Document:

ex_10-26.htm

    
      

    

    
      

    

    EXHIBIT 10.26

     

    
      REGISTRATION RIGHTS
AGREEMENT

       

      This
Registration Rights Agreement (this “Agreement”) is made as of August 31, 2008
by GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation (the “Company”), for the
benefit of the Holders (as such term is hereinafter defined).  The
Company hereby confirms that the rights granted under this Agreement constitute
a material inducement to the CVC California, LLC (the initial Holder) to enter
into the Loan Agreement, make Loans from time to time thereunder, and/or acquire
or hold Conversion Shares and/or Warrant Shares (as such terms are hereinafter
defined).  Each Holder, by its participation or request to participate
in any Registration effected pursuant to this Agreement, shall be deemed to have
confirmed such Holder’s agreement to comply with the applicable provisions of
this Agreement.

       

      NOW,
THEREFORE, the Company hereby agrees, in favor of the Holders, as
follows:

       

      1.             
Definitions.  In
addition to those terms defined elsewhere in this Agreement, the following terms
shall have the following meanings wherever used in this Agreement:

       

      “Acquired Company”
shall mean Island Environmental Services, Inc., a California corporation, all of
the issued and outstanding capital stock of which is being acquired by a
wholly-owned subsidiary of the Company on the date hereof.

       

      “Act” shall mean the
Securities Act of 1933, as amended, and any successor statute from time to
time.

       

      “Affiliate” shall
mean, with respect to any person, any other person controlling, controlled by or
under common control with the first person.

       

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

       

      “Common Stock” shall
mean the authorized common stock of the Company.

       

      “Company” shall mean
General Environmental Management, Inc., a Nevada corporation, and shall include
any successor(s) thereto.

       

      “Conversion Shares”
shall mean the shares of Common Stock issuable at any time and from time to time
upon conversion of the Term Note in whole or in part.

       

      “Costs and Expenses”
shall mean all of the costs and expenses relating to any subject Registration
Statement, including but not limited to registration, filing and qualification
fees, blue sky expenses, costs of listing any Shares on any exchange or other
trading media, and printing expenses, fees and disbursements of counsel and
accountants to the Company, and reasonable fees and disbursements of a single
counsel to the Holders; provided, however, that
underwriting discounts and commissions attributable solely to the securities
registered for the benefit of Holders, fees and disbursements of any additional
counsel to Holders, and all other expenses attributable solely to Holders shall
be borne by each subject Holder.

       

      “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and any successor statute
from time to time.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      “Holders” shall mean,
collectively, all Persons holding Registrable Shares from time to
time.

       

      “Loan Agreement” shall
mean the Revolving Credit and Term Note Agreement of even date herewith by and
between CVC California, LLC and the Company, as the same may be amended,
modified, supplemented and/or restated from time to time in accordance with the
provisions thereof.

       

      “Loans” shall mean the
loans extended to the Company from time to time under and pursuant to the Loan
Agreement.

       

      “Person” shall mean
any individual, corporation, partnership, limited partnership, limited liability
company, trust, or other entity of any kind ,and any government or department or
agency thereof.

       

      “Registrable Shares”
shall mean all Shares, excluding any Shares which may then be sold by the Holder
thereof without volume limitation pursuant to Rule 144 promulgated under the
Act.

       

      “Registration” shall
mean any registration of Common Stock pursuant to a registration statement filed
by the Company with the SEC in respect of any class of Common Stock, other than a registration
statement in respect of employee stock options or other employee benefit plans
or in respect of any merger, consolidation, acquisition or like combination,
whether on Form S-4, Form S-8 or any equivalent form of registration then in
effect.

       

      “Registration Period”
shall mean, with respect to a Registration Statement, the period of time from
the effective date of such Registration Statement until such date as is the
earlier of (a) the date on which all of the Registrable Securities covered
by such Registration Statement shall have been sold to the public, or
(b) the date on which the Warrant Shares issued or issuable upon cashless
exercise of the Warrant in accordance with Section 1.3 of the Warrant (in the
opinion of counsel to the Company evidenced by a written opinion issued to the
Holders in form and substance reasonably acceptable to the Holders) may be
immediately sold without restriction (including, without limitation, as to
volume restrictions) by each Holder thereof without registration under the
Act.

       

      “Registration
Statement” shall mean any registration statement filed or to be filed by
the Company in respect of any Registration.

       

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

       

      “Shares” shall mean
(a) the Conversion Shares issued and/or issuable from time to time, (b) the
Warrant Shares issued and/or issuable from time to time, and (c) any additional
or other shares of Common Stock issued in respect of any of the foregoing Shares
by reason of any stock split, stock dividend, merger, share exchange,
recapitalization or other such event.

       

      “Term Note” shall mean
the Term Note issued pursuant to and as defined in the Loan
Agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Warrants” shall mean
the warrants to purchase Shares, issued by the Company pursuant to the Loan
Agreement, including any and all warrants issued in replacement of the original
such warrants.

       

      “Warrant Shares” shall
mean the Common Stock and/or other securities issued and/or issuable from time
to time upon exercise of any of the Warrants, and any additional or other Shares
issued in respect of any of the foregoing Shares by reason of any stock split,
stock dividend, merger, share exchange, recapitalization or other such
event.

       

      2.            
Shelf
Registration.

       

      (a)    The
Company shall prepare and file with the SEC (i) not later than forty-five (45)
days after the completion of the Company’s audit of the financial statements of
the Acquired Company (which audit the Company hereby agrees to commence promptly
after the date hereof and to complete as promptly as practicable after the date
hereof, in accordance with Regulation S-X and all other applicable rules and
regulations of the SEC with respect to material acquisitions), a Registration
Statement or Registration Statements (as necessary) on a form that is
appropriate under the Act (and, if available, pursuant to Rule 415 promulgated
under the Act), covering the resale of all of the Registrable Securities; provided, that if the
SEC refuses to declare the Registration Statement filed pursuant to this Section
2(a) effective as a valid secondary offering under Rule 415 due to the number of
Registrable Shares included in such Registration Statement relative to the
number of outstanding shares of Common Stock, then (i) the Company shall be
permitted to reduce the number of Registrable Shares included in such
Registration Statement to an amount that does not exceed the amount that the SEC
allows for the offering thereunder to qualify as a valid secondary offering
under Rule 415, and (ii) the Company shall file, as soon as practicable
thereafter and in accordance with the Act and the SEC’s rules and regulations, a
Registration Statement (or Registration Statement(s) if required by the SEC) to
register the Registrable Securities excluded from the initial Registration
Statement filed hereunder, provided that the terms of Sections 2(b) through 2(i)
below shall apply to such Registration Statement or Registration Statements once
the filing thereof is permitted.

       

      (b)    The
Company shall use its commercially reasonable efforts to cause the Registration
Statement(s) required by this Section 2 to be declared effective under the Act
as promptly as possible after the filing thereof, but in any event not later
than one hundred eighty (180) days after the date of completion of the audit of
the financial statements of the Acquired Company (or, in the case of any
additional Registration statements required under Section 2a above, the later
filing date therefor permitted in accordance with Section 2(a)
above).

       

      (c)    If
(i) any Registration Statement required by this Section 2 is not declared
effective on or prior to the required effective date in accordance with Section
2(b) above, or (ii) any Registration Statement required by this
Section 2 shall cease to be available for use by the Holders as selling
stockholders (A) as provided under Section 2(f) below where such
unavailability continues for a period in excess of five (5) days beyond the
allowed time period, or (B) for any other reason including, without
limitation, by reason of a stop order, a material misstatement or omission in
such Registration Statement or the information contained in such Registration
Statement having become outdated and continues to be unavailable for a period in
excess of thirty (30) days (which need not be consecutive days) in any twelve
(12) month period, then the Company shall pay to the Holders, ratably in
proportion to the number of Registrable Shares held by the respective Holders, a
cash fee equal to the product of $500 multiplied by the number of calendar days
during which any of the events described in clauses (i) or (ii) above occurs and
is continuing (the “Blackout Period”);
provided, however, that the
aggregate such fees payable under this Section 2(c) shall not exceed
$500,000.  Each such payment shall be due within five (5) days after
the end of each 30-day period of the Blackout Period until the termination of
the Blackout Period and within five (5) days after such
termination.  The Blackout Period shall terminate upon the
effectiveness of the Registration Statement in the case of clause (i) above and
upon true notice from the Company that the Registration Statement is again
available in the case of clause (ii) above.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (d)    The
Company shall use its commercially reasonable efforts to keep each Registration
Statement under this Section 2 effective at all times during the applicable
Registration Period.

       

      (e)    If any
offering pursuant to a Registration Statement pursuant to this Section 2
involves an underwritten offering (which may only be with the consent of the
Company, which shall not be unreasonably withheld or delayed), the Holders
(acting by a majority in interest) shall have the right to select an investment
banker or bankers and manager or managers to administer to the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company.

       

      (f)    If the
Registrable Securities are registered for resale under an effective Registration
Statement, the Holders shall cease any distribution of such Shares under such
Registration Statement:

       

      (i)    for a
period of up to six (6) months if (A) such distribution would require the public
disclosure of material non-public information concerning any transaction or
negotiations involving the Company or any of its Affiliates that, in the
reasonable judgment of the Company’s Board of Directors, would materially
interfere with such transaction or negotiations, or (B) such distribution would
otherwise require premature disclosure of information that, in the reasonable
judgment of the Company’s Board of Directors, would adversely affect or
otherwise be detrimental to the Company; provided that the
Company shall not invoke this clause (i) more than once in any twelve (12) month
period or for more than six (6) months in any such twelve (12) month
period;

       

      (ii)   not more
than once in any twelve (12) month period, for up to 30 days, upon the request
of the Company if the Company proposes to file a Registration Statement under
the Act for the offering and sale of securities for its own account in an
underwritten offering and the managing underwriter therefor shall advise the
Company in writing that in its opinion the continued distribution of the
Registrable Securities would adversely affect the offering of the securities
proposed to be registered for the account of the Company; and

       

      (iii)           for
a period of up to sixty (60) days after the filing of the Company’s annual
report on Form 10-K or other event that requires the filing of a post-effective
amendment to any Registration Statement hereunder, so long as the Company has
filed and is during such period actively pursuing effectiveness of such
post-effective amendment with the staff of the SEC.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      The
Company shall promptly notify the Holders in writing at such time as (x) such
transactions or negotiations have been otherwise publicly disclosed or
terminated, or (y) such non-public information has been publicly disclosed or
counsel to the Company has determined that such disclosure is not required due
to subsequent events.

       

      (g)    The
Company shall (i) permit the Holders’ counsel to review (A) such
Registration Statement, and all amendments and supplements thereto, in each case
to the extent of any information with respect to the Holders, their and their
Affiliates’ beneficial ownership of securities of the Company, and their
intended method of disposition of Registrable Securities, and (B) all requests
for acceleration or effectiveness thereof and any correspondence between the
Company and the SEC relating to the Registration Statement (collectively, the
“Registration
Documents”), for a reasonable period of time prior to their filing with
the SEC, (ii) not file (or send) any Registration Documents in a form to
which such counsel reasonably objects, and (iii) not request acceleration of
such Registration Statement without prior written notice to such
counsel.  The sections of such Registration Statement covering
information with respect to the Holders, their and their Affiliates’ beneficial
ownership of securities of the Company, and their intended method of disposition
of Registrable Securities shall conform to the information provided to the
Company by the Holders.

       

      (h)    The
Registration Statement pursuant to this Section 2 shall not include any
securities other than Registrable Shares.

       

      (i)      The
Company shall bear all of the Costs and Expenses of the Registration pursuant to
this Section 2.

       

      3.            
Piggyback
Registration.  In
the event that the Company shall propose a Registration at any time when a
Registration Statement(s) covering all Registrable Shares is not effective
pursuant to Section 2 above, then the Company shall give to each Holder written
notice (the “Registration Notice”)
of such proposed Registration (which notice shall include a statement of the
proposed filing date thereof, the underwriters and/or managing underwriters of
the subject offering, and any other known material information relating to the
proposed Registration) not less than twenty (20) or more than sixty (60) days
prior to the filing of the subject Registration Statement, and shall, subject to
the limitations provided in this Section 3, include in such Registration
Statement all or a portion of the Registrable Shares owned by and/or issuable to
each Holder, as and to the extent that such Holder may request same to be so
included by means of written notice given to the Company within ten (10) days
after the Company’s giving of the Registration Notice.  Each Holder
shall be permitted to withdraw all or any part of its Registrable Shares from a
Registration Statement by written notice to the Company given at any time prior
to the effective date of the Registration Statement.  The Company
shall bear all of the Costs and Expenses of any Registration described in this
Section 3; provided, however, that each
Holder shall pay, pro rata based upon the
number of its Registrable Shares included therein, the underwriters’ discounts,
commissions and compensation attributable solely to the inclusion of such
Registrable Shares in the overall public offering. Notwithstanding anything to
the contrary contained herein, the Company’s obligation to include a Holder’s
Registrable Shares in any such Registration Statement shall be subject, at the
option of the Company, to the following further conditions:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (a)    The
distribution for the account of such Holder shall be underwritten by the same
underwriters (if any) who are underwriting the distribution of the securities
for the account of the Company and/or any other persons whose securities are
covered by such Registration Statement, and shall be made at the same
underwriter discount or commission applicable to the distribution of the
securities for the account of the Company and/or any other persons whose
securities are covered by such Registration Statement; and such Holder shall
enter into an agreement with such underwriters containing customary
indemnification and other provisions;

       

      (b)    If at any
time after giving the Registration Notice, and prior to the effective date of
the Registration Statement filed in connection with such Registration Notice,
the Company shall determine for any reason not to proceed with the subject
Registration, the Company may, at its election, give written notice of such
determination to the Holders and, thereupon, shall be relieved of its obligation
to register any of the Holders’ Registrable Shares in connection with such
Registration;

       

      (c)    In
connection with an underwritten public offering pursuant to a Registration
Statement under this Section 3, if and only if the managing underwriter(s)
thereof shall advise the Company in writing that, due to adverse market
conditions or the potential adverse impact on the offering to be made for the
account of the Company, the securities to be included in such Registration will
not include all of the Registrable Shares requested to be so included by the
Holders, then the Company will promptly furnish each such Holder with a copy of
such written statement and may require, by written notice to each such Holder
accompanying such written statement, that the distribution of all or a specified
portion of such Registrable Shares be excluded from such distribution (with any
such “cutback” to be allocated among the subject Holders (and, if applicable,
any other holders of Common Stock to be included in such Registration) in
proportion to the relative number of shares of Common Stock requested by such
Persons to be included in such Registration); and

       

      (d)    The
Company shall not be obligated to effect any registration of Shares incidental
to the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option or
other employee benefit plans.

