AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT

AGREEMENT (this “ Agreement ”) is made and entered into as of the 4th day of September, 2009, by and between CVC CALIFORNIA, LLC , a Delaware limited liability company (the “ Lender ”), and GENERAL ENVIRONMENTAL MANAGEMENT, INC. , a Nevada corporation (the “ Borrower ”);

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

WHEREAS , the Lender and Borrower are parties to a Revolving Credit and Term Loan Agreement dated as of August 31, 2008 (the “ Original Agreement ”), pursuant to which the Lender has made available to the Borrower a revolving credit facility and a term loan; and

WHEREAS , in order to assist the Borrower to better manage its anticipated cash flow needs and conform its credit facilities with the needs of the Business Operations after giving effect to the sale by the Borrower of its Wholly-Owned Subsidiary, GEM Mobile Treatment Services, Inc., consummated on August 17, 2009, the Borrower has requested the Lender to restructure the credit facilities under the Original Agreement on the terms and conditions of this Agreement; and

WHEREAS , the Lender is willing and able to effect such restructuring on the terms and conditions of this Agreement;

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

I.              DEFINITIONS

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

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

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

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

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

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

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

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

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

“ Assignee Lender ” has the meaning set forth in Section 8.02 below.

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

“ Board Observer Agreement ” shall mean the letter agreement dated January 8, 2009 by and between the Borrower and the Lender, pursuant to which the Borrower has granted to the Lender certain observer rights with respect to the Board of Directors of the Borrower.

“ Borrowing Base ” shall mean an amount, determined in accordance with the most recent borrowing base report provided to the Lender under Section 5.04(d) below, equal to (a) 85% of Eligible Accounts, plus (b) 75% of the value of unbilled goods and/or services theretofore provided by the Borrower or any Domestic Subsidiary (such value to be calculated, except to the extent otherwise provided in the applicable Contract with the customer, on an arithmetic basis based on the portion of the subject project for which goods and/or services have actually been rendered but not yet billed) and which, if billed at such time, would constitute an Eligible Account, minus (c) such reserves as the Lender may establish from time to time in its Permitted Discretion (including, without limitation, to account for dilution and other contingencies and risks of collection).  In the event that the Borrower has not timely delivered a current Borrowing Base report in accordance with Section 5.04(d) below, then the applicable Borrowing Base shall be such amount as is established by the Lender in its Permitted Discretion, until such time as the Borrower has delivered a current Borrowing Base report.

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

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

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

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

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

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

“ Closing Date ” shall mean the date on which the conditions precedent set forth in part A of Article IV below are satisfied or have been waived by the Lender in its sole discretion.

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

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

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

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

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

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

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

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

“ Convertible Term Loan ” shall mean the convertible term loan in the face amount of $6,314,699.59   described in Section 2.02(a)(ii) below.

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

“ Deed of Trust ” shall mean the outstanding deed of trust pursuant to which the Lender has received a first priority Lien on the Owned Real Property as Collateral for the Obligations.

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

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

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

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

“ EBITