Document:

Exhibit 10.2

 

AMENDED
AND RESTATED STOCKHOLDER AGREEMENT

 

AMENDED AND
RESTATED STOCKHOLDER AGREEMENT dated as of September 23, 2008 (the “Agreement”),
among WAVEXPRESS, INC., a Delaware corporation (the “Company”), and the
stockholders listed on Exhibit A hereto, as the same may be
supplemented from time to time (individually, a “Stockholder” and,
collectively, the “Stockholders”).

 

WHEREAS,
the Company and the Stockholders are parties to that certain Stockholder
Agreement, dated as of October 15, 1999 (the “Original Agreement”);
and

 

WHEREAS, in
accordance with Section 6.12 of the Original Agreement, the Company and
the undersigned Stockholders desire to amend and restate the Original Agreement
in its entirety as set forth herein.

 

Accordingly,
the undersigned Stockholders agree as follows:

 

ARTICLE V

DEFINITIONS

 

5.1.                              Defined
Terms.  As used in this Agreement, the following terms shall have
the meanings specified below:

 

“Affiliate”
shall mean, with respect to any Person, any other person which directly or
indirectly controls, is controlled by, or is under common control with such
person, including any limited partner, the general partner of which is any such
other person.

 

“Approved
Sale” has the meaning set forth in Section 3(a).

 

“Board”
shall mean the Board of Directors of the Company.

 

“Common
Stock” shall mean the Company’s Common Stock, par value $0.0001 per share.

 

“Common
Stock Equivalents” shall mean, with respect to any Stockholder, the number
of shares of Common Stock owned by such Stockholder and the number of shares of
Common Stock into or for which any shares of Preferred Stock or Convertible
Securities owned by such Stockholder shall be convertible, exchangeable or
exercisable (other than in respect of accrued and unpaid dividends) as of the date
of determination thereof.

 

“Convertible
Securities” shall mean any options, warrants, convertible notes or other
securities or rights (other than Shares) convertible, exchangeable or
exercisable, with or without the payment of additional consideration, into or
for shares of Common Stock, directly or indirectly.

 

“Disposition
Event” means (a) (i) the sale of all or substantially all of the
assets of the Company or its subsidiaries in a single transaction or series of
related transactions whether by liquidation, dissolution, merger, consolidation
or sale or (ii) the sale or other transfer of at least 51% of the
outstanding shares of Common Stock in a single transaction or a series of
related transactions, in either case to any Person who is not an Affiliate of
the Company, or of a stockholder thereof, immediately prior to such transaction
or transactions, or (b) the effective time of any merger, share exchange,
consolidation, or other business combination of the Company if immediately
after such transaction Persons who hold a majority of the outstanding 

 

 

voting
securities entitled to vote generally in the election of directors of the
surviving entity (or the entity owning 100% of such surviving entity) are not
Persons who, immediately prior to such transaction, held the securities of the
Company entitled to vote generally in the election of directors.

 

“Encumbrances”
shall mean any and all liens, claims, charges, security interests, options or
other legal or equitable encumbrances.

 

“Founders”
shall mean Sarnoff and Wave.

 

“Person”
shall mean an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

 

“Preferred
Stock” shall mean any shares of capital stock of the Company hereafter
issued which are preferred as to dividends or assets over any other class of
capital stock of the Company.

 

“Sarnoff”
shall mean Sarnoff Corporation, a New Jersey corporation.

 

“SEC”
shall mean the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act.

 

“Securities
Act” shall mean the Securities Act of 1933, or any similar federal statute,
and the rules and regulations of the SEC thereunder, all as the same shall
be in effect at the time.

 

“Shares”
shall mean any shares of capital stock of the Company, including Common Stock
and Preferred Stock, now or hereafter issued.

 

“Wave”
shall mean Wave Systems Corp., a Delaware corporation.

 

ARTICLE VI

BOARD OF DIRECTORS

 

6.1.                              Nomination
and Election of Directors.

 

(a)                                  Selection
of Nominees.  In any and all elections of directors of the
Company (whether at a meeting or by written consent in lieu of a meeting), each
Stockholder, to the extent that such Stockholder has voting rights, shall vote,
or cause to be voted, or cause such Stockholder’s designees as directors to
vote, all Shares owned by such Stockholder or over which such Stockholder has
voting control, so as to fix the number of directors of the Company at such
number as Wave may from time to time designate (currently two directors), and
to nominate and elect such two directors of the Company as are designated by
Wave (which directors shall currently be Steven K. Sprague and Gerard T.
Feeney).

 

Each Stockholder
agrees to vote, or to cause to be voted, all voting Securities owned by such
Stockholder, or over which such Stockholder has voting control, in order to
comply with this Section 2.1(a).

 

(b)                                 If
any vacancy shall occur in the Board as a result of death, disability,
resignation or any other termination of a director, the replacement for such
vacating director shall be designated by the Person or Persons who originally
designated such vacating director.  Wave 

 

 

shall also be entitled to designate the removal and
replacement of any director, with or without cause.

 

(c)                                  No
Stockholder shall vote any Shares in favor of the removal of a director
nominated by one of the other Stockholders hereunder unless the right of any
such Stockholder so to nominate such director shall no longer exist due to the
reduction in the ownership of Common Stock Equivalents by such Stockholder
pursuant to Section 2.1(a); provided, however, that upon the
request of the Stockholder to remove a director previously nominated by such
Stockholder, the Stockholders shall vote all of their Shares in favor of (i) the
removal of such director and (ii) the election of any replacement director
as may be designated by such Stockholder.

 

6.2.                              PROXY.  EACH STOCKHOLDER
HEREBY GRANTS TO THE COMPANY AN IRREVOCABLE PROXY, COUPLED WITH AN INTEREST, TO
VOTE ALL OF THE VOTING SECURITIES OWNED BY SUCH STOCKHOLDER OR OVER WHICH SUCH
STOCKHOLDER HAS VOTING CONTROL TO THE EXTENT NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS ARTICLE 2 IN THE EVENT OF ANY BREACH BY SUCH STOCKHOLDER OF
HIS, HER OR ITS OBLIGATIONS UNDER THE VOTING AGREEMENT CONTAINED HEREIN.

 

6.3.                              Action
by Securityholders.  Each Stockholder further agrees that such
Stockholder will not vote any voting Shares owned by such Stockholder or over
which such Stockholder has voting control, or take any action by written
consent, or take any other action as a stockholder of the Company, to
circumvent the voting arrangements required by this Article 2.  Without limiting the generality of the
foregoing, each Stockholder agrees not to (a) vote any voting Shares owned
by such Stockholder or over which such Stockholder has voting control, or take
any other action as a stockholder of the Company, to approve any corporate action
or transaction by the Company not previously approved by the Board elected in
accordance with this Article 2 and the By-Laws of the Company, or (b) commence
or maintain any shareholder’s derivative suit challenging any action or
transaction approved by the Company’s Board.

 

6.4.                              Board
of Directors Meeting Expenses.  The Company shall reimburse each
director for all reasonable out-of-pocket expenses incurred by such director in
connection with the attendance at meetings of the Board.

 

ARTICLE VII

TRANSFER OF SHARES

 

7.1.                              Restrictions
on Transfer.  So long as this Agreement is in effect, no
Stockholder shall sell, assign, transfer, give, encumber, pledge, hypothecate
or in any other way dispose of any Shares or any Convertible Securities (any of
which being a “Transfer”), except as permitted pursuant to Section 3.2
or as may approved by the Company in writing. 
No Transfer in violation of this Agreement shall be made or recorded on
the books of the Company and any such Transfer shall be void and of no force or
effect.  Subject to the terms of this
Agreement, the Stockholders shall be entitled to exercise all rights of
ownership of their Shares and Convertible Securities.

 

 

7.2.                              Certain
Permitted Transfers.  The Company and the Stockholders
acknowledge and agree that any of the following Transfers shall be deemed to be
in compliance with this Agreement, and shall not be governed by Section 3.3:

 

(a)                                  a
Transfer made to the Company;

 

(b)                                 a
Transfer upon the death of a Stockholder to his executors, administrators and
testamentary trustees;

 

(c)                                  a
Transfer made by Wave to any of its Affiliates or to any of its respective
officers, directors, employees or consultants, or to any officer, director,
employee or consultant of any of its Affiliates; and

 

(d)                                 a
Transfer made for nominal consideration or as a gift in compliance with
applicable federal and state securities laws to the Stockholder’s spouse,
parents or issue or to a trust, the beneficiaries of which, or to a corporation
or partnership the stockholders or partners of which, include only the
Stockholder and such Stockholder’s spouse or issue.

 

7.3.                              Approved
Sale.

 

(a)                                  In
the event that a Disposition Event is approved by the Company’s Board of
Directors and consented to by Wave (an “Approved Sale”), each Stockholder
hereby waives, to the extent permitted by applicable law, all rights to object
to or dissent from such Approved Sale and hereby agrees to consent to and raise
no objection against such Approved Sale. The Company and the Stockholders
hereby agree to cooperate fully in any Approved Sale and not to take any action
prejudicial to or inconsistent with such Approved Sale.  Without limiting the generality of the
foregoing, each Stockholder hereby agrees to (i) vote such Stockholder’s
Securities to approve the terms of any such Approved Sale and such matters
ancillary thereto as may be necessary in the judgment of the Board of Directors
of the Company to effect such Approved Sale, (ii) waive any appraisal
rights that such Stockholder would have with respect to such Approved Sale, (iii) in
an Approved Sale structured as a sale of stock, sell all of such Stockholder’s
Securities on the terms and conditions approved by the Board of Directors of
the Company and (iv) upon request, deliver such Stockholder’s Securities
(together with executed instruments of transfer) in escrow (pending receipt of
the purchase price therefor) to counsel for the Company in such sale.

 

(b)                                 The
obligations of the Stockholders with respect to any Approved Sale are subject
to the satisfaction of the conditions that (i) upon the consummation of
such Approved Sale, all of the sellers of Common Stock will receive the same
form and amount of consideration per share of Common Stock, or if any such
sellers are given an option as to the form and amount of consideration to be
received per share of Common Stock, all holders of Common Stock will be given
the same option, and (ii) the aggregate liability of a Stockholder with
respect to indemnification obligations in connection with such Approved Sale
shall be limited to the proceeds received by such Stockholder in connection
with such Approved Sale.

 

(c)                                  Each
Stockholder hereby appoints Wave as such Stockholder’s true and lawful proxy
and attorney in connection with any Approved Sale, with full power of
substitution, to vote all Shares owned by such Stockholder or over which such
Stockholder has voting control to 

 

 

effectuate the agreements set forth in this Section 3.3
in the event of any breach by such Stockholder of its obligations under this Section 3.3.  The proxies and powers granted by each
Stockholder pursuant to this Section 3.3(c) are coupled with an
interest and are given to secure the performance of such Stockholder’s duties
under this Section 3.3.  Such
proxies are irrevocable for so long as this Section 3.3 remains in effect
and will survive the death, incompetence or disability of any Stockholder who
is an individual and the merger, liquidation or dissolution of any Stockholder
that is a corporation, limited liability company, partnership or other entity.

 

ARTICLE VIII

TERMINATION

 

8.1.                              This
Agreement will terminate upon the earliest to occur of (a) the completion
of any voluntary or involuntary liquidation or dissolution of the Company, (b) the
completion of an initial public offering of the Common Stock or (c) the
completion of a sale of the Company or its business (whether by merger,
consolidation, sale of all or substantially all of the assets or capital stock
of the Company, or otherwise).

 

ARTICLE IX

MISCELLANEOUS

 

9.1.                              Certificate
Legend.  Upon execution of this Agreement, the certificates
representing Shares and Convertible Securities held by the Stockholders shall
contain substantially the following legend, in addition to any other legends
deemed appropriate or necessary by the Company:

 

This
certificate is transferable only upon compliance with and subject to the
provisions of a Stockholder Agreement among the Company, its stockholders and
their respective spouses, a copy of which Agreement is on file in the office of
the Secretary of the Company at its principal place of business.  The Company will furnish a copy of such
Agreement to the record holder of this Certificate, without charge, upon
written request to the Company at its principal place of business or registered
office.

 

9.2.                              Negotiable
Form.  Whenever any Shares are to be delivered or sold pursuant
to this Agreement, the Person selling such Shares shall deliver such
certificates or other instruments duly endorsed or accompanied by appropriate
stock powers or assignments separate from the instrument.

 

9.3.                              Enforcement.  No
Shares or Convertible Securities shall be transferred on the books of the
Company and no sale, assignment, transfer, pledge or other disposition thereof
shall be effective unless and until the terms and provisions of this Agreement
are complied with, and in cases of violation of this Agreement by the attempted
transfer of the Shares or Convertible Securities without compliance with the
terms and provisions thereof, such sale, assignment, transfer, pledge or other
disposition shall be invalid and of no effect, and the Company and/or 

 

 

any of the Stockholders who are not attempting to
transfer the Shares or Convertible Securities shall have the right to compel
the Stockholder who is attempting to transfer the Shares or Convertible
Securities, and/or the purported transferee, to transfer and deliver the same
in accordance with the applicable provisions of this Agreement.

 

9.4.                              Specific
Performance.  The parties hereto recognize that the Company’s
Shares and Convertible Securities cannot be readily purchased or sold on the
open market and that it is to the benefit of the Company and the Stockholders
that this Agreement be carried out; and for those and other reasons, the
parties hereto would be irreparably damaged if this Agreement is not
specifically enforced in the event of a breach hereof.  If any controversy concerning the rights or
obligations to purchase or sell any Shares and Convertible Securities arises,
or if this Agreement is breached, the parties hereto hereby agree that remedies
at law might be inadequate and that, therefore, such rights and obligations,
and this Agreement, shall be enforceable by specific performance.  The remedy of specific performance shall not
be an exclusive remedy, but shall be cumulative of all other rights and
remedies of the parties hereto at law, in equity or under this Agreement.

 

9.5.                              Transferees
and Future Stockholders.  The Company and the Stockholders shall
cause any transferee of any Shares or Convertible Securities that is not
already a party to this Agreement and any future Stockholder of the Company to
execute a consent in the form attached as Exhibit B hereto, prior
to or simultaneously with such transfer, to be bound by the terms and
conditions of the Agreement.  Upon
execution thereof, provided such transfer shall not have been made in
contravention of this Agreement, such Stockholder shall be entitled to the
rights of an owner of the Shares or Convertible Securities held by such
Stockholder hereunder, provided that the foregoing shall not apply to Shares or
Convertible Securities that have been sold pursuant to an effective
registration statement under the Securities Act or Rule 144 thereunder.

 

9.6.                              Notices.  Any
notices or other communications required or permitted hereunder shall be
sufficiently given if in writing and delivered in person, transmitted by
telecopier or sent by registered or certified mail (return receipt requested)
or recognized overnight delivery service, postage pre-paid, addressed as follows,
or to such other address as any such party may notify to the other parties in
writing:

 

(a)                                  if
to the Company:

 

WaveXpress, Inc.

179 Franklin Street

Suite 509

New York,
NY  10013

Attn: Gerard T. Feeney, as Vice President

Fax No.:  212-645-0191

 

(b)                                 if
to a Stockholder,

at the address
set forth on

Exhibit A hereto

 

 

A notice or
communication will be effective (i) if delivered in person or by overnight
courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, five business
days after dispatch.

 

9.7.                              Binding
Effect; Assignment.  This Agreement, including, the rights and
conditions contained herein in connection with disposition of Shares and
Convertible Securities, shall be binding upon the parties hereto, together with
their respective executors, administrators, successors, personal
representatives, heirs and assigns permitted under this Agreement.

 

9.8.                              GOVERNING LAW.  THE AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF DELAWARE.

 

9.9.                              Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such provisions
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance here from. 
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.

 

9.10.                        Entire
Agreement.  This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.

 

9.11.                        Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.

 

9.12.                        Amendments.  No
modification, amendment of waiver of any provision of this Agreement will be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the holders of at least 80% of
the total number of then outstanding Shares held by the Stockholders; provided,
however, that (i) no amendment, modification or waiver of any
provision of this Agreement that could materially adversely affect the rights
of the Founders hereunder in a manner different from the rights of the other
Stockholders shall be effective against such Founders without their written
consent, and (ii) no amendment, modification or waiver of any provision of
this Agreement that could materially adversely affect the rights of the other
Stockholders hereunder in a manner different from the rights of the Founders
shall be effective against such other Stockholders unless approved in writing
by the holders of a majority of the Shares held by such other Stockholders
constituting Common Stock.  The failure
of any party to enforce any of the provisions of this Agreement will in no way
be construed as a waiver of such provisions and will not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.

 

9.13.                        Captions.  The
captions of this Agreement are for convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions hereof.

 

 

9.14.                        Pronouns.  Any
masculine personal pronoun shall be considered to mean the corresponding
feminine or neuter personal pronoun, and vice versa, as the context requires.

 

9.15.                        Spouses.  By
executing this Agreement, the spouse of each Stockholder that is an individual
agrees to be bound in all respects by the terms of this Agreement to the same
extent as the Stockholders.  Each spouse
further agrees that should she or he predecease the Stockholder to whom she or
he is married or should she or he become divorced from such Stockholder, any of
the Shares which such spouse may own or in which she or he may have any
interest shall remain subject to all of the restrictions and to all of the
rights of the Stockholders contained in this Agreement.

 

[The
remainder of this page is intentionally left blank.]

 

 

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

 

	
   

  	
  WAVEXPRESS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  Sprague

  
	
   

  	
  Name:
  Michael Sprague

  
	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SARNOFF
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  J. Levin

  
	
   

  	
  Name: Robert
  J. Levin

  
	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WAVE SYSTEMS
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard
  T. Feeney

  
	
   

  	
  Name: Gerard
  T. Feeney

  
	
   

  	
  Title:   Chief Financial Officer

  

 

 

EXHIBIT
A

 

Stockholders

 

Sarnoff Corporation

201 Washington Road

CN 5300

Princeton, NJ 08543-5300

Attention:  Robert J. Levin

Fax #:  609-720-4801

Wave Systems Corp.

480 Pleasant Street

Lee, MA 01238

Attention:  Gerard T. Feeney, Chief
Financial Officer

Fax No.: (413) 243-0045

 

 

EXHIBIT
B

 

Form of
Consent

 

The
undersigned, having purchased Shares of WaveXpress, Inc., hereby agrees to
be bound by the terms and conditions of the Stockholder Agreement of the
Company as a “Stockholder” thereunder, the form of which is attached hereto, as
if the undersigned had been a party to such agreement as of the date thereof.

 

	
  Name:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Telecopy No.:

  	
   

  
	
   

  	
   

  
	
  No. of Shares:

  	
   

  
							

 

I, the
undersigned, being the spouse of the above-named Stockholder, hereby
acknowledge that I have read and understand the Stockholder Agreement, and I
agree to be bound by the terms thereof, including, but not limited to, Section 5.15
thereof.