       

      4.            
Registration
Procedures.  In
the case of each Registration effected by the Company in which Registrable
Shares are to be sold for the account of any Holder, the Company, at its sole
cost and expense (exclusive of items excluded in the proviso to the definition
of “Costs and Expenses” above), will use its commercially reasonable efforts
to:

       

      (a)    prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Registration Statement, until the completion
of the distribution of the Registrable Shares included therein, as may be
required by the applicable rules and regulations of the SEC and the instructions
applicable to the form of such Registration Statement, and furnish to the
Holders of the Registrable Shares covered thereby copies of any such supplement
or amendment not less than three Business Days prior to the date first used
and/or filed with the SEC; and comply with the provisions of the Act with
respect to the disposition of all the Shares to be included in such Registration
Statement;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (b)    provide
(i) the Holders of the Registrable Shares to be included in such Registration
Statement, (ii) the underwriters (which term, for purposes of this Agreement,
shall include a person deemed to be an underwriter within the meaning of Section
2(11) of the Act, if any, thereof, (iii) the sales or placement agent, if any,
therefor, (iv) one counsel for such underwriters or agent, and (v) not more than
one counsel for all the Holders of such Registrable Shares, the reasonable
opportunity to review such Registration Statement, each prospectus included
therein or filed with the SEC, and each amendment or supplement thereto, in each
case to the extent of any disclosures regarding the Holders, their and their
Affiliates’ beneficial ownership of securities of the Company, and their
intended method of disposition of the Registrable Shares included in such
Registration Statement (or any amendment to any such information previously
included in such Registration Statement (including any amendment or supplement
thereto) or any prospectus included therein);

       

      (c)    for a
reasonable period prior to the filing of such Registration Statement, and not
more than once in any calendar quarter throughout the period specified above,
make available for inspection by the Persons referred to in Section 4(b) above
such financial and other information and books and records of the Company, and
cause the officers, directors, employees, counsel and independent certified
public accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel referred to in
such Section 4(b), to conduct a reasonable investigation within the meaning of
the Act; provided, however, that each
such party shall be required to maintain in confidence and not disclose to any
other person or entity any information or records reasonably designated by the
Company in writing as being confidential, until such time as and to the extent
that (i) such information becomes a matter of public record or generally
available to the public (whether by virtue of its inclusion in such Registration
Statement or otherwise, other than by reason of a breach hereof), (ii) such
party shall be required to disclose such information pursuant to the subpoena or
order of any court or other governmental agency or body having jurisdiction over
the matter, or (iii) such information is required to be set forth in such
Registration Statement or the prospectus included therein or in an amendment to
such Registration Statement or an amendment or supplement to such prospectus in
order that such Registration Statement, prospectus, amendment or supplement, as
the case may be, does not include an untrue statement of a material fact or omit
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and further provided,
that the Company need not make such information available, nor need it cause any
officer, director or employee to respond to such inquiry, unless each such
Holder of Registrable Shares to be included in a Registration Statement
hereunder, upon the Company’s request, executes and delivers to the Company a
specific undertaking to substantially the same effect contained in the preceding
proviso;

       

      (d)    promptly
notify in writing the Holders of Registrable Shares to be included in a
Registration Statement hereunder, the sales or placement agent, if any, therefor
and the managing underwriter of the securities being sold, (i) when such
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the SEC and by the blue sky
or securities commission or regulator of any state with respect thereto or any
request by the SEC for amendments or supplements to such Registration Statement
or the prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (v) if it shall be the case,
at any time when a prospectus is required to be delivered under the Act, that
such Registration Statement, prospectus, or any document incorporated by
reference in any of the foregoing contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (e)    obtain
the withdrawal of any order suspending the effectiveness of such Registration
Statement or any post-effective amendment thereto at the earliest practicable
date;

       

      (f)     if
requested by any managing underwriter or underwriter, any placement or sales
agent or any Holder of Registrable Shares to be included in a Registration
Statement, promptly incorporate in a prospectus, prospectus supplement or
post-effective amendment such information as is required by the applicable rules
and regulations of the SEC and as such managing underwriter or underwriters,
such agent or such Holder may reasonably specify should be included therein
relating to the terms of the sale of the Registrable Shares included thereunder,
including, without limitation, information with respect to the number of
Registrable Shares being sold by such Holder or agent or to such underwriters,
the name and description of such Holder, the offering price of such Registrable
Shares and any discount, commission or other compensation payable in respect
thereof, the purchase price being paid therefor by such underwriters and with
respect to any other terms of the offering of the Registrable Shares to be sold
in such offering; and make all required filings of such prospectus, prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus, prospectus supplement or
post-effective amendment;

       

      (g)    furnish
to each Holder of Registrable Shares to be included in such Registration
Statement hereunder, each placement or sales agent, if any, therefor, each
underwriter, if any, thereof and the counsel referred to in Section 4(b) an
executed copy of such Registration Statement, each such amendment and supplement
thereto (in each case excluding all exhibits and documents incorporated by
reference) and such number of copies of the Registration Statement (excluding
exhibits thereto and documents incorporated by reference therein unless
specifically so requested by such Holder, agent or underwriter, as the case may
be) and the prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Act, as such Holder, agent, if any, and underwriter, if any,
may reasonably request in order to facilitate the disposition of the Shares
owned by such Holder, sold by such agent or underwritten by such underwriter and
to permit such Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Act; and the Company hereby consents to the use of such
prospectus and any amendment or supplement thereto by each such Holder and by
any such agent and underwriter, in each case in the form most recently provided
to such person by the Company, in connection with the offering and sale of the
Shares covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment thereto;

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (h)    timely
(i) register or qualify (to the extent legally required) the Shares to be
included in such registration statement under such other securities laws or blue
sky laws of such jurisdictions to be designated by the Holders of a majority of
such Shares participating in such registration and each placement or sales
agent, if any, therefor and underwriter, if any, thereof, as any Holder and each
underwriter, if any, of the securities being sold shall reasonably request, (ii)
keep such registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in such
jurisdictions for so long as may be necessary to enable such Holder, agent or
underwriter to complete its distribution of the Registrable Shares pursuant to
such Registration Statement, and (iii) take any and all such actions as may be
reasonably necessary or advisable to enable such Holder, agent, if any, and
underwriter to consummate the disposition in such jurisdictions of such Shares;
provided, however, that the
Company shall not be required for any such purpose to (A) qualify generally to
do business as a foreign corporation or a broker-dealer in any jurisdiction
wherein it would not otherwise be required to qualify but for the requirements
of this Section 4(h), (B) subject itself to taxation in any such jurisdiction,
or (C) consent to general service of process in any such
jurisdiction;

       

      (i)     cooperate
with the Holders of the Registrable Shares to be included in a Registration
Statement hereunder and the managing underwriter(s) to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold, which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, in customary form to permit the transfer
thereof through the Company’s transfer agent; and enable such Registrable Shares
to be in such denominations and registered in such names as the managing
underwriter(s) may request at least two (2) business days prior to any sale of
the Registrable Shares;

       

      (j)     provide a
CUSIP number for all Shares, and cause the Shares to be accepted for trading or
listing on the principal securities exchange or trading medium on which shares
of that class of the Company are traded or listed, in each case not later than
the effective date of the Registration Statement;

       

      (k)    in the
event that Registrable Securities included in any Registration Statement are to
be sold to or through any underwriter or placement or sales agent, (i) make such
representations and warranties to the Holders of such Registrable Shares and the
placement or sales agent, if any, therefor and the underwriters, if any, thereof
in form, substance and scope as are customarily made in connection with any
offering of equity securities pursuant to any appropriate agreement and/or in a
registration statement filed on the form applicable to such Registration
Statement; (ii) if so requested by any such underwriter or placement or sales
agent, obtain an opinion of counsel to the Company in customary form and
covering such matters, of the type customarily covered by such an opinion, as
the managing underwriters, if any, and/or the placement or sales agent may
reasonably request, addressed to such Holders and the placement or sales agent,
if any, therefor and the underwriters, if any, thereof and dated the effective
date of such Registration Statement (and if such Registration Statement
contemplates an underwritten offering of a part or of all of the Shares included
in such Registration Statement, dated the date of the closing under the
underwriting agreement relating thereto); (iii) if so requested by any such
underwriter or placement or sales agent, obtain a “cold comfort” letter or
letters from the independent certified public accountants of the Company
addressed to the Holders and the placement or sales agent, if any, therefor and
the underwriters, if any, thereof, dated (A) the effective date of such
Registration Statement, and (B) the effective date of the most recent (or, if so
stated in the request therefor, the next) prospectus supplement to the
prospectus included in such

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       Registration
Statement or post-effective amendment to such Registration Statement which
includes unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such prospectus
(and, if such Registration Statement contemplates an underwritten offering
pursuant to any prospectus supplement to the prospectus included in such
Registration Statement or post-effective amendment to such Registration
Statement which includes unaudited or audited financial statements as of a date
or for a period subsequent to that of the latest such statements included in
such prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and covering
such matters of the type customarily covered by letters of such type; (iv)
deliver such documents and certificates, including officers’ certificates, as
may be customary and reasonably requested by Holders of at least a majority of
the Registrable Shares being sold and the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof to evidence the accuracy
of the representations and warranties made pursuant to clause (i) above and the
compliance with or satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company; and (v)
undertake such obligations relating to expense reimbursement, indemnification
and contribution as are provided in Sections 2, 3 and 5 hereof;

       

      (l)     notify in
writing each Holder of Registrable Shares of any proposal by the Company to
amend or waive any provision of this Agreement and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;

       

      (m)   engage to
act on behalf of the Company, with respect to the Registrable Shares to be so
registered, a registrar and transfer agent having such duties and
responsibilities (including, without limitation, registration of transfers and
maintenance of stock registers) as are customarily discharged by such an agent,
and to enter into such agreements and to offer such indemnities as are customary
in respect thereof; and

       

      (n)    otherwise
comply with all applicable rules and regulations of the SEC, and make available
to the Holders, as soon as practicable, but in any event not later than 18
months after the effective date of such Registration Statement, an earnings
statement covering a period of at least twelve months which shall satisfy the
provisions of Section 6(a) of the Act (including pursuant to Rule 158
thereunder).

       

      5.            
Indemnification by the
Company.

       

      (a)    The
Company shall indemnify each Holder and its Affiliates from and against any
claim, loss, cost, charge or liability of any kind, including amounts paid in
settlement and reasonable attorneys’ fees, which may be incurred by the Holder
or Affiliate as a result of any breach of any representation or warranty or
covenant of the Company contained in this Agreement or in any certificate
delivered on the closing date of any public offering of Shares.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (b)   The
Company shall indemnify and hold harmless each Holder and its Affiliates, any
underwriter (as defined in the Act) for any Holder, each officer and director of
a Holder, legal counsel and accountants for a Holder, and each person, if any,
who controls a Holder or such underwriter within the meaning of the Act, against
any losses, expenses, claims, damages or liabilities, joint or several, to which
such Holder or any such Affiliate, underwriter, officer, director or controlling
person becomes subject, under the Act or any rule or regulation thereunder or
otherwise, insofar as such losses, expenses, claims, damages or liabilities (or
actions in respect thereof) (i) are caused by any untrue statement or alleged
untrue statement of any material fact contained in any preliminary prospectus
(if used prior to the effective date of the Registration Statement), or
contained, on the effective date thereof, in any Registration Statement in which
Registrable Shares were included, the prospectus contained therein, any
amendment or supplement thereto, or any other document related to such
Registration Statement, or (ii) arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) arise out
of any violation by the Company of the Act or any rule or regulation thereunder
applicable to the Company and relating to actions or omissions otherwise
required of the Company in connection with such registration.  The
Company shall reimburse each Holder and any such Affiliate, underwriter,
officer, director or controlling person for any legal or other expenses
reasonably incurred by such Holder, or any such officer, director, underwriter
or controlling person in connection with investigating,  defending or
settling any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable to any such persons in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished to
the Company in writing by such Person expressly for inclusion in any of the
foregoing documents.  This indemnity shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld or delayed.

       

      6.            
Further Obligations of
Holders.  The
obligations of the Company with respect to any particular Holder are subject to
such Holder’s agreement to the following (which such Holder shall specifically
confirm in writing to the Company upon the Company’s request in connection with
any Registration Statement):

       

      (a)    Such
Holder shall furnish in writing to the Company all information concerning such
Holder and its and its Affiliates’ holdings of securities of the Company and its
Affiliates, and the intended method of disposition of the Registrable Securities
included in such Registration Statement, as shall be reasonably required in
connection with the preparation and filing of any Registration Statement
covering any of such Holder’s Registrable Shares.

