affiliate of CLW or SCWW;

     

    (vii)       relates
to the employment of any Person at an annual rate of compensation greater than
$75,000;

     

    (viii)      are
subject to termination or modification by any third party as a result of the
transactions contemplated by this Agreement;

     

    (ix)         involve
more than $10,000 and will require the CLW or SCWW to purchase or provide goods
or services for a period of more than 90 days after the Closing Date (other than
Ordinary Course customer contracts); or

     

    (x)          are
otherwise material to the business of CLW or SCWW.

     

    (b)         Each
Contract is, and immediately after the Closing will be (on identical terms),
legal, valid, binding, enforceable against the CLW and SCWW and in full force
and effect in the form delivered to Purchaser. CLW and SCWW are not, and, to the
Seller's Knowledge, no other party is in material breach of or default under any
Contract, and each of the Seller, CLW or SCWW have not received in writing or
otherwise any claim or assertion that the Seller, CLW or SCWW is in material
breach of or default under any Contract.

     

    (c)         No
event has occurred or, based on facts presently known to exist, is reasonably
anticipated which with notice or lapse of time or both would constitute a
breach or
default, or permit termination, acceleration or modification, under any
Contract.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    4.20         Employment
Laws.  Except to the extent expressly provided in Schedule 4.20:

     

    (a)           CLW
and SCWW are  in compliance with all federal, state or other
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and occupational safety with respect
to its business (except for violations or failures to comply which are not
reasonably likely to result in a Material Adverse Effect), and have not received
notice of, and, to the Knowledge of the Seller, is not engaged in, any unfair
labor practice with respect to its business.

     

    (b)           There
is no labor strike, dispute, slowdown or stoppage pending or, to Knowledge
of the Seller, threatened against or affecting CLW or SCWW. No employee of CLW
or SCWW is represented by a union.

     

    (c)           There
are no claims, grievances or arbitration proceedings, workers’ compensation
proceedings, labor disputes (including charges of violations of any federal,
state or local laws or regulations relating to current or former employees
(including retirees)), governmental investigations or administrative proceedings
of any kind pending or, to the Knowledge of the Seller, threatened against or
relating to CLW or SCWW, their employees or employment practices, or operations
as they pertain to conditions of employment that could have a Material Adverse
Effect; nor is CLW or SCWW subject to any order, judgment, decree, award or
administrative ruling arising from any such matter that could have a Material
Adverse Effect.

     

    4.21         Principal
Customers.  Schedule 4.21 contains a
true and complete list of the names and addresses of the
ten (10) largest customers of CLW or SCWW, as measured by the fees
received from such customer during each of the twelve (12) months ended
December 31, 2007 and December 31, 2008 and the eight months ended
August 31, 2009.  Except as set forth on Schedule 4.21, in the last
twelve (12) months, no such customer: (i) has cancelled, suspended or
otherwise terminated its relationship with CLW or SCWW, or (ii) has advised
the Seller, CLW or SCWW of its intention to cancel, suspend or otherwise
terminate its relationship with CLW or SCWW, or to materially reduce its
business or adversely change the terms upon which it pays for goods or services
from CLW or SCWW.  Subject to the receipt of all applicable consents,
approvals, and authorizations described in Schedule 4.18 and to the
Seller’s Knowledge, the Seller does not, except as disclosed on Schedule 4.21, reasonably
anticipate that any customer listed on Schedule 4.21 will
cancel, suspend or terminate its relationship with CLW or SCWW, or materially
reduce its business or adversely change the terms upon which it pays for goods
or services from CLW or SCWW as a result of the consummation of the transactions
contemplated by this Agreement.  The Seller, CLW and SCWW have not
taken any action that would result in the cancellation, suspension or
termination of CLW's or SCWW's relationship with any customer. 

     

    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

     

    4.22          Compliance with
Law.  Except as set forth in Schedule 4.22, in all material
respects, neither CLW or SCWW; (a) is in violation of, or conducting its
business or operations in violation of, or using or occupying its properties or
assets in violation of, any Legal Requirement, (b) in the past seven years,
has not violated, conducted its business or operations in violation of, or used
or occupied their properties or assets in violation of, any Legal Requirement,
or (c) in the past seven years, has not received any notice of any alleged
violation of, or any citation for noncompliance with, any Legal
Requirement.  To the Seller’s Knowledge, there are no facts that are
reasonably likely to give rise to any material violation by CLW or SCWW of the
provisions of any Legal Requirement.

     

    4.23          Environmental
Laws.

     

    Except as disclosed on Schedule 4.23, (i) CLW
and SCWW are  in material compliance with all applicable Environmental
Laws,, (ii)  CLW or SCWW have not generated, processed, produced, stored,
treated, transported, Released or disposed of any Hazardous Materials at, in,
on, under, about or from any Environmental Site (including facilities previously
leased or owned by CLW or SCWW or, to the Knowledge of Seller, any other
business the stock or net assets of which have been acquired by CLW or SCWW) or
at any other location except in material compliance with all applicable
Environmental Laws, and (iii) the Seller, CLW or SCWW has not received from
any Governmental Entity or any other Person, any material notice of violation,
notice to comply, compliance schedule, administrative or judicial complaint or
proceeding, information request, order, enforcement action or lien with respect
to alleged or alleging material potential violations of or liabilities under
Environmental Laws by or on behalf of the CLW or SCWW or relating to the Real
Property (including facilities previously leased by CLW or SCWW).  The
Seller, CLW and SCWW have provided Purchaser with copies (which may include
electronic copies) of all material reports in their possession of environmental
compliance audits, environmental assessments, environmental inspection reports,
and correspondence with or submissions to Governmental Entities under
Environmental Laws, in each case in connection with the operation of the
Company’s business or the Real Property.

     

    4.24         Brokers’
Fees.  Except as set forth on Schedule 4.24, no broker,
finder or similar agent has been employed by or on behalf of the Seller in
connection with this Agreement or the transactions contemplated hereby, and the
Sellers has not entered into any agreement, arrangement or understanding of any
kind with any Person for the payment of any brokerage commission, finder’s fee
or any similar compensation in connection with this Agreement or the
transactions contemplated hereby.

     

    4.25         Taxes.  Except
as to any matters disclosed in Schedule 4.26:

     

    (a)           The
term “Taxes” means all
material net income, capital gains, gross income, gross receipts, sales, use,
escheat, transfer, ad valorem, franchise, profits, license, capital,
withholding, payroll, employment, excise, goods and services, severance, stamp,
occupation, premium, property, assessments, or other governmental charges of any
kind whatsoever,
together with any interest, fines and any penalties, additions to tax or other
additional amounts incurred, accrued with respect thereto, assessed, charged or
imposed under applicable federal, state, local or foreign tax law, provided that
any interest, penalties, additions to tax or additional amounts that relate to
Taxes for any taxable period (including any portion of any taxable period ending
on or before the Closing Date) shall be deemed to be Taxes for such period,
regardless of when such items are incurred, accrued, assessed or
charged.  References to CLW or SCWW shall be deemed to include any
predecessor to such Person from which CLW or SCWW incurs a liability for Taxes
as a result of transferee liability.  The term “Tax Returns” means all
material tax returns, reports, statements or estimates that CLW or SCWW was
required to file or will be required to file prior to the Closing
Date.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (b)           All
Tax Returns required to be filed with respect to the CLW or SCWW, or their
businesses have been timely filed.