 

	
  Name:

  	
   

  
	
   

  	
   

  
	
  Signature:ex_10-19.htm

    
      

      

    

    EXHIBIT
10.19

     

    
      REVOLVING CREDIT AND TERM
LOAN AGREEMENT

      
         

        AGREEMENT (this “Agreement”) is made
and entered into as of the 31st day of
August,  2008, by and between CVC CALIFORNIA, LLC, a
Delaware limited liability company (the “Lender”), and GENERAL ENVIRONMENTAL MANAGEMENT,
INC., a Nevada corporation (the “Borrower”);

      

       

      W I T N E S S E T H
:

       

      WHEREAS, the Borrower and its
Subsidiaries are engaged in the business of providing field services, technical
services, transportation, off-site treatment, on-site treatment services, and
environmental health and safety compliance services (collectively, the “Business
Operations”); and

       

      WHEREAS, the Borrower’s
Wholly-Owned Subsidiary, General Environmental Management, Inc. (a Delaware
corporation), is party to the Acquisition Agreement described below, pursuant to
which such Wholly-Owned Subsidiary will acquire all of the issued and
outstanding capital stock of the Target (as such term is hereinafter defined),
for consideration consisting of cash, a promissory note, and certain contingent
payments; and

       

      WHEREAS, in order to provide
funds for (a) the payment of a portion of the purchase price payable under the
Acquisition Agreement, (b) the repayment of the Borrower’s outstanding
Indebtedness to the Existing Lenders (as such term is hereinafter defined), and
(c) the Company’s working capital and other general corporate purposes, the
Borrower has requested the Lender to extend to the Borrower a revolving credit
facility and a term loan on the terms and conditions of this Agreement;
and

       

      WHEREAS, the Lender is willing
and able to provide such revolving credit facility and make such term loan to
the Borrower on the terms and conditions of this Agreement;

       

      NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, the
parties hereby agree as follows:

       

      
        	
                I.

              	
                DEFINITIONS

              

      

       

      Section
1.01.  Defined Terms.  In addition to the other terms
defined elsewhere in this Agreement, as used herein, the following terms shall
have the following meanings:

       

      “Accounts” shall mean
“accounts” (as defined in the UCC) of the Borrower and its Domestic Subsidiaries
from time to time.

       

      “Account Debtor” shall
mean any Person who is obligated on an Account.

       

      “Acquisition
Agreement” shall mean the Stock Purchase Agreement dated as of August 31,
2008 by and between the Target, the Seller, the Trust and GEM-DE.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      “Acquisition
Documents” shall mean, collectively, the Acquisition Agreement, the
Seller Notes and any and all agreements, instruments, certificates and other
documents executed and/or delivered pursuant thereto.

       

      “Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.

       

      “Advances” shall mean
the principal amounts loaned to the Borrower from time to time pursuant to
Section 2.01 below.

       

      “Affiliate” shall
mean, with respect to any Person, any other Person in Control of, Controlled by,
or under common Control with the first Person, and any other Person who has a
substantial interest, direct or indirect, in the first Person or any of its
Affiliates, including, without limitation, any officer or director of the first
Person or any of its Affiliates; provided, however, that neither
the Lender nor any of its Affiliates shall be deemed an “Affiliate” of the
Borrower for any purposes of this Agreement.  For the purpose of this
definition, a “substantial interest” shall mean the direct or indirect legal or
beneficial ownership of more than ten (10%) percent of any class of stock or
similar interest.

       

      “Agreement” shall mean
this Revolving Credit and Term Loan Agreement as it may from time to time be
amended, modified, supplemented and/or restated.

       

      “Applicable Law” shall
mean all applicable provisions of all (a) constitutions, statutes, ordinances,
rules, regulations and orders of all governmental and/or quasi-governmental
bodies, (b) Government Approvals, and (c) order, judgments and decrees of all
courts and arbitrators.

       

      “Availability” shall
mean the amount (if any) by which, at the time of determination, (a) the
Revolving Credit Commitment exceeds (b) the outstanding principal amount of
Advances.

       

      “Borrowing Base” shall
mean an amount, determined in accordance with the most recent borrowing base
report provided to the Lender under Section 5.04(d) below, equal to (a) 90% of
Eligible Accounts, plus (b) the fixed
amount of (i) $1,000,000 at all times from the date of this Agreement through
and including August 31, 2009, (ii) $800,000 at all times from September 1, 2009
through and including August 31, 2010, and (iii) $600,000 at all times from
September 1, 2010 through and including August 31, 2011, minus (c) such
reserves as the Lender may establish from time to time in its Permitted
Discretion (including, without limitation, to account for dilution and other
contingencies and risks of collection).  In the event that the
Borrower has not timely delivered a current Borrowing Base report in accordance
with Section 5.04(d) below, then the applicable Borrowing Base shall be such
amount as is established by the Lender in its Permitted Discretion, until such
time as the Borrower has delivered a current Borrowing Base report.

       

      “Borrowing Date” means
the Business Day on which the Lender makes a Loan hereunder.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Business Day” shall
mean a day other than (a) a Saturday, (b) a Sunday, or (c)  a day on
which banking institutions in the State of California or the State of Florida
are authorized or required by law or executive order to close.

       

      “Capital Expenditures”
shall mean with respect to any Person, all expenditures of such Person for
tangible assets which are capitalized, and the fair value of any tangible assets
leased by such Person under any lease which would be a Capitalized Lease,
determined in accordance with GAAP, including all amounts paid or accrued by
such Person in connection with the purchase (whether on a cash or deferred
payment basis) or lease (including Capitalized Lease Obligations) of any
machinery, equipment, real property, improvements to real property (including
leasehold improvements), or any other tangible asset of such Person which is
required, in accordance with GAAP, to be treated as a fixed asset on the
consolidated balance sheet of such Person.

       

      “Capitalized Lease”
shall mean any lease which is or should be capitalized on the balance sheet of
the lessee thereunder in accordance with GAAP.

       

      “Capitalized Lease
Obligation” shall mean with respect to any Person, the amount of the
liability which reflects the amount of future payments under all Capitalized
Leases of such Person as at any date, determined in accordance with
GAAP.

       

      “Cash Equivalents”
shall mean (a) marketable securities issued, or directly and fully guaranteed or
insured, by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) having maturities of not more than twelve (12)
months from the date of acquisition; (b) time deposits, demand deposits,
certificates of deposit, acceptances or prime commercial paper issued by, or
repurchase obligations for underlying securities of the types described in
clause (a) entered into with any commercial bank having a short-term deposit
rating of at least A-2 or the equivalent thereof by Standard & Poor’s
Corporation or at least P-2 or the equivalent thereof by Moody’s Investors
Service, Inc.; (c) commercial paper with a rating of A-I or A-2 or the
equivalent thereof by Standard & Poor’s Corporation or P-1 or P-2 or the
equivalent thereof by Moody’s Investors Service, Inc. and in each case maturing
within twelve (12) months after the date of acquisition; (d) marketable direct
obligations issued by any state in the United States or any agency or
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof and, at the time of acquisition, have one of the two highest
ratings generally obtainable from either Standard & Poor’s Corporation or
Moody’s Investors Services, Inc.; (e) tax-exempt commercial paper of United
States municipal, state or local governments rated at least A-2 or the
equivalent thereof by Standard & Poor’s Corporation or at least P-2 or the
equivalent thereof by Moody’s Investors Services, Inc. and maturing within
twelve (12) months after the date of acquisition thereof; (f) any other items
selected by the Borrower and approved by the Lender (which approval shall not be
unreasonably withheld or delayed); or (g) any mutual fund or other pooled
investment vehicle which invests principally in the foregoing
obligations.

       

      “Closing Date” shall
mean the date on which the Term Loan and the initial Advance is funded, which
shall be simultaneous with the consummation of the transactions pursuant to the
Acquisition Agreement.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Closing Fees” shall
mean the sum of $405,000 in respect of the revolving credit facility and the
Term Loan hereunder, which shall be payable in accordance with Section 2.03(a)
below.

       

      “Code” shall mean the
Internal Revenue Code of 1986, and the rules and regulations promulgated
thereunder, as in effect from time to time.

       

      “Collateral” shall
mean all collateral pledged by the Borrower and/or any Subsidiary as security
for the payment and performance of the Obligations, whether pursuant to the
Collateral Agreement or any other Security Document.

       

      “Collateral Agreement”
shall mean the Collateral Agreement, dated as of the Closing Date, by and
between the Borrower, its Subsidiaries and the Lender, as same may be amended,
modified, supplemented and/or restated from time to time.

       

      “Common Stock” shall
mean the authorized common stock of the Company, $.001 par value per
share.

       

      “Confidential
Information” shall mean information that the Borrower furnishes to the
Lender which is not generally available to the public or available to the Lender
from a source other than the Borrower which is not, to the Lender’s knowledge,
bound by any confidentiality agreement in respect thereof.

       

      “Contract” shall mean
any indenture, agreement (other than this Agreement), other contractual
restriction, lease in which the Borrower or any Subsidiary is a lessor or
lessee, license or instrument.

       

      “Control” shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms “Controlling” and
“Controlled”
shall have meanings correlative thereto.

       

      “Control Agreement”
shall mean, with respect to each bank account and/or securities account
maintained by or in the name of the Borrower or any Domestic Subsidiary, an
agreement executed and delivered by the Borrower (or the subject Domestic
Subsidiary, as applicable) and the account intermediary, whereby the account
intermediary acknowledges the Lender’s Lien on such account and all funds or
property therein, and “control” (within the meaning of the UCC) over such
account is established in favor of the Lender.

       

      “Deed of Trust” shall
mean a deed of trust, mortgage or other such instrument, in form and substance
reasonably satisfactory to the Lender and acceptable for filing in the
appropriate land records, pursuant to which the Lender shall receive a first
priority Lien on the Owned Real Property as Collateral for the
Obligations.

       

      “Default” shall mean
any of the events specified in Article VII hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Disclosure Schedule”
shall mean the disclosure schedule, dated as of the Closing Date, executed and
delivered by the Borrower to the Lender, the section numbers of which correspond
to the Section numbers of this Agreement.

       

      “Dollars” or “$” shall mean United
States Dollars, lawful currency for the payment of public and private
debts.

       

      “Domestic Subsidiary”
shall mean any Subsidiary which is incorporated or formed under the laws of the
United States, any State or Commonwealth in the United States, or the District
of Columbia.

       

      “Eligible Account”
shall mean the face amount of each trade Account of the Borrower or a Domestic
Subsidiary (if same has executed a Guaranty Agreement and become a party to the
Collateral Agreement) for services rendered or goods and products sold in the
ordinary course of the Business Operations which the Lender, in its Permitted
Discretion, deems to be an Eligible Account; provided, however, that an
Account be deemed an Eligible Account if it meets all of the following
conditions:

       

      (a)           the
subject services or products and goods have been rendered, shipped or delivered
on an absolute sale basis (subject to normal course inspection and acceptance by
customers) to an Account Debtor which is not an Affiliate, vendor or supplier of
the Borrower or a Subsidiary, with an invoice date contemporaneous with or
within twenty (20) calendar days after the date of shipment or service, and
which does not constitute a consignment sale, bill-and-hold sale,
sale-and-return or other such arrangement and is not subject to any other
repurchase, return or offset agreement binding upon the Borrower or a Domestic
Subsidiary; the subject services or products and goods have been fully provided,
rendered, shipped and/or delivered (or shipped f.o.b.) to such Account Debtor on
an open account basis (or with payment guaranteed by a domestic letter of
credit, drawn on or by a domestic financial institution, acceptable to the
Lender in all respects), and no part of the subject services, products or goods
has been returned, rejected, lost or damaged; the Account is not evidenced by
chattel paper or an instrument of any kind; and such Account Debtor is not
insolvent or the subject of any bankruptcy or insolvency proceeding of any kind
in any jurisdiction;

       

      (b)           if
the Account Debtor is located outside the continental United States, payment for
the subject services or goods shall be secured by an irrevocable letter of
credit, which letter of credit shall have been confirmed by a financial
institutional reasonably acceptable to the Lender payable in the full amount of
the face value of the Account in lawful currency of the United
States;

       

      (c)           it
is a valid, legally enforceable obligation of the Account Debtor thereunder
payable in Dollars and is not subject to any recoupment, offset or other defense
or any discount or chargeback on the part of such Account Debtor (provided that
prompt payment discounts or other discounts granted in the ordinary course of
business shall not cause an Account to be disqualified hereunder, so long as
only the discounted amount of such Account, if not otherwise disqualified, is
included in the calculation of the Borrowing Base) or to any claim on the part
of such Account Debtor denying liability thereunder (provided that the
undisputed portion may be considered to be an Eligible Account);

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (d)           it
is subject to no Lien whatsoever, except for the Lien of the
Lender;

       

      (e)           it
has not remained unpaid in whole or in part for a period exceeding ninety (90)
days after the original invoice date;

       

      (f)          
 it does not arise out of a transaction (whether direct or indirect) with
an employee, officer, agent, director or Affiliate of the Borrower or any
Subsidiary or with any entity controlled by any employee, officer, or director
of the Borrower or any Subsidiary;

       

      (g)           it
is not subject to any contract retainage or other withholding of any portion of
payments on amounts invoiced, whether to secure the Borrower’s or any
Subsidiary’s performance or otherwise;

       

      (h)           it
does not represent the unpaid portion of an Account any portion of which was
previously paid or agreed to be paid through the issuance or delivery of equity
securities or other non-cash consideration;

       

      (i)           
if the Account Debtor is the United States, any State or Commonwealth therein,
or any department, agency or instrumentality thereof, the Borrower or the
applicable Domestic Subsidiary has duly assigned its rights to payment of such
Account to the Lender pursuant to the federal Assignment of Claims Act and any
comparable State statutes;

       

      (j)           
the Lender has a perfected first priority Lien in such Account;

       

      (k)           such
Account is not payable by any person other than the Account Debtor (such as a
beneficiary, recipient or subscriber individually), provided that the portion
thereof which is payable by the Account Debtor may be considered to be an
Eligible Account;

       

      (l)            at
least sixty (60%) percent in dollar amount of the total Accounts owed by such
Account Debtor and/or its Affiliates constitute Eligible Accounts;

       

      (m)           the
total Accounts owed by the subject Account Debtor (other than Jacobs Engineering
Group, Inc.) and/or its Affiliates constitute less than twenty-five (25%)
percent of all Eligible Accounts (provided that only the excess over twenty-five
(25%) percent shall be disqualified under this clause (m), unless the Lender has
otherwise consented in writing to the inclusion of all or any portion of such
excess);

       

      (n)           such
Account is payable solely to the Borrower or a Domestic Subsidiary which has
executed a Guaranty Agreement and become a party to Collateral Agreement, and
the Borrower or such Domestic Subsidiary is not aware of any dispute by the
Account Debtor with respect to such Account; and

       

      (o)           it
is not otherwise determined by the Lender, in the Lender’s Permitted Discretion,
to be difficult to collect, uncollectible or otherwise unacceptable for any
reason.

       

      “EBITDA” shall mean,
for the subject period, for the Borrower and its Subsidiaries on a consolidated
basis, the sum of (a) Net Income, plus (b) Interest
Expense deducted in the calculation of such Net Income, plus (c) all income
taxes deducted in the calculation of such Net Income, plus (d) depreciation
and amortization expense deducted in the calculation of such Net Income, plus (e) other
non-cash charges and expenses deducted in the calculation of such Net Income,
excluding accruals for operating expenses made in the ordinary course of
business.  To the extent that any calculation of EBITDA encompasses
the period from July 1, 2008 through the Closing Date, then the Target shall, on
a pro forma basis, be
treated as if it had been a Subsidiary of the Borrower at all times from and
after July 1, 2008.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      “Environmental Indemnity
Agreement” shall mean an environmental indemnity agreement, to be dated
as of the Closing Date, pursuant to which the Borrower and its Subsidiaries
shall agree to indemnify and hold harmless the Lender and its Affiliates from
and in respect of any and all environmental claims and liabilities relating to
the Owned Real Property and all operations (past, present and future) conducted
on or about the Owned Real Property.

       

      “Environmental Report”
shall mean the Phase I Environmental Site Assessment of the Owned Real Property
dated July 23, 2008, prepared by IVI Due Diligence Services, Inc. for US Capital
Corporation.

       

      “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as in effect from time to
time.

       

      “ERISA Affiliate”
shall mean, with respect to any Person, any other Person which is under common
control with the first Person within the meaning of Section 414(b) or 414(c) of
the Code; provided, however, that with
respect to the Borrower, no Person which is an Affiliate of the Lender (other
than the Borrower and its Subsidiaries) shall be deemed an ERISA Affiliate for
purposes of this Agreement

       

      “Event of Default” has
the meaning set forth in Article VII below.

       

      “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

       

      “Existing Lenders”
shall mean, collectively, (a) Laurus Master Fund, Ltd., Valens U.S. SPV I, LLC,
and Valens Offshore SPV II Corp., and (b) The Alliance Portfolio.

       

      “Financial Statements”
has the meaning set forth in Section 3.01(a) below.

       

      “Fiscal Year” shall
mean the fiscal year of the Company which ends on December 31 of each
year.

       

      “Fixed Charges” shall
mean, for the period in question, the sum of (a) all principal payments
scheduled or required to be made during or with respect to such period in
respect of Indebtedness of the Borrower and its Subsidiaries, plus (b) all cash
Interest Expense of the Borrower and its Subsidiaries for such period, plus (c) all cash
income taxes paid or accrued for the Borrower and its Subsidiaries for such
period.

       

      “Foreign Subsidiary”
shall mean any Subsidiary which is not a Domestic Subsidiary.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      “GAAP” shall mean
generally accepted accounting principles in the United States of America,
consistently applied, unless the context otherwise requires, with respect to any
financial terms contained herein, as then in effect with respect to the
preparation of financial statements.

       

      “GEM-DE” shall mean
General Environmental Management, Inc., a Delaware corporation, which is a
Wholly-Owned Subsidiary of the Borrower.

       

      “Government Approval”
shall mean an authorization, consent, non-action, approval, license or exemption
of, registration or filing with, or report to, any governmental or
quasi-governmental department, agency, body or other unit.

       

      “Guaranty”, “Guaranteed” or to
“Guarantee”, as
applied to any Indebtedness, liability or other obligation, shall mean (a) a
guaranty, directly or indirectly, in any manner, including by way of endorsement
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), of any part or all of such obligation, and (b) an
agreement, contingent or otherwise, and whether or not constituting a guaranty,
assuring, or intended to assure, the payment or performance (or payment of
damages in the event of non-performance) of any part or all of such obligation
by any means (including, without limitation, the purchase of securities or
obligations, the purchase or sale of property or services, or the supplying of
funds).

       

      “Guaranty Agreement”
shall mean a guaranty agreement, to be dated as of the Closing Date, executed by
each Subsidiary in favor of the Lender, pursuant to which the Subsidiaries
jointly and severally guaranty the full and timely payment and performance of
all of the Obligations.