       

      (b)    Such
Holder shall indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed a Registration Statement, each person (if
any) who controls the Company within the meaning of the Act, and any underwriter
(as defined in the Act) for the Company, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, controlling
person or underwriter may become subject under the Act or any rule or regulation
thereunder or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) (i) are caused by any untrue statement or
alleged untrue statement of any material fact contained in any preliminary
prospectus (if used prior to the effective date of the Registration Statement),
or contained, on the effective date thereof, in any Registration Statement in
which such Holder’s Registrable Shares were included, the prospectus contained
therein, any amendment or supplement thereto, or any other document related to
such Registration Statement, or (ii) arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished to the Company by such Holder in
writing expressly for inclusion in any of the foregoing documents.  In
no event shall any Holder be required to pay indemnification hereunder (or
contribution under Section 7(d) below) in an aggregate amount in excess of the
net proceeds received by such Holder in the subject offering.  This
indemnity shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the subject Holder, which consent shall not be unreasonably withheld or
delayed.

       

      7.            
Additional
Provisions.

       

      (a)    Each
Holder and each other Person indemnified pursuant to Section 5 above shall, in
the event that it receives notice of the commencement of any action against it
which is based upon an alleged act or omission which, if proven, would result in
the Company’s having to indemnify it pursuant to Section 5 above, promptly
notify the Company, in writing, of the commencement of such action and permit
the Company, if the Company so notifies such Holder within twenty (20) days
after receipt by the Company of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to such Holder; provided, however, that such
Holder or other indemnified person shall be entitled to retain its own counsel
at its own expense (except that the indemnifying party shall bear the expense of
such separate counsel if representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of
interest).  The failure to notify the Company promptly of the
commencement of any such action shall not relieve the Company of any liability
to indemnify such Holder or such other indemnified person, as the case may be,
under Section 5 above, except to the extent that the Company shall be actually
prejudiced or shall suffer any loss by reason of such failure to give notice,
and shall not relieve the Company of any other liabilities which it may have
under this or any other agreement.

       

      (b)    The
Company and each other Person indemnified pursuant to Section 6 above shall, in
the event that it receives notice of the commencement of any action against it
which is based upon an alleged act or omission which, if proven, would result in
any Holder having to indemnify it pursuant to Section 6 above, promptly notify
such Holder, in writing, of the commencement of such action and permit such
Holder, if such Holder so notifies the Company within twenty (20) days after
receipt by such Holder of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to the Company; provided, however, that the
Company or other indemnified person shall be entitled to retain its own counsel
at the Company’s expense.  The failure to notify any Holder promptly
of the commencement of any such action shall not relieve such Holder of
liability to indemnify the Company or such other indemnified person, as the case
may be, under Section 6 above, except to the extent that the subject Holder
shall be actually prejudiced or shall suffer any loss by reason of such failure
to give notice, and shall not relieve such Holder of any other liabilities which
it may have under this Agreement or any other agreement.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (c)    No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified person who is party to such claim or
litigation, consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified person of a release from all liability in respect
to such claim or litigation.  Each such indemnified person shall
furnish such information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.

       

      (d)    If the
indemnification provided for in Section 5 and 6 is unavailable or insufficient
to hold harmless an indemnified party, then, subject to the limits set forth in
Section 6(b) above, each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the expenses, claims,
losses, damages or liabilities (or actions or proceedings in respect thereof)
referred to in Section 5 and 6, in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the sellers of Shares on
the other hand in connection with statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses, as well as any other relevant equitable
considerations.  The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement  of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
sellers of Shares and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.  The Company and the Holders agree that it would not be just
and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if  all sellers of Shares were
treated as one entity for such purpose) or by another method of allocation which
does not take account of the equitable considerations referred to in the first
sentence of this Section.  The amount paid by an indemnified person as
a result of the expenses, claims, losses, damages or liabilities (or actions or
proceedings in respect thereof) referred to in the first sentence of this
Section 7(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified person in connection with investigating or
defending any claim, action or proceeding which is the subject of this Section
7(d).  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.  The
obligations of sellers of Shares to contribute pursuant to this Section 7(d)
shall be several in proportion to the respective amounts of Shares sold by them
pursuant to a Registration Statement.

       

      8.             Rule 144
Information.  For
so long as the Company shall be a reporting company under the Exchange Act, the
Company will at all times keep publicly available adequate current public
information with respect to the Company of the type and in the manner specified
in Rule 144 promulgated under the Act.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      9.             Limitations on Subsequent
Registration Rights. The
Company is not party to or bound by, and the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Shares
then outstanding and/or issuable, hereafter enter into, any agreement with any
holder or prospective holder of any securities of the Company which would
require the Company to include such securities in any Registration filed under
Section 2 above.

       

      10.   Notices.  All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be given by personal delivery, by
telecopier (with confirmation of receipt), by recognized overnight courier
service (with all charges prepaid or billed to the account of the sender), or by
certified or registered mail, return receipt requested, and with postage
prepaid, addressed (a) if to the Company, at its office at 3191 Temple Avenue,
Suite 250, Pomona, California 91768, Attention: Timothy J. Koziol, Telecopier:
(909) 444-8356, or such other address or telecopier number as shall have been
specified by the Company to the Holders by written notice, or (b) if to any
Holder, at his, her or its address or telecopier number as same appears on the
records of the Company.  All notices shall be deemed to have been
given either at the time of the delivery or telecopy (with confirmation of
receipt) thereof, or, if sent by overnight courier, on the next business day
following delivery thereof to the overnight courier service, or, if mailed, at
the completion of the third business day following the time of such
mailing.

       

      11.         
Waiver and
Amendment.  No
waiver, amendment or modification of this Agreement or of any provision hereof
shall be valid unless evidenced by a writing duly executed by the Company and
Holders holding, in the aggregate, a majority of the Registrable Shares then
outstanding and/or issuable.  No waiver of any default hereunder shall
be deemed a waiver of any other, prior or subsequent default
hereunder.

       

      12.         
Governing
Law.  This
Agreement shall (irrespective of the place where it is executed and delivered)
be governed, construed and controlled by and under the substantive laws of the
State of New York, without regard to conflicts of law principles (other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law)

       

      13.          
Binding
Effect.  This
Agreement shall be binding upon and shall inure to benefit of the Company and
the Holders and their respective successors in interest from time to
time.

       

      14.         
Captions.  The
captions and Section headings used in this Agreement are for convenience only,
and shall not affect the construction or interpretation of this Agreement or any
of the provisions hereof.

       

      15.          
Gender.  All
pronouns used in this Agreement in the masculine, feminine or neuter gender
shall, as the context may allow, also refer to each other gender.

       

      16.          
Entire
Agreement.  This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.

       

      17.          
Reliance and
Benefit.  This
Agreement is intended to benefit, and may be relied upon by, all Holders from
time to time, as if such Holders were expressly named herein, party hereto and
signatory hereon.

       

      [The
remainder of this page is intentionally blank]

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF, the
Company has executed this Agreement as of the date first set forth
above.

       

      
        
          	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation	 
	 	 	 	 	 
	
                   

                	 	
                  By:   
      

                	
                   

                	 
	
                   

                	 	 	
                  
                    Timothy
      J. Koziol

                    Chief
      Executive Officer

                  

                	 

        

      

       

       

      14ex_10-27.htm

    
      

      

    

    EXHIBIT 10.27

     

    
      COLLATERAL
AGREEMENT

       

      COLLATERAL
AGREEMENT, dated as of August 31, 2008, by and among GENERAL ENVIRONMENTAL
MANAGEMENT, INC., a Nevada corporation (“Borrower”), GENERAL
ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation (“GEM-DE”), GENERAL
ENVIRONMENTAL MANAGEMENT OF RANCHO CORDOVA LLC, a California limited liability
company (“GEMRC”), GEM MOBILE
TREATMENT SERVICES, INC., a California corporation (“GEMMTS”), GEM 6
ACQUISITIONS CORPORATION, a Delaware corporation (“GEM 6”), and any and
all Additional Grantors who may become a party to this Agreement from time to
time (the Borrower, GEM-DE, GEMRC, GEMMTS, GEM 6 and such Additional Grantors
are each hereinafter referred to as a “Grantor” and
collectively as the “Grantors”), and CVC
CALIFORNIA, LLC (the “Secured Party”) as
Lender under the Revolving Credit and Term Loan Agreement of even date herewith
(as amended, modified, supplemented and/or restated from time to time, the
“Loan
Agreement”) by and between the Borrower and the Secured
Party.

       

      STATEMENT OF
PURPOSE

       

      Pursuant
to the Loan Agreement, the Secured Party is making and may hereafter from time
to time make Loans to the Borrower in the aggregate principal amount of up to
$13,500,000 at any time outstanding, upon the terms and subject to the
conditions set forth therein.

       

      It is a
condition precedent to the obligation of the Secured Party to make the Loans to
the Borrower under the Loan Agreement that the Grantors shall have executed and
delivered this Agreement to the Secured Party.

       

      NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, and to induce the Secured
Party to enter into the Loan Agreement and make the Loans to the Borrower
thereunder, each Grantor hereby agrees with the Secured Party, as
follows:

       

      ARTICLE
I

       

      DEFINED
TERMS

       

      Section
1.1.  Terms Defined in the Uniform
Commercial Code

       

      (a)        
The
following terms when used in this Agreement shall have the meanings assigned to
them in the UCC (as defined in Section 1.2 below) as
in effect from time to time:  “Account”, “Account Debtor”,
“Authenticate”,
“Certificated
Security”, “Chattel Paper”;
“Commercial Tort
Claim”, “Deposit Account”,
“Documents”,
“Electronic Chattel
Paper”, “Equipment”, “Farm Products” “Fixture”, “General Intangible”,
“Instrument”,
“Inventory”,
“Investment Company
Security”, “Investment Property”,
“Issuer”,
“Letter of Credit
Rights”, “Proceeds”, “Record”, “Registered
Organization”, “Security”, “Securities
Entitlement”, “Securities
Intermediary”, “Securities Account”,
“Supporting
Obligation”, “Tangible Chattel
Paper”, and “Uncertificated
Security”.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (b)        
Terms
defined in the UCC and not otherwise defined herein or in the Loan Agreement
shall have the meaning assigned in the UCC as in effect from time to
time.

       

      Section
1.2.       Definitions.  The
following terms when used in this Agreement shall have the meanings assigned to
them below:

       

      “Additional Grantor”
means each Subsidiary of the Borrower which hereafter becomes a Grantor pursuant
to Section 7.15
hereof and Section 5.11 of the Loan Agreement.

       

      “Agreement” means this
Collateral Agreement, as amended, restated, supplemented or otherwise modified
from time to time.

       

      “Applicable Insolvency
Laws” means all Applicable Laws governing bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (including, without
limitation, 11 U.S.C. Sections 547, 548 and 550 and other “avoidance”
provisions of Title 11 of the United States Code, as amended or
supplemented).

       

      “Assignment of Claims
Act” means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15, 31
U.S.C.  Section 3737, and 31 U.S.C. Section 3727), including all
amendments thereto and regulations promulgated thereunder.

       

      “Collateral” has the
meaning assigned thereto in Section
2.1.

       

      “Collateral Account”
means any collateral account established by the Secured Party as provided in
Section
5.2.

       

      “Control” means the
manner in which “control” is achieved under the UCC with respect to any
Collateral for which the UCC specifies a method of achieving
“control”.

       

      “Controlled
Depository” has the meaning assigned thereto in Section
4.6(a).

       

      “Copyrights” means
collectively, all of the following of any Grantor: (a) all copyrights,
rights and interests in copyrights, works protectable by copyright, copyright
registrations and copyright applications anywhere in the world, (b) all
reissues, extensions, continuations (in whole or in part) and renewals of any of
the foregoing, (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing, (d) the right to sue for
past, present and future infringements of any of the foregoing, and (e) all
rights corresponding to any of the foregoing throughout the world.

       

      “Copyright Licenses”
means any written agreement naming any Grantor as licensor or licensee, granting
any right under any Copyright, including, without limitation, the grant of
rights to manufacture, distribute, exploit and sell materials derived from any
Copyright.

       

      “Effective Endorsement and
Assignment”  means, with respect to any specific type of
Collateral, all such endorsements, assignments and other instruments of transfer
reasonably requested by the Secured Party with respect to the Security Interest
granted in such Collateral, and in each case, in form and substance satisfactory
to the Secured Party.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Government Contract”
means a contract between any Grantor and an agency, department or
instrumentality of the United States or any state, municipal or local
Governmental Authority located in the United States or all obligations of any
such Governmental Authority arising under any Account now or hereafter owing by
any such Governmental Authority, as account debtor, to any Grantor.

       

      “Grantors” has the
meaning set forth in the preamble of this Agreement.

       

      “Guarantors” means the
collective reference to each Person executing a guaranty of the
Obligations.

       

      “Guaranty Agreement”
means any guaranty of the Obligations in effect from time to time.