     

    (c)           All
Taxes required to be shown on such Tax Returns or otherwise due by or with
respect to CLW or SCWW or their businesses have been timely paid.

     

    (d)          All
such Tax Returns are true, correct and complete in all material
respects.

     

    (e)           No
adjustment relating to such Tax Returns has been proposed formally or informally
by any tax authority and, to the Knowledge of the Seller, no basis exists for
any such adjustment.

     

    (f)           CLW
or SCWW has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts owing with respect to its business to any employee,
independent contractor, creditor, member or other third party.

     

    (g)          There
are no pending or threatened Actions for the assessment or collection of Taxes
against CLW or SCWW (insofar as either relates to the activities or income of
CLW or SCWW or their businesses).

     

    (h)          There
are no Tax Liens on any properties or assets of CLW or SCWW, including their
businesses.

     

    4.26         FIRPTA. Neither CLW
nor SCWW has been a “United States real property holding company” within the
meaning of Section 897(c)(2) of the Code.

     

    5.           
 Representations
and Warranties of Purchaser.  As an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated herein
and except as set forth in the disclosure schedule delivered by Purchaser on the
date hereof (the “Purchaser’s
Disclosure Schedule”), Purchaser makes to Seller for Seller’s benefit and
for the benefit of Holders of the Notes, the representations and warranties set
forth in this Section 5.  Nothing in the Purchaser’s Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Purchaser’s
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail.  An exception in
the Purchaser’s Disclosure Schedule relating to one representation or warranty
shall be deemed to qualify or to serve as an exception to another representation
or warranty to the extent such exception expressly cross-references one or more
applicable representations set forth in another section of this Section
5.  The Purchaser’s Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
5.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    5.1           Organization; Good Standing;
Authority.  Purchaser has been duly organized and validly
exists as a corporation in good standing under the laws of the State of
Nevada.  Purchaser has full corporate power and authority to do and
perform all acts and things to be done by it under this Agreement, the Security
Agreement and any other agreements related to this transaction to which
Purchaser is a party (“Seller’s
Agreements”).  The execution and delivery of Seller’s
Agreements by Purchaser and the performance of its obligations hereunder and
thereunder have been, to the extent necessary, duly and properly authorized and
no other action or approval by Purchaser or any other Person, except as
otherwise provided in this Agreement, is necessary for the execution, delivery
or performance of Seller’s Agreements by Purchaser.

     

    5.2           Execution and
Delivery.  Except as set forth on Schedule 5.2, all
consents, approvals, authorizations and orders necessary for the execution,
delivery and performance by Purchaser of Seller’s Agreements have been duly and
lawfully obtained, and Purchaser has full right, power, authority and capacity
to execute, deliver and perform Seller’s Agreements.  The Seller’s
Agreements have been duly executed and delivered by Purchaser and constitute
legal, valid and binding agreements of Purchaser enforceable against Purchaser
in accordance with their respective terms, except that enforceability may be
limited by the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of
creditors.

     

    5.3           No
Conflicts.  The execution, delivery and performance of Seller’s
Agreements and the consummation of the transactions contemplated hereby will not
(a) except as set forth on Schedule 5.3, conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (with or without notice or passage of time, or both),
or otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument to
which Purchaser is a party or by which Purchaser is bound or affected or to
which any of the property or assets of Purchaser are bound or affected,
(b) result in the violation of the provisions of the Certificate of
Incorporation or Bylaws of Purchaser or any Legal Requirement, or
(c) result in the creation or imposition of any Lien upon any property or
asset of Purchaser.

     

    5.4           Brokers.  Except
as set forth on Schedule 5.4, no broker,
finder or similar agent has been employed by or on behalf of Purchaser or any
affiliate of Purchaser in connection with this Agreement or the transactions
contemplated hereby, and neither Purchaser
nor any affiliate of Purchaser has entered into any agreement, arrangement or
understanding of any kind with any Person for the payment of any brokerage
commission, finder’s fee or any similar compensation in connection with this
Agreement or the transactions contemplated hereby.  

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    5.5           Investment.  Purchaser
acknowledges that the CLW Shares have not been registered under the Securities
Act of 1933 (the “Securities
Act”) or qualified under any state blue sky or other securities laws, and
may not be resold absent registration under the Securities Act and qualification
under applicable state blue sky or other securities laws, or an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act (and applicable blue sky or other securities laws). Purchaser is
acquiring the CLW Shares for its own account, for investment purposes only and
not with a view towards the resale or distribution thereof in violation of the
Securities Act or any blue sky or other securities laws.

     

    6.            
Covenants; Other
Agreements.

     

    6.1           Further
Assurances.  If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each party hereto shall take or cause to be taken all such necessary or
desirable action and execute, deliver and file, or cause to be executed,
delivered and filed, all necessary or desirable documentation.

     

    6.2           Release of Personal
Guarantees; Compensating Payments.   GEM shall use its
best efforts to refinance all liabilities of CLW and SCWW that are personally
guaranteed by Douglas B. Edwards and Gary S. Edwards (such guarantees are
identified on Schedule
6.2 hereto), so as to remove Douglas B. Edwards and Gary S. Edwards from
any primary or secondary liability on or with respect to any such liabilities of
CLW and SCWW. From the date hereof to and until the date, if any, on which GEM
shall have achieved the refinance described in the previous sentence, GEM shall
pay to each of Douglas B. Edwards and Gary S. Edwards, monthly in arrears on the
first day of each calendar month, an amount determined by multiplying the amount
of principal outstanding on all loans to SCWW by the National Bank of
California, by 1%, and dividing the product by 12.

     

    6.3           Financial
Covenants.  From the date hereof and at all times until (i) the
Notes and the ADO Note have been irrevocably paid in full (to the extent not
earlier converted, if applicable), whether by timely payment, payment by
guarantors, satisfaction by recourse to the SCWW Shares and the CLW Shares under
the Security Agreement; the final resolution of any insolvency proceedings or
assignment for the benefit of creditors; or other irrevocable satisfaction; (ii)
the full performance by GEM as to any conversion of any Notes and as to any
exercise of the Warrants; and (iii) the irrevocable payment in full of all other
amounts that shall have become due to the Seller or any of the Note Holders,
whether or not any of the forgoing shall then payable or past due, under this
Agreement, the Security Agreement, the Notes or under any guaranty made by GEM,
CLW and Purchaser under the terms of this Agreement, GEM and the Purchaser shall
cause the performance of each of the following:

     

     (a)  Capital Improvement
Reserves.  To assure that SCWW shall have access to adequate capital
improvement funding, a minimum of $25,000 per month of SCWW’s cash flow shall be
reserved on the books of SCWW for expenditure by SCWW on capital improvements
within SCWW.  For all purposes of this Agreement and the Security
Agreement , SCWW “cash flow” shall not include any amounts so reserved, whether
at such minimum or greater amounts, and, for clarity, shall not include any cash
flow spent on SCWW capital improvements in the same month as that cash flow was
realized.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (b)  GEM’s Senior Lender
Debt.