       

      “Indebtedness” shall
mean (without duplication), with respect to any Person, (a) all obligations or
liabilities, contingent or otherwise, for borrowed money, (b) any and all
obligations represented by promissory notes, bonds, debentures or the like, or
on which interest charges are customarily paid, (c) any liability secured by any
mortgage, pledge, lien or security interest on property owned or acquired,
whether or not such liability shall have been assumed, (d) obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or services
(excluding trade payables and accrued obligations incurred in the ordinary
course of business), (f) any obligations (contingent or otherwise) of such
Person as an account party or applicant in respect of letters of credit and/or
bankers’ acceptances, or in respect of financial or other hedging obligations,
and (g) Guarantees, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations in respect of the
obligations of others.

       

      “Intellectual
Property” shall have the meaning ascribed thereto in the Collateral
Agreement.

       

      “Interest Expense”
shall mean, for the relevant period, interest expense (including, without
limitation, interest attributable to Capitalized Leases in accordance with GAAP)
and fees with respect to Indebtedness.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      “Investment”, as
applied to the Borrower or any Subsidiary, shall mean: (a) any shares of capital
stock, evidence of Indebtedness or other security issued by any other Person to
the Borrower or any Subsidiary, (b) any loan, advance or extension of credit to,
or contribution to the capital of, any other Person, other than credit terms
extended to customers in the ordinary course of business, (c) any other
investment by the Borrower or any Subsidiary in any assets or securities of any
other Person, and (d) any commitment to make any Investment.

       

      “Joinder Agreement”
shall mean a joinder agreement, to be dated as of the Closing Date, executed by
the Target in favor of the Lender, pursuant to which the Target shall join in
and become a party to the Guaranty Agreement and the Collateral Agreement, and
shall pledge all of its assets and properties as Collateral for the
Obligations.

       

      “Knowledge” or “Known”
or words of similar import shall mean, with respect to the Borrower and/or any
Subsidiary, the actual knowledge of Timothy J. Koziol and Brett M. Clark (and/or
their respective successors as officers of the Borrower) after reasonable
inquiry of the appropriate employees of the Borrower and the
Subsidiaries.

       

      “Landlord Waiver”
shall mean a landlord waiver, subordination and/or access agreement, in form and
substance reasonably satisfactory to the Lender, executed in favor of the Lender
by the Landlord of Real Property leased or occupied by the Borrower or any
Subsidiary.

       

      “Liabilities and
Contingencies” has the meaning set forth in Section 3.01(c)
below.

       

      “Lien”, as applied to
the property or assets (or the income or profits therefrom) of the Borrower or
any Subsidiary, shall mean (in each case, whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise): (a) any mortgage, lien, pledge, hypothecation, attachment,
assignment, deposit arrangement, encumbrance, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest or encumbrance of any kind in respect of
any property (including, without limitation, stock of any Subsidiary) of the
Borrower or any Subsidiary, or upon the income or profits therefrom; (b) any
arrangement under which any property of the Borrower or any Subsidiary is
transferred, sequestered or otherwise identified for the purpose of subjecting
or making available the same for the payment of Indebtedness or the performance
of any other liability in priority to the payment of the general, unsecured
creditors of the Borrower or any Subsidiary; (c) any Indebtedness or liability
which remains unpaid after the same shall become due and payable and which, if
unpaid, by law or otherwise is given any priority whatsoever over the general
unsecured creditors of the Borrower or any Subsidiary; and (d) any agreement
(other than this Agreement) or other arrangement which, directly or indirectly,
prohibits the Borrower or any Subsidiary from creating or incurring any lien on
any of its properties or assets or which conditions the ability to do so on the
security, on a pro rata or other basis,
of Indebtedness other than Indebtedness outstanding under this
Agreement.

       

      “Loan Documents” shall
mean the collective reference to this Agreement, the Notes, the Security
Documents, the Environmental Indemnity Agreement, the Validity Guaranties, the
Subordination Agreement, the Warrants, the Registration Rights Agreement, and
any and all other agreements, instruments, certificates and other documents as
may be executed and delivered by the Borrower and/or any of the Subsidiaries
pursuant hereto or thereto.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      “Loans” shall mean,
collectively, the Advances and the Term Loan.

       

      “Material Adverse
Effect” shall mean any event, act, omission, condition or circumstance
which has or would reasonably be expected to have a material adverse effect on
(a) the business, operations, properties, assets or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) the
ability of the Borrower or any Subsidiary to perform its obligations under any
of the Loan Documents, or (c) the validity or enforceability of, or the Lender’s
rights and remedies under, any of the Loan Documents, other than due to the acts
or omissions of the Lender or any of its Affiliates.

       

      “Maximum Revolver
Amount” shall mean $7,000,000.

       

      “Monitoring Fee” shall
mean the fees payable to the Lender pursuant to Section 2.03(b)
below.

       

      “Net Income” shall
mean the consolidated net income (or loss) of the Borrower and its Subsidiaries
for the period in question, after giving effect to deduction of or provision for
all operating expenses, all taxes and reserves (including reserves for deferred
taxes) and all other proper deductions, all determined in accordance with GAAP;
provided, however, that for
purposes of calculating Net Income, there shall be excluded and no effect shall
be given to (a) the restoration of any contingency reserve except to the extent
that such reserve was established during the subject period, and (b) any Net
Income attributable to any Subsidiary to the extent that the Borrower (or any
Subsidiary through which the Borrower owns the subject Subsidiary) is prohibited
(by law, Contract, minority ownership rights or otherwise) from receiving a
distribution of such Net Income from such Subsidiary.

       

      “Notes” shall mean,
collectively, the Revolving Credit Note and the Term Note.

       

      “Obligations” shall
mean the collective reference to all Indebtedness and other liabilities and
obligations of every kind and description owed by the Borrower to the Lender
from time to time under or pursuant to this Agreement, the Notes, the Security
Documents and the other Loan Documents (excluding the Warrant and Registration
Rights Agreement, other than amounts payable from time to time pursuant to
Section 2(c) of the Registration Rights Agreement), and/or otherwise in respect
of the Loans, however evidenced, created or incurred, fixed or contingent, now
or hereafter existing, due or to become due.

       

      “Organic Documents”
shall mean, with respect to any Person, the certificate of incorporation,
articles of incorporation, certificate of formation, certificate of limited
partnership, by-laws, operating agreement, limited partnership agreement or
other such document of such Person.

       

      “Owned Real
Property”  shall mean the Real Property, consisting of
approximately 4.5 acres of improved land and buildings, owned by General
Environmental Management of Rancho Cordova, LLC (a Wholly-Owned Subsidiary of
the Borrower) located at 11855 White Rock Road, Rancho Cordova, California
95742.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      “Permitted Discretion”
shall mean a determination or judgment made by the Lender in good faith in the
exercise of reasonable business judgment from the perspective of a secured
lender.

       

      “Permitted
Indebtedness” shall mean any and all Indebtedness expressly permitted
pursuant to Section 6.01 below.

       

      “Permitted Liens”
shall mean those Liens expressly permitted pursuant to Section 6.02
below.

       

      “Person” shall mean
any individual, partnership, corporation, limited liability company, banking
association, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

       

      “Real Properties”
shall mean, collectively, any real properties (land, buildings and/or
improvements) now owned or leased or occupied by the Borrower or any of the
Subsidiaries, and, during the period of the Borrower’s and/or Subsidiary’s
occupancy thereof, any other real properties heretofore owned or leased by the
Borrower or any Subsidiary (provided that, with respect to leased properties,
the “Real Property” shall refer only to the portion of the subject property
(excluding common areas) leased by the Borrower or a Subsidiary).

       

      “Registration Rights
Agreement” shall mean the Registration Rights Agreement, to be dated as
of the Closing Date, made by the Company for the benefit of the Lender and any
subsequent Holders (as such term is defined in the Registration Rights
Agreement), as same may be amended, modified, supplemented and/or restated from
time to time.

       

      “Revolving Credit
Commitment” shall mean the Lender’s agreement to make Advances to the
Borrower within the limitations set forth in Section 2.01 below.

       

      “Revolving Credit Maturity
Date” shall mean August 31, 2011; provided, however, that in the
event that the Advances are prepaid or required to be prepaid pursuant to
Section 2.01(e) or Section 2.07 below, then the Revolving Credit Maturity Date
shall be deemed to have occurred simultaneously with such prepayment or required
prepayment.

       

      “Revolving Credit
Note” shall mean the promissory note of the Borrower issued to the Lender
to represent the Advances and interest thereon, as described in Section 2.01(f)
below.

       

      “Sale” shall mean any
transaction or series of related transactions (a) whereby a majority of the
outstanding capital stock of or equity interests in the Borrower which
ordinarily has voting power for the election of directors (including preferred
stock counted on an “as converted” basis into common stock and common stock
counted on a fully diluted basis) is sold, assigned or transferred, (b) whereby
the Borrower issues shares of its capital stock or equity interests which, after
giving effect to such transaction or transactions, constitute a majority of the
outstanding capital stock of the Borrower which ordinarily has voting power for
the election of a majority of the Borrower’s directors (including, if
applicable, preferred stock counted on an “as converted” basis into common stock
and common stock counted on a fully diluted basis), (c) whereby Control of
the Borrower is held by a Person (or group of Persons acting in concert) who
does not hold such Control on the date of this Agreement, (d) in which the
Borrower is a constituent party to any merger or consolidation and as a result
thereof (i) the holders of the outstanding capital stock of the Borrower which
ordinarily has voting power for the election of a majority of the Borrower’s
directors (including, if applicable, preferred stock counted on an “as
converted” basis into common stock) immediately prior to such merger or
consolidation cease to own a majority of the outstanding capital stock of the
Borrower which ordinarily has voting power for the election of a majority of the
Borrower’s directors (including, if applicable, preferred stock counted on an
“as converted” basis into common stock), or (ii) the Borrower is not the
surviving entity, or (e) whereby all or any material portion of the assets of
the Borrower and the Subsidiaries (taken as a whole) are sold, assigned or
transferred.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      “SEC” shall mean the
United States Securities and Exchange Commission, and any successor agency
performing the functions thereof.

       

      “SEC Reports” shall
mean all periodic and current reports, registration statements, proxy statements
and other reports filed or required to be filed by the Borrower with the SEC
pursuant to the Act and/or the Exchange Act, and any amendments or supplements
thereto filed with the SEC.

       

      “Security Documents”
shall mean the Guaranty Agreement, the Collateral Agreement, the Joinder
Agreement, the Deed of Trust, collateral assignments, Landlord Waivers, Control
Agreements, financing statements or other such agreements or documents pursuant
thereto, and any other agreements or instruments securing or creating or
evidencing Liens securing the Obligations.

       

      “Seller” shall mean
Randy Costales and Gloria Costales.

       

      “Seller Notes” shall
mean (a) the subordinated promissory note of GEM-DE in the principal amount of
$1,062,500, be issued by GEM-DE to the Seller on the Closing Date pursuant to
the Acquisition Agreement, (b) the subordinated promissory note of GEM-DE in the
principal amount of $187,500, to be issued by GEM-DE to the Trust on the Closing
Date pursuant to the Acquisition Agreement, and (c) any Contingent Note (as
defined in the Acquisition Agreement) which may be issued after the Closing
Date.

       

      “Subordinated Debt”
shall mean the Seller Notes and all other Indebtedness for money borrowed and
other liabilities of the Borrower, whether or not evidenced by promissory notes,
which is contractually subordinated in right of payment, in a manner
satisfactory to the Lender (as evidenced by the Lender’s prior written approval
thereof), to all Obligations of the Borrower to the Lender.

       

      “Subordination
Agreement” shall mean the Subordination Agreement, to be dated as of the
Closing Date (as same may thereafter be amended, modified, supplemented and/or
restated from time to time), by and between the Lender, the Seller, the Trust
and GEM-DE, pursuant to which the Seller shall subordinate its rights under the
Seller Notes to the Obligations on terms and conditions satisfactory to the
Lender.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      “Subsidiary” or “Subsidiaries” shall
mean the individual or collective reference to any corporation, limited
liability company or other entity of which 50% or more of the outstanding shares
of stock or other equity interests of each class having ordinary voting power
and/or rights to profits (other than stock having such power only by reason of
the happening of a contingency) is at the time owned by the Borrower, directly
or indirectly through one or more Subsidiaries of the Borrower.

       

      “Target” shall mean
Island Environmental Services, Inc., a California corporation.

       

      “Term Loan” shall mean
the term loan in the face amount of $6,500,000 to be made pursuant to Section
2.02(a) below.

       

      “Term Note” shall mean
the promissory note of the Borrower issued to the Lender as described in Section
2.02(d) below.

       

      “Trust” shall mean NCF
Charitable Trust, a Florida wholly charitable trust and tax-exempt organization
classified as a public charity.

       

      “UCC” means the
Uniform Commercial Code as in effect in the State of New York on the date hereof
and hereafter from time to time.

       

      “Validity Guaranties”
shall mean, collectively, (a) the Validity Guaranty, to be dated as of the
Closing Date, by and among Lender, the Borrower and Timothy J. Koziol, and (b)
the Validity Guaranty, to be dated as of the Closing Date, by and among the
Lender, the Borrower and Brett M. Clark.

       

      “Warrants” shall mean
the warrants to purchase an aggregate of 3,000,000 shares of Common Stock
(subject to adjustment), such warrants to be issued by the Borrower to the
Lender on the Closing Date.

       

      “Wholly-Owned
Subsidiary” shall mean each Domestic Subsidiary of which all of the
outstanding equity securities (other than directors’ qualifying shares) are
owned by the Borrower or another such Wholly-Owned Subsidiary.

       

      Section 1.02.  Use
of Defined Terms.  All terms defined in this Agreement shall
have their defined meanings when used in the Notes, the Security Documents, the
other Loan Documents, and all certificates, reports or other documents made or
delivered pursuant to this Agreement, unless otherwise defined therein or unless
the specific context shall otherwise require.

       

      Section
1.03.  Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP.

       

      Section
1.04.  Other Definitional Provisions.  The words
“hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified.  The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms
of such terms.  The word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless
otherwise specified.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      II.           GENERAL
TERMS

       

      Section 2.01. 
Revolving
Credit Loans.

       

      (a)           Subject
at all times to all of the terms and conditions of this Agreement, the Lender
hereby agrees to extend to the Borrower a secured revolving credit facility,
from the Closing Date to the Revolving Credit Maturity Date, in an aggregate
principal amount not to exceed, at any time outstanding, the lesser of (i) the
Borrowing Base at the subject time, or (ii) the Maximum Revolver Amount (the
"Revolving Credit
Commitment").

       

      (b)           Such
revolving credit loans are herein sometimes referred to individually as an
"Advance" and
collectively as the "Advances."  Subject
at all times to all of the terms and conditions of this Agreement, from the
Closing Date to the Revolving Credit Maturity Date and within the limits of the
Revolving Credit Commitment, the Lender shall lend, and the Borrower may borrow,
prepay (without premium or penalty) and reborrow under this Section
2.01.  Each request for an Advance (i) shall be irrevocable, (ii)
shall be deemed to constitute an express affirmation that all conditions
precedent set forth in part B of Article IV hereof are satisfied on the date of
such request and will be satisfied on the requested Borrowing Date, and (iii)
shall be made to the Lender in writing, not later than three (3) Business Days
prior to the requested Borrowing Date, by an authorized officer of the Borrower
or by telephonic communication by such authorized officer to the Lender, which
shall be confirmed by written notice to the Lender to be delivered to the Lender
by the Business Day next following the subject request.  In no event
shall the Borrower request, or shall the Lender be required to honor, (A) any
request for an Advance in an amount greater than the Availability at such time,
(B) any request for an Advance in an amount less than $100,000, or (C) more than
one request (or more frequently if reasonably required by the Borrower) for the
borrowing of Advances in any seven (7) calendar day period.

       

      (c)           The
Borrower shall pay the Lender interest on all Advances at the rate(s) per annum
as in effect from time to time in accordance with the Revolving Credit
Note.  Such interest shall be payable monthly in arrears on the first
day of each calendar month and on the Revolving Credit Maturity Date, and shall
be computed on the daily unpaid balance of all Advances made under the
Borrower's revolving credit loan accounts with the Lender, based on a three
hundred sixty (360) day year, counting the actual number of days
elapsed.  The Borrower hereby authorizes the Lender to charge the
Borrower's revolving credit loan accounts for all such interest; provided, however, that the
Lender shall be under no obligation to make any such charge to the Borrower’s
revolving credit loan accounts (including, without limitation, if there is
insufficient Availability at the time such interest is due and
payable).

       

      (d)           In
the event and to the extent that, at any time, the outstanding principal amount
of Advances exceeds the Revolving Credit Commitment then in effect, then the
Borrower shall immediately, without notice or demand, make a payment to the
Lender in respect of the Advances in an amount sufficient to cause the
outstanding principal amount of Advances to be equal to or less than the
Revolving Credit Commitment then in effect.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (e)           Unless
sooner due and payable by reason of an Event of Default or Sale having occurred,
the Borrower shall pay in full all of the Obligations to the Lender in respect
of all Advances on or prior to the Revolving Credit Maturity
Date.  Anything elsewhere contained in this Agreement to the contrary
notwithstanding, in the event that and at such time as the Term Loan shall be
repaid or be required to be repaid in full, the Revolving Credit Commitment
shall thereupon terminate and all outstanding Advances, all accrued interest
thereon and all other outstanding Obligations (including, without limitation,
accrued Monitoring Fees) shall be immediately due and payable, without
requirement of any notice or demand.

       

      (f)           All
Advances shall be evidenced by a secured Revolving Credit Note of the Company
payable to the Lender or registered assigns.

       

      (g)           The
Borrower may, at its option, terminate the Revolving Credit Commitment at any
time by giving twenty (20) days’ prior written notice thereof to the Lender, and
paying to the Lender, on the date fixed for termination, an amount equal to the
sum of (i) all outstanding principal and accrued interest of the Advances, and
(ii) all accrued Monitoring Fees.

       

      Section
2.02.  Term Loan.

       

      (a)           Subject
at all times to all of the terms and conditions of this Agreement, the Lender
hereby agrees to extend to the Borrower a Term Loan repayable in the principal
amount of $6,500,000.  Notwithstanding such stated principal amount
and the stated principal amount of the Term Note, the Lender shall only be
required to fund to the Borrower the principal sum of $5,000,000 in respect of
the Term Loan, and the $1,500,000 difference shall be treated as original issue
discount.  The $5,000,000 fundable amount of the Term Loan shall be
borrowed in a single borrowing on the Closing Date, and principal amounts repaid
in respect of the Term Loan may not be reborrowed

       

      (b)           The
Term Loan shall be repayable in installments, in accordance with the schedules
of payments set forth in the Term Note.  The Borrower shall be
required to prepay the Term Loan in full simultaneously with the consummation of
any Sale or any termination of the Revolving Credit Commitment.

       

      (c)           The
Borrower shall pay the Lender interest on the principal balance of the Term Loan
at the rate(s) per annum as in effect from time to time in accordance with the
Term Note.  Such interest shall be payable in accordance with the Term
Note, and shall be computed on the daily unpaid balance of the Term Loan, based
on a three hundred sixty (360) day year, counting the actual number of days
elapsed.  The Borrower hereby authorizes the Lender to charge the
Borrower’s revolving credit loan accounts for all such interest and/or for any
or all principal amounts due and payable in respect of the Term Loans; provided, however, that the
Lender shall be under no obligation to make any such charge to the Borrower’s
revolving credit loan accounts (including, without limitation, if there is
insufficient Availability at the time such interest and/or principal is due and
payable).

       

      (d)           The
Term Loan shall be evidenced by a secured Convertible Term Note of the Borrower
payable to the Lender or registered assigns.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (e)           In
the event and to the extent that the Borrower shall receive payment (other than
by offset) in respect of any indemnification claim under the Acquisition
Agreement, (i) the Borrower shall immediately give written notice to the Lender
upon receipt of such indemnification payment, stating the date and amount of
such payment, and (ii) the Borrower shall, upon demand by the Lender, make a
prepayment on the Term Note in an amount equal to the net after-tax amount of
the indemnification payment received by the Borrower.  Any prepayment
under this Section 2.02(e) shall not require payment of any prepayment
premium.

       

      Section
2.03.  Fees and Premiums.

       

      (a)           The
Borrower shall pay the Closing Fees to the Lender on the Closing
Date.  The Closing Fees shall be deemed fully earned on the Closing
Date and shall not be refundable in whole or in part and shall not be subject to
reduction or set-off under any circumstances.

       

      (b)           The
Borrower shall further pay to the Lender, on the first (1st) day of
each calendar month prior to the Revolving Credit Maturity Date or the earlier
termination of the Revolving Credit Commitment and payment of the Obligations in
accordance with Section 2.01(g) above or Section 2.07 below, and upon the
termination of the Revolving Credit Commitment and payment of the Obligations
thereon, a collateral monitoring, availability and administrative fee in an
amount equal to 0.083% of the average daily outstanding principal amount of
Advances during the immediately preceding calendar month (which shall be
appropriately prorated, based on a 30-day month, for any partial calendar
month).

       

      (c)           In
the event of any prepayment of all or any portion of the Term Loan prior to
August 1, 2011 (other than a prepayment pursuant to Section 2.02(e) above), in
addition to the payment of the subject principal amount and all unpaid accrued
interest thereon, the Borrower shall be required to pay to the Lender a
prepayment premium in an amount equal to (i) two (2%) percent of the principal
amount being prepaid if the prepayment is made on or prior to that date which is
eighteen (18) months after the Closing Date, and (ii) one (1%) percent of the
principal amount being prepaid if such prepayment is made subsequent to that
date which is eighteen (18) months after the Closing Date and prior to August 1,
2011.

       

      (d)           Payments
received in respect of the Obligations after 12:00 Noon on any day shall be
deemed to be received on the next succeeding Business Day, and if any payment is
received other than by wire transfer of immediately available funds, such
payment shall be subject to three (3) Business Days’ clearance prior to being
credited to the Obligations for interest calculation purposes.

       

      (e)           In
the event that the Lender notifies the Borrower that the Lender is ready,
willing and able to fund the Loans on substantially the terms of this Agreement
and the Closing Date has not occurred within ten (10) days thereafter other than
due to the fault of the Lender, then the Lender may, at any time thereafter
until the Closing Date, terminate this Agreement by written notice to the
Borrower, in which event the Borrower shall immediately pay to the Lender, as
liquidated damages (and not as a penalty) and as the Lender’s sole and exclusive
remedy, a fee in the amount of $250,000.  No deposits theretofore paid
by the Borrower to the Lender shall be applied to or offset against such
fee.  This Section 2.03(e) shall survive any termination of this
Agreement.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      Section 2.04.  Use
of Proceeds.  The Borrower shall utilize the proceeds of the
Loans solely (a) on the Closing Date, (i) to repay all outstanding Indebtedness
owed by the Borrower and its Subsidiaries to the Existing Lenders, and (ii) to
pay a portion of the purchase price payable to the Seller under the Acquisition
Agreement, (b) for working capital and other general corporate purposes of the
Borrower (including, without limitation, the payment of those undisputed
accounts payable listed in Schedule 3.01(g) of
the Disclosure Schedule within ten (10) Business Days after the Closing Date),
and (c) for the payment of fees and expenses associated with the consummation of
the transactions contemplated by this Agreement and the Acquisition
Agreement.

       

      Section
2.05.  Further Obligations.  With respect to all
Obligations for which the interest rate is not otherwise specified herein
(whether such Obligations arise hereunder, pursuant to the Notes or Security
Documents, or otherwise), such Obligations shall bear interest at the rate(s) in
effect from time to time pursuant to the Revolving Credit Note.

       

      Section
2.06.  Application of Payments.  All amounts paid to
or received by the Lender in respect of the Loans from whatever source (whether
from the Borrower, any Subsidiary pursuant to a Guaranty Agreement, any
realization upon any Collateral, or otherwise) shall, unless otherwise directed
by the Borrower with respect to any particular payment (unless an Event of
Default shall then be continuing, in which event the Lender may disregard the
Borrower’s direction), be applied (a) first, to reimburse the Lender for all
out-of-pocket costs and expenses incurred by the Lender which are reimbursable
to the Lender in accordance with this Agreement, the Notes and/or any of the
other Loan Documents, (b) next, to any accrued but unpaid fees or prepayment
premiums, and amounts payable under Section 2(c) of the Registration Rights
Agreement, (c) next, to unpaid accrued interest on the Term Loan, (d) next, to
unpaid accrued interest on the Advances, (e) next, to the outstanding principal
of the Term Loan, to the extent then due and payable, (f) next, to the
outstanding principal of the Advances, and (g) finally, to the payment of any
other outstanding Obligations; and after payment in full of the Obligations, any
further amounts paid to or received by the Lender in respect of the Loans shall
be paid over to the Borrower or such other Person(s) as may be legally entitled
thereto.

       

      Section
2.07.  Sale; Term Loan Payment.  Anything elsewhere
contained in this Agreement and/or the Notes to the contrary notwithstanding,
the Revolving Credit Commitment shall terminate and all Obligations shall become
immediately due and payable, without requirement of any notice or demand, (a)
upon the consummation of any Sale, and (b) upon the prepayment or required
prepayment in full of the Term Loan.  In addition, the Term Loan and
all Obligations shall become immediately due and payable, without requirement of
any notice or demand, (i) upon the consummation of any Sale, and (ii) upon any
termination of the Revolving Credit Commitment.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      Section
2.08.  Obligations Unconditional.

       

      (a)           The
payment and performance of all Obligations shall constitute the absolute and
unconditional obligations of the Borrower, and shall be independent of any
defense or rights of set-off, recoupment or counterclaim which the Borrower
might otherwise have against the Lender.  All payments required by
this Agreement and/or the Notes shall be paid free of any deductions or
withholdings for any taxes or other amounts and without abatement, diminution or
set-off.  If the Borrower is required by law to make such a deduction
or withholding from a payment hereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of the Lender or its members), the Borrower shall pay to
the Lender such additional amount as is necessary to ensure that, after the
making of such deduction or withholding, the Lender receives (free from any
liability in respect of any such deduction or withholding) a net sum equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made.  The Borrower shall (i)
pay the full amount of any deduction or withholding, which it is required to
make by-law, to the relevant authority within the payment period set by the
relevant law, and (ii) promptly after any such payment, deliver to the Lender an
original (or certified copy) official receipt issued by the relevant authority
in respect of the amount withheld or deducted or, if the relevant authority does
not issue such official receipts, such other evidence of payment of the amount
withheld or deducted as is reasonably acceptable to the
Lender.  Notwithstanding anything to the contrary contained in this
Section 2.08(a), in the event that the Borrower is compelled by legal process to
make payment to a third party (“Third Party
Payment”), including any taxing authority, of any amount that is
unrelated to this Agreement or the transactions hereunder and that is owed by
the Lender to such third party, then, upon the Borrower making such payment and
presenting to the Lender satisfactory evidence of such payment, such Third Party
Payment shall be entered on the Lender’s books and records as a credit to the
Borrower’s account.  The Borrower shall give the Lender at least
fifteen (15) days’ written notice prior to making any such Third Party
Payment.

       

      (b)           If,
at any time and from time to time after the Closing Date, (i) any change in any
existing law, regulation, treaty or directive or in the interpretation or
application thereof, (ii) any new law, regulation, treaty or directive enacted
or application thereof, or (iii) compliance by the Lender with any request or
directive (whether or not having the force of law) from any governmental
authority (A) subjects the Lender to any tax, levy, impost, deduction,
assessment, charge or withholding of any kind whatsoever with respect to any
Loan Document, or changes the basis of taxation of payments to the Lender of any
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of the Lender or its members), or (B) imposes on the Lender any other condition
or increased cost in connection with the transactions contemplated thereby or
participations therein, and the result of any of the foregoing is to increase
the cost to the Lender of making or continuing any Loan or to reduce any amount
receivable hereunder, then, in any such case, the Borrower shall promptly pay to
the Lender any additional amounts necessary to compensate the Lender, on an
after-tax basis, for such additional cost or reduced amount as determined by the
Lender.  If the Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.08(b), the Lender shall promptly notify the
Borrower of the event by reason of which the Lender has become so entitled, and
each such notice of additional amounts payable pursuant to this Section 2.08(b)
submitted by the Lender to the Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      Section
2.09.  Reversal of Payments.  To the extent that any
payment or payments made to or received by the Lender pursuant to this Agreement
or any other Loan Document are subsequently invalidated, declared to be
fraudulent or preferential, set aside, or required to be repaid to any trustee,
receiver or other person under any state or federal bankruptcy or other such
law, then, to the extent thereof, such amounts shall be revived as Obligations
and continue in full force and effect hereunder as if such payment or payments
had not been received by the Lender.

       

      III.           REPRESENTATIONS AND
WARRANTIES

       

      As of the
Closing Date and on each Borrowing Date (unless the representation and warranty
refers to a specific date, in which case such representation and warranty shall
continue in effect with respect to such specific date), the Borrower hereby
makes the following representations and warranties to the Lender, all of which
representations and warranties shall survive the Closing Date, the delivery of
the Notes and the making of the Loans, shall be continuing in nature so long as
any Obligations are outstanding or the Revolving Credit Commitment remains in
effect, and are as follows:

       

      Section
3.01.  Financial Matters.

       

      (a)           The
Borrower has heretofore furnished to the Lender (i) the audited consolidated
financial statements (including balance sheets, statements of income, statements
of cash flows and statements of stockholders’ equity) of the Borrower and its
Subsidiaries as at December 31, 2005, 2006 and 2007, and for the Fiscal Years
then ended, and (ii) the unaudited consolidated financial statements of the
Borrower and its Subsidiaries as of June 30, 2008 and for the six (6) months
then ended (collectively, the “Financial
Statements”).

       

      (b)           The
Financial Statements (i) have been prepared in accordance with GAAP on a
consistent basis for all periods (subject, in the case of the unaudited
Financial Statements, to the absence of full footnote disclosures, and to normal
non-material audit adjustments), (ii) are complete and correct in all material
respects, (iii) fairly present the consolidated financial condition of the
Borrower and its Subsidiaries as of said dates, and the results of their
operations for the periods stated, (iv) contain and reflect all necessary
adjustments and accruals for a fair presentation of the Borrower’s and its
Subsidiaries’ consolidated financial condition and results of operations as of
the dates of and for the periods covered by such Financial Statements, and (v)
make full and adequate provision, subject to and in accordance with GAAP, for
the various assets and liabilities (including, without limitation, deferred
revenues) of the Borrower and its Subsidiaries, fixed or contingent, and the
results of their operations and transactions in their accounts, as of the dates
and for the periods referred to therein.

       

      (c)           Except
as set forth in Schedule 3.01(c) of
the Disclosure Schedule, neither the Borrower nor any Subsidiary has any
liabilities, obligations or commitments of any kind or nature whatsoever,
whether absolute, accrued, contingent or otherwise (collectively “Liabilities and
Contingencies”), including, without limitation, Liabilities and
Contingencies under employment agreements and with respect to any “earn-outs”,
stock appreciation rights, or related compensation obligations, except: (i)
Liabilities and Contingencies disclosed in the Financial Statements or footnotes
thereto, (ii) Liabilities and Contingencies incurred in the ordinary course of
business and consistent with past practice since the date of the most recent
Financial Statements, or (iii) those Liabilities  and Contingencies
which are not required to be disclosed under GAAP.  The reserves, if
any, reflected on the balance sheet included in the most recent Financial
Statements are appropriate and reasonable.  Neither the Borrower nor
any Subsidiary has any Indebtedness for money borrowed, outstanding obligations
for the purchase price of property, contingent obligations or liabilities for
taxes, or any unusual forward or long-term commitments, except as specifically
set forth in Schedule
3.01 of the Disclosure Schedule.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      (d)           Since
the date of the most recent Financial Statements, except as set forth in Schedule 3.01(d) of
the Disclosure Schedule, there has been no material adverse change in the
working capital, condition (financial or otherwise), assets, liabilities,
reserves, business, management, operations or prospects of the Borrower and its
Subsidiaries (taken as a whole), including, without limitation, the
following:

       

      (i)           there
has been no material change in any assumptions underlying, or in any methods of
calculating, any bad debt, contingency or other reserve relating to the Borrower
or any Subsidiary;

       

      (ii)           there
have been (A) no material write-downs in the value of any inventory of, and
there have been no write-offs as uncollectible of any notes, accounts receivable
or other receivables of, the Borrower or any Subsidiary other than write-offs of
accounts receivable reserved in full as of the date of the most recent financial
statements delivered to the Lender, and (B) no reserves established for the
uncollectibility of any notes, Accounts or other receivables of the Borrower or
any Subsidiary, except to the extent that same have been disclosed to the Lender
in writing and would not, individually or in the aggregate, cause the
outstanding Advances to exceed the Revolving Credit Commitment;

       

      (iii)           no
debts have been cancelled, no claims or rights of substantial value have been
waived, and no properties or assets (real, personal or mixed, tangible or
intangible) have been sold, transferred, or otherwise disposed of by the
Borrower or any Subsidiary except in the ordinary course of business and
consistent with past practice;

       

      (iv)           there
has been no change in any method of accounting or accounting practice utilized
by the Borrower or any Subsidiary;

       

      (v)           
no material casualty, loss or damage has been suffered by the Borrower or any
Subsidiary, regardless of whether such casualty, loss or damage is or was
covered by insurance;

       

      (vi)           Any
announced changes in the policies or practices of any customer, supplier or
referral source which would reasonably be expected to have a Material Adverse
Effect;

       

      (vii)         Any
incurrence of (A) any liability or obligation outside of the ordinary course of
business, or (B) any Indebtedness other than Permitted
Indebtedness;

       

      (viii)        Any
declaration, setting aside or payment of any dividend or distribution or any
other payment of any kind by the Company to or in respect of any equity
securities of the Company; and

       

      (ix)           No
action described in this Section 3.01(d) has been agreed to be taken by the
Borrower or any Subsidiary.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (e)           The
Borrower has in place adequate systems of internal controls and disclosure
controls and procedures sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences, and
(v) the Borrower and its management are able to obtain timely and accurate
information regarding the Business Operations and all material transactions
relating to the Borrower and its Subsidiaries; and no material deficiency exists
with respect to the Borrower’s systems of internal controls.

       

      (f)           Schedule 3.01(f) of
the Disclosure Schedule sets forth a pro forma consolidated
balance sheet of the Borrower and its Subsidiaries (including the Target) as of
June 30, 2008 but giving pro forma effect to the
consummation of the transactions contemplated by the Acquisition Agreement (in
accordance with the terms thereof), the Loan(s) to be made on the Closing Date,
the repayment of the Indebtedness owed to the Existing Lenders, and the other
transactions contemplated by this Agreement.  Such pro forma balance sheet
has been prepared by the Borrower in reliance, in part, on the financial
statements of the Target (which are believed by the Borrower to be accurate in
all material respects) and represents the Borrower’s best good faith estimate of
the assets and liabilities of the Company and its Subsidiaries after giving
effect to the aforedescribed transactions.

       

      (g)           Schedule 3.01(g) of
the Disclosure Schedule sets forth a true and complete list of all undisputed
and all disputed accounts payable (itemized by creditor, dollar amount and
original due date) of the Borrower and its Subsidiaries that are more than
ninety (90) days past due as of the date of this Agreement.

       

      Section
3.02.  Organization; Corporate Existence.

       

      (a)           The
Borrower (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, (ii) has all requisite corporate
power and authority to own its properties and to carry on its business as now
conducted and as proposed hereafter to be conducted, (iii) is qualified to do
business as a foreign corporation in the State of California and in each other
jurisdiction in which the failure of the Borrower to be so qualified would have
a Material Adverse Effect, and (iv) has all requisite corporate power and
authority to execute and deliver, and perform all of its obligations under, the
Loan Documents to which it is a party.  True and complete copies of
the Organic Documents of the Borrower, together with all amendments thereto,
have been furnished to the Lender.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      (b)           Each
of the Subsidiaries (i) is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation, (ii) has all
requisite corporate or company power and authority to own its properties and to
carry on its business as now conducted and as proposed hereafter to be
conducted, (iii) is qualified to do business as a foreign corporation or limited
liability company in each jurisdiction in which the failure of such Subsidiary
to be so qualified would have a Material Adverse Effect, and (iv) has all
requisite corporate or company power and authority to execute and deliver, and
perform all of its obligations under, the Loan Documents to which it is a
party.  True and complete copies of the Organic Documents of each
Subsidiary (including the Target), together with all amendments thereto, have
been furnished to the Lender.

       

      Section
3.03.  Authorization.

       

      (a)           The
execution, delivery and performance by the Borrower and its Subsidiaries of
their respective obligations under the Loan Documents and the Acquisition
Agreement, have been duly authorized by all requisite company, corporate and
other action and will not, either prior to or as a result of the consummation of
the transactions contemplated by this Agreement: (i) violate any provision of
Applicable Law, any order of any court or other agency of government, any
provision of the Organic Documents of the Borrower or any Subsidiary, or any
Contract, indenture, agreement or other instrument to which the Borrower or any
Subsidiary is a party (including, without limitation, rights of first refusal
held by the Existing Lenders), or by which the Borrower or any Subsidiary or any
of their respective assets or properties are bound which would have a Material
Adverse Effect, or (ii) be in conflict with, result in a breach of, or
constitute (after the giving of notice or lapse of time or both) a default
under, or, except as may be provided in the Loan Documents, result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
property or assets of the Borrower or any Subsidiary pursuant to, any such
Contract, indenture, agreement or other instrument.

       

      (b)           This
Agreement and other Loan Documents, and the Acquisition Documents, have been
duly executed and delivered by the Borrower and each Subsidiary (in each case to
the extent it is a party thereto), and constitute the valid and binding
obligations of the Borrower and each Subsidiary (in each case to the extent it
is a party thereto), enforceable against the Borrower and each Subsidiary in
accordance with their respective terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency, reorganization, moretorium, fraudulent
transfer or other similar laws now or hereafter in effect relating to creditors’
rights generally, and by general principles of equity.

       

      (c)           Neither
the Borrower nor any Subsidiary is required to obtain any Government Approval,
consent or authorization from, or to file any declaration or statement with, any
governmental instrumentality or agency in connection with or as a condition to
the execution, delivery or performance of any of the Loan Documents or the
Acquisition Documents.

       

      (d)           The
Borrower has reserved for issuance a sufficient number of shares of Common Stock
to satisfy its obligations upon conversion in full of the Term Note and the
exercise of all the Warrants.  Upon conversion of the Term Note in
accordance with the terms thereof, the share of Common Stock issuable upon such
conversion will be validly issued, fully paid and nonassessable.  Upon
exercise of the Warrants in accordance with the terms thereof, the Warrant
Shares (as such term is defined in the Warrants) will be validly issued, fully
paid and nonassessable.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Section
3.04.  Litigation.  Except as disclosed in Schedule 3.04 of the
Disclosure Schedule, there is no action, suit or proceeding at law or in equity
or by or before any governmental instrumentality or other agency now pending or,
to the knowledge of the Borrower, threatened against or affecting the Borrower
or any Subsidiaries or any of their respective assets, which, if adversely
determined, would have a Material Adverse Effect.  The Borrower has no
Knowledge of any state of facts, events, conditions or circumstances which are
reasonably likely to give rise to, or would properly constitute grounds for or
the basis of, any suit, action, arbitration, proceeding or investigation
(including, without limitation, any unfair labor practice charges, interference
with union organizing activities, or other labor or employment claims) against
or with respect to the Borrower or any Subsidiary which, if adversely
determined, would have a Material Adverse Effect.

       

      Section
3.05.  Material Contracts.  Except as disclosed on
Schedule 3.05
of the Disclosure Schedule, neither the Borrower nor any Subsidiary is (a) a
party to any Contract, agreement or instrument or subject to any charter or
other corporate or organizational restriction which has had or if breached by
the Borrower or any Subsidiary would reasonably be expected to have a Material
Adverse Effect, (b) subject to any liability or obligation under or relating to
any collective bargaining agreement, or (c) in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contract, agreement or instrument to which it is a party or by
which any of its assets or properties is bound, which default, individually or
in the aggregate, would have or could reasonably be expected to have a Material
Adverse Effect.

       

      Section
3.06.  Title to Properties.  The Borrower and each
Subsidiary has good title to all of its owned properties and assets, free and
clear of all mortgages, security interests, restrictions, encumbrances or other
Liens of any kind, except for restrictions on the nature of use thereof imposed
by Applicable Law, and except for Permitted Liens, none of which materially
interfere with the use and enjoyment of such properties and assets in the normal
course of the Business Operations as presently conducted, or materially impair
the value of such properties and assets for the purpose of such
business.

       

      Section
3.07.  Real Property.  Schedule 3.07 of the
Disclosure Schedule sets forth a correct and complete list of all Real
Properties leased or occupied by the Borrower and/or any of the Subsidiaries
(including the Target) on the date of this Agreement.  Except for the
Owned Real Property, neither the Borrower nor any Subsidiary (including the
Target) owns any Real Property.  The Borrower or the subject
Subsidiary has a valid lessee’s interest in each Real Property currently leased
or occupied by the Borrower or any Subsidiary.  Neither the Borrower,
any Subsidiary nor, to the Borrower’s Knowledge, any other party thereto, is in
material breach or violation of any requirements of any such lease; and such
Real Properties are in good condition (reasonable wear and tear excepted) and
are adequate for the current and proposed businesses of the Borrower and its
Subsidiaries.  To the Borrower’s Knowledge, the Borrower’s and its
Subsidiaries’ use of the Real Properties in the normal conduct of the Business
Operations does not violate any applicable building, zoning or other law,
ordinance or regulation affecting such Real Properties, and no covenants,
easements, rights-of-way or other such conditions of record materially impair
the Borrower’s and its Subsidiaries’ use of the Real Properties in the normal
conduct of the Business Operations.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      Section
3.08.  Machinery and Equipment.  The machinery and
equipment owned and/or used by the Borrower and the Subsidiaries is, as to each
individual material item of machinery and equipment, and in the aggregate as to
all such equipment, in good and usable condition and in a state of good
maintenance and repair (reasonable wear and tear excepted), and adequate for its
use in the Business Operations.  All of such machinery and equipment
has been inspected and maintained at all times and from time to time in
accordance with all Applicable Law and applicable manufacturers’ warranties,
specifications and recommendations

       

      Section
3.09.  Capitalization.  Except as disclosed in Schedule 3.09 of the
Disclosure Schedule and new Subsidiaries which may hereafter be formed or
acquired in compliance with this Agreement, the Borrower does not, directly or
indirectly, own any capital stock of or any form of equity interest in any other
Person.

       

      Section
3.10.  Solvency.  After giving effect to the Loans
and the other transactions contemplated hereby (including pursuant to the
Acquisition Documents), the borrowings made and/or to be made by the Borrower
under this Agreement do not and will not render the Borrower insolvent or with
unreasonably small capital for its business; the fair saleable value of all of
the assets and properties of the Borrower does now, and will, upon the funding
of the Loans contemplated hereby, exceed the aggregate liabilities and
Indebtedness of the Borrower (including contingent liabilities); the Borrower is
not contemplating either the filing of a petition under any state or federal
bankruptcy or insolvency law, or the liquidation of all or any substantial
portion of its assets or property; the Borrower has no Knowledge of any Person
contemplating the filing of any such petition against the Borrower; and the
Borrower reasonably anticipates that it will be able to pay its debts as they
mature.

       

      Section 3.11.  No
Investment Company.  The Borrower is not an “investment
company” or a company “controlled” by an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.

       

      Section
3.12.  Margin Securities.  Neither the Borrower nor
any Subsidiary owns or has any present intention of acquiring any “margin
security” or any “margin stock” within the meaning of Regulations T, U or X of
the Board of Governors of the Federal Reserve System (herein called “margin
security” and “margin stock”).  None of the proceeds of the Loans will
be used, directly or indirectly, for the purpose of purchasing or carrying, or
for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry, any margin security or margin stock or for any
other purpose which might constitute the transactions contemplated hereby a
“purpose credit” within the meaning of said Regulations T, U or X, or cause this
Agreement to violate any other regulation of the Board of Governors of the
Federal Reserve System or the Exchange Act, or any rules or regulations
promulgated under such statutes.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      Section
3.13.  Taxes.

       

      (a)           All
federal, state and local tax returns and tax reports required to be filed by the
Borrower and/or any Subsidiary have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and reports are
required to be filed, and all of such tax returns, tax reports and other filings
are correct and complete in all material respects.  All federal, state
and local income, franchise, sales, use, property, excise, ad valorem,
value-added, payroll and other taxes (including interest, penalties and
additions to tax and including estimated tax installments where required to be
filed and paid) due from or with respect to the Borrower and the Subsidiaries
have been fully paid (except for taxes the validity of which are being contested
in good faith by appropriate proceedings and as to which the Borrower or
Subsidiary has set aside on its books adequate reserves), and appropriate
accruals have been made on the Borrower’s books for taxes not yet due and
payable.  All taxes and other assessments and levies which the
Borrower and/or any Subsidiary is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to the proper
governmental authorities to the extent due and payable.  Except as set
forth in Schedule
3.13 of the Disclosure Schedule, there are no outstanding or pending
claims, deficiencies or assessments for taxes, interest or penalties with
respect to any taxable period of the Borrower or any Subsidiary, and no
outstanding tax Liens.

       

      (b)           Except
as disclosed in Schedule 3.13 of the
Disclosure Schedule, the Borrower has no Knowledge and has not received notice
of any pending audit with respect to any federal, state or local tax returns of
the Borrower or any Subsidiary, and no waivers of statutes of limitations have
been given or requested with respect to any tax years or tax filings of the
Borrower or any Subsidiary.

       

      Section
3.14.  ERISA.  Except as set forth in Schedule 3.14 of the
Disclosure Schedule, neither the Borrower nor any ERISA Affiliate of the
Borrower maintains or has any obligation to make any contributions to any
pension, profit sharing or other similar plan providing for deferred
compensation to any employee.  With respect to any such plan(s) as may
now exist or may hereafter be established by the Borrower or any ERISA Affiliate
of the Borrower, and which constitutes an “employee pension benefit plan” within
the meaning of Section 3(2) of ERISA, except as set forth on Schedule 3.14 of the
Disclosure Schedule:  (a) the Borrower or the subject ERISA Affiliate
has paid and shall cause to be paid when due all amounts necessary to fund such
plan(s) in accordance with its terms, (b) except for normal premiums payable by
the Borrower to the Pension Benefit Guaranty Corporation (“PBGC”), the Borrower
or the subject ERISA Affiliate has not taken and shall not take any action which
could result in any liability to the PBGC, or any of its successors or assigns,
(c) the present value of all accrued benefits thereunder shall not at any time
exceed the value of the assets of such plan(s) allocable to such accrued
benefits, (d) there have not been and there shall not be any transactions such
as would cause the imposition of any tax or penalty under Section 4975 of the
Code or under Section 502 of ERISA, which would adversely affect the funded
benefits attributable to the Borrower or the subject ERISA Affiliate, (e) there
has not been and there shall not be any termination or partial termination
thereof (other than a partial termination resulting solely from a reduction in
the number of employees of the Borrower or an ERISA Affiliate of the Borrower,
which reduction is not anticipated by the Borrower), and there has not been and
there shall not be any “reportable event” (as such term is defined in Section
4043(b) of ERISA) on or after the effective date of Section 4043(b) of ERISA
with respect to any such plan(s) subject to Title IV of ERISA, (f) no
“accumulated funding deficiency” (as defined in Section 412 of the Code) has
been or shall be incurred on or after the effective date of Section 412 of the
Code, (g) such plan(s) have been and shall be determined to be “qualified”
within the meaning of Section 401(a) of the Code, and have been and shall be
duly administered in compliance with ERISA and the Code, and (h) the Borrower is
not aware of any fact, event, condition or cause which might adversely affect
the qualified status thereof.  As respects any “multi-employer plan”
(as such term is defined in Section 3(37) of ERISA) to which the Borrower or any
ERISA Affiliate thereof has heretofore been, is now, or may hereafter be
required to make contributions, the Borrower or such ERISA Affiliate has made
and shall make all required contributions thereto, and there has not been and
shall not be any “complete withdrawal” or “partial withdrawal” (as such terms
are respectively defined in Sections 4203 and 4205 of ERISA) therefrom on the
part of the Borrower or such ERISA Affiliate.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      Section
3.15.  Intellectual Property.  Except as set forth in
Schedule 3.15 of
the Disclosure Schedule, the Borrower and the Subsidiaries own or have the valid
right to use all patents, trademarks, copyrights, software, computer programs,
equipment designs, network designs, equipment configurations, technology and
other intellectual property used, marketed and/or sold in the Business
Operations, and the Borrower and the Subsidiaries are in compliance in all
material respects with all licenses, user agreements and other such agreements
regarding the use of intellectual property used in the Business Operations; and
the Borrower has no Knowledge that and has received no notice claiming that any
of such intellectual property infringes upon or violates the valid rights of any
other Person.

       

      Section
3.16.  Compliance with Laws.  The Borrower and the
Subsidiaries are in compliance with all occupational safety, health, wage and
hour, employment discrimination, environmental, flammability, labeling and other
Applicable Law which are material to the Business Operations, except where such
non-compliance would not, individually or in the aggregate, have a Material
Adverse Effect.  Neither the Borrower nor any Subsidiary is aware of
any existing state or facts, events, conditions or occurrences which may now or
hereafter constitute or result in a violation of any Applicable Law, or which
may be reasonably expected to give rise to the assertion of any such violation,
which individually or in the aggregate could have a Material Adverse
Effect.  Neither the Borrower nor any Subsidiary has received written
notice of default or violation, nor is the Borrower or any Subsidiary in default
or violation, with respect to any judgment, order, writ, injunction, decree,
demand or assessment issued by any court or any federal, state, local, municipal
or other governmental agency, board, commission, bureau, instrumentality or
department, domestic or foreign, relating to any aspect of the Borrower’s or any
Subsidiaries’ business, affairs, properties or assets.  Except as
disclosed in Schedule
3.16 of the Disclosure Schedule, neither the Borrower nor any Subsidiary
has received written notice of or been charged with, or is, to the Borrower’s
Knowledge, under investigation with respect to, any violation of any provision
of any Applicable Law, which violation would, individually or in the aggregate
with all other such violations, have a Material Adverse Effect.

       

      Section
3.17.  Licenses and Permits.  The Borrower and each
Subsidiary has all federal, state and local licenses and permits required to be
maintained in respect of the ownership and operation of the Owned Real Property
and otherwise in connection with and material to the Business Operations, and,
to Borrower’s Knowledge, all such licenses and permits are valid and in full
force and effect.   The Borrower and each Subsidiary has complied
with the requirements of such licenses and permits in all material respects, and
has received no written notice of any pending or threatened proceedings for the
suspension, termination, revocation or limitation thereof. There is no existing
circumstance or condition Known to the Borrower that would be reasonably
expected to cause or permit any of such licenses or permits to be voided,
revoked or withdrawn.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      Section
3.18.  Insurance.  Schedule 3.18 of the
Disclosure Schedule lists all insurance coverages maintained by the Borrower and
its Subsidiaries on the date of this Agreement, including the names of insurers,
policy limits and deductibles.  The Borrower has not received written
notice of cancellation or intent not to renew any of such policies, and there
has not occurred, and to the Borrower’s Knowledge there does not exist, any
condition (other than general industry-wide conditions) such as would cause any
of such insurers to cancel any of such insurance coverages, or would be
reasonably likely to materially increase the premiums charged to the Borrower or
any Subsidiary for coverages consistent with the scope and amounts of coverages
as in effect on the date hereof.

       

      Section
3.19.  Environmental Laws.

       

      (a)           Except
to the extent disclosed in the Environmental Report, the Borrower and each
Subsidiary has complied in all material respects with all Environmental Laws
relating to its business and properties, and to the Knowledge of the Borrower
there exist no Hazardous Substances in amounts in violation of applicable
Environmental Laws or underground storage tanks on any of the Real Properties
the existence of which would, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, except those that are stored and
used in material compliance with Applicable Laws.

       

      (b)           Except
to the extent disclosed in the Environmental Report, neither the Borrower nor
any Subsidiary has received written notice of any pending or threatened
litigation or administrative proceeding which in any instance (i) asserts or
alleges any violation of applicable Environmental Laws on the part of the
Borrower or any Subsidiary, (ii) asserts or alleges that the Borrower or any
Subsidiary is required to clean up, remove or otherwise take remedial or other
response action due to the disposal, depositing, discharge, leaking or other
release of any Hazardous Substances or materials, or (iii) asserts or alleges
that the Borrower or any Subsidiary is required to pay all or any portion of the
costs of any past, present or future cleanup, removal or remedial or other
response action which arises out of or is related to the disposal, depositing,
discharge, leaking or other release of any hazardous substances or materials by
the Borrower or any Subsidiary.  To the Borrower’s Knowledge, neither
the Borrower nor any Subsidiary is subject to any judgment, decree, order or
citation related to or arising out of any Environmental Laws.  To the
Borrower’s Knowledge, neither the Borrower nor any Subsidiary has been named or
listed as a potentially responsible party by any governmental body or agency in
any matter arising under any Environmental Laws.  Neither the Borrower
nor any Subsidiary is a participant in, nor does the Borrower have Knowledge of,
any governmental investigation involving environmental condition at any of the
Real Properties.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (c)           Except
to the extent disclosed in the Environmental Report, neither the Borrower or any
Subsidiary nor, to the Borrower’s Knowledge, any other person, firm, corporation
or governmental entity has caused or permitted any Hazardous Substances or other
materials to be stored, deposited, treated, recycled or disposed of on, under or
at any of the Real Properties which materials, if known to be present, would
reasonably be expected to require or authorize cleanup, removal or other
remedial action by the Borrower or any Subsidiary under any applicable
Environmental Laws.

       

      (d)           To
the Borrower’s Knowledge, all owners and/or tenants of  properties
adjacent to the Owned Real Property and which may affect the environmental
condition of the Owned Real Property have implemented and are in compliance with
all mandated remediation programs in respect of Hazardous Substances and other
environmental contamination caused by or emanating from such owners’ or tenants’
properties or operations.

       

      (e)           As
used in this Section 3.19 and in Sections 5.03 and 5.08 below, the following
terms have the following meanings:

       

      “Environmental Laws”
include all federal, state, and local laws, rules, regulations, ordinances,
permits, orders, and consent decrees agreed to by the Borrower or any
Subsidiary, relating to health, safety, and environmental matters applicable to
the business and property of the Borrower or any Subsidiary.  Such
laws and regulations include but are not limited to the Resource Conservation
and Recovery Act (“RCRA”), 42 U.S.C.
§6901 et seq., as amended; the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C.
§9601 et seq., as amended; the Toxic Substances Control Act (“TSCA”), 15 U.S.C.
§2601 et seq., as amended; and the Clean Water Act, 33 U.S.C. §1331 et seq., as
amended.

       

      “Hazardous
Substances”, “Release”, “Respond” and “Response” shall have
the meanings assigned to them in CERCLA, 42 U.S.C. §9601, as
amended.

       

      “Notice” means any
actual summons, citation, directive, information request, notice of potential
responsibility, notice of violation or deficiency, order, claim, complaint,
investigation, proceeding, judgment, letter, or other written communication from
the United States Environmental Protection Agency or other federal, state, or
local agency or authority, or any other entity or individual, public or private,
concerning any intentional or unintentional act or omission which involves
management of Hazardous Substances in amounts in violation of Environmental Laws
on or off any Real Properties; the imposition of any lien on any Real
Properties, including but not limited to liens asserted by government entities
in connection with any Borrower’s or Subsidiary’s response to the presence or
Release of Hazardous Substances in amounts in violation of Environmental Laws;
and any alleged violation of or responsibility under any Environmental
Laws.

       

      Section
3.20.  Sensitive Payments.  Neither the Borrower nor
any Subsidiary has (a) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States or the jurisdiction in which made, (b) established
or maintained any unrecorded fund or asset for any purpose or made any false or
artificial entries on its books, (c) made any payments to any person with the
intention that any part of such payment was to be used for any purpose other
than that described in the documents supporting the payment, or (d) done
business with or proposes to do business with any country, or any Person in any
country, which is prohibited or restricted under any Applicable Law of the
United States, or engaged in or proposes to engage in any “trading with the
enemy” or other transactions violating any rules or regulations of the Office of
Foreign Assets Control or any similar laws, rules or regulations of any federal,
state, local or foreign government or governmental agency.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      Section
3.21.  Acquisition Agreement.  To the Borrower’s
Knowledge, all representations and warranties made by the Seller in the
Acquisition Agreement are true and correct in all material
respects.

       

      Section
3.22.  Full Disclosure.  No statement of fact made by
the Borrower in this Agreement or any other Loan Document or in any information
memorandum, business summary, agreement, certificate, schedule or other written
statement furnished by the Borrower or any Subsidiary to the Lender pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make any statements
contained herein or therein not misleading.  Except for matters of a
general economic or political nature which do not affect the Borrower or any
Subsidiary uniquely, there is no fact presently known to the Borrower which has
not been disclosed to the Lender, which has had or would reasonably be expected
to have a Material Adverse Effect.  All of the SEC reports filed by
the Borrower have been prepared in accordance with the applicable rules and
regulations of the SEC, are true and accurate in all material respects (subject
to any filed amendments), and do not contain any material misstatement of fact
or any omission which, in light of the circumstances, would be materially
misleading.

       

      Section
3.23.  Reaffirmation.  Each and every request by the
Borrower for an Advance shall constitute a reaffirmation of the truth and
accuracy in all material respects of the Borrowers’ and each Subsidiary’s
representations and warranties made in this Agreement and the Security Documents
on and as of the date of such request.

       

      IV.           CONDITIONS OF MAKING THE
LOANS

       

      A.           The
obligation of the Lender to make the initial Loan hereunder and to consummate
the other transactions contemplated hereby are subject to the following
conditions precedent:

       

      Section
4.01.  Representations and Warranties.  The
representations and warranties set forth in Article III hereof and in the other
Loan Documents shall be true and correct on and as of the Closing
Date.

       

      Section
4.02.  Loan Documents.  The Borrower and its
Subsidiaries (as applicable) shall have duly executed and/or delivered to the
Lender all of the following:

       

      (a)           The
Notes;

       

      (b)           The
Guaranty Agreement, the Collateral Agreement (and the stock certificates and
stock powers required to be delivered thereunder), the Deed of Trust, (together
with a title policy or title commitment insuring the first priority Lien of the
Deed of Trust in form and substance satisfactory to the Lender, and all related
affidavits, undertakings and other supporting agreements and documents), the
Environmental Indemnity Agreement, the Deed of Trust (together with a title
policy or title commitment in form and substance satisfactory to the Lender, and
all related affidavits, undertakings and other supporting agreements and
documents), the Environmental Indemnity Agreement, the Validity Guaranties
(which shall have been executed and delivered by the individuals party thereto)
and any and all other Security Documents required by the Lender at the Closing
Date (including, without limitation, a Landlord Waiver in respect of Borrower’s
business premises in Pomona, California and any warehousemen’s waivers, bailee
letters or consents required by the Lender);

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      (c)           The
Warrants;

       

      (d)           The
Registration Rights Agreement;

       

      (e)           A
certificate or certificates of insurance, with loss payable endorsements,
evidencing the insurance required by Section 5.01(d) below;

       

      (f)           A
current Borrowing Base report in conformity with Section 5.04(d) below, and a
written request for the borrowing of the Term Loan and the initial
Advance;

       

      (g)           A
certificate of the Secretary or an Assistant Secretary of the Borrower and each
Subsidiary (including the Target), certifying (i) the vote of the Boards of
Directors or other governing body of the Borrower and each Subsidiary,
authorizing and directing the execution and delivery of the Loan Documents, the
Acquisition Document and all further agreements, instruments, certificates and
other documents pursuant hereto and thereto, and the consummation of the
transactions contemplated hereby and thereby, and (ii) the accuracy and
completeness of the Acquisition Documents attached to such certificate of the
Borrower;

       

      (h)           A
certificate of the Secretary or an Assistant Secretary of the Borrower and each
Subsidiary (including the Target), certifying the names of the officers of the
Borrower and each Subsidiary who are authorized to execute and deliver the Loan
Documents and all other agreements, instruments, certificates and other
documents to be delivered pursuant hereto and thereto, together with the true
signatures of such officers.  The Lender may conclusively rely on such
certificate until the Lender shall receive any further such certificate
canceling or amending the prior certificate and submitting the signatures of the
officers named in such further certificate;

       

      (i)           Certified
copies of the Organic Documents of the Borrower and each Subsidiary (including
the Target), and a certificate of the Secretary of State or other appropriate
official of the jurisdiction of formation of each such entity and of each
jurisdiction 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; and

       

      (j)           Such
other agreements, instruments, documents and certificates (including, without
limitation, satisfactory lien and judgment searches respecting the Borrower) as
the Lender or its counsel may reasonably request.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      Section
4.03.  Acquisition and Related Transactions.  The
transactions contemplated by the Acquisition Agreement shall have been
consummated in accordance with the terms thereof (without waiver, amendment or
material variation), and the Borrower shall have delivered to the Lender true
and complete copies of the Acquisition Documents.  In addition, the
Target shall have executed and delivered to the Lender the Joinder Agreement,
together with a completed Perfection Certificate in the form attached to the
Collateral Agreement.

       

      Section
4.04.  Seller Notes; Subordination Agreement.  The
Borrower shall have delivered to the Lender (a) a true and complete copy of each
of the Seller Notes issued on the Closing Date, and (b) the Subordination
Agreement executed and delivered by the Seller, the Trust and
GEM-DE.

       

      Section
4.05.  Environmental Report.  The Lender shall have
received written confirmation from the firm which prepared the Environmental
Report, expressly consenting to the reliance by the Lender on the Environmental
Report, as if the Environmental Report had been prepared for and addressed to
the Lender.

       

      Section
4.06.  Payoff Letters; Lien Releases.  The Borrower
shall have delivered or caused to be delivered to the Lender payoff and release
letters signed by each of the Existing Lenders (or, in the case of the Laurus
group of Existing Lenders, their administrative and collateral agent), in form
and substance satisfactory to the Lender, (a) confirming the amounts required to
be paid to the Existing Lenders on the Closing Date in order to pay all of the
Borrower’s and its Subsidiaries’ obligations to the Existing Lenders and redeem
(or effect a third-party purchase of) all warrants issued by the Borrower to the
existing Lenders, (b) affirming that, upon receipt of such amounts on the
Closing Date, all Liens, encumbrances and security interests held by the
Existing Lenders shall be terminated and released, and all collateral shall be
released and retuned to the Borrower and its Subsidiaries, and (c) authorizing
the filing, upon receipt of such amount on the Closing Date, of mortgage
releases and termination statements in respect of all Lien filings against the
Borrower and its Subsidiaries in respect of such Liens, encumbrances and
security interests of the Existing Lender.  The Borrower shall pay
such amounts to the Existing Lenders on the Closing Date out of the proceeds of
the initial Loans.

       

      Section
4.07.  Legal Opinion.  The Lender shall have received
a written opinion of deCastro, PC, counsel for the Borrower and the
Subsidiaries, dated the Closing Date, satisfactory to the Lender and its counsel
in scope and substance.

       

      Section
4.08.  Fees and Reimbursements.  The Borrower shall
have paid to the Lender the Closing Fees, and shall have paid or reimbursed the
Lender for its reasonable out-of-pocket costs, charges and expenses incurred to
the Closing Date; and in connection herewith, the Borrower hereby irrevocably
authorizes the Lender to charge such amounts as Advances to the Borrower’s
revolving credit loan account.  Failure of the Lender to effect any
such charge shall not excuse the Borrower from its obligation to pay such
amounts.

       

      Section
4.09.  Further Matters.  All legal matters, and the
form and substance of all documents, incident to the transactions contemplated
hereby shall be satisfactory to counsel for the Lender.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      Section 4.10.  No
Default.  No Default or Event of Default shall have occurred
and be continuing.

       

      B.           The
obligation of the Lender to make any Advances subsequent to the Closing Date is
subject to (a) the representations and warranties set forth in Article III and
in the other Loan Documents being true and correct in all material respects
(except that, to the extent that any representation or warranty is already
qualified by concepts of materiality and/or Material Adverse Effect, then such
representations and warranties shall be true and correct in all respects) on and
as of the subject Borrowing Date, (b) the Lender’s receipt of a current
Borrowing Base report in conformity with Section 5.04(d) below, (c) the
execution and delivery of such further Security Documents as the Lender may have
reasonably requested pursuant to the Security Documents theretofore executed and
delivered, and (d) there being no continuing Default or Event of
Default.

       

      V.           AFFIRMATIVE
COVENANTS

       

      The
Borrower hereby covenants and agrees that, from the date hereof and until all
Obligations (whether now existing or hereafter arising) have been paid in full
and the Revolving Credit Commitment has been terminated, unless the Lender shall
otherwise consent in writing, the Borrower shall, and shall cause each of its
Subsidiaries to:

       

      Section
5.01.  Corporate and Insurance.  Do or cause to be
done all things necessary to at all times (a) preserve, renew and keep in full
force and effect its corporate or other legal existence, rights, licenses,
permits and franchises, (b) comply with the Loan Documents and any other
agreements and instruments executed and delivered hereunder and thereunder (to
the extent a party thereto), (c) maintain, preserve and protect all of its
franchises and material trade names, and preserve all of its material property
used or useful in the conduct of its business and keep the same in good repair,
working order and condition (reasonable wear and tear excepted), and from time
to time make, or cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the Business
Operations carried on in connection therewith may be properly and advantageously
conducted at all times, (d) maintain insurance in amounts, on such terms
and against such risks (including fire and other hazards insured against by
extended coverage, and public liability insurance covering claims for personal
injury, death or property damage) as are customary for companies of similar size
revenues in the same or similar businesses and operating in the same or similar
locations, as well as all such other insurance as is required by the Collateral
Agreement, each of which policies (other than workers compensation) shall be
issued by a financially sound and reputable insurer reasonably satisfactory to
the Lender and shall name the Lender as loss payee and additional insured as its
interest appears and provide for the Lender to receive written notice thereof at
least thirty (30) days prior to any cancellation of the subject policy, and (e)
comply with all material Contracts and material obligations to which it is a
party or by which it is bound, all benefit plans which it maintains or is
required to contribute to, and all Applicable Law (including, without
limitation, Environmental Laws) material to its Business Operations, and all
requirements of its insurers, whether now in effect or hereafter enacted,
promulgated or issued.  The Borrower will provide to the Lender a
certificate of the foregoing insurance, promptly upon request.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      Section
5.02.  Payment of Taxes.  File, pay and discharge, or
cause to be paid and discharged, all taxes, assessments and governmental charges
or levies imposed upon the Borrower and/or any Subsidiary or upon its income and
profits or upon any of its property (real, personal or mixed) or upon any part
thereof, before the same shall become in default, as well as all lawful claims
for labor, materials, supplies and otherwise, which, if unpaid when due, might
become a Lien or charge upon such property or any part thereof; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay and discharge or cause
to be paid and discharged any such tax, assessment, charge, levy or claim so
long as (a) the validity thereof shall be contested in good faith by appropriate
proceedings and the Borrower or such Subsidiary shall have set aside on its
books adequate reserves with respect to any such tax, assessment, charge, levy
or claim so contested, and (b) payment with respect to any such tax, assessment,
charge, levy or claim shall be made before any of the Borrower’s or such
Subsidiary’s property shall be seized or sold in satisfaction
thereof.

       

      Section
5.03.  Notices.  Give prompt written notice to the
Lender of (a) the filing by the Borrower of any SEC Reports, (b) the receipt by
the Borrower or any Subsidiary of any Notice in respect of Hazardous Substances
or otherwise in respect of or under any Environmental Laws or any claimed
violation thereof by the Borrower, any Subsidiary or any Real Property, (c) any
proceedings instituted against the Borrower or any Subsidiary in any federal or
state court or before any commission or other regulatory body, whether federal,
state or local, which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect (d) occupancy of any new or additional Real
Property, and (e) the occurrence of any material casualty to any Collateral, any
Material Adverse Effect, or any Default or Event of Default, and the action that
the Borrower has taken, is taking, or proposes to take with respect
thereto.

       

      Section
5.04.  Periodic Reports.  Furnish to the
Lender:

       

      (a)           Within
ninety (90) calendar days after the end of each Fiscal Year consolidated and
consolidating balance sheets, statements of income, statements of stockholders’
equity, and statements of cash flows of the Borrower and its Subsidiaries,
together with footnotes and supporting schedules thereto, certified (as to the
consolidated statements) by independent certified public accountants selected by
the Borrower and reasonably satisfactory to the Lender, showing the financial
condition of the Borrower and its Subsidiaries at the close of such Fiscal Year
and the results of operations of the Borrower and its Subsidiaries during such
Fiscal Year;

       

      (b)           Within
(i) thirty (30) calendar days after the end of each fiscal month (forty-five
(45) calendar days in the case of the end of a fiscal quarter), consolidated
(and, if specifically requested by the Lender reasonably in advance,
consolidating) unaudited balance sheets, statements of income, statements of
stockholders’ equity and statements of cash flows of the Borrower and its
Subsidiaries, in each case with supporting schedules thereto, prepared by the
Borrower and certified by the Borrower’s Chairman, President, Chief Executive
Officer, Chief Financial Officer or Chief Accounting Officer, such balance
sheets to be as of the close of such fiscal month and such statements of income,
statements of stockholders’ equity and statements of cash flows to be for the
period from the beginning of the then-current Fiscal Year to the end of such
fiscal month or fiscal quarter (as the case may be), together with comparative
statements of income and cash flows for the corresponding period in the
immediately preceding Fiscal Year, in each case subject to normal audit and
year-end adjustments;

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      (c)           Concurrently
with the delivery of each of the financial statements required by Sections
5.04(a) and 5.04(b) above, a certificate on behalf of the Borrower (signed by
the Chairman, President, Chief Executive Officer, Chief Financial Officer or
Chief Accounting Officer of the Borrower), certifying (i) that he has examined
the provisions of this Agreement and that no Default or Event of Default has
occurred and/or is continuing, and (ii) with respect to any financial statements
as of or ending on a date as of which compliance with Sections 6.18 and/or 6.19
below is required, a calculation of the applicable EBITDA and/or EBITDA to Fixed
Charges ratio for the subject measuring period;

       

      (d)           On
or prior to the fifteenth (15th)
calendar day of each calendar month, a detailed calculation of the Borrowing
Base as of the close of the immediately preceding calendar month, in form and
substance, and with supporting documentation (including, without limitation,
receivables and payables agings as of the close of the immediately preceding
calendar month), as may reasonably be required by the Lender;

       

      (e)           Within
fifteen (15) calendar days after the end of each calendar month, an accounts
receivable aging report and an accounts payable aging report for the Borrower
and the Subsidiaries (each on a consolidated and consolidating
basis);

       

      (f)           As
soon as approved by the Borrower’s Board of Directors (but in any event not
later than the beginning of each Fiscal Year), a budget and operating plan (on a
quarter-by-quarter basis) for such Fiscal Year, in such detail as may reasonably
be required by the Lender;

       

      (g)           As
and when distributed to the Borrower’s shareholders, copies of all proxy
materials, reports and other information which the Borrower provides to its
shareholders; and as and when distributed to any other holders of Indebtedness
of the Borrower or the Subsidiaries, copies of all reports, statements and other
information provided to such lenders; and

       

      (h)           Promptly,
from time to time, such other information (including, without limitation,
receivables and payables agings, and sales reports) regarding the Borrower’s or
any Subsidiary’s operations, assets, business, affairs and financial condition,
as the Lender may reasonably request.

       

      To the
extent that the financial statements required by Sections 5.04(a) and 5.04(b)
are contained in any SEC Reports filed by the Borrower within the required time
period hereunder for the delivery of such financial statements, then the
Borrower shall be deemed to have complied with the subject financial statement
delivery by notifying the Lender of the filing of the subject SEC
Report.

       

      To the
extent that any report or other delivery required under this Section 5.04 or
elsewhere in this Agreement will, at the time of anticipated delivery to the
Lender, contain any material non-public information, the Borrower will notify
the Lender thereof as promptly as practicable prior to the delivery of such
report (but without disclosing the specific items of material non-public
information or the nature thereof), and if so requested by the Lender prior to
the required date of the information delivery hereunder, the Borrower shall (x)
if reasonably practicable, redact such material non-public information from the
subject report prior to the delivery thereof to the Lender, or (y) defer
delivery of such report until such time as the Borrower has made public
disclosure of the subject material information or the Lender has affirmatively
requested delivery of such report.  Absent timely request by the
Lender as aforesaid, the Borrower shall make the required delivery to the Lender
on a timely basis.

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      Section
5.05.  Books and Records; Inspection.  Maintain
centralized books and records regarding all of the Business Operations at the
Borrower’s principal place of business, and permit agents or representatives of
the Lender to inspect, at any time during normal business hours, upon reasonable
notice, and without undue material disruption of the Business Operations, all of
the Borrower’s and its Subsidiaries’ various books and records, to make copies,
abstracts and/or reproductions thereof, and to discuss the business and affairs
of the Borrower and the Subsidiaries with the management of the
Borrower.

       

      Section
5.06.  Accounting.  Maintain a standard system of
accounting in order to permit the preparation of financial statements in
accordance with GAAP and Regulation S-X promulgated under the Act.

       

      Section
5.07.  Reimbursements.  Pay or reimburse the Lender
or other appropriate Persons on demand for all reasonable costs, expenses and
other charges incurred or payable from time to time in connection with the
transactions contemplated by this Agreement, any waivers or amendments in
respect of any Loan Documents (whether or not completed or executed), any
“workout” or enforcement action (whether or not consummated or completed, and
regardless of the outcome thereof), an the Lenders initial SEC filing reporting
its and its Affiliates’ beneficial ownership of securities of the Borrower,
including but not limited to any and all search fees, recording fees, costs of
inspections, and legal and accounting fees.

       

      Section
5.08.  Environmental Response.  In the event that
Borrower obtains knowledge during the term of this Agreement of any material
discharge, spill, injection, escape, emission, disposal, leak or other Release
of Hazardous Substances in amounts in violation of applicable Environmental Laws
by the Borrower or any Subsidiary on any Real Property owned or leased by the
Borrower or any Subsidiary, which is not authorized by a permit or other
approval issued by the appropriate governmental agencies and which requires
notification to or the filing of any report with any federal or state
governmental agency by the Borrower or any Subsidiary, the Borrower shall
promptly: (a) notify the Lender; and (b) to the extent required of Borrower or
any  Subsidiary by applicable Environmental Laws, comply with the
notice requirements of the Environmental Protection Agency and applicable state
agencies, and take all steps necessary to promptly clean up such discharge,
spill, injection, escape, emission, disposal, leak or other Release in
accordance with all applicable Environmental Laws and the Federal National
Contingency Plan, and, if required, by applicable Environmental Laws, receive a
certification from all applicable state agencies or the Environmental Protection
Agency, that such Real Property has been cleaned up to the satisfaction of such
agency(ies).