       

      “Intellectual
Property” means collectively, all of the following of any Grantor:
(a)  all systems software, applications software and internet rights,
including, without limitation, screen displays and formats, internet domain
names, web sites (including web links), program structures, sequence and
organization, all documentation for such software, including, without
limitation, user manuals, flowcharts, programmer’s notes, functional
specifications, and operations manuals, all formulas, processes, ideas and
know-how embodied in any of the foregoing, and all program materials,
flowcharts, notes and outlines created in connection with any of the foregoing,
whether or not patentable or copyrightable, (b) concepts, discoveries,
improvements and ideas, (c) any useful information relating to the items
described in clause (a) or (b), including know-how, technology, engineering
drawings, reports, design information, trade secrets, practices, laboratory
notebooks, specifications, test procedures, maintenance manuals, research,
development, manufacturing, marketing, merchandising, selling, purchasing and
accounting, (d) Patents and Patent Licenses, Copyrights and Copyright
Licenses, Trademarks and Trademark Licenses, and (e) other licenses to use
any of the items described in the foregoing clauses (a), (b), (c) and (d) or any
other similar items of such Grantor necessary for the conduct of its
business.

       

      “Issuer” means any
issuer of any Investment Property or Partnership/LLC Interests (including,
without limitation, any Issuer as defined in the UCC).

       

      “Loan Agreement” shall
have the meaning assigned thereto in the preamble of this
Agreement.

       

      Obligations” means,
with respect to the Borrower, the meaning assigned to such term in the Loan
Agreement, and with respect to each Guarantor, the obligations of such Guarantor
under its Guaranty Agreement, and with respect to all Grantors, all liabilities
and obligations of the Grantors hereunder.

       

      “Partnership/LLC
Interests” means, with respect to any Grantor, the entire partnership,
membership interest or limited liability company interest, as applicable, of
such Grantor in each partnership, limited partnership or limited liability
company owned thereby, including, without limitation, such Grantor’s capital
account, its interest as a partner or member, as applicable, in the net cash
flow, net profit and net loss, and items of income, gain, loss, deduction and
credit of any such partnership, limited partnership or limited liability
company, as applicable, such Grantor’s interest in all distributions made or to
be made by any such partnership, limited partnership or limited liability
company, as applicable, to such Grantor and all of the other economic rights,
titles and interests of such Grantor as a partner or member, as applicable, of
any such partnership, limited partnership or limited liability company, as
applicable, whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership or limited
liability company, as applicable, by separate agreement or
otherwise.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Patents” means
collectively, all of the following of any Grantor: (a) all patents, rights
and interests in patents, patentable inventions and patent applications anywhere
in the world, (b) all reissues, extensions, continuations (in whole or in
part) and renewals of any of the foregoing, (c) all income, royalties,
damages or payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing, (d) the right to sue for past, present and future infringements
of any of the foregoing, and (e) all rights corresponding to any of the
foregoing throughout the world.

       

      “Patent License” means
all agreements now or hereafter in existence, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent.

       

      “Perfection
Certificate” means (a) the perfection certificate dated as of the date
hereof, substantially in the form of Exhibit A attached
hereto, and otherwise in form and substance satisfactory to the Secured Party,
and duly certified by an authorized officer of the Borrower, and (b) a
perfection certificate in form and substance satisfactory to the Secured Party,
delivered by each Additional Grantor at the time that such Additional Grantor
becomes a party hereto, which shall be duly certified by an authorized officer
of such Additional Grantor.

       

      “Secured Party” has
the meaning assigned thereto in the preamble of this Agreement.

       

      “Securities Act” means
the Securities Act of 1933, including all amendments thereto and regulations
promulgated thereunder.

       

      “Security Interests”
means the liens and security interests granted pursuant to Article
II.

       

      “Subsidiary Issuer”
means any Issuer of Investment Property or any Partnership/LLC Interests, which
is a direct or indirect Subsidiary of any Grantor.

       

      “Trademarks” means
collectively, all of the following of any Grantor: (a) all trademarks,
rights and interests in trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos,
other business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and all
applications in connection therewith anywhere in the world, (b) all
reissues, extensions, continuations (in whole or in part) and renewals of any of
the foregoing, (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing, (d) the right to sue for
past, present and future infringements of any of the foregoing, and (e) all
rights corresponding to any of the foregoing throughout the world.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Trademark License”
means any agreement now or hereafter in existence, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark.

       

      “UCC” means the
Uniform Commercial Code as in effect in the State of New York, as amended or
modified from time to time.

       

      “Vehicles” means all
cars, trucks, trailers, and other vehicles covered by a certificate of title
under the laws of any state, all tires and all other appurtenances to any of the
foregoing.

       

      Section
1.3.      Other Definitional
Provisions.  Terms
defined in the Loan Agreement and not otherwise defined herein shall have the
meanings assigned thereto in the Loan Agreement. The words “hereof,” “herein”,
“hereto” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.  The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such
terms.  Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor’s Collateral or the relevant part thereof.  The word
“including” and words of similar import when used in this Agreement shall mean
“including, without limitation,” unless otherwise specified.

       

      ARTICLE
II

       

      SECURITY
INTEREST

       

      Section
2.1.       Grant of Security
Interest.

       

      (a)         Each
Grantor hereby grants, pledges and collaterally assigns to the Secured Party a
security interest in all of such Grantor’s right, title and interest in the
following property now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest, and wherever located or deemed located (collectively,
the “Collateral”), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations:

       

                                                
(i)          all
Accounts;

       

                                                
(ii)         all cash
and currency;

       

                                                 (iii)       
all
Chattel Paper;

       

                                                
(iv)        all
Commercial Tort Claims;

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

                                                
(v)         all
Deposit Accounts;

       

                                                
(vi)        all
Documents;

       

                                                
(vii)       all
Equipment;

       

                                                
(viii)      all
Fixtures;

       

                                                 (ix)       
all
General Intangibles (including, without limitation, any and all indemnification
claims against the Seller under the Acquisition Agreement);

       

                                                
(x)         all
Instruments;

       

                                                
(xi)        all
Intellectual Property;

       

                                                
(xii)       all
Inventory;

       

                                                
(xiii)      all
Investment Property;

       

                                                
(xiv)      all
Letter of Credit Rights;

       

                                                
(xv)       all
Vehicles;

       

                                                
(xvi)      all other
personal property not otherwise described above;

       

                                                
(xvii)     all books
and records pertaining to the Collateral; and

       

                                 (xviii)   
to the
extent not otherwise included, all Proceeds and products of any and all of the
foregoing and all collateral security and Supporting Obligations (as now or
hereafter defined in the UCC) given by any Person with respect to any of the
foregoing.

       

      (b)        
Notwithstanding
clause (a) of this Section 2.1, to the
extent that, at any time, the grant of a security interest in any contract
rights would, notwithstanding Sections 9-407 and 9-408 of the UCC or other
applicable law, cause a breach of the subject Contract permitting the
conterparty thereto to terminate such Contract under applicable law, such
contract rights shall not at such time be part of the Collateral (but the
proceeds thereof and any Supporting Obligations therefor shall be part of the
Collateral).  Each Grantor shall use all commercially reasonable
efforts to obtain any necessary consents or waivers required in order for such
Grantor to grant the Security Interests in any affected Contract.

       

      Section
2.2.      Grantors Remain
Liable.  Anything
herein to the contrary notwithstanding: (a) each Grantor shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by
Secured Party of any of the rights hereunder shall not release any Grantor from
any of its duties or obligations under the contracts and agreements included in
the Collateral, (c) the Secured Party shall have no obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder, and (d) the Secured Party
shall have no liability in contract or tort for any Grantor’s acts or
omissions.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      ARTICLE
III

       

      REPRESENTATIONS AND
WARRANTIES

       

      To induce
the Secured Party to enter into the Loan Agreement and to make the Loans to the
Borrower thereunder, each Grantor hereby represents and warrants to the Secured
Party that:

       

      Section
3.1.      Existence.  Each
Grantor is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, has the requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being and hereafter proposed to be conducted and is duly
qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification and authorization other than in any such jurisdiction where
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.

       

      Section
3.2.      Authorization of Agreement;
No Conflict.  Each
Grantor has the right, power and authority and has taken all necessary corporate
or other organizational action to authorize the execution, delivery and
performance of, this Agreement.  This Agreement has been duly executed
and delivered by the duly authorized officers of each Grantor and this Agreement
constitutes the legal, valid and binding obligation of the Grantors enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors’ rights in general, and general limitations on the availability of
equitable remedies.  The execution, delivery and performance by the
Grantors of this Agreement will not, by the passage of time, the giving of
notice or otherwise, violate any material provision of any Applicable Law or any
Contract material to the business of any Grantor and will not result in the
creation or imposition of any Lien, other than the Security Interests, upon or
with respect to any property or revenues of any Grantor.

       

      Section
3.3.     Consents.  No
approval, consent, exemption, authorization or other action by, or notice to, or
filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against any Grantor or any Subsidiary Issuer of this Agreement,
except (i) as may be required by laws affecting the offering and sale of
securities generally, (ii) filings with the United States Copyright Office
and/or the United States Patent and Trademark Office, and (iii) filings under
the UCC and/or the Assignment of Claims Act.

       

      Section
3.4.  Perfected Priority
Liens.  The
Security Interests granted pursuant to this Agreement (a) constitute valid
security interests in all of the Collateral in favor of the Secured Party, as
collateral security for the Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting to
purchase any Collateral from such Grantor, and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except to the extent of
any priority accorded under Applicable Law to any Permitted
Liens.  Upon the filing of financing statements in the jurisdiction of
formation of the respective Grantors reflected in the respective Perfection
Certificates, and the filing of appropriate collateral assignments with the
United States Copyright Office and the United States Patent and Trademark
Office, the Security Interests will be perfected first priority security
interests (subject only to the exceptions noted in the immediately preceding
sentence) in all Collateral in which a security interest can be perfected by
means of filing; and upon delivery to the Secured Party of the certificates
representing the Collateral consisting of Certificated Securities, the Security
Interests will be perfected first priority security interests in such
Collateral.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      Section
3.5.     Title; No Other
Liens.  Except
for the Security Interests, each Grantor owns each item of the Collateral free
and clear of any and all Liens or claims other than Permitted
Liens.  No financing statement under the UCC of any state which names
a Grantor as debtor or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Secured Party pursuant to this Agreement or in
respect of Permitted Liens.  No Collateral is in the possession or
Control of any Person asserting any claim thereto or security interest therein,
except that (a) the Secured Party or its designee may have possession or Control
of Collateral as contemplated hereby, (b) a depositary bank may have Control of
a Deposit Account owned by a Grantor at such depositary bank and a Securities
Intermediary may have Control over a Securities Account owned by a Grantor at
such Securities Intermediary, in each case subject to the terms of any Deposit
Account control agreement or Securities Account control agreement, as applicable
and to the extent required by Section 4, in favor
of the Secured Party, and (c) a bailee, consignee or other Person may have
possession of Collateral as contemplated by, and so long as, the applicable
Grantors have complied to the satisfaction of the Secured Party with the
applicable provisions of Section 4.

       

      Section
3.6.       State of Organization;
Location of Inventory, Equipment and Fixtures; Other
Information.

       

      (a)        
The exact
legal name of each Grantor is as set forth in its Perfection
Certificate.

       

      (b)       
Each
Grantor is a Registered Organization organized under the laws of the
jurisdiction identified for such Grantor in its Perfection
Certificate.  The taxpayer identification number and Registered
Organization number of each Grantor is as set forth for such Grantor in its
Perfection Certificate.

       

      (c)       
All
Collateral consisting of Inventory, Equipment and Fixtures (whether now owned or
hereafter acquired) is (or will be) located at the locations specified in the
Perfection Certificates.

       

      (d)       
The
mailing address, chief place of business, chief executive office and office
where each Grantor keeps its books and records relating to the Accounts,
Documents, General Intangibles, Instruments and Investment Property in which it
has any interest is located at the locations specified for such Grantor in its
Perfection Certificate.  No Grantor has any other places of
business.  No Grantor does business nor has done business during the
past five years under any trade name or fictitious business name except as
disclosed for such Grantor in its Perfection Certificate.  Except as
disclosed in its Perfection Certificate, no Grantor has acquired assets from any
Person, other than assets acquired in the ordinary course of such Grantor’s
business, during the past five years.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Section
3.7.     Accounts.  Each
existing Account constitutes, and each hereafter arising Account will
constitute, the legally valid and binding obligation of the applicable Account
Debtor.  The amount represented by each Grantor to the Secured Party
as owing by each Account Debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances in the
ordinary course of business where applicable.  No Account Debtor has
any defense, set-off, claim or counterclaim against any Grantor that can be
asserted against the Secured Party, whether in any proceeding to enforce Secured
Party’s rights in the Collateral or otherwise, except defenses, set-offs, claims
or counterclaims that are not, in the aggregate, material to the value of the
Accounts.  None of the Accounts is, nor will any hereafter arising
Account be, evidenced by a promissory note or other Instrument, other than a
check, that has not been pledged and delivered to the Secured Party in
accordance with the terms hereof.

       

      Section
3.8.      Chattel
Paper.  As
of the date hereof, the Borrower does not hold any Chattel Paper.

       

      Section
3.9.      Commercial Tort
Claims.  As
of the date hereof, the Borrower does not hold any Commercial Tort Claims except
as described in its Perfection Certificate; and, upon becoming aware at any time
and from time to time of any further Commercial Tort Claims, the Grantors shall
notify the Secured Party thereof in accordance with Section
4.4.

       

      Section
3.10.    Deposit
Accounts.  As
of the date hereof, all Deposit Accounts (including, without limitation, cash
management accounts that are Deposit Accounts) owned by the Borrower are listed
in its Perfection Certificate.

       

      Section
3.11.    Intellectual
Property.  None
of the Intellectual Property owned by any Grantor is the subject of any written
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor, except as would not reasonably be expected to have a Material
Adverse Effect.