     

    (i) GEM Senior Debt Retirement.  GEM
shall fully pay and satisfy (other than by any refinancing) its senior lender
(except indebtedness that is owed to the senior lender in connection with GEM's
sale of GEM Mobile Treatment Services, Inc.) (the “Senior Lender Debt”) not later
than March 12, 2010 at 5 p.m. Pacific Time (the "Stock Transfer Rescission
Time"). Time is of the essence of GEM’s obligation under this covenant.
Without diminishing the general effect of Section 8.13 hereof, the Parties
acknowledge with particularity that (i) the Parties had originally intended to
contract on the basis that GEM would have achieved immediately after Closing the
retirement of the Senior lender Debt; (ii) for pressing business reasons, GEM
nevertheless requested of Seller an extension of that retirement performance to
the Stock Transfer Rescission Time; (iii) Seller is willing to provide the
extension on the terms of this subsection (b) only upon the undertaking by GEM
to specifically perform this covenant.  Any failure fully to do so
shall constitute the “Debt
Retirement Default” hereunder.  The Parties agree that in the
event of a Debt Retirement Default the amount of money damages would be
difficult or impossible to prove under law and that a specific performance
remedy is therefore appropriate and agreed by the Parties.  GEM and
GEMEM agree not to assert to the contrary in any dispute hereunder. The Parties
also agree that the consequences to GEM and GEMEM of any Debt Retirement Default
are not a penalty but rather are an attempt by the Parties to place in
substantially the same position as they were prior to Closing (A) GEM and the
Purchaser, on the one hand, and (B) Seller, CLW and SCWW, on the other
hand.

     

    In the
event of any Debt Retirement Default, and notwithstanding any provision in this
Agreement or in any related agreement or instrument to the contrary, and upon
the irrevocable and unconditional re-transfer of the CLW Stock from Purchaser to
Seller under the terms of the Security Agreement:

     

    (1) this
Agreement, other than the provisions of  this
Section  6.3(b) and Sections 7 and 8 hereof;

     

    (2) the Corporate Guarantee, to the
extent it guarantees payment of the Notes but not to the extent it relates to
any obligations, under Paragaphs 7 & 8 hereof

     

    (3)
Security Agreement Section 6 (“Services Agreement to Preserve CLW Stock
Value”);

     

    (4) The
Notes

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (4) The
Warrants

     

    (5) all
actions (other than payments to employees and payments of costs and expenses as
agreed hereunder) taken by any and all Parties to perform the transactions
contemplated hereby;

     

    shall be
(thereupon and without any further action by any Party), as between GEM and the
Purchaser on the one hand, and the Seller and each holder of the Notes on the
other hand, deemed rescinded and null and void.  Upon the rescissions,
if any, contemplated hereby, Seller agrees to cause CLW and the each holder of
the Notes to GEM the original Notes and Corporate Guaranty issued at the Closing
hereunder; and...

     

    (ii) Until the Senior Lender Debt shall
have been fully paid and satisfied as required in subsection (i) above, GEM
shall cause there to be no distributions or other transfers of funds (including
loans) from SCWW to Purchaser or GEM or any of SCWW’s affiliates other than to
assist in the direct monthly payment of Note One, Note Two, Note Three, and the
ADO Note obligations from the Closing Date through March 12, 2010, and to
reimburse GEM for all out of pocket expenses for the employment contract of
Douglas B. Edwards.

     

    (c) GEM New Capital and
Uses.  GEM shall use its best efforts to raise $5,000,000 in
new investment capital by June 30, 2010, to be used as follows:

    

    
      	
               
      

            	
              (1)

            	
              the
      first use of proceeds of any new investment capital raised shall be to pay
      off the $2,000,000 Seller’s Note;

            

    

    

    
      	
               
      

            	
              (2)

            	
              the
      next $2,000,000 will be used toward: (i) the amount of funds sufficient
      for SCWW to complete SCWW’s regulatory compliance requirements; (ii) up to
      $300,000 as required to pay down the National Bank of California loans as
      an inducement to substitute GEM for Douglas Edwards and Gary Edwards as
      guarantors of the National Bank of California debt; and (iii) the balance
      toward SCWW’s working capital; and

            

    

    

    
      	
               
      

            	
              (3)

            	
              the
      final $1,000,000 shall apply toward GEM’s working
  capital.

            

    

    

    (d)  Restriction on SCWW
Hiring.  To assure consistent use of SCWW working capital
regarding personal services, SCWW shall not hire, or contract for, any
additional non-operating personnel beyond the level that would cause an increase
in the ratio of ONE DOLLAR for non-operating personnel expense for every EIGHT
DOLLARS of revenue.  For purpose of this ratio, sales persons are
considered as operating personnel but sales supervisors who are not primarily in
the field acquiring and servicing accounts are not considered operating
personnel.  SCWW may replace any terminated non-operating personnel or
add new persons provided that the total expenditure for all non-operating
personnel does not exceed the $1:$8 ratio.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (e)  Current
Ratio.  GEM shall cause SCWW to maintain a Current Ratio of 1.25:1, as
determined by reference to SCWW’s monthly balance sheets. “Current Ratio” means
total current assets divided by current total liabilities.

     

    (f)  Debt Service
Requirement.  GEM shall maintain a Debt Service Requirement of one
month of current debt requirement excluding scheduled principal payments in
excess of $100,000.00.  Funds required to debt service all principal
reductions in excess of $100,000 shall be maintained for a period of no less
than fifteen calendar days from the due date of such payments.

     

    (h)
Waiver of Financial Covenants.  The restrictions in 6.3 Financial Covenants
can be waived on written approval of the Seller, or with the written approval of
Holders of 50% of the outstanding Notes principal.

     

    (i) The above Financial Covenants shall
be in effect until (i) Douglas Edwards and Gary Edwards are removed as
guarantors of all SCWW and CLW debt, and (ii) either the $2,000,000 Seller Note
and the $1,000,000 “Agua de Oro” note payable to Seller are paid in full or the
$5,000,000 equity raise with use of proceeds outlined in “GEM New Capital and
Uses” is funded in full.

     

    7.           Indemnification.

     

                          7.1           Survival
Provisions.

     

    (a)           The
representations and warranties, covenants and agreements of the parties hereto
contained in this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby (and any examination, or knowledge of, or
investigation by or on behalf of any party hereto).

     

    (b)           Claims
for indemnification pursuant to Section 7.2(a) must be made by
delivery of written notice to the party against whom the indemnification claim
is made, setting forth in general terms the basis for the indemnification claim,
no later than the third anniversary of the date of this Agreement (the “Termination Date”); provided, however, claims for
indemnification for Damages (defined below) arising from any material breach of
the representations and warranties contained in Sections 4.1 (Title to Shares),
4.2 (Organization, Good Standing, Authority), 4.3 (Execution and Delivery),
4.23 (Compliance with Law), 4.24 (Environmental Laws), 4.26 (Taxes) or claims
for material internal misrepresentations (collectively, “Excluded Claims”) may be made
at any time, subject to the applicable statute of limitations.  (The
Termination Date or the applicable later date as described above is referred to
herein as the “Claims
Period”).

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

                          7.2           Indemnification.

     

    (a)           
The Seller hereby covenants and agrees to defend, indemnify and hold harmless
Purchaser and GEM and their respective affiliates (collectively, the “Purchaser Indemnitees”) from
and against any and all claims, actions, losses, obligations, costs, expenses,
settlement payments, awards, damages, judgments, fines, penalties and other
liabilities of any kind or nature whatsoever, including, without limitation,
reasonable attorneys’, accountants’ and experts’ fees (collectively, “Damages”) arising out of or
resulting from: (i) any material inaccuracy in or breach of any
representation or warranty made by the Seller in this Agreement or in any
certificate delivered pursuant to this Agreement; (ii) the failure of
Seller to perform or observe any covenant, agreement or condition to be
performed or observed by Seller pursuant to this Agreement.  

     

    (b)           Purchaser
and GEM hereby covenant and agree to defend, indemnify and hold harmless Seller,
the Agent and the Holders of the Notes and their respective affiliates
(collectively, the “Seller
Indemnitees”) from and against any and all Damages arising out of or
resulting from: (i) any material inaccuracy in or breach of any
representation or warranty made by Purchaser or GEM in this Agreement or in any
other related agreement to which they are, respectively, a party or in any
certificate delivered pursuant to this Agreement or any such related agreement
and (ii) the failure of Purchaser or GEM to perform or observe any
covenant, agreement or condition to be performed or observed by Purchaser or GEM
pursuant to this Agreement or any such related agreement.

     

    8.           General
Provisions.

     

    8.1           Notices.  All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery; upon
confirmed transmission by telecopy if sent during normal business hours of the
recipient (or if not, on the next business day of the recipient); three days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid; or otherwise upon delivery by hand or by messenger or one
day after deposit with a nationally recognized overnight courier
service.  Concurrently with the initiation of any such notice, the
sender shall make a good faith effort to send the addressee a copy of such
notice by electronic mail and to alert the addressee by telephone. Each of the
Company and the Holder may, by notice to the other, specify for itself from time
to time address specifications different from the initial address specifications
as follows:

     

    If to the
Company, addressed to:

     

    General
Environmental Management, Inc.

    Attention:
Timothy J. Koziol, CEO

    3194
Temple Ave, Ste. 250

    Pomona,
California 91768

    Facsimile
No.:  909.444.8356

    Telephone
No.: 909.444.9500

    Email:
Tim.Koziol@go-gem.com

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    

    With a
copy to:

    Patrick
Lund

    Lund LAW
Group

    1451
Quail Street, Suite 202

    Newport
Beach, CA 92660

    Facsimile
number: 949.250.4503

    Telephone
No.: 949 250.4230

    Email:
ricklund@lundlawgroup.com

    

    If to
Holder, addressed to:

     

    United
States Environmental Response, LLC

    4255
Harbour Island Lane

    Oxnard,
CA  93035

    Facsimile
number: 805.382.1313

    Telephone
No.: 805.850.8992

    Email:
canondougedwards@yahoo.com

    

    With a
copy to:

    Steven A.
O’Rourke Professional Corporation

    Attention:
Steven A. O’Rourke

    21700
Oxnard St., Suite 1160

    Woodland
Hills, CA 91367

    Facsimile
number: 818.530.4306

    Telephone
No.: 805.807.1346

    Email:
Steve@CalCorpLaw.com

    

                          8.2           Severability.  If
any term or provision of this Agreement or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable such term or provision in any other
jurisdiction, the remaining terms and provisions of this Agreement or the
application of such terms and provisions to circumstances other than those as to
which it is held invalid or enforceable.

     

                          8.3           Third Party Rights.
Except as provided in Section 7, notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any other
Person not a party to this Agreement (including, without limitation, any
employee broker or finder), and this Agreement shall be effective only as
between the parties hereto, their successors and permitted assigns.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

                          8.4           Entire
Agreement.  This Agreement, including the exhibits and
schedules attached hereto and other documents referred to herein, contains the
entire understanding of the parties hereto with respect of its subject matter
and supersedes all prior and contemporaneous agreements and understandings, oral
and written, between the parties with respect to such subject matter, including,
without limitation, any and all letters of intent as to the transactions
contemplated hereby.

     

                          8.5           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the parties hereto and the Holders of the Notes and their
respective successors and permitted assigns. This Agreement and the rights and
obligations hereunder shall not be assignable by any party, without the written
consent of the other parties and any such purported assignment by any party
without such consent shall be void.  

     

                          8.6           Counterparts.  This
Agreement may be executed in one or more counterparts, including by facsimile or
similar means of electronic communication, each of which shall be deemed an
original, but all such counterparts together shall constitute but one and the
same Agreement.

     

                          8.7           Recitals, Schedules and
Annexes.  The recitals, schedules, exhibits and annexes to this
Agreement are incorporated herein and made a part hereof as if fully set forth
at length herein.

     

                          8.8           Construction.  The
section and subsection headings used herein are inserted for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.  As used in this Agreement, the masculine, feminine or
neuter gender, shall be deemed to include the others whenever and wherever the
context so requires.

     

                          8.9           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
California.

     

                          8.10         Waiver.  Any
term or provision of this Agreement may be waived in writing at any time by the
party or parties entitled to the benefits thereof.  Any waiver
affected pursuant to this Section 8.10 shall be binding upon all parties
hereto.  No failure to exercise nor any delay in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude the exercise of any
other right, power or privilege.  No waiver of any breach of any
covenant or agreement hereunder shall be deemed a waiver of any preceding or
subsequent breach of the same or any other covenant or agreement.  The
rights and remedies of each party under this Agreement are in addition to all
other rights and remedies, at law or in equity that such party may have against
the other parties.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

                          8.11         Amendment.  No
supplement, modification, amendment or waiver of this Agreement shall be binding
unless executed in writing by Purchaser, on the one hand, and the Sellers, on
the other hand.  

     

                          8.12         Publicity.  The
initial press release relating to the execution and delivery of this Agreement
shall be a joint press release, to be agreed upon by the Purchaser and the
Seller.  

     

                          8.13         Specific
Performance.  Each of the Parties hereto acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached.  Accordingly, each of the
parties agrees that the other parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
addition to any other remedy to which they may be entitled, at law or in
equity.

     

                          8.14         Cumulative Remedies.
 All rights and
remedies of the parties hereto are cumulative of each other and of every other
right or remedy a party may otherwise have at law or in equity, and the exercise
of one or more rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of other rights or remedies.

     

                          8.15         Expenses.  Each
of the Parties hereto shall bear their own respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants, provided, however, that,
GEM shall:

    

    (b) pay
to Douglas B. Edwards up to $10,000 in attorneys’ fees incurred by him and
outstanding in connection with the negotiation of his employment agreement with
GEM;

     

    (b) cause
SCWW to pay up to Seller $50,000 in attorneys’ fees incurred by Seller prior to
5 p.m. November 11, 2009, and all attorney’s fees incurred by Seller thereafter,
in each such case as incurred in connection with the negotiation, preparation
and closing of this Agreement and related agreements, instruments and closing
documents.  For this purpose, the amount of such fees “incurred” shall
exclude the amount of fees referred to and paid by GEM under subsection (a)
above but the amount of reimbursement under this subsection (b) shall be
cumulative of the reimbursement amount under subsection (a) above;
and

     

    (c) pay
to Seller all amounts in attorneys’ fees and costs, accountants’ fees and costs
and other costs of enforcement, related to advice concerning any incipient Debt
Retirement Default, any actual Debt Retirement Default and all matters and
actions necessary or appropriate to any rescissions, re-transfer of CLW Stock,
novations of documents and other adjustments incurred by Seller in connection
with a Debt Retirement Default.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    

    In
connection with any demand for payment under this section 8.15, Seller shall
present to GEM invoices by the services providers in reasonable detail as to
matters and dates of service.

     

    IN WITNESS WHEREOF, each of the parties
hereto has executed this Agreement, or has caused this Agreement to be executed
on its behalf by a representative duly authorized, all as of the date first
above set forth.

     

    

     

    
      
        	
                “Seller”

                 

                United
      States Environmental Response, LLC,

                a
      California limited liability company, by

                Petro
      Flow, LLC, a California limited liability

                company

                 

                By: ________________________________                                                               

                       Douglas
      B. Edwards, Manager

                 

                 

                 

              	 
      	
                “Purchaser”

                 

                GEM
      Environmental Management, Inc.,

                a
      Nevada corporation

                 

                By: ________________________________

                       Timothy
      J. Koziol, CEO

                 

                 

                 

                “GEM”

                 

                General
      Environmental Management, Inc.,

                a
      Nevada corporation,

                 

                By:
      ________________________________

                      Timothy
      J. Koziol, CEO

              

      

    

     

     

    31ex10-44.htm

    
      

      

    

    Exhibit
10.44

    
 

    
      THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THIS SECURITY
IS “RESTRICTED” AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.

      

      THE
HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY
NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMPANY, WHICH SHALL NOT BE UNREASONABLY WITHHELD, AND
THEN ONLY: (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A; (II)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT; (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (IV) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(1), (2), (3); OR
(7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (IN THE FORM OF WHICH CAN BE OBTAINED FROM
THE COMPANY) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (V) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.

      

      

      GENERAL
ENVIRONMENTAL MANAGEMENT, INC.

      6.5%
SECOND-PRIORITY SENIOR SECURED PROMISSORY NOTE

      

      
        
          	
                  NUMBER:  ONE

                	
                  $1,700,000.00

                
	
                  POMONA,
      CALIFORNIA

                	
                  NOVEMBER
      6, 2009

                

        

      

      

      FOR VALUE RECEIVED, GENERAL ENVIRONMENTAL MANAGEMENT,
INC., a Nevada corporation (the “Company”), promises to pay to
the Forney Family Unitrust, a trust settled under the laws of the State of
California (the latest of any registered holder of this Note is herein referred
to as the “Holder”), in
United States dollars (in immediately available funds) the principal sum of
ONE MILLION SEVEN HUNDRED
THOUSAND DOLLARS ($1,700,000.00), together with (i) interest accrued
thereon from the date of this Note on the unpaid principal balance outstanding
from time to time; and (ii) other costs and expenses payable or to become
payable on the terms of this Note.  The Company will not, and will
instruct any transfer agent not to, register on the books of the Company the
transfer of this Note unless the conditions specified in the legend set out in
capital letters at the top of this Note are satisfied.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      This Note
is “Note One” in the series of six promissory notes (the “Notes”) made by the Company
pursuant to the terms and conditions of that certain Stock Purchase Agreement
dated as of November 6, 2009 by and among the Company and the other parties
thereto (the “Stock Purchase
Agreement”), the other Notes in the series being designated in the Stock
Purchase Agreement as the Seller’s Note, Note Two, Note Three, Note Four and
Note Five (herein the “Senior
Notes”).

      

      1.           Interest
Rate.  Interest on this Note shall accrue on all amounts
outstanding from the date hereof until the payment in full of all outstanding
principal of, and interest and costs and expenses payable on, this Note at the
rate of (A) Six and One Half Percent (6.5%) before the occurrence of any Event
of Default (as defined hereinafter), hereunder and, (B) Nine and One Half
Percent (9.5%) per annum after and during the continuance of any Event of
Default, provided that
in no event shall the interest rate be higher than the maximum rate permitted by
applicable law.   Interest on this Note shall be compounded
monthly and calculated on the basis of the actual number of days elapsed and a
360-day year.

      

      2.           Payment Schedule. Payment of
the outstanding principal of this Note shall be due and payable in 120
installments (“Installments”) commencing on
December 1, 2009 and continuing on the first day of each calendar month through
November 1, 2019 (collectively, the “Installment
Dates”).  Installments are payable in the following
amounts (subject
to the other terms of this Note): (A) the amount of principal and accrued
interest payable in the first one hundred nineteen (119) Installments shall be
equal Installments of principal and interest, calculated on the basis of a
30-year amortization of this Note and (B) the one hundred twentieth (120th)
Installment shall be a final, “balloon”, Installment in the amount of all
then-outstanding principal, interest and other amounts then outstanding
hereunder. Schedule A to this Note sets forth the schedule and amount of such
Installments.   Notwithstanding the foregoing, (C) all
outstanding principal and interest shall become due and payable on the date, if
any, on which the principal amount, or part thereof, of this Note is accelerated
and (D) the amount of principal specified in any Prepayment Notice (as defined
hereafter) shall be payable on the date specified for such payment in that
Notice of Prepayment.  On each Installment Date, all interest accrued
at a rate higher than 6.5% per annum shall also be payable.  Costs and
expenses such as may become payable hereunder are payable at the earlier of (i)
demand of the Holder; or (ii) the next succeeding Installment
Date.  All payments hereunder are payable at any United States address
or by wire transfer to any United States bank account, in each case as the
Holder may designate from time to time to the Company.  Whenever any
payment to be made hereunder would otherwise become due on a date which is not a
Business Day (as hereinafter defined), the payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest with respect to such
payment.  “Business
Day” means any day on which banks in the City of Los Angeles, California
are generally open for business.

      

      3.           Seniority;
Enforcement; Subrogation.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.1           Certain Definitions.  For
purposes of Paragraph 3, “Company” means the Company on
a consolidated basis   As to the Company: (i) “Senior Debt” means all Debt
outstanding from the Company to ComVest Capital LLC (the “ComVest Debt”), as of the date
of this Note, and includes any increase in the amount of indebtedness owed to
ComVest, and when it has been fully repaid, the ComVest Debt shall no longer be
part of the Senior Debt calculation;  and (ii) “Junior Debt” means all Debt,
whether now or hereafter incurred or outstanding, other than the Senior Debt and
this Note.  "Debt"
as to any person or entity (including the Company) (any such person or entity,
the “Obligor”) means:
(a) all obligations incurred by the Obligor in respect of borrowed money; (b)
all obligations owing by the Obligor to the seller or lessor of any real or
personal property under leases that are treated as "finance leases"; (c), or any
other creditor, bank or person in respect of amounts paid under letters of
credit, acceptances or other similar instruments; (d) any other obligations of
the Obligor that constitute a balance sheet liability of the Obligor, from time
to time; (e) all Guarantees issued by the Obligor in respect of any of the
foregoing items of Debt; (f) all liabilities (choate or conditional), principal
of and premium, if any, and interest (including without limitation, interest
accruing or that would have accrued but for the filing of a bankruptcy,
reorganization or other insolvency proceeding whether or not such interest
constitutes an allowed claim in such proceeding) on, and any and all other fees,
charges, expense reimbursement obligations, indemnities and other amounts owing
or which may become owing (whether or not then payable) pursuant to the terms
of, or any settlement or compromise of, all leases, accounts payable, trade
debt, agreements, documents and instruments providing for, creating, securing,
guaranteeing or evidencing or otherwise entered into in connection with all such
debt; (g) all deferrals, renewals, extensions, refundings, replacements,
refinancings and restructuring of and amendments, modification and supplements
to any Debt described above.  For purposes of this Paragraph 3, the term
"Guarantee" means, as to
any person, any obligation of such person guaranteeing or intended to guarantee
any indebtedness, including without limitation leases, dividends, principal,
premium, interest, penalties, fees, reimbursements, indemnifications, damages,
and other expenses payable under the terms of the documentation governing such
indebtedness.

       

       

      3.2           No New Debt Senior to Senior Debt. After the date
of this Note, the Company, Santa Clara Waste Water Company, a California
corporation (“SCWW”) or California Living Waters, Inc. shall not incur any Debt
other than debt incurred to replace the indebtedness to the National Bank of
California, the terms of which purport to be senior to any of the Notes. 
All new debt of the Company, SCWW and CLW shall be Junior Debt to any of the
Notes.  

       

       

      3.3           Debt
Priority.  Obligations under this Note are senior to all Junior
Debt on the terms set forth in Paragraph 4.  Obligations under this
Note shall be junior to the Senior Debt only to the extent of the express terms,
such as existed on the date this Note, of the Senior Debt.   In
the event that the Company shall fail to comply with any of the covenants or
other agreements contained in any agreement or instrument relating to Senior
Debt or an event of default shall occur with respect to Senior Debt other than a
Payment Default, which default or event of default shall not have been cured or
waived (a "Covenant
Default"), the Company shall give prompt written notice of such Covenant
Default to the Holder.

       

       

      3.4           Subrogation.  In the
event that the Holder shall be required to turn over any payment or distribution
under this Note to the holders of Senior Debt (or to any court) to be applied to
Senior Debt, the full amount of such payment shall automatically be added to the
principal amount of this Note and the Holder shall become subrogated to the
rights of the Senior Debt holders to the extent of such payments to such Senior
Debt holder or holders or court.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      3.5           Continuing
Effect.  The provisions of this Paragraph 3 are not intended to
impair and shall not impair as between the Company and the Holder the obligation
of the Company to pay Holder all amounts owing under this Note.  All
rights and interests under this Note, and all agreements and obligations of the
Company under this Paragraph 3 shall remain in full force and effect
irrespective of (i) any lack of validity or unenforceability of any agreement or
instrument relating to any Senior Debt, or (ii) any other circumstances that
might otherwise constitute a defense available to, or a discharge of, any
Holders of this Note or the Company.

       

       

      3.6           Event of Default Not
Affected.  Notwithstanding the foregoing in this Paragraph 3,
the failure of the Company to timely pay, according to the terms of this Note
other than this Paragraph 3, any amount payable on such other terms shall
constitute an Event of Default hereunder.

       

       

      4.           
Default.

       

       

      4.1           Bankruptcy
Event.  In the event of any liquidation, dissolution or winding
up of the Company, or of any execution, sale, receivership, insolvency,
arrangement, marshalling of assets or liabilities, composition, assignment for
the benefit of creditors, bankruptcy, liquidation, readjustment, reorganization
or other similar proceeding relative to the Company or its debts, its property
or its operations, whether voluntary or involuntary (each of the foregoing, a
"Bankruptcy Event"),
this Note shall be irrevocably paid in full in cash or other immediately
available funds before any payment is made upon the Junior Debt. In the event of
any such Bankruptcy Event, any payment or distribution of any kind or character,
whether in cash, property or securities that shall be made upon or in respect of
Junior Debt shall be promptly remitted to the Holder of this Note and applied in
payment of this Note unless and until the this Note shall have been irrevocably
paid or satisfied in full.

       

       

      4.2           Payment Default on This Note.
In the event the Company shall fail to timely pay amounts payable hereunder, (in
this Paragraph 4, a "Payment
Default"), then no cash payment shall be made by the Company on account
of Junior Debt, whether for principal, interest or otherwise, or for the
purchase, acquisition or retirement thereof, unless and until such this Note
shall have been irrevocably paid in full.

       

       

      4.3           Covenant Default on This
Note.   In the event that the Company shall fail to comply
with any of the covenants or other agreements contained in the Stock Purchase
Agreement, or any guarantee or other agreement or instrument relating to this
Note or an Event of Default shall occur with respect to this Note (other than a
Payment Default) which default or event of default shall not have been cured or
waived (in this Paragraph 4, a "Covenant Default"), and a
holder of Junior Debt shall have received written notice of such Covenant
Default from the Company or any Holder of this Note or any representative
thereof, then no cash payment shall be made after receipt of such written notice
by that holder of Junior Debt, in each case, on account of that Junior Debt,
whether for principal, interest or otherwise, unless and until such this Note
shall have been irrevocably paid in full or until such Covenant Default shall
have been cured or waived.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      4.4           Junior Debt Restricted on Note
Default. If there shall exist a continuing default under this Note, the
holders of Junior Debt shall not take any action to collect, or to pursue any
other remedy with respect to, accelerated principal on Junior Debt prior to the
earlier of: (i) (x) the irrevocable payment in full of all this Note in cash or
other immediately available funds, and (y) the termination of all guarantees of
this Note; or (ii) the occurrence or commencement of a Bankruptcy Event, and in
the event that an involuntary Bankruptcy Event is commenced against the Company,
such involuntary Bankruptcy Event is not dismissed, bonded, stayed, vacated or
discharged within 60 days of commencement thereof.

       

       

      4.5           Certain Payments Held in
Trust.  In the event that the holder of any Junior Debt shall
receive any payment or distribution of assets that such holder is not entitled
to retain under the provisions of this Note, such holder shall hold any amount
so received in trust for the benefit of the Holder of this Note, shall segregate
such assets from other assets held by such Holder and shall on demand forthwith
turn over such payment or distribution (without liability for interest thereon)
to the Holder of this Note in the form received (with any necessary endorsement)
to be applied to this Note. Upon such payment to the Holder of this Note, the
full amount of such payment shall automatically be added to the principal amount
of this Note.

       

       

      4.6           Third Party Beneficiaries; Specific
Performance; Continuing Effect.  The provisions of this
Paragraph 4 are for the benefit of the Holder of this Note (and the Holder’s
successors and assigns) and shall be enforceable by the Holder directly against
holders of Junior Debt.  No Holder of this Note shall be prejudiced in
its right to enforce subordination of Junior Debt by any act or failure to act
by the Company or anyone in custody of the Company's assets or property. Any
Holder of this Note is hereby authorized to demand specific performance of the
provisions of this Paragraph 4 applicable to it, whether or not the Company
shall have complied with any of the provisions of this Note applicable to this
Note. Holders of Junior Debt shall not, to the full extent permitted by law, be
entitled to any defense based on the adequacy of a remedy at law, which might be
asserted as a bar to such specific performance. The provisions of this Paragraph
4 shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of this Note is rescinded or must otherwise be returned by the
Holder of this Note upon the bankruptcy, insolvency or reorganization of the
Company or otherwise, all as though such payment had not been
made.  The provisions of this Paragraph 4 are not intended to impair
and shall not impair as between the Company and Holder the obligation of the
Company to pay Holder all amounts owing under this Note.  All rights
and interests under this Note, and all agreements and obligations of the Holder
of this Note and the Company under this Paragraph 4 shall remain in full force
and effect irrespective of (i) any lack of validity or unenforceability of any
agreement or instrument relating to this Note, or (ii) any other circumstances
that might otherwise constitute a defense available to Senior Debt or the
Company, or a discharge of this Note.

       

      4.7           Certain Notices. The Company
agrees, for the benefit of the holders of this Note, that in the event that this
Note shall become due and payable before the expressed maturity of any
Installment because of the occurrence of an Event of Default hereunder, the
Company will give prompt notice in writing of such happening to the holders of
this Note.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      4.8           Event of Default Not
Affected.  Notwithstanding the foregoing in this Paragraph 4,
the failure of the Company to timely pay, according to the terms of this Note
other than this Paragraph 4, any amount payable on such other terms shall
constitute an Event of Default hereunder.

       

      5.           
 Security Interest.
This Note is secured by all of the capital stock of California Living
Waters, Incorporated, a California corporation (“CLW”) and of SCWW, by, and
pursuant to the terms of, that certain a Security Agreement dated
November 5, 2009 by and among the Company, the initial Holders of this Note, and
the Senior Notes.

       

      6.           
 Guarantee.  This
Note is the “Note One” as defined in, and being in part the subject of, that
certain Corporate
Guarantee dated as of November 5, 2009, by the Company and GEM
Environmental Management Inc., and that certain CLW Guarantee dated November 5,
2009  by California Living Waters Inc.

       

      7.           
 Events of
Default.  “Default” means any event which
is, or after notice or passage of time, or both, would be, an Event of
Default.  “Event of
Default” means any of the following:

       

      (a) 
the Company shall fail to pay in full any principal, accrued interest or other
amounts due to Holder under this Note when due and payable; if an Event of
Default shall occur under and as defined in this Paragraph, then Holder shall
give notice to the Purchaser of such breach, and Purchaser shall have 10 days
from the receipt of such notice to cure the default. Notwithstanding, default
interest, if applicable shall commence upon the default and shall continue until
the default is cured in accordance with this Paragraph.

       

      (b) 
the Company shall default in the performance of or compliance with any covenant,
agreement or other obligation of the Company contained in this Note that is not
remedied, waived or cured within five (5) days following such default in
performance or noncompliance;

       

      (c)  any representation or
warranty of the Company contained herein or in the Stock Purchase Agreement
shall prove to have been false or incorrect in any material respect as of the
date of this Note;

       

      (d)  the Company shall default (as
principal, guarantor or other surety) in the payment of any principal of,
premium (if any) or interest on, any indebtedness for borrowed money to any
other party, or shall default in the performance of or compliance with any other
obligation contained in the documentation evidencing or securing any such other
indebtedness, and in connection with such default such indebtedness becomes due
and payable prior to the date it would otherwise become due and payable, or the
Company shall fail to pay such indebtedness at its stated maturity;

       

      (e) 
other than on terms approved in writing beforehand by the Holder, (i) the
Company's dissolution, termination of existence, suspension or discontinuance of
business or ceasing to operate as a going concern; (ii) the appointment of a
receiver, trustee, custodian or similar official, for the Company or any
material portion of the property or assets of the Company; (iii) the conveyance
of any material portion of the assets of the Company to a trustee, mortgage or
liquidating agent or an assignment for the benefit of creditors by the Company;
(iv) the commencement of any proceeding, whether federal or state, relating to
bankruptcy, insolvency, dissolution, reorganization, composition, renegotiations
of outstanding indebtedness, arrangement or otherwise to the relief of debtors
or the readjustment of indebtedness, by or against the Company, which is not
stayed, vacated or released within sixty (60) days of commencement; (v) the
consent by the Company to the action, appointment, conveyance, or commencement
of any of the foregoing; or (vi) any Company corporate action in furtherance of
any of the foregoing.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       (f) 
entry of a final judgment or judgments, that are not stayed, bonded or
discharged within thirty (30) days, the aggregate unpaid liabilities thereon are
in excess of $250,000 (excluding insured portions) against the Company or for
which the Company is otherwise responsible;

       

       (g) 
there shall occur, or the Company shall enter into any agreement providing for,
a Change of Control (as defined below) of the Company; the term “Change of Control” shall mean
any transaction or series of related transactions (including without limitation
any reorganization, merger, consolidation, sale of assets or sale of stock) that
will result in (i) the sale of all or substantially all of the assets of
the Company, (ii) a change in ownership of 50% or more of the Company’s
then outstanding capital stock, in one or a series of transactions occurring
within a period of six (6) months, other than any such change of ownership
resulting from the sale by the Company of its securities in connection with one
or more financing transactions, or (iii) a consolidation or merger of the
Company with or into any other corporation or corporations (or other corporate
reorganization) immediately after which the shareholders of the Company hold
less than fifty percent (50%) of the voting power of the surviving
corporation.

       

      Upon the
occurrence of any Event of Default described in Paragraph (a), (d), (e), or (g)
above, all outstanding principal of this Note and all accrued but unpaid
interest thereon shall be accelerated automatically, without any further action
by any party, and shall become immediately due and payable notwithstanding any
other provision of this Note, without presentment, demand, protest, notice of
protest or other notice of dishonor of any kind, all of which are hereby
expressly waived by the Company; and upon the occurrence of any other Event of
Default described in the other subparagraphs above in this Paragraph, Holder
may, at Holder’s option exercisable at any time thereafter, by notice to the
Company in writing, accelerate this Note and declare the entire outstanding
principal balance of this Note and all accrued but unpaid interest thereon
immediately due and payable, without presentment, demand, protest, notice of
protest or other notice of dishonor of any kind, all of which are hereby
expressly waived by the Company.   Holder may enforce its rights under
this Note and otherwise at law or in equity or both.   All
remedies available to Holder under this Note or otherwise shall be cumulative,
and no course of dealing between the Company and Holder or any delay or omission
in exercising any power or right shall operate as a waiver thereof.  The
Company shall notify the Holder immediately in writing of the occurrence of any
Event of Default, which notification shall include a summary of the material
facts relating to such Event of Default and shall specify the date on which such
Event of Default occurred.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      8.           
 [INTENTIONALLY
LEFT BLANK]

       

      9.          
  Prepayment.  The
Company may prepay this Note in whole or from time to time in part, together
with all accrued interest on this Note (or portion being prepaid) without
penalty or premium of any kind, provided that the Company
shall have given the Holder of this Note written notice (a “Notice of Prepayment”)
specifying (A) a date certain (the “Prepayment Date”) on which the
Company thereby commits to make such prepayment; and (B) the principal amount of
that prepayment.  To be effective, a Notice of Prepayment must have
been received by the Holder of this Note not later than 14 days prior to the
Prepayment Date. Upon Holder’s receipt Notice of Prepayment, the Prepayment Date
shall thereby become the Installment Date for the principal amount of prepayment
specified in the Notice of Prepayment

       

      10.           Order of Application of
Payments.  All payments to be applied against this Note and the
amounts from time to time payable hereunder, shall be applied in the following
order of priority: (i) against costs and expenses of each and every Event of
Default, if any, (including with relationship to the Holder’s rights and duties
toward holders of Senior Debt and/or Junior Debt and/or in any proceeding or
suits related to such Event of Default); (ii) against all outstanding interest
payable at an increased rate hereunder by reason of any Default; (iii) against
all outstanding interest payable at the base rate of 6.5%; (iv) against any
other non-principal monetary rights the Holder may come to have against the
company by reason of this Note; (v) against prepayment of principal pursuant to
a Notice of Prepayment; (vi) against past-due principal Installments, on this
Note, in the sequence of such past-due Installments, oldest to most recent;
(vii) against the outstanding principal of this Note, in reverse order of the
scheduled Installment Dates of those principal Installments.