       

      Section
5.09.  Management.  Cause Timothy J. Koziol to
continue to be employed or to function as the Chief Executive Officer of the
Borrower, Brett M. Clark to continue to be employed or to function as the Chief
Financial Officer of the Borrower, William Mitzell to continue to be employed or
to function as the Chief Operating Officer of the Borrower, and Clyde E. Rhodes,
Jr. to continue to be employed or to function as the Chief Compliance Officer of
the Borrower, unless a successor is appointed within sixty (60) days after the
termination of any such individual’s employment and such successor is reasonably
satisfactory to the Lender.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      Section 5.10.  Use
of Proceeds.  Cause all proceeds of the Loans to be utilized
solely in the manner and for the purposes set forth in Section 2.04
above.

       

      Section
5.11.  Future Subsidiaries.  At any time and from
time to time when the Borrower or any of its Domestic Subsidiaries proposes to
form or acquire any Domestic Subsidiary subsequent to the Closing Date, the
Borrower shall give written notice thereof to the Lender reasonably in advance
of (and in no event less than fifteen (15) days prior to) the formation or
acquisition of such Domestic Subsidiary, accompanied by true and complete copies
of the Organic Documents of such Domestic Subsidiary and stating, with respect
to such Domestic Subsidiary, (a) its proper legal name, (b) its jurisdiction of
incorporation or formation, (c) the jurisdictions (if any) in which it is
qualified or is required to be qualified to do business as a foreign entity, (d)
the number of shares of capital stock, equity securities or ownership interests
outstanding, and (e) the record owners of such outstanding capital stock, equity
securities or other ownership interests; and contemporaneously with the
formation or acquisition of such new Domestic Subsidiary, such new Domestic
Subsidiary shall be deemed to have made and joined in all of the representations
and warranties made by the Borrower in this Agreement and the other Loan
Documents (all of which shall be applicable to such new Domestic Subsidiary as
if named therein), and the Borrower shall cause such new Domestic Subsidiary to
execute and deliver to the Lender (i) a Guaranty Agreement in form and substance
reasonably satisfactory to the Lender (or a joinder agreement with respect to
the existing Guaranty Agreement in form and substance reasonably satisfactory to
the Lender), and (ii) a Collateral Agreement (with completed perfection
certificate and other appropriate Security Documents) in substantially the form
of the Collateral Agreement as then in effect (or a joinder agreement with
respect to the existing Collateral Agreement in form and substance reasonably
satisfactory to the Lender) and other Security Documents as reasonably requested
by the Lender.

       

      Section
5.12.  Landlord Waivers.  To the extent requested by
the Lender from time to time subsequent to the Closing Date, use commercially
reasonable efforts to obtain, in form and substance reasonably satisfactory to
the Lender, any and all bailee waivers, warehousemen’s waivers, Landlord Waivers
and/or access agreements requested by the Lender in respect of locations where
there is stored or held Collateral having an aggregate fair market value in
excess of $25,000 and this Section 5.12 shall be applicable to any material
leased premises for which a Landlord Waiver has not been obtained as of the
Closing Date.

       

      Section
5.13.  Deposit Accounts.  Notify the Lender upon
opening any new bank account or securities account, and cause the subject bank
or securities intermediary promptly to execute and deliver to the Lender a
Control Agreement in respect of such bank account or securities account; and
this Section 5.13 shall also be applicable to any and all bank accounts for
which Control Agreements have not been entered into on the Closing Date if (a)
the funds in such bank account exceed $10,000, or (ii) the funds held in the
Bank Accounts for which Control Agreements are not in place exceed $25,000 in
the aggregate; and to the extent that a required Control Agreement is not
entered into within thirty (30) days after the Closing Date, then the subject
bank account(s) shall be promptly closed and the funds held therein shall be
transferred to one or more accounts at another banking institution which has
executed and delivered a Control Agreement in respect of such account(s) in form
and substance satisfactory to the Lender; provided that the requirements of this
section shall not apply to any bank account used by the Borrower or its
Subsidiaries to make payroll payments so long as no amounts are held in such
accounts for more than two (2) Business Days.

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      Section
5.14.  Seller Notes Certification.  Not less than ten
(10) Business Days prior to making any payment on or in respect of either of the
Seller Notes, provide to the Lender (a) a pro forma calculation of
the coverage test under Section 6.19 below as of the date of the most recent
financial statements of the Borrower then available and giving pro forma effect to the
proposed payment on the Seller Notes, and (b) certifying that, both before and
after giving effect to such proposed payment on the Seller Notes, no Event of
Default exists or shall exist; and to the extent that any such calculation or
certification shall indicate that an Event of Default exists or would exist
immediately after giving effect to the proposed payment, the Borrower shall not
make such proposed payment.

       

      Section
5.15.  Rights of First Refusal.  At any time when any
Obligations are outstanding or the Revolving Credit Commitment remains in
effect, provide written notice to Lender not less than thirty (30) days prior to
accepting any bona fide offer or
proposal with respect to any equity or debt financing to be undertaken by the
Borrower or any of its Subsidiaries (which notice shall set forth in reasonable
detail all of the material terms and conditions on which such equity or debt
financing is to be effected), and if the Lender or any Affiliate of the Lender
agrees in writing, within twenty (20) days after receipt of such notice, to
provide such equity or debt financing on substantially similar material terms as
those set forth in the Borrower’s notice, the Borrower or such Subsidiary shall
undertake such financing with the Lender or its Affiliate promptly thereafter
(subject to the Borrower’s or the Subsidiary’s right to abandon the proposed
financing altogether); and this Section 5.15 shall (a) again be applicable in
the event that any proposed equity or debt financing terms offered to the Lender
are modified in a manner which is materially more advantageous to the
investor(s), taken as a whole, and (b) be applicable successively to each and
every proposed equity or debt financing until the Obligations have been paid in
full and the Revolving Credit Commitment has been terminated or has
expired.

       

      VI.           NEGATIVE
COVENANTS

       

      The
Borrower hereby covenants and agrees that, until all Obligations (whether now
existing or hereafter arising) have been paid in full and the Revolving Credit
Commitment has been terminated, unless the Lender shall otherwise consent in
writing, the Borrower shall not, and shall not permit any Subsidiary to,
directly or indirectly:

       

      Section
6.01.  Indebtedness.  Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
Indebtedness, other than:

       

      (a)           Indebtedness
to the Lender pursuant to the Loan Documents;

       

      (b)           liabilities
with respect to trade obligations, accounts payable, advances, royalty or other
similar payments, operating leases and other normal accruals incurred in the
ordinary course of business, or with respect to which the Borrower or the
subject Subsidiary is contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent that the Borrower or the
subject Subsidiary has set aside on its books adequate reserves
therefor;

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      (c)           Indebtedness
existing on the date of this Agreement owed to those Persons, in those amounts
and having those maturities as set forth in Schedule 3.01 of the
Disclosure Schedule, including any extensions, renewals or refinancings of such
Indebtedness provided that (i) there is no increase in the principal amount
thereof at the time of such extension, renewal or refinancing, and (ii) there is
no other material change in the terms of such Indebtedness which is materially
adverse to the Borrower or to the Lender;

       

      (d)           Capitalized
Leases reflected in the Financial Statements, and Capitalized Leases hereafter
entered into by the Borrower or its Subsidiaries in the ordinary course of the
Business Operations and within the limitations provided in Section 6.17
below;

       

      (e)           purchase
money Indebtedness incurred in connection with the Borrower’s or its
Subsidiaries’ acquisition of capital assets in the ordinary course of the
Business Operations and within the limitations provided in Section 6.17
below;

       

      (f)           Subordinated
Debt in such amounts and upon such terms and conditions as shall be acceptable
to the Lender in its sole and absolute discretion;

       

      (g)           intercompany
Indebtedness between the Borrower and any Wholly-Owned Subsidiary or between
Wholly-Owned Subsidiaries;

       

      (h)           Guarantees
to the extent permitted pursuant to Section 6.03 below; and

       

      (i)           The
Seller Notes.

       

      Section
6.02.  Liens.  Create, incur, assume or suffer to
exist any Lien or other encumbrance of any nature whatsoever on any of its
assets, now or hereafter owned, other than:

       

      (a)           subject
to Section 5.02 above, Liens securing the payment of taxes which are either not
yet due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower or the subject Subsidiary shall have
set aside on its books adequate reserves;

       

      (b)           deposits
under workers’ compensation, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for the
repayment of money borrowed) or leases, or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;

       

      (c)           statutory
Liens of landlords; Liens imposed by law, such as, carriers’, warehousemen’s,
materialmen’s or mechanics’ liens, incurred by the Borrower or any Subsidiary in
good faith in the ordinary course of business and discharged promptly after same
are incurred and prior to delinquency thereof; fully bonded Liens arising out of
a judgment or award against the Borrower or any Subsidiary with respect to which
the Borrower or such Subsidiary shall currently be prosecuting an appeal, a stay
of execution pending such appeal having been secured; and Liens arising out of a
judgment or award against the Borrower or any Subsidiary which are fully covered
by insurance (subject to applicable deductibles) and for which the relevant
insurer has not denied or disclaimed coverage;

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      (d)           other
Liens incurred in connection with Indebtedness expressly permitted pursuant to
Section 6.01(d) and/or Section 6.01(e) above, or existing on the subject assets
at the time of acquisition thereof, provided that such Liens do not extend to
any assets or property other than the specific assets or properties acquired
pursuant to such permitted Indebtedness;

       

      (e)           encumbrances
consisting of easements, rights-of-way, survey exceptions and other similar
restrictions on the use of Real Property, or minor irregularities in title
thereto which do not materially impair the use of such property in the operation
of the business of the Borrower and its Subsidiaries;

       

      (f)         
  Liens in existence on the date of this Agreement (other than Liens
in favor of the Existing Lenders), as set forth on Schedule 6.02 of the
Disclosure Schedule;

       

      (g)           Liens
arising out of judgments or awards (i) which are fully covered by insurance
(subject to applicable deductibles) and for which the relevant insurer has not
denied or disclaimed coverage, (ii) with respect to which the Borrower or the
subject Subsidiary shall be prosecuting an appeal in good faith and in respect
of which a stay of execution shall have been issued, or (iii) which do not
cause an Event of Default under Section 7.01(i) below;

       

      (h)           Liens
in favor of the Lender; and

       

      (i)           extensions,
renewals or replacements of any Lien referred to in clauses (a) through (f)
above, provided that same shall not effect any increase in any principal amount
secured thereby.

       

      Section
6.03.  Guarantees.  Guarantee, endorse or otherwise
in any manner become or be responsible for obligations of any other Person,
except (a) endorsements of negotiable instruments for collection in the ordinary
course of business, and (b) Guarantees by the Borrower of obligations of
Wholly-Owned Subsidiaries in the ordinary course of business.

       

      Section
6.04.  Sales of Assets and Management.  (a) Sell,
lease, transfer, encumber or otherwise dispose of any of the Borrower’s or any
Subsidiary’s properties, assets, rights, licenses or franchises other than (i)
sales of inventory in the ordinary course of business, (ii) licenses, joint
ventures and related transactions entered into, modified or terminated in the
ordinary course of business, or (iii) the disposition of surplus, obsolete or
worn-out equipment in the ordinary course of business, or (b) permit any
Affiliate of the Borrower (other than a Subsidiary which is a party to the
Collateral Agreement) to own or obtain any patent, patent application,
copyright, copyright application, trademark, trademark application, license, or
other intangible asset relating to the Business Operations except in the normal
course of business on terms and conditions no less favorable to the Borrower or
any Subsidiary than those which could be obtained in an arms’ length transaction
with an unaffiliated third party.

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      Section
6.05.  Sale-Leaseback. Enter into any arrangement, directly or
indirectly, with any Person whereby the Borrower or any Subsidiary shall sell or
transfer any property (real, personal or mixed) used or useful in the Business
Operations, whether now owned or hereafter acquired, and thereafter rent or
lease such property.

       

      Section
6.06.  Investments; Acquisitions.  Make any
Investment in, or otherwise acquire or hold securities (including, without
limitation, capital stock and evidences of Indebtedness) of, or make loans or
advances to, or enter into any arrangement for the purpose of providing funds or
credit to, any other Person (including any Affiliate), except:

       

      (a)           Investments
in Wholly-Owned Subsidiaries which have complied with the requirements of
Section 5.11 above;

       

      (b)           advances
(to the extent permitted by Applicable Law, including federal securities laws)
to employees of the Borrower or any Wholly-Owned Subsidiaries for normal
business expenses not to exceed at any time $25,000 in the
aggregate;

       

      (c)           equity
interests in Account Debtors received in connection with the settlement of
amounts due to the Borrower or any Subsidiary in the ordinary course of business
or upon the insolvency of the subject Account Debtors;

       

      (d)           Investments
of excess cash generated in the Business Operations in Cash Equivalents;
and

       

      (e)           Investments
of cash in overnight deposits or other customary cash management Investments
with commercial banks or in commercial paper satisfying the criteria for such
banks or commercial paper as set forth in the definition of Cash
Equivalents.

       

      Section
6.07.  Real Property; Corporate Form;
Acquisitions.  Purchase or acquire any Real Property or any
ownership interest in any Real Property; or dissolve or liquidate, or
consolidate or merge with or into, sell all or substantially all of the assets
of the Borrower or any Subsidiary to, or acquire all or substantially all of the
securities, assets or properties of, any other Person, except for (a)
consolidations of Wholly-Owned Subsidiaries (provided that the owner of the
Owned Real Property shall not be consolidated with any other Subsidiary); (c)
mergers of a Wholly-Owned Subsidiary (other than the owner of the Owned Real
Property) into the Borrower or into a Wholly-Owned Subsidiary; or (d) sales to
the Borrower or another Subsidiary for fair value.

       

      Section
6.08.  Dividends and Redemptions.  Directly or
indirectly declare or pay any dividends, or make any distribution of cash or
property, or both, to any Person in respect of any of the shares of the capital
stock or other equity securities of the Borrower or any other Person, or
directly or indirectly redeem, purchase or otherwise acquire for consideration
any securities or shares of the capital stock or other equity securities of the
Borrower or any other Person, or establish or make payment into any sinking fund
for any such purpose; provided, that this
Section 6.08 shall not be deemed to prohibit the payment of dividends or
distributions by any Subsidiary to the Borrower or to any other direct or
indirect Wholly-Owned Subsidiary.

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

      Section
6.09.  Compensation.  Directly or indirectly pay any
cash compensation to any executive officers of the Borrower except in accordance
with the compensation levels disclosed in Schedule 6.09 of the
Disclosure Schedule or as otherwise approved by the disinterested members of the
Board of Directors of the Borrower but in no case in any amount or amounts which
would cause or reasonably be expected to cause a Material Adverse
Effect.

       

      Section
6.10.  Change of Business.  Directly or indirectly:
(a) engage in a business materially different from the general nature of the
Business Operations (i) as now being conducted, or (ii) as the same may
hereafter be reasonably expanded from time to time in like areas of business;
(b) wind up the Business Operations or cease substantially all of its normal
Business Operations for a period in excess of ten (10) consecutive days; or (c)
suffer any material disruption, interruption or discontinuance of a material
portion of its normal Business Operations for a period in excess of thirty (30)
consecutive days (provided that no Material Adverse Effect shall exist or arise
during such thirty (30) day period).

       

      Section
6.11.  Receivables.  Sell or assign in any way any
accounts receivable, promissory notes or trade acceptances held by the Borrower
or any Subsidiary with or without recourse, except for collections (including
endorsements) in the ordinary course of business.

       

      Section
6.12.  Certain Amendments.  Agree, consent, permit or
otherwise undertake to amend any of the terms or provisions of the Borrower’s or
any Subsidiary’s Organic Documents or the Seller Notes in a manner which may
impair or adversely affect in any respect any of the Lender’s rights under any
of the Loan Documents.

       

      Section
6.13.  Affiliate Transactions.  Enter into any
Contract, agreement or transaction with any Affiliate of the Borrower except (a)
as disclosed in Schedule 6.13 of the
Disclosure Schedule, (b) for intercompany Indebtedness between the Borrower and
any Wholly-Owned Subsidiary or between any Wholly-Owned Subsidiaries, or (c) in
the normal course of business on terms and conditions no less favorable to the
Borrower or any Subsidiary than those which could be obtained in an arms’ length
transaction with an unaffiliated third party.

       

      Section
6.14.  Fiscal Year.  Amend its Fiscal
Year.

       

      Section
6.15.  Subordinated Debt.  Prepay, redeem or purchase
any Subordinated Debt, or make any payment on any Subordinated Debt, except as
permitted in accordance with the applicable subordination
agreement.

       

      Section
6.16.  ERISA.  Suffer or permit any condition or
circumstance contrary to or in violation of Section 3.14 above, if same has or
would reasonably be expected to have a Material Adverse Effect.

       

      Section
6.17.  Capital Expenditures.  Make aggregate Capital
Expenditures (whether through cash purchase, principal payments under
Capitalized Leases, or otherwise) in any Fiscal Year, in the aggregate for the
Borrower and all Subsidiaries, in excess of $600,000.

       

      Section
6.18.  EBITDA.  Permit EBITDA to be less than (a)
$1,000,000 for the fiscal quarter ending September 30, 2008, (b) $2,000,000 for
the two (2) consecutive fiscal quarters ending December 31, 2008, (c) $3,000,000
for the three (3) consecutive fiscal quarters ending March 31, 2009, or (d)
$4,000,000 in any four (4) consecutive fiscal quarters ending on or after June
30, 2009; provided, however, that it
shall not be an Event of Default hereunder if actual EBITDA in any measuring
period is within 10% of the required minimum EBITDA for such measuring period as
set forth in this Section 6.18, so long as actual EBITDA for the next succeeding
measuring period hereunder is equal to or greater than the required EBITDA for
such next succeeding measuring period.

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      Section
6.19.  Coverage Test.  Permit the ratio of (a) EBITDA
minus any and
all dividends, distributions and/or redemption payments made by the Borrower to
its shareholders or other holders of equity interests, to (b) Fixed Charges, to
be less than (i) 1.25 to 1.0 for any four (4) consecutive fiscal quarters ending
on or after September 30, 2008.