       

      Section
3.12.    Inventory.  Collateral
consisting of Inventory is of good and merchantable quality, free from any
material defects, and has, to the knowledge of each Grantor, been manufactured
in accordance with the requirements of the Fair Labor Standards Act and all
other Applicable Law.  To the knowledge of each Grantor, none of such
Inventory is subject to any licensing, Patent, Trademark, trade name or
Copyright with any Person that restricts any Grantor’s ability to manufacture
and/or sell such Inventory.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Section
3.13.     Investment Property;
Partnership/LLC Interests.

       

      (a)       
As of the
date hereof, all Investment Property (including, without limitation, Securities
Accounts and cash management accounts that are Investment Property) and all
Partnership/LLC Interests owned by the Borrower are listed in its Perfection
Certificate.

       

      (b)       
All
Investment Property and all Partnership/LLC Interests issued by any Subsidiary
Issuer to any Grantor (i) have been duly and validly issued and, if applicable,
are fully paid and nonassessable, (ii) are beneficially owned as of record by
such Grantor, and (iii) represent the percentage ownership of all classes of the
capital stock or equity interests of such Subsidiary Issuer as set forth in such
Grantor’s Perfection Certificate.

       

      (c)       
None of
the Partnership/LLC Interests (i) are traded on a securities exchange or in
securities markets, (ii) by their terms expressly provide that they are
Securities governed by Article 8 of the UCC, or (iii) are Investment Company
Securities.

       

      Section
3.14.    Instruments.  As
of the date hereof, the Borrower does not hold any Instruments and is not named
a payee of any promissory note or other evidence of indebtedness.

      ARTICLE
IV

      COVENANTS

       

      Until the Obligations shall
have been indefeasibly paid in full and the Revolving Credit Commitment has been
terminated, unless express written consent has been obtained from the Lender,
the Grantors covenant and agree that:

       

      Section
4.1.       Maintenance of Perfected
Security Interest; Further Information.

       

      (a)         Each
Grantor shall maintain the Security Interest created by this Agreement as a
perfected Security Interest having at least the priority described in Section 3.4 and
shall defend such Security Interest against the claims and demands of all
Persons whomsoever.

       

      (b)       
Each
Grantor will furnish to the Secured Party from time to time statements and
schedules further identifying and describing the assets and property of such
Grantor and such other reports in connection therewith as the Secured Party may
reasonably request, all in reasonable detail.

       

      Section
4.2.       Maintenance of
Insurance.

       

      (a) Each
Grantor will maintain, with financially sound and reputable companies, insurance
policies (i) insuring the Collateral against loss by fire, explosion,
theft, fraud and such other casualties, including business interruption, as may
be reasonably satisfactory to the Secured Party in amounts and with deductibles
at least as favorable as those generally maintained by businesses of similar
size engaged in similar activities, and (ii) insuring such Grantor and the
Secured Party against liability for hazards, risks and liability to persons and
property relating to the Collateral, in amounts and with deductibles at least as
favorable as those generally maintained by businesses of similar size engaged in
similar activities, such policies to be in such form and having such coverage as
may be reasonably satisfactory to the Lender.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (b)       
All such
insurance (other than workers’ compensation) shall (i) name the Secured
Party as loss payee (to the extent covering risk of loss or damage to tangible
property) and as an additional insured as its interests may appear (to the
extent covering any other risk), (ii) provide that no cancellation shall be
effective until at least thirty (30) days after receipt by the Secured Party of
written notice thereof, and (iii) be reasonably satisfactory in all other
respects to the Secured Party.

       

      (c)        
Upon the
request of the Secured Party, each Grantor shall deliver to the Secured Party
periodic information from a reputable insurance broker with respect to the
insurance referred to in this Section
4.2.

       

      Section
4.3.       Changes in Locations;
Changes in Name or Structure.  No
Grantor will, except upon fifteen (15) days’ prior written notice to the Secured
Party and delivery to the Secured Party of (a) all additional financing
statements (executed if necessary for any particular filing jurisdiction) and
other instruments and documents reasonably requested by the Secured Party to
maintain the validity, perfection and priority of the Security Interests, and
(b) if applicable, a written supplement to its Perfection
Certificate:

       

                                 (i)         
permit
any Deposit Account to be held by or at a depositary bank other than the
depositary bank that held such Deposit Account as of the date hereof as set
forth in the Perfection Certificate;

       

                                 (ii)        
permit
any of the Inventory, Equipment or Fixtures to be kept at a location other than
those listed in the Perfection Certificate, except as otherwise permitted
hereunder;

       

                                 (iii)      
permit
any Investment Property (other than Certificated Securities delivered to the
Secured Party pursuant to Section 4.5) to be
held by a Securities Intermediary;

       

                                 (iv)      
change
its jurisdiction of organization or the location of its chief executive office
from that identified in the Perfection Certificate; or

       

                                 (v)       
change
its name, identity or corporate or organizational structure to such an extent
that any financing statement filed by the Secured Party in connection with this
Agreement would become misleading.

       

      Section
4.4.       Required
Notifications.  Each
Grantor shall promptly notify the Secured Party, in writing, of: (a) any Lien
(other than the Security Interests or Permitted Liens) on any of the Collateral,
(b) the occurrence of any other event which could reasonably be expected to have
a material adverse effect on the aggregate value of the Collateral or on the
Security Interests, (c) any Collateral which, to the knowledge of such Grantor,
constitutes a Government Contract, and (d) the acquisition or ownership by
such Grantor of any (i) Commercial Tort Claim, (ii) Deposit Account, or (iii)
Investment Property after the date
hereof.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
4.5.       Delivery
Covenants

       

      .  Each
Grantor will deliver and pledge to the Secured Party all Certificated
Securities, Partnership/LLC Interests evidenced by a certificate, negotiable
Documents, Instruments, and Tangible Chattel Paper owned or held by such
Grantor, in each case, together with an Effective Endorsement and Assignment and
all Supporting Obligations, as applicable, unless such delivery and pledge has
been waived in writing by the Secured Party.

       

      Section
4.6.       Control
Covenants.

       

      (a)        
Each
Grantor shall instruct (and otherwise use its reasonable efforts to cause) (i)
each depositary bank holding a Deposit Account owned by such Grantor, and (ii)
each Securities Intermediary holding any Investment Property owned by such
Grantor, to execute and deliver a control agreement, sufficient to provide the
Secured Party with Control of such Deposit Account or Investment Property, and
otherwise in form and substance reasonably satisfactory to the Secured Party
(any such depositary bank executing and delivering any such control agreement, a
“Controlled
Depositary”, and any such Securities Intermediary executing and
delivering any such control agreement, a “Controlled
Intermediary”).  In the event any such depositary bank or
Securities Intermediary refuses to execute and deliver such control agreement,
the Secured Party, in its sole discretion, may require the applicable Deposit
Account and Investment Property to be transferred to the Secured Party or a
different Controlled Depositary or Controlled Intermediary, as applicable,
reasonably selected by the Grantor and reasonably satisfactory to the Secured
Party, which agrees to execute and deliver such control agreement.

       

      (b)        
Each
Grantor will take such actions and deliver all such agreements as are requested
by the Secured Party to provide the Secured Party with Control of all Letter of
Credit Rights and Electronic Chattel Paper owned or held by such Grantor,
including, without limitation, with respect to any such Electronic Chattel
Paper, by having the Secured Party identified as the assignee of the Record(s)
pertaining to the single authoritative copy thereof.

       

      (c)        
If any
Collateral (other than Collateral specifically subject to the provisions of
Section 4.6(a)
and Section
4.6(b)) exceeding in value $5,000 in the aggregate (such Collateral
exceeding such amount, the “Excess Collateral”)
is at any time in the possession or control of any consignee, warehouseman,
bailee (other than a carrier transporting Inventory to a purchaser in the
ordinary course of business), processor, or any other third party, such Grantor
shall notify in writing such Person of the Security Interests created hereby,
shall use its reasonable efforts to obtain such Person’s written agreement in
writing to hold all such Collateral for the Secured Party’s account subject to
the Secured Party’s instructions, and shall cause such Person to issue and
deliver to the Secured Party warehouse receipts, bills of lading or any similar
documents relating to such Collateral to the Secured Party together with an
Effective Endorsement and Assignment; provided that if such
Grantor is not able to obtain such agreement and cause the delivery of such
items, the Secured Party, in its sole discretion, may require such Excess
Collateral to be moved to another location specified by the Secured
Party.  Further, each Grantor shall perfect and protect such Grantor’s
ownership interests in all Inventory stored with a consignee against creditors
of the consignee by filing and maintaining financing statements against the
consignee reflecting the consignment arrangement filed in all appropriate filing
offices, providing any written notices required to notify any prior creditors of
the consignee of the consignment arrangement, and taking such other actions as
may be appropriate to perfect and protect such Grantor’s interests in such
inventory under Section 2-326, Section 9-103, Section 9-324 and Section 9-505 of
the UCC or otherwise.  All such financing statements filed pursuant to
this Section
4.6(c) shall be assigned, on the face thereof, to the Secured
Party.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      Section
4.7.      Filing
Covenants.  Pursuant
to Section 9-509 of the UCC and any other Applicable Law, each Grantor
authorizes the Secured Party to file or record financing statements and other
filing or recording documents or instruments with respect to the Collateral
without the signature of such Grantor in such form and in such offices as the
Secured Party determines appropriate to perfect the Security Interests of the
Secured Party under this Agreement.  Such financing statements may
describe the Collateral in the same manner as described herein or may contain an
indication or description of Collateral that describes such property in any
other manner as the Secured Party may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the Security
Interest in the Collateral granted herein, including, without limitation,
describing such property as “all assets” or “all personal
property.”  Further, a photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any
jurisdiction.  Each Grantor hereby authorizes, ratifies and confirms
all financing statements and other filing or recording documents or instruments
filed by Secured Party prior to the date of this Agreement.

       

      Section
4.8.       Accounts.

       

      (a)       
Other
than in the ordinary course of business consistent with its past practice, no
Grantor will (i) grant any extension of the time of payment of any Account,
(ii) compromise or settle any Account for less than the full amount
thereof, (iii) release, wholly or partially, any Account Debtor,
(iv) allow any credit or discount whatsoever on any Account, or
(v) amend, supplement or modify any Account in any manner that could
adversely affect the value thereof.

       

      (b)       
Each
Grantor will deliver to the Secured Party a copy of each material demand, notice
or document received by such Grantor that questions or calls into doubt the
validity or enforceability of any material Account.

       

      (c)       
The
Secured Party shall have the right to make test verifications of the Accounts in
any manner and through any medium that it reasonably considers advisable, and
each Grantor shall furnish all such assistance and information as the Secured
Party may require in connection with such test verifications.  From
time to time (but not more frequently than once in any six (6) month period,
except for reasonable cause or unless an Event of Default is then continuing),
upon the Secured Party’s reasonable request and at the expense of the Grantors,
the Grantors shall cause independent public accountants or others satisfactory
to the Secured Party to furnish to the Secured Party reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.

       

      (d)       
Upon
request of the Secured Party at any time, each Grantor shall direct its Account
Debtors (including by means of appropriate direction on all invoices) to remit
all payments on such Grantor’s Accounts to a lockbox or blocked account at a
Controlled Depository, which account shall be swept by the Secured Party on a
weekly (or more frequent) basis, with collected funds in such account applied to
the outstanding Advances or made available to such Grantor.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      Section
4.9.       Intellectual
Property.

       

      (a)       
Within
five (5) Business Days after the last day of each fiscal quarter in which any
Grantor shall identify and/or confirm the existence of any registered
Intellectual Property owned or claimed to be owned by such Grantor, such Grantor
shall notify the Secured Party of the particulars thereof (including the name or
title of the subject Intellectual Property, the filing office in which any
filings may have been made in respect thereof, and the filing date and
registration number of each such filing), and shall execute and deliver to the
Grantor, for filing, any and all such collateral assignments as the Secured
Party may reasonably request in order to confirm and/or perfect the Security
Interests in such Intellectual Property.

       

      (b)       
Except as
could not reasonably be expected to have a Material Adverse Effect, each Grantor
(either itself or through licensees) (i) will continue to use each registered
Trademark (owned by such Grantor) and Trademark for which an application (owned
by such Grantor) is pending, to the extent reasonably necessary to maintain such
Trademark in full force free from any claim of abandonment for non-use,
(ii) will maintain products and services offered under such Trademark at a
level substantially consistent with the quality of such products and services as
of the date hereof, (iii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark could reasonably be expected to become invalidated or impaired in any
way, (iv) will not do any act, or knowingly omit to do any act, whereby any
issued Patent owned by such Grantor would reasonably be expected to become
forfeited, abandoned or dedicated to the public, (v) will not (and will not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any registered Copyright owned by such Grantor or Copyright
for which an application is pending (owned by such Grantor) could reasonably be
expected to become invalidated or otherwise impaired, and (vi) will not (either
itself or through licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.

       

      (c)        
Each
Grantor will notify the Secured Party promptly if it knows, or has reason to
know, that any application or registration relating to any material Intellectual
Property owned by such Grantor may become forfeited, abandoned or dedicated to
the public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property
owned by such Grantor or such Grantor’s right to register the same or to own and
maintain the same.

       

      (d)       
Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Secured Party within five (5) Business Days after the last day of the fiscal
quarter in which such filing occurs.  Upon request of the Secured
Party, such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Secured Party may
reasonably request to evidence the Secured Party’s security interest in any
material Copyright, Patent or Trademark and the goodwill and General Intangibles
of such Grantor relating thereto or represented thereby.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (e)       
Each
Grantor will take all reasonable and necessary steps, in such Grantor’s
reasonable business judgment and at such Grantor’s sole cost and expense,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

       

      (f)        
In the
event that any material Intellectual Property owned by a Grantor is infringed,
misappropriated or diluted by a third party, the applicable Grantor shall
(i) at such Grantor’s sole cost and expense, take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect
such Intellectual Property, and (ii) if such Intellectual Property is of
material economic value, promptly notify the Secured Party after it learns of
such infringement, misappropriation or dilution.

       

      Section
4.10.      Investment Property;
Partnership/LLC Interests.

       

      (a)       
Without
the prior written consent of the Lender, no Grantor will (i) vote to
enable, or take any other action to permit, any Subsidiary Issuer to issue any
Investment Property or Partnership/LLC Interests, except for those additional
Investment Property or Partnership/LLC Interests that will be subject to the
Security Interest granted herein in favor of the Secured Party, or
(ii) enter into any agreement or undertaking restricting the right or
ability of such Grantor or the Secured Party to sell, assign or transfer any
Investment Property or Partnership/LLC Interests or Proceeds
thereof.  The Grantors will defend the right, title and interest of
the Secured Party in and to any Investment Property and Partnership/LLC
Interests against the claims and demands of all Persons whomsoever.

       

      (b)       
If any
Grantor shall become entitled to receive or shall receive (i) any Certificated
Securities (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the ownership interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any Investment Property, or otherwise in respect thereof, or (ii)
any sums paid upon or in respect of any Investment Property upon the liquidation
or dissolution of any Issuer, such Grantor shall accept the same as the agent of
the Secured Party, hold the same in trust for the Secured Party, segregated from
other funds of such Grantor, and promptly deliver the same to the Secured Party
in accordance with the terms hereof.

       

      Section
4.11.     Equipment.  Each
Grantor will maintain each item of Equipment in good working order and condition
(reasonable wear and tear and obsolescence excepted), and in accordance with any
manufacturer’s manual and/or recommendations, and will as quickly as practicable
provide all maintenance, service and repairs necessary for such purpose and will
promptly furnish to the Secured Party a statement respecting any material loss
or damage to any of the Equipment, except for such obsolete or worn-out
machinery or equipment which such Grantor has determined, in its reasonable
business judgment, to be no longer useful or desirable for its use in the
Business Operations.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      Section
4.12.     Vehicles.  Upon
the request of the Secured Party at any time and from time to time, any and all
applications for certificates of title or ownership indicating the Secured
Party’s first priority Lien on the Vehicle covered by such certificate, and any
other necessary documentation, shall be filed in each office in each
jurisdiction which the Secured Party shall deem reasonably advisable to perfect
its Liens on the Vehicles.  Prior thereto, each certificate of title
or ownership relating to each Vehicle shall be maintained by the applicable
Grantor in accordance with Applicable Law to reflect the ownership interest of
such Grantor.

       

      Section
4.13.     Further
Assurances.  Upon
the request of the Secured Party and at the sole expense of the Grantors, each
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the Secured
Party may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (a) the collateral assignment of any
Contract, (b) with respect to Government Contracts, collateral assignment
agreements and notices of collateral assignment, in form and substance
reasonably satisfactory to the Secured Party, duly executed by the subject
Grantor in compliance with the Assignment of Claims Act (or analogous state
Applicable Law), and (c) all applications, certificates, instruments,
registration statements, and all other documents and papers the Secured Party
may reasonably request and as may be required by law in connection with the
obtaining of any consent, approval, registration, qualification, or
authorization of any Person deemed necessary or appropriate for the effective
exercise of any rights under this Agreement.

       

      ARTICLE
V

       

      REMEDIAL
PROVISIONS

       

      Section
5.1.       General
Remedies.  If
an Event of Default shall occur and be continuing, the Secured Party may
exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the UCC or any other Applicable Law.  Without limiting the generality
of the foregoing, the Secured Party, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Secured Party or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk.  The Secured Party may disclaim any warranties of
title, possession and quiet enjoyment.  The Secured Party shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released.  Each
Grantor further agrees, at the Secured Party’s request, to assemble the
Collateral and make it available to the Secured Party at places which the
Secured Party shall reasonably select, whether at such Grantor’s premises or
elsewhere.  To the extent permitted by Applicable Law, each Grantor
waives all claims, damages and demands it may acquire against the Secured Party
arising out of the exercise by it of any rights hereunder except to the extent
any such claims, damages, or demands result solely from the gross negligence or
willful misconduct of the Secured Party.  If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least ten (10) days before
such sale or other disposition.

       

      Section
5.2.       Specific
Remedies.

       

      (a)        
The
Secured Party hereby authorizes each Grantor to collect its Accounts; provided, that, the
Secured Party may curtail or terminate such authority at any time after the
occurrence and during the continuance of an Event of Default.

       

      (b)        
Upon the
occurrence and during the continuance of an Event of Default:

       

                                 (i)         
the
Secured Party may communicate with Account Debtors of any Account subject to a
Security Interest and upon the request of the Secured Party, each Grantor shall
notify (such notice to be in form and substance satisfactory to the Secured
Party) its Account Debtors and parties to the Contracts subject to a Security
Interest that such Accounts and the Contracts have been assigned to the Secured
Party;

       

                                 (ii)       
each
Grantor shall forward to the Secured Party, on the last Business Day of each
week, deposit slips related to all cash, money, checks or any other similar
items of payment received by the Grantor during such week, and, if requested by
the Secured Party, copies of such checks or any other similar items of payment,
together with a statement showing the application of all payments on the
Collateral during such week and a collection report with regard thereto, in form
and substance satisfactory to the Secured Party.

       

                                
(iii)        whenever
any Grantor shall receive any cash, money, checks or any other similar items of
payment relating to any Collateral (including any Proceeds of any Collateral),
such Grantor agrees that it will, within one (1) Business Day of such receipt,
deposit all such items of payment into the Collateral Account or in a Deposit
Account at Controlled Depositary; and until such Grantor shall deposit such
cash, money, checks or any other similar items of payment in the Collateral
Account or in a Deposit Account at a Controlled Depositary, such Grantor shall
hold such cash, money, checks or any other similar items of payment in trust for
the Secured Party and as property of the Secured Party, separate from the other
funds of such Grantor, and the Secured Party shall have the right to transfer or
direct the transfer of the balance of each Deposit Account to the Collateral
Account.  All such Collateral and Proceeds of Collateral received by
the Secured Party hereunder shall be held by the Secured Party in the Collateral
Account as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 5.4.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

                                
(iv)       the
Secured Party shall have the right to receive any and all cash dividends,
payments or distributions made in respect of any Investment Property or
Partnership/LLC Interests or other Proceeds paid in respect of any Investment
Property or Partnership/LLC Interests, and any or all of any Investment Property
or Partnership/LLC Interests shall be registered in the name of the Secured
Party or its nominee, and the Secured Party or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such
Investment Property or Partnership/LLC Interests, at any meeting of
shareholders, partners or members of the relevant Issuers, and (B) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Investment Property or Partnership/LLC
Interests as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property or Partnership/LLC Interests upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate,
partnership or company structure of any Issuer or upon the exercise by any
Grantor or the Secured Party of any right, privilege or option pertaining to
such Investment Property or Partnership/LLC Interests, and in connection
therewith, the right to deposit and deliver any and all of the Investment
Property or Partnership/LLC Interests with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Secured Party may determine), all without liability except to account for
property actually received by it; but the Secured Party shall have no duty to
any Grantor to exercise any such right, privilege or option and the Secured
Party shall not be responsible for any failure to do so or delay in so
doing.  In furtherance thereof, each Grantor hereby authorizes and
instructs each Issuer with respect to any Collateral consisting of Investment
Property and Partnership/LLC Interests to (i) comply with any instruction
received by it from the Secured Party in writing that (A) states that an Event
of Default has occurred and is continuing, and (B) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions from
such Grantor, and each Grantor agrees that each Issuer shall be fully protected
in so complying, and (ii) except as otherwise expressly permitted hereby,
pay any dividends, distributions or other payments with respect to any
Investment Property or Partnership/LLC Interests directly to the Secured Party;
and

       

                                
(v)        the
Secured Party shall be entitled to (but shall not be required
to):  (A) proceed to perform any and all obligations of the applicable
Grantor under any Contract and exercise all rights of such Grantor thereunder as
fully as such Grantor itself could, (B) do all other acts which the Secured
Party may deem necessary or proper to protect its Security Interest granted
hereunder, provided such acts are not inconsistent with or in violation of the
terms of the Loan Agreement or Applicable Law, and (C) sell, assign or otherwise
transfer any Contract constituting Collateral, subject, however, to the prior
approval of each other party to such Contract, to the extent required under the
Contract.

       

                                
(c)        Unless an
Event of Default shall have occurred and be continuing and the Secured Party
shall have given notice to the relevant Grantor of the Secured Party’s intent to
exercise its corresponding rights pursuant to Section 5.2(b),
each Grantor shall be permitted to receive all cash dividends, payments or other
distributions made in respect of any Investment Property and Partnership/LLC
Interests, in each case paid in the normal course of business of the relevant
Issuer and consistent with past practice, to the extent permitted in the Loan
Agreement, and to exercise all voting and other corporate, company or
partnership rights with respect to any Investment Property and Partnership/LLC
Interests; provided, that no
vote shall be cast or other corporate, company or partnership right exercised or
other action taken which, in the Secured Party’s reasonable judgment, would
impair the Collateral or which would result in a Default or Event of Default
under any provision of the Loan Agreement, this Agreement or any other Loan
Document.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      Section
5.3.       Private
Sale.

       

      (a)        
Each
Grantor recognizes that the Secured Party may be unable to effect a public sale
of any or all Collateral consisting of Securities which have not been registered
for resale under the Securities Act (“Restricted Securities
Collateral”), by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof.  Each Grantor acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not by reason thereof be deemed not to
have been made in a commercially reasonable manner.  The Secured Party
shall be under no obligation to delay a sale of any of the Restricted Securities
Collateral for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do
so.

       

      (b)        
Each
Grantor agrees to use its best efforts to do or cause to be done all such other
acts as may be necessary to make such sale or sales of all or any portion of the
Restricted Securities Collateral valid and binding and in compliance with any
and all other Applicable Laws.

       

      Section
5.4.       Application of
Proceeds.  At
such intervals as may be agreed upon by the Borrower and the Secured Party, or,
if an Event of Default shall have occurred and be continuing, at any time at the
Secured Party’s election, the Secured Party may apply all or any part of the
Collateral or any Proceeds of the Collateral in payment in whole or in part of
the Obligations (after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Secured Party hereunder, including, without limitation, reasonable attorneys’
fees and disbursements) in accordance with Section 2.05 of the Loan
Agreement.  Any balance of such Proceeds remaining after payment in
full of the Obligations shall be paid over to the Grantors, or to whomever else
may be lawfully entitled to receive the same. Only after (a) the payment by the
Secured Party of any other amount required by any provision of law, including,
without limitation, Section 9-610 and Section 9-615 of the UCC, and (b) the
payment in full of the Obligations, shall the Secured Party account for the
surplus, if any, to any Grantor, or to whomever else may be lawfully entitled to
receive the same.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      Section
5.5.       Waiver,
Deficiency.  Each
Grantor hereby waives, to the extent permitted by Applicable Law, all rights of
redemption, appraisement, valuation, stay, extension or moratorium now or
hereafter in force under any Applicable Law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the Collateral or any
portion thereof.  Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Secured Party to collect such deficiency.

       

      ARTICLE
VI

       

      THE SECURED
PARTY

       

      Section
6.1.       Secured Party’s Appointment
as Attorney-In-Fact.

       

      (a)        
Each
Grantor hereby irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Secured Party the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, to do any or all of the following upon the occurrence
and during the continuance of an Event of Default:

       

                                (i)          
in the
name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Account or Contract subject to a
Security Interest or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Account or Contract subject to a Security Interest
or with respect to any other Collateral whenever payable;

       

                                 (ii)        
in the
case of any Intellectual Property, execute and deliver, and have recorded, any
and all agreements, instruments, documents and papers as the Secured Party may
request to evidence the Secured Party’s security interest in such Intellectual
Property and the goodwill and General Intangibles of such Grantor relating
thereto or represented thereby;

       

                                
(iii)        pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs
thereof,

       

                                
(iv)       execute,
in connection with any sale provided for in this Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

                                
(v)        (A) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Secured Party
or as the Secured Party shall direct; (B) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of any Collateral;
(C) sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (E) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral; (F) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Secured Party may deem appropriate;
(G) assign any Copyright, Patent or Trademark (along with the goodwill of
the business to which any such Copyright, Patent or Trademark pertains), for
such term or terms, on such conditions, and in such manner, as the Secured Party
shall in its sole discretion determine; and (H) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Secured Party were the absolute
owner thereof for all purposes, and do, at the Secured Party’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Secured Party deems necessary to protect, preserve or realize upon the
Collateral and the Secured Party’s Security Interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor might
do.

       

      (b)        
If any
Grantor fails to perform or comply with any of its agreements contained herein,
the Secured Party, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement in accordance with the provisions of Section
6.1(a).

       

      (c)        
The
expenses of the Secured Party incurred in connection with actions taken pursuant
to the terms of this Agreement shall be deemed to be Loans under the Loan
Agreement and shall, together with interest thereon at the rate(s) in effect
from time to time pursuant to the Term Note, from the date of payment by the
Secured Party to the date reimbursed by the Grantors, be payable by the Grantors
(jointly and severally) to the Secured Party on demand.

       

      (d)        
Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof in accordance with Section
6.1(a).  All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the Security Interests created hereby are
released.