       

      11.           Expenses of
Enforcement.  The Company agrees to reimburse the Holder upon
demand for all reasonable out-of-pocket expenses, all costs and expenses
(including reasonable attorneys fees, accountants’ fees, collection agency fees,
and experts’ fees) of the Holder in connection with the enforcement (including
the negotiation and settlement of the terms of any workout or creditors’
committee or similar proceeding) in connection with the Holder’s enforcement of
the Company’s obligations hereunder.

       

      12.           No Rights As A Shareholder.
Nothing contained in this Note shall be construed as conferring upon the Holder
or any other person the right to vote or consent or to receive notice as a
shareholder in respect of meetings of shareholders for the election of directors
of the Company or any other matters or any rights whatsoever as a shareholder of
the Company.

       

      13.           Lost, Stolen or Mutilated
Note. 
If this Note is lost, stolen, mutilated or destroyed, the Company will,
on such reasonable terms with respect to indemnity or otherwise as it may in its
discretion impose, issue a new Note of like denomination, tenor, and date as
this Note.  Any such new Note shall constitute an original contractual
obligation of the Company, and the lost, stolen, mutilated or destroyed, as
applicable, shall be null and void.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      14.           Notices.  All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery; upon
confirmed transmission by telecopy if sent during normal business hours of the
recipient (or if not, on the next business day of the recipient); three days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid; or otherwise upon delivery by hand or by messenger or one
day after deposit with a nationally recognized overnight courier
service.  Concurrently with the initiation of any such notice, the
sender shall make a good faith effort to send the addressee a copy of such
notice by electronic mail and to alert the addressee by telephone. Each of the
Company and the Holder may, by notice to the other, specify for itself from time
to time address specifications different from the initial address specifications
as follows:

       

      If to the Company, addressed
to:

       

      General
Environmental Management, Inc.

      Attention:
Tim Koziol, CEO

      3194
Temple Ave, Ste. 250

      Pomona,
California 91768

      Facsimile
No.:  909.444.9900

      Telephone
No.: 909.444.9500

      Email:
Tim.Koziol@go-gem.com

      

      With copy
to:

      Patrick
Lund

      Lund LAW
Group

      1451
Quail Street, Suite 202

      Newport
Beach, CA 92660

      Facsimile
number: 949.250.4503

      Telephone
No.: 949 250.4230

      Email:
ricklund@lundlawgroup.com

      

                     If
to Holder, addressed to:

       

      United
States Environmental Response, LLC

      4255
Harbour Island Lane

      Oxnard,
CA  93035

      Facsimile
number: 805.382.1313

      Telephone
No.: 805.850.8992

      Email:
canondougedwards@yahoo.com

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      With a
copy to:

      Steven A.
O’Rourke Professional Corporation

      Attention:
Steven A. O’Rourke

      21700
Oxnard St., Suite 1160

      Woodland
Hills, CA 91367

      Facsimile
number: 818.530.4306

      Telephone
No.: 805.807.1346

      Email:
Steve@CalCorpLaw.com

       

      15.           Waiver.   The
undertakings of the Company hereunder shall remain in full force and effect
without regard to, and shall not be impaired by, (a) any exercise or
nonexercise, or any waiver by the Holder of any right, remedy, power or
privilege under any of the Notes, (b) any amendment to or modification of
the Stock Purchase Agreement or any of the Notes or any GEM or SCWW guarantee
thereof, or (c) the release or discharge or termination of any security or
guarantee for any of the obligations under the Stock Purchase Agreement or any
of the Notes, whether or not shall have notice or knowledge of any of the
foregoing. The Holder’s prior recourse to any part or all collateral, if any,
under the Notes shall not constitute a condition of any demand, suit or
proceeding for payment or collection of the obligations under this
Note.  No act, failure or delay by the Holder shall constitute a
waiver by the Holder of its rights and remedies hereunder or otherwise. No
single or partial waiver by the Holder of any default or right or remedy that it
may have shall operate as a waiver of any other default, right or remedy or of
the same default, right or remedy on a future occasion. The Company waives to
the maximum extent permitted by applicable law presentment, notice of dishonor
and protest, notice of intent to accelerate and notice of acceleration of all
instruments included in or evidencing any of the obligations under this Note,
and any and all other notices and demands whatsoever.

       

      16.           Headings;
Interpretation.  The headings and captions used in this Note
are used only for convenience and are not to be considered in construing or
interpreting this Note.  The Company and the Holder have participated
jointly in the negotiation and drafting of this Note.  If an ambiguity
or question of intent or interpretation arises, this Note shall be construed as
if drafted jointly by the Company and the Holder and no presumption or burden of
proof shall arise favoring or disfavoring either of them by virtue of the
authorship of any of the provisions of this Note.  Any reference to
any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.  The words “include” or “including” shall mean
“include, without limitation” or “including, without limitation,” as the case
may be, and the language following “include” or “including” shall not be deemed
to set forth an exhaustive list.

       

      17.           Time of
Essence.  Time shall be of the essence in the performance of
the obligations of the Company hereunder.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      18.           Severability.  If,
for any reason, a court of competent jurisdiction finds any provision of this
Note, or any portion hereof, to be unenforceable, such decision shall not affect
the validity of the remaining portion, which remaining portion shall continue in
full force and effect as if this Note had been executed with the invalid portion
thereof eliminated therefrom or modified to the extent permitted by
law.

       

      19.           Governing Law. THIS NOTE AND
THE RIGHTS OF THE HOLDER UNDER IT WILL BE GOVERNED BY AND CONSTRUED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA.   The Company submits to and agrees to the exclusive
jurisdiction of the state and federal courts sitting in the city of Los Angeles,
California, in any action or proceeding arising out of or relating to this Note
and agrees that all claims in respect of the action or proceeding may be, and
shall be, heard and determined in any such court.  The Company waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of any other party with respect thereto.  The Holder may make service
of process by sending or delivering a copy of the process to the Company at the
address and in the manner provided for the giving of notices
above.  Nothing in this Paragraph, however, shall affect the right of
any of the Holder to serve legal process in any other manner permitted by law or
in equity.  The Company and the Holder shall be bound by a final
judgment in any action or proceeding so brought, which shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided by law
or in equity. In the event of any action or suit based upon or arising out of
any alleged breach of any provision of this Note, the prevailing party will be
entitled to recover from the other party reasonable attorneys' fees and other
costs of such action or suit.

       

      

      IN WITNESS WHEREOF, the
Company has duly executed this Note as of the day and year first above
written.

       

      
        
          
            
              
                	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT, INC.	 
	 	 	 	 	 
	
                         

                      	 	 	
                        /s/
      

                      	 
	
                         

                      	 	 	
                        Timothy
      J. Koziol, CEO

                      	 

              

            

          

        

      

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      SCHEDULE
A

      

      (Attached
hereto)

       

       

       

      12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]