       

      VII.         DEFAULTS

       

      Section
7.01.  Events of Default.  Each of the following
events is herein, and in the Notes, sometimes referred to as an Event of
Default:

       

      (a)           if
any representation or warranty made herein or in any other Loan Document, or in
any certificate, financial statement, Borrowing Base report, instrument or other
written statement furnished by the Borrower or any Subsidiary in connection with
this Agreement, any other Loan Document or any of the borrowings hereunder shall
be false, inaccurate or misleading in any material respect when made or when
deemed made hereunder;

       

      (b)           any
default in the payment of any principal or interest under either of the Notes or
any other Obligations when the same shall be due and payable, whether at the due
date thereof or at a date required for prepayment or by acceleration or
otherwise, and the continuance of any such non-payment (in whole or in part) for
a period of three (3) Business Days;

       

      (c)           any
default in the due observance or performance of any covenant, condition or
agreement contained in any Section of Article VI hereof, which, if capable of
being cured, is not fully cured within thirty (30) days after the occurrence
thereof;

       

      (d)           any
default in the due observance or performance of any covenant, condition or
agreement to be observed or performed under Article V hereof, or otherwise
pursuant to the terms hereof or any other Loan Document and not addressed in
Sections 7.01(a), (b) or (c), and the continuance of such default unremedied for
a period of thirty (30) days (five (5) Business Days in the case of Sections
2.04(b) and 5.01(d) above) after written notice thereof to the Borrower, or such
other cure period as may be provided in the applicable Loan
Document;

       

      (e)           any
default with respect to any Indebtedness of the Borrower or any of the
Subsidiaries (other than to the Lender) in an aggregate amount in excess of
$50,000, if the effect of such default is to permit the holder, with or without
notice or lapse of time or both, to accelerate the maturity of any such
Indebtedness for money borrowed or to cause such Indebtedness for money borrowed
to become due prior to the stated maturity thereof;

       

      (f)           if
the Borrower or any Subsidiary shall: (i) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its
properties, (ii) admit in writing its inability to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent or be the subject of an order for relief
under Title 11 of the United States Code, or (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against him or
it in any proceeding under any such law, or (vi) take or permit to be taken any
action in furtherance of or for the purpose of effecting any of the
foregoing;

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      (g)           if
any order, judgment or decree shall be entered, without the application,
approval or consent of the Borrower or any Subsidiary, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Borrower or any
Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the
Borrower or any Subsidiary, or of all or any substantial part of its assets, and
such order, judgment or decree shall continue unstayed and in effect for any
period of sixty (60) days;

       

      (h)           if
final judgment(s) or administrative order for the payment of money in an
uninsured amount in excess of $50,000 individually or in the aggregate shall be
rendered against the Borrower and/or any Subsidiary, and the same shall remain
undischarged or unbonded for a period of thirty (30) consecutive days, during
which execution shall not be effectively stayed;

       

      (i)            the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss
of or damage to, any property of the Borrower or any Subsidiary having an
aggregate fair value or repair cost (as the case may be) in excess of $50,000
individually or in the aggregate, and any such levy, seizure or attachment shall
not be set aside, bonded or discharged within thirty (30) days after the date
thereof;

       

      (j)            if
any Lien purported to be created by any Security Document shall cease to be a
valid perfected first priority Lien (subject only to any priority accorded by
Applicable Law to Permitted Liens) on the assets or properties covered thereby,
or the Borrower or any Subsidiary or Affiliate thereof shall assert in writing
that any Lien purported to be created by any Security Document is not a valid
perfected first priority lien (subject only to any priority accorded by
Applicable Law to Permitted Liens) on the assets or properties purported to be
covered thereby;

       

      (k)           if
(i) any of the Loan Documents shall, other than by reason of the Lender’s
default, bankruptcy or insolvency, cease to be in full force and effect (other
than as a result of the discharge thereof in accordance with the terms thereof
or by written agreement of all parties thereto), or (ii) the Borrower or any
Subsidiary or Affiliate thereof shall disclaim or deny the validity of any Loan
Document or its obligations thereunder;

       

      (l)            if
the Borrower or any Subsidiary or any executive officer of the Borrower or any
Subsidiary shall be indicted for, convicted of or plead nolo contendere to any
felony offense;

       

      (m)          if
the Common Stock shall not be traded or listed on any national securities
exchange, the Nasdaq Global Market, the Nasdaq Select Market (or any other
Nasdaq market) or the OTC Bulletin Board for any period of thirty (30)
consecutive days; or

       

      (n)           the
shall occur any Material Adverse Effect.

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      Section
7.02.  Remedies.  Upon the occurrence of any Event of
Default, and at all times thereafter during the continuance thereof: (a) the
Notes, and any and all other Obligations, shall, at the Lender’s option (except
in the case of Sections 7.01(f) and 7.01(g) hereof, the occurrence of which
shall automatically effect acceleration, regardless of any action or forbearance
in respect of any prior or ongoing Default or Event of Default which may be
inconsistent with such automatic acceleration), become immediately due and
payable, both as to principal, interest and other charges, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes or other evidence of such Obligations
to the contrary notwithstanding, (b) all outstanding Obligations under the
Notes, and all other outstanding Obligations, shall bear interest at the default
rates of interest provided in the Notes, (c) the Lender may file suit against
the Borrower on the Notes and against the Borrower and the Subsidiaries under
the other Loan Documents and/or seek specific performance or injunctive relief
thereunder (whether or not a remedy exists at law or is adequate), (d) the
Lender shall have the right, in accordance with the Security Documents, to
exercise any and all remedies in respect of such or all of the Collateral as the
Lender may determine in its discretion (without any requirement of marshalling
of assets or other such requirement, all of which are hereby waived by the
Borrower), and (e) the Revolving Credit Commitment shall, at the Lender’s option
(except in the case of Sections 7.01(f) and 7/01(g) hereof, the occurrence of
which shall automatically effect termination, regardless of any action or
forbearance in respect of any prior or ongoing Default or Event of Default which
may be inconsistent with such automatic termination), be immediately terminated
or reduced, and the Lender shall be under no further obligation to consider
making any further Advances.

       

      VIII.        PARTICIPATING LENDERS;
ASSIGNMENT.

       

      Section
8.01.  Participations.  Anything in this Agreement to
the contrary notwithstanding, the Lender may, at any time and from time to time,
without in any manner affecting or impairing the validity of any Obligations,
transfer, assign or grant participating interests in the Loans as the Lender
shall in its sole discretion determine, to such other Persons (the “Participants”) as the
Lender may determine.  Upon any such transfer, assignment or granting
of participating interests, the Participants shall be deemed to be included
within the term “Lender” for all purposes of this Agreement, subject to such
agreements and arrangements as the Lender and the Participants may agree upon.
Notwithstanding the granting of any such participating interests: (a) the
Borrower shall look solely to the Lender for all purposes of this Agreement and
the transactions contemplated hereby, (b) the Borrower shall at all times have
the right to rely upon any waivers or consents signed by the Lender as being
binding upon all of the Participants, and (c) all communications in respect of
this Agreement and such transactions shall remain solely between the Borrower
and the Lender (exclusive of Participants) hereunder.

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

      Section
8.02.  Transfer and Assignment.  Anything in this
Agreement to the contrary notwithstanding, the Lender may, at any time and from
time to time, without in any manner affecting or impairing the validity of any
Obligations, transfer and assign all or any portion of its interest in this
Agreement, the Notes and the other Loan Documents to any Person (an “Assignee Lender”) as
the Lender may determine; provided, however, that unless
an Event of Default exists at the time of the assignment, the Assignee Lender
(a) shall be a financial institution, investment fund or other financial entity
which has a net worth of $75,000,000 or more (as represented and warranted to
the Lender by such prospective Assignee Lender) and which regularly engages, as
part of its normal business operations, in the making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit, and
(b) shall not be a business which, to the Lender’s knowledge, derives any
material revenues (directly or through any parent or subsidiary) from
environmental health and safety compliance services (including transportation or
treatment of Hazardous Substances.  Upon any such transfer or
assignment, the Assignee Lender shall be deemed to succeed (to the extent of the
interest assigned) to the rights and obligations of the Lender for all purposes
of this Agreement.  In the event of any transfer and assignment of the
Lender’s entire interest in this Agreement, the Notes and the Security
Documents, the Lender shall be replaced by the Assignee Lender as “Secured
Party” under the Collateral Agreement and all other Security
Documents.

       

      Section
8.03.  Recordation of Assignment.  In respect of any
negotiation, transfer or assignment of all or any portion of any Lender’s
interest in this Agreement, any Note and/or any other Loan Documents at any time
and from time to time, the following provisions shall be
applicable:

       

      (a)           The
Borrower, or any agent appointed by the Borrower, shall maintain a register (the
“Register”) in
which there shall be recorded the name and address of each Person holding any
Note(s) hereunder or any commitment to lend hereunder, and the principal amount
payable to such Person under such Person’s Note(s) or committed by such Person
under such Person’s lending commitment.  The Borrower hereby
irrevocably appoints the Lender (and/or any subsequent Lender appointed by the
Lender then maintaining the Register) as the Borrower’s agent for the purpose of
maintaining the Register.

       

      (b)           In
connection with any negotiation, transfer or assignment as aforesaid, the
transferor/assignor shall deliver to the Lender then maintaining the Register an
assignment and assumption agreement executed by the transferor/assignor and the
transferee/assignee, setting forth the specifics of the subject transaction,
including but not limited to the amount and nature of Obligations and/or lending
commitments being transferred or assigned (and being assumed, as applicable),
and the proposed effective date of such transfer or assignment and the related
assumption (if applicable).

       

      (c)           Subject
to receipt of completed tax forms (indicating withholding status, or exemption
from withholding, as applicable, of the transferee/assignee) reasonably required
by the Person then maintaining the Register, and (if required by such Person)
surrender of the negotiated, transferred or assigned Note(s) for reissuance by
the Borrower, such Person shall record the subject transfer, assignment and
assumption in the Register.  Anything contained in any Note or other
Loan Document to the contrary notwithstanding, no negotiation, transfer or
assignment shall be effective until it is recorded in the Register pursuant to
this Section 8.03(c).  The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error; and the Borrower and each
Lender shall treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement.  The Register
shall be available for inspection by the Borrower and each Lender at any
reasonable time and from time to time upon reasonable prior notice.

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

       

      IX.           MISCELLANEOUS

       

      Section
9.01.  Survival.  This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto, shall survive the making by the Lender of the Loans
and the execution and delivery to the Lender of the Notes, and shall continue in
full force and effect for so long as the Notes or any other Obligations are
outstanding and unpaid or the Revolving Credit Commitment remains
outstanding.  Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party; and all covenants, promises and agreements in
this Agreement contained, by or on behalf of the Borrower shall inure to the
benefit of the successors and assigns of the Lender.

       

      Section
9.02.  Indemnification.  The Borrower shall indemnify
the Lender and its directors, managers, officers, employees, attorneys and
agents against, and shall hold the Lender and such Persons harmless from, any
and all losses, claims, damages and liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by the Lender or any such Person
arising out of, in any way connected with, or as a result of: (a) the use of any
of the proceeds of the Loans made by the Lender to the Borrower; (b) this
Agreement, the ownership and operation of the Borrower’s and any Subsidiary’s
assets, including all Real Properties and improvements or any Contract, the
performance by the Borrower or any other Person of their respective obligations
thereunder, and the consummation of the transactions contemplated by this
Agreement; (c) any finder’s fee, brokerage commission of other such obligation
payable or alleged to be payable in respect of the transactions contemplated by
this Agreement which arises or is alleged to arise from any agreement, action or
conduct of the Borrower or any of its Affiliates, and/or (d) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not the Lender or its directors, officers, managers, employees,
attorneys or agents are a party thereto; provided that such
indemnity shall not apply to any such losses, claims, damages, liabilities or
related expenses arising from (i) any unexcused breach by the Lender of any of
its obligations under this Agreement, (ii) the willful misconduct or gross
negligence of the Lender as determined by a final, non-appealable judgment of a
court of competent jurisdiction, or (iii) the breach of any commitment or legal
obligation of the Lender to any Person other than the Borrower or its
Affiliates, provided that such
breach is determined pursuant to a final and nonappealable decision of a court
of competent jurisdiction.  The foregoing indemnity shall remain
operative and in full force and effect regardless of the expiration or any
termination of this Agreement, the consummation of the transactions contemplated
by this Agreement, the repayment of the Loans, the invalidity or
unenforceability of any term or provision of any Loan Document, any
investigation made by or on behalf of the Lender, and the content or accuracy of
any representation or warranty made by the Borrower or any Subsidiary in any
Loan Document.  All amounts due under this Section 9.02 shall be
payable on written demand therefor.

       

      Section
9.03.  Governing Law.  This Agreement and the other
Loan Documents shall (irrespective of where same are executed and delivered) be
governed by and construed in accordance with the laws of the State of New York
(without giving effect to principles of conflicts of laws other than Sections
5-1401 and 5-1402 of the New York General Obligations Law).

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      Section
9.04.  Waiver and Amendment.  Neither any
modification or waiver of any provision of this Agreement, the Notes, or any
other Loan Document, nor any consent to any departure by the Borrower or any
Subsidiary therefrom, shall in any event be effective unless the same shall be
set forth in writing duly signed or acknowledged by the Lender and all parties
to such Loan Document, and then such waiver or consent shall be effective only
in the specific instance, and for the specific purpose, for which
given.  No notice to or demand on the Borrower in any instance shall
entitle the Borrower to any other or future notice or demand in the same,
similar or other circumstances.

       

      Section
9.05.  Reservation of Remedies.  Neither any failure
nor any delay on the part of the Lender in exercising any right, power or
privilege hereunder or under the Notes or any other Loan Document shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or future exercise, or the exercise of any other right, power or
privilege.

       

      Section
9.06.  Notices.  All notices, requests, demands and
other communications under or in respect of this Agreement or any transactions
hereunder shall be in writing (which may include telegraphic or telecopied
communication) and shall be personally delivered or mailed (by prepaid
registered or certified mail, return receipt requested), sent by prepaid
recognized overnight courier service, or telegraphed or telecopied by facsimile
transmission to the applicable party at its address or telecopier number
indicated below.

       

      If to the
Lender:

       

      CVC
California, LLC

      One North
Clematis, Suite 300

      West Palm
Beach, FL 33401

      Attention:
Chief Financial Officer

      Telecopier:
(212) 829-5986

       

      with a
copy to:

       

      Greenberg
Traurig, LLP

      200 Park
Avenue

      New York,
New York  10166

      Attention:  Shahe
Sinanian, Esq.

      Telecopier:
(212) 801-6400

       

      If to the
Borrower:

       

      General
Environmental Management, Inc.

      3191
Temple Avenue, Suite 250

      Pomona,
California  91768

      Attention:
Timothy J. Koziol

      Telecopier:  (909)
444-8356

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      with a
copy to:

       

      deCastro,
PC

      309
Laurel Street

      San
Diego, California  92101

      Attention:
Stanley M. Moskowitz, Esq.

      Telecopier:
(619) 702-9401

       

      or, as to
each party, at such other address or telecopier number as shall be designated by
such party in a written notice to the other party delivered as
aforesaid.  All such notices, requests, demands and other
communications shall be deemed given (a) when personally delivered, (b) three
(3) Business Days after being deposited in the mails with postage prepaid (by
registered or certified mail, return receipt requested), (c) one (1) Business
Day after being delivered to the telegraph company or overnight courier service,
if prepaid and sent overnight delivery, addressed as aforesaid and with all
charges prepaid or billed to the account of the sender, or (d) when sent by
facsimile transmission to a telecopier number designated by such
addressee.

       

      Section
9.07.  Binding Effect.  This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower shall not assign any
of its rights or obligations hereunder without the prior written consent of the
Lender.

       

      Section
9.08.  Consent to Jurisdiction; Waiver of Jury
Trial.  The Borrower hereby consents to the jurisdiction of all
courts of the State of New York and the United States District Court for the
Southern District of New York, as well as to the jurisdiction of all courts from
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to this Agreement, any
other Loan Document, any other agreements, instruments, certificates or other
documents executed in connection herewith or therewith, or any of the
transactions contemplated hereby or thereby, or any of the Borrower’s or any
Subsidiary’s obligations hereunder or thereunder.  The Borrower hereby
waives the right to interpose any counterclaims (other than compulsory
counterclaims) in any action brought by the Lender hereunder or in respect of
any other Loan Document, provided that this waiver shall not preclude the
Borrower from pursuing any such claims by means of separate
proceedings.  THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL
OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO WAIVES
TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.  The Lender may
file a copy of this Agreement as evidence of the foregoing waiver of right to
jury trial.

       

      Section
9.09.  Certain Waivers.  The Borrower hereby waives
any claims for special, consequential or punitive damages in any way arising out
of or relating to this Agreement, any of the other Loan Documents, or any breach
hereof or thereof.

       

      Section
9.10.  Severability.  If any provision of this
Agreement is held invalid or unenforceable, either in its entirety or by virtue
of its scope or application to given circumstances, such provision shall
thereupon be deemed modified only to the extent necessary to render same valid,
or not applicable to given circumstances, or excised from this Agreement, as the
situation may require, and this Agreement shall be construed and enforced as if
such provision had been included herein as so modified in scope or application,
or had not been included herein, as the case may be.

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      Section
9.11.  Captions.  The Article and Section headings in
this Agreement are included herein for convenience of reference only, and shall
not affect the construction or interpretation of any provision of this
Agreement.

       

      Section
9.12.  Sole and Entire Agreement.  This Agreement,
the Notes, the other Loan Documents, and the other agreements, instruments,
certificates and documents referred to or described herein and therein
constitute the sole and entire agreement and understanding between the parties
hereto as to the subject matter hereof, and supersede all prior discussions,
agreements and understandings of every kind and nature between the parties as to
such subject matter.

       

      Section
9.13.  Confidentiality.  The Lender shall not
disclose any Confidential Information to any Person without the prior written
consent of the Borrower; provided, however, that nothing
herein contained shall limit any disclosure of the tax structure of the
transactions contemplated hereby, or the disclosure of any information (a) to
the extent required by statute, rule, regulation or judicial process, (b) to
counsel for the Lender, (c) to bank examiners, auditors, accountants or, if
required by law, any regulatory authority, (d) to the officers, partners,
managers, directors, employees, agents and advisors (including independent
auditors and counsel) of the Lender, provided that such Persons shall be bound
by this Section 9.13, (e) in connection with any litigation which relates to
this Agreement to which the Lender is a party, (f) to a subsidiary or Affiliate
of the Lender, or (g) to any assignee or participant (or prospective assignee or
participant) which agrees to be bound by this Section 9.13, and further provided, that in no
event shall the Lender be obligated or required to return any materials
furnished by the Borrower.  The obligations of the Lender under this
Section 9.13 shall supersede and replace the obligations of the Lender under any
confidentiality letter in respect of this financing previously signed and
delivered by the Lender to the Borrower.

       

      Section
9.14.  Counterparts; Fax Signatures.  This Agreement
may be executed in any number of counterparts, all of which shall constitute one
and the same agreement.  This Agreement may be executed by fax and
electronic signatures, each of which shall be fully binding on the signing
party.

       

      [The
remainder of this page is intentionally blank]

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their duly
authorized officer as of the day and year first written above.

       

      
        
          	 	 	 	CVC
      CALIFORNIA, LLC	 
	 	 	 	 	 
	
                   

                	 	
                  By: 
      

                	
                   

                	 
	
                   

                	 	 	
                  Name:
      Gary E. Jaggard

                  Title: Managing Director

                	 

        

      

       

      
        
          
            	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT,
      INC.	 
	 	 	 	 	 
	
                     

                  	 	
                    By: 
      

                  	
                     

                  	 
	
                     

                  	 	 	
                    Timothy
      J. Koziol

                    Chief Executive Officer

                  	 

          

        

         

         

        50

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]