       

      Section
6.2.       Duty of Secured
Party.  The
Secured Party’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Secured Party
deals with similar property for its own account.  Neither the Secured
Party nor any of its officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof.  The powers conferred on the Secured Party hereunder are
solely to protect the Secured Party’s interests in the Collateral and shall not
impose any duty upon the Secured Party to exercise any such
powers.  The Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      ARTICLE
VII

       

      MISCELLANEOUS

       

      Section
7.1.      Amendments in
Writing.  None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance with Section 9.04 of the
Loan Agreement.

       

      Section
7.2.       Notices.  All
notices, requests and demands to or upon the Secured Party or any Grantor
hereunder shall be effected in the manner provided for in Section 9.06 of the
Loan Agreement.

       

      Section
7.3.       No Waiver by Course of
Conduct, Cumulative Remedies.  The
Secured Party shall not by any act (except by a written instrument pursuant to
Section 7.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of
Default.  No failure to exercise, nor any delay in exercising on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A
waiver by the Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Secured Party
would otherwise have on any future occasion.  The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.

       

      Section
7.4.       Enforcement Expenses,
Indemnification.

       

      (a)        
The
Grantors agree (jointly and severally) to pay or reimburse the Secured Party on
demand for all of its costs and expenses incurred in connection with enforcing
or preserving any rights under this Agreement and the other Loan Documents
(including, without limitation, in connection with any workout, restructuring,
bankruptcy or other similar proceeding), including, without limitation, the
reasonable fees and disbursements of counsel to the Secured Party.

       

      (b)       
The
Grantors agree (jointly and severally) to pay, and to save the Secured Party
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other similar taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this
Agreement.  For clarity, the foregoing does not include net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed by
federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of the Lender or its members.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      (c)        
The
Grantors agree (jointly and severally) to pay, and to save the Secured Party
harmless from any and all liabilities, obligations, losses, damages, penalties,
costs and expenses in connection with actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent any Grantor would be required to do so pursuant to Section 9.02 of the
Loan Agreement.

       

      (d)        
The
agreements in this Section 7.4 shall
survive repayment of the Obligations and the termination of this Agreement
and/or any other Loan Documents.

       

      Section
7.5.       Waiver of Jury Trial;
Preservation of Remedies.

       

      (a)        
EACH
GRANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.

       

      (b)       
The
parties hereto preserve, without diminution, certain remedies that such Persons
may employ or exercise freely, either alone, in conjunction with or during a
dispute.  Each such Person shall have and hereby reserves the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable:  (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale granted in the Loan Documents or under Applicable Law or by
judicial foreclosure and sale, including a proceeding to confirm the sale, (ii)
all rights of self-help including peaceful occupation of property and collection
of rents, set-off, and peaceful possession of property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and in filing an involuntary
bankruptcy proceeding, and (iv) when applicable, a judgment by confession of
judgment.  Preservation of these remedies does not limit the power of
an arbitrator to grant similar remedies that may be requested by a party in a
dispute.

       

      Section
7.6.       Successors and
Assigns.  This
Agreement shall be binding upon the successors and assigns of each Grantor and
shall inure to the benefit of each Grantor (and shall bind all Persons who
become bound as a Grantor to this Agreement), the Secured Party and their
successors and assigns; provided, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of all holders of
Obligations.

       

      Section
7.7.       Set-Off.  Each
Grantor hereby irrevocably authorizes the Secured Party at any time and from
time to time during the continuance of an Event of Default, without notice to
such Grantor, any such notice being expressly waived by each Grantor, to set off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Secured Party (or any agent of the Secured Party) to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
the Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to the Secured Party hereunder and claims of every
nature and description of the Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Loan Agreement, any other Loan
Document or otherwise, as the Secured Party may elect, whether or not the
Secured Party has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured.  The Secured
Party shall notify such Grantor promptly of any such set-off and the application
made by the Secured Party of the proceeds thereof; provided, that the
failure to give such notice shall not affect the validity of such set-off and
application.  The rights of the Secured Party under this Section 7.7 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Secured Party may have.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Section
7.8.      Counterparts.  This
Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

       

      Section
7.9.       Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.

       

      Section
7.10.     Section
Headings.  The
Section headings used in this Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.

       

      Section
7.11.     Integration.  This
Agreement and the other agreements, instruments and documents referred to herein
represent the agreement of the Grantors and the Secured Party with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Secured Party relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
agreements, instruments and documents referred to herein.

       

      Section
7.12.    Governing
Law.  This
Agreement shall be governed by, construed, interpreted and enforced in
accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law (other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law).

       

      Section
7.13.     Consent to
Jurisdiction.  Each
Grantor hereby irrevocably consents to the personal jurisdiction of all courts
(state and/or federal) located or sitting in New York County, New York, as well
as to the jurisdiction of all courts to which an appeal may be taken from such
courts, in any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Loan Agreement, the Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations.  Each Grantor hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Secured Party in connection with this
Agreement, the Loan Agreement, the Notes or the other Loan Documents, any rights
or obligations hereunder or thereunder, or the performance of such rights and
obligations, on behalf of itself or its property, by registered or certified
mail, return receipt requested, in the manner specified in Section 9.06 of the
Loan Agreement.  Nothing in this Section 7.13 shall
affect the right of the Secured Party to serve legal process in any other manner
permitted by Applicable Law or affect the right of the Secured Party to bring
any action or proceeding against any Grantor or its properties in the courts of
any other jurisdictions.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      Section
7.14.      Acknowledgements.

       

      (a)        
Each
Grantor hereby acknowledges that:  (i) it has been advised by counsel
in the negotiation, execution and delivery of this Agreement, (ii) the Secured
Party has no fiduciary relationship with or duty to any Grantor arising out of
or in connection with the Loan Agreement, this Agreement or any of the other
Loan Documents, and the relationship between the Grantors (on the one hand) and
the Secured Party (on the other hand) in connection herewith or therewith is
solely that of debtor and creditor, and (iii) no joint venture is created hereby
or otherwise exists by virtue of the transactions contemplated
hereby.

       

      (b)        
Each
Issuer party to this Agreement acknowledges receipt of a copy of this Agreement
and agrees to be bound thereby and to comply with the terms thereof insofar as
such terms are applicable to it.  Each Issuer agrees to provide such
notices to the Secured Party as may be necessary to give full effect to the
provisions of this Agreement.

       

      Section
7.15.     Additional
Grantors.  Each
Subsidiary of the Borrower that is required to become a party to this Agreement
pursuant to Section 5.11 of the Loan Agreement shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of a
joinder agreement (with a Perfection Certificate and/or other appropriate
disclosure schedules respecting such Additional Grantor) in form and substance
satisfactory to the Secured Party.

       

      Section
7.16.      Releases.

       

      (a)        
At such
time as the Obligations shall have been indefeasibly paid in full and the
Revolving Credit Commitment has been terminated, the Collateral shall be
released from the Liens created hereby, and this Agreement and all obligations
(other than those expressly stated to survive such termination) of the Secured
Party and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors.  At the request and sole
expense of any Grantor following any such termination, the Secured Party shall
deliver to such Grantor any Collateral held by the Secured Party hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.

       

      (b)        
If any of
the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Loan Agreement, then the Secured
Party, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such
Collateral.

       

      [Signature
Page to Follow]

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

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

       

      
        
          	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation	 
	 	 	 	 	 
	
                   

                	 	
                  By:  
      

                	
                   

                	 
	
                   

                	 	 	
                  Timothy
      J. Koziol

                  Chief Executive Officer

                	 

        

         

        
          
            
              
                	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation	 
	 	 	 	 	 
	
                         

                      	 	
                        By:  
      

                      	
                         

                      	 
	
                         

                      	 	 	
                        

                          Timothy
      J. Koziol

                          Chief Executive Officer

                        

                      	 

              

            

          

        

         

        
          
            
              
                
                  
                    	 	 	 	GENERAL
      ENVIRONMENTAL MANAGEMENT, INC., Of RANCHO CORDOVA LLC	 
	 	 	 	 	 
	
                             

                          	 	
                            By:  
      

                          	
                             

                          	 
	
                             

                          	 	 	
                            

                              Timothy
      J. Koziol

                              Manager

                            

                          	 

                  

                

                 

                
                  
                    	 	 	 	GEM
      MOBILE TREATMENT SERVICES, INC.	 
	 	 	 	 	 
	
                             

                          	 	
                            By:  
      

                          	
                             

                          	 
	
                             

                          	 	 	
                            

                              

                                Timothy
      J. Koziol

                                Chief Executive Officer

                              

                            

                          	 

                  

                

              

            

          

        

         

        
          
            	 	 	 	GEM
      6 ACQUISITIONS CORPORATION	 
	 	 	 	 	 
	
                     

                  	 	
                    By:  
      

                  	
                     

                  	 
	
                     

                  	 	 	
                    

                      

                        Timothy
      J. Koziol

                        President

                      

                    

                  	 

          

        

         

        
          
            	 	 	 	GEMCVC
      CALIFORNIA, LLC	 
	 	 	 	 	 
	
                     

                  	 	
                    By:  
      

                  	
                     

                  	 
	
                     

                  	 	 	
                    Name:
      Gary E. Jaggard

                    
                      Title:
      Managing Director

                    

                  	 

          

        

      

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
A

      to

      Collateral
Agreement

       

      Dated as
of August 31, 2008

       

      This
Perfection Certificate is being rendered to ComVest Capital, LLC (the “Secured
Party”) by General Environmental Management Inc (“GEVI”) and its subsidiaries
(each a “Grantor” and collectively the “Grantors”), pursuant to that certain
Collateral Agreement dated as of August 31, 2008 by and among the Secured Party
and the Grantors (as amended, modified, supplemented and/or restated from time
to time, the “Collateral Agreement”).  Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Collateral Agreement.

       

      Each
Grantor hereby certifies to the Secured Party that as of the Closing
Date:

       

      SECTION
1.  Identification
Information.

       

      (a) 
The jurisdiction of incorporation, organization or formation of each Grantor and
the date of such incorporation, organization or formation is as
follows:

       

      The exact
legal name of each Borrower as it appears on its certificate of formation
is:

       

      
        	
                
                  General
      Environmental Management, Inc. a Nevada
      Corporation  (1)

                

              
	 
	
                
                  General
      Environmental Management, Inc. a Delaware Corporation
      (1)

                

              
	 
	
                
                  General
      Environmental Management of Rancho Cordova,
      LLC  (2)

                

              
	 
	
                
                  GEM
      Mobile Treatment Services Inc.
(1)

                

              

      

       

      The
following is the type of business entity for each Borrower (check as applicable
and specify for which Borrower):

       

      
        	
                
                  (1)

                

              	 	 
      	 	 
      
	
                corporation
      (indicate
      any sub-chapter S election)

              	 	
                limited
      partnership

              	 	
                general
      partnership

              

      

       

      
        	
                
                  (2)

                

              	 	 
      	 
      
	
                limited
      liability company

              	 	
                other
      (please specify)

              	 
      

      

      

      Schedule
A lists the date of organization, jurisdiction of organization, organizational
identification number and federal tax identification number for each
Borrower.  Each Borrower is in good standing under the jurisdictions
applicable to such Borrower as set forth on Schedule A.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      

      (b)       
 The location of the chief executive office of each Grantor is as
follows:

                             

                                   
3191 Temple Ave., Suite 250, Pomona, CA 91768

      

      (c)        
The exact legal name of each Grantor as it appears in its Certificate of
Incorporation or other Organic Document is as follows:  See
1(a)

       

      (d)       
Except as set forth herein, (i) no Grantor has changed its identity or
organizational structure in any way within the past five years, and (ii) no
Person has merged or consolidated with or into any Grantor and no Person has
liquidated into or transferred all or substantially all of its assets to any
Grantor in any way within the past year.

       

      Since the
date of formation, the following Grantors have made or entered into the
following mergers, acquisitions, consolidations, reorganizations, changes in
state of incorporation or formation, or other changes in organizational form
affecting such Borrower:

       

      
        	
                
                  Acquisition
      of the assets of Firestone Environmental Services, Inc. dba Prime
      Environmental Services, Inc. and Firestone Associates, Inc. dba Firestone
      Energy Co.

                

              
	
                
                   

                  Acquisition
      of 100% of the membership interest of PCI of California,
      LLC

                

              
	
                
                   

                  Acquisition
      of the assets of EnVectra , Inc.

                

              
	
                
                   

                  General
      Environmental Management, Inc., a Delaware Corporation is the successor to
      Hazpak Environmental Services, Inc.

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware Corporation (GEM) affected a
      merger with an Ultronics Corporation merger subsidiary where GEM was the
      surviving entity.  Ultronics, the parent, then changed its name
      to General Environmental Management, Inc. a Nevada
      Corporation.

                

              
	
                
                   

                  Acquisition
      of 100% of the stock of  K2M Mobile Treatment Services
      Inc.

                

              

      

      

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (e)        
The following is a list of all other names (including trade names or similar
appellations) used by any Grantor at any time during the past five
years:

       

      
        	
                Date

              	
                Borrower’s
      Current Name

              	
                Borrower’s
      Prior Name

              
	
                
                  March 16, 2005

                

              	
                
                  General
      Environmental Management, Inc. a Nevada Corporation

                

              	
                
                  Ultronics
  Corporation

                

              
	
                
                  February 14, 2003

                

              	
                
                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                  Lighthouse Environmental,
      Inc.

                

              
	
                
                  August 17, 2006

                

              	
                
                  GEM
      Mobile Treatment Services Inc.

                

              	
                
                  K2M
      Mobile Treatment Services
Inc.

                

              

      

      

      (f)         
The taxpayer identification number of each Grantor is as follows: See Schedule
A

       

      (g)        
The registered organization identification number of each Grantor is as
follows:  See Schedule B

       

      SECTION
2.      Current
Locations.

       

      (a)        
The following are the only locations at which any Grantor maintains any books or
records relating to any Accounts:

       

      
        
          	
                  Grantor 

                	
                  Mailing
      Address 

                	
                  County
      and State

                
	
                  
                    
                      General
      Environmental Management, Inc. a Delaware
      Corporation

                    

                  

                	
                  
                    
                      3191
      Temple Ave.

                      Suite
      250

                    

                  

                	
                  
                    Pomona, CA
  91768

                  

                

        

      

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      (b)        
The following are all the locations not identified above where any Grantor
maintains any Inventory or Equipment:

       

      
        	
                Grantor

              	
                Mailing
      Address

              	
                Activity &
      Assets

              	
                Owner, Landlord, Processor, Warehouse or
      Cosignee

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  11155
      Jersey Blvd.

                  Unit
      G

                  Rancho
      Cucamonga, CA  91730

                

              	
                
                   

                  Waste
      management

                   

                

              	
                
                   

                  Leased

                   

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  7821
      S. 198th
      st.

                  Kent,
      WA 98148

                

              	
                
                   

                  Waste
      management

                   

                

              	
                
                   

                  Leased

                   

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  6180
      Egret Court, Suite B

                  Benecia,
      CA 94510

                

              	
                
                   

                  Waste
      management

                

              	
                
                   

                  Leased

                

              
	
                
                   

                  General
      Environmental Management of Rancho Cordova, LLC

                

              	
                
                   

                  11855
      White Rock Road.

                  Rancho
      Cordova, CA  95742

                

              	
                
                   

                  Waste
      management

                

              	
                
                   

                  Owned

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  3191
      Temple Ave.

                  Suite
      250

                

                
                  Pomona,
      CA 91768

                

              	
                
                   

                  Corporate
      office

                  Computers
      and office furniture

                

              	
                
                   

                  Leased

                

              
	
                
                   

                  GEM
      Mobile Treatment Services Inc.

                

              	
                
                   

                  1196
      E. Willow st.

                  Signal
      Hill, CA

                

              	
                
                   

                  Water
      Treatment Services

                

              	
                
                   

                  Lessee

                

              
	
                
                   

                  GEM
      Mobile Treatment Services Inc.

                

              	
                
                   

                  5514
      John Martin Road, Baytown, TX

                

              	
                
                   

                  Water
      Treatment Services

                

              	
                
                   

                  Lessee

                

              

      

       

      SECTION
3.      Deposit
Accounts and Securities Accounts.  The Grantors maintain the
following Deposit Accounts:

       

                                                  See Schedule
C

       

                    
SECTION 4.      Securities and Investment
Property.  The Grantors hold the following securities (including,
without limitation, shares or equity interests in subsidiaries) and Investment
Property:

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      
        	
                Grantor

              	
                Name of
      Subsidiary

              	
                Address

              	
                No. of Shares and
      Interest

              	
                Type of
      Operation

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  General
      Environmental Management of Rancho Cordova, LLC

                

              	
                
                   

                  3191
      Temple Ave.

                  Suite
      250

                

                
                  Pomona,
      CA 91768

                

              	
                
                   

                  100%

                

              	
                
                   

                  Consolidation
      and transfer of hazardous waste

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Nevada Corporation

                

              	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  3191
      Temple Ave.

                  Suite
      250

                

                
                  Pomona,
      CA

                

              	
                
                   

                  100%

                

              	
                
                   

                  Corporate
      Holding company

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  GEM
      Mobile Treatment Services, Inc.

                

              	
                
                   

                  3191
      Temple Ave.

                  Suite
      250

                

                
                  Pomona,
      CA

                

              	
                
                   

                  100%

                

              	
                
                   

                  Water
      Treatment Services

                

              

      

      

      SECTION
5.      Patents.The Grantors
are the registered owners of the following Patents:

       

      
        	
                Grantor

              	
                Application or Patent
      No.

              	
                Country

              	
                Issue or Filing
      Date

              	
                Expiration Date

              	
                Title

              
	
                
                  GEM

                

              	
                
                  US
      6846422 B2

                

              	
                
                  US

                

              	
                
                  Jan.
      25, 2005

                

              	
                
                  2015

                

              	
                
                  Sludge
      Stripping Process System

                

              

      

      

       

      SECTION
6.      Trademarks.  The
Grantors are the registered owners of the following Trademarks:

       

      
        	
                Grantor

              	
                Description

              	
                Registration/Application
      No.

              	
                Date

              
	
                GEM

              	
                Logo in process

              	
                N/A

              	
                11/2007

              

      

       

      SECTION
7.      Copyrights.  The
Grantors are the registered owners of the following Copyrights:

       

      
        	
                Grantor

              	
                Description

              	
                Registration/Application
      No.

              	
                Date

              
	
                N/A

              	 
      	 
      	 
      

      

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      SECTION
8.      Commercial
Tort Claims.  On the date hereof, the Grantors hold the
following Commercial Tort Claims:  None

       

      SECTION
9.      Unusual
Transactions.  Other
than as set forth below, all Accounts have been originated by the Grantors and
all Inventory and Equipment have been acquired by the Grantors in the ordinary
course of business from Persons in the business of selling goods of such
kind.  None

       

      SECTION
10.    Reliance.  The
undersigned acknowledge that the Secured Party is entitled to rely and has, in
fact, relied on the information contained herein, and any successor or assign of
the Secured Party is entitled to rely on the information contained
herein.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, each Grantor has executed this Perfection Certificate as of the
date first above written.

       

      
        
          
            	 	 	 	
                    GENERAL
      ENVIRONMENTAL MANAGEMENT, INC.

                    a
      Nevada corporation

                  	 
	 	 	 	 	 
	
                     

                  	 	
                    By:  
      

                  	
                     

                  	 
	
                     

                  	 	 	
                    
                      Name:Brett
      M. Clark

                    

                  	 
	
                     

                  	 	 	
                    
                      Title:  Executive
      Vice President Finance – Chief Financial Officer

                    

                  	 

          

           

          
            
              
                
                  	
                           

                        	 	
                          By:  
      

                        	
                           

                        	 
	
                           

                        	 	 	
                          
                            Name:  Timothy
      J. Koziol

                          

                        	 
	
                           

                        	 	 	
                          
                            Title:
      Chairman of the Board and Chief Executive Officer

                          

                        	 

                

              

            

          

           

          
            
              
                
                  
                    
                      	 	 	 	
                              General
      Environmental Management, Inc.

                              a
      Delaware Corporation

                            	 
	 	 	 	 	 
	
                               

                            	 	
                              By:  
      

                            	
                               

                            	 
	
                               

                            	 	 	
                              
                                Name:
      Brett M. Clark

                              

                            	 
	
                               

                            	 	 	
                              
                                Title:  Executive
      Vice President Finance – Chief Financial Officer

                              

                            	 

                    

                  

                   

                  
                    
                      	
                               

                            	 	
                              By:  
      

                            	
                               

                            	 
	
                               

                            	 	 	
                              
                                Name:  Timothy
      J. Koziol

                              

                            	 
	
                               

                            	 	 	
                              
                                Title:
      Chairman of the Board and Chief Executive Officer

                              

                            	 

                    

                  

                

              

            

          

           

          
            
              	 	 	 	
                      General
      Environmental Management of Rancho Cordova, LLC

                    	 
	 	 	 	 	 
	
                       

                    	 	
                      By:  
      

                    	
                       

                    	 
	
                       

                    	 	 	
                      
                        Name:
      Brett M. Clark

                      

                    	 
	
                       

                    	 	 	
                      
                        Title:  Manager

                      

                    	 

            

          

           

          
            
              	
                       

                    	 	
                      By:  
      

                    	
                       

                    	 
	
                       

                    	 	 	
                      
                        Name:  Timothy
      J. Koziol

                      

                    	 
	
                       

                    	 	 	
                      
                        Title:  Executive
      Vice President Finance – Chief Financial Officer

                      

                    	 

            

          

        

         

        
          
            
              	 	 	 	
                      
                        GEM
      Mobile Treatment Services Inc.

                      

                    	 
	 	 	 	 	 
	
                       

                    	 	
                      By:  
      

                    	
                       

                    	 
	
                       

                    	 	 	
                      
                        
                          Name:
      Brett M. Clark

                        

                      

                    	 
	
                       

                    	 	 	
                      
                        
                          Title:  Executive
      Vice President Finance – Chief Financial
    Officer

                        

                      

                    	 

            

          

           

          
            
              	
                       

                    	 	
                      By:  
      

                    	
                       

                    	 
	
                       

                    	 	 	
                      
                        Name:  Timothy
      J. Koziol

                      

                    	 
	
                       

                    	 	 	
                      
                        Title:  Executive
      Vice President Finance – Chief Financial Officer

                      

                    	 

            

          

           

        

      

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      Schedule
A

       

      
        	
                
                  Borrower
      Name

                

              	
                
                  Date
      of Organization

                

              	
                
                  Jurisdiction
      of Organization

                

              	
                
                  Organizational
      Identification
      Number

                

              	
                
                  Federal
      Tax Identification Number

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Nevada Corporation

                

              	
                
                   

                  3/14/1990

                

              	
                
                   

                  Nevada

                

              	 
      	
                
                   

                  87-0485313

                

              
	
                
                   

                  General
      Environmental Management, Inc. a Delaware
Corporation

                

              	
                
                   

                  2/7/2003

                

              	
                
                   

                  Delaware

                

              	 
      	
                
                   

                  68-0541179

                

              
	
                
                   

                  General
      Environmental Management of Rancho Cordova, LLC

                

              	
                
                   

                  2/17/2000

                

              	
                
                   

                  California

                

              	 
      	
                
                   

                  42-1693717

                

              
	
                
                   

                  GEM
      Mobile Treatment Services Inc.

                

              	
                
                   

                  March
      15, 1994

                

              	
                
                   

                  California

                

              	 
      	
                
                   

                  95-4581335

                

              

      

       

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      Schedule
B

       

      Location
of Executive Offices

       

      General
Environmental Management, Inc., a Nevada corporation

      Type:  Corporation

      State
Organizational number:  C2199-1990

      State of
Incorporation:  Nevada

      Federal
Identification Number:  87-0485313

      Chief
Executive Office:

      3191
Temple Ave, Suite 250

      Pomona,
CA 91768

      

      Locations
of Collateral

       

      General
Environmental Management, Inc., a Nevada corporation

      Type:  Corporation

      State
Organizational number:  C2199-1990

      State of
Incorporation:  Nevada

      Federal
Identification Number:  87-0485313

      Chief
Executive Office:

      3191
Temple Ave, Suite 250

      Pomona,
CA 91768

      

      General
Environmental Management, Inc., a Delaware corporation

      Type:  Corporation

      State
Organizational number:  3623485

      State of
Incorporation:  Delaware

      Federal
Identification Number:  68-0541179

      Chief
Executive Office:

      3191
Temple Ave, Suite 250

      Pomona,
CA 91768

      Other
locations:

      Rancho
Cucamonga (SoCal):

      11155
Jersey Blvd. Unit G

      Rancho
Cucamonga, CA  91730

      Benicia
(NorCal) Office:

      6180
Egret Court, Suite B

      Benecia,
CA 94510

      Kent
(NorWest) Office:

      7821 S.
198TH Street

      Kent, WA
98032

      Santee
(San Diego):

      10020
Prospect Ave.

      Suite
A-1

      Santee,
CA 92072

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      General
Environmental Management of Rancho Cordova LLC, a California limited liability
company

      Type:  Limited
Liability Company

      State
Organizational number:  200004810063

      State of
Incorporation:  California

      Federal
Identification Number:  42-1693717

      Chief
Executive Office:

      3191
Temple Ave, Suite 250

      Pomona,
CA 91768

      Other
locations:

      GEM
Rancho Cordova LLC:

      11855
White Rock Road.

      Rancho
Cordova, CA  95742

       

      GEM
Mobile Treatment Services, Inc., a California corporation

      Type:  Corporation

      State
Organizational number:  C1871081

      State of
Incorporation:  California

      Federal
Identification Number:  95-4581335

      Chief
Executive Office:

      3191
Temple Ave, Suite 250

      Pomona,
CA 91768

      Other
locations:

      Long
Beach (SoCal) Facility:

      1196 East
Willow

      Signal
Hill, CA 90755

      Texas
(Central) Facility :

      5428 John
Martin Road

      Baytown,
TX 77521

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      Schedule
C

      (Bank
Accounts, Lockboxes and P.O. Boxes)

       

      
        	
                Borrower

              	 	
                Name, Address, Phone and Fax
      No. of Bank and Bank
      Contact

              	 	
                Type of
      Account

              
	
                 

                General
      Environmental Management, Inc. (DE)

              	 	
                 

                Wells
      Fargo – Yen Yi

                433
      N. Camden Drive Suite 505

                Beverly
      Hills, CA 90210

                310-285-5889
      p         310-278-6344
      f

              	 	
                 

                General
      Operating Account

                Payroll
      Account

                Restricted
      Deposit Account

                Medical
      Ins. Operating Act.

                Investment
      Operating Act.

                Lockbox

              
	
                 

                General
      Environmental Management of Rancho Cordova LLC

              	 	
                 

                Same

              	 	
                 

                General
      Operating Account

                Payroll
      Account

              
	
                 

                General
      Environmental Management  - GEM

              	 	
                 

                Same

              	 	
                 

                General
      Operating Account

                Payroll
      Account

                Lockbox

              

      

       

       

       

      36

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"}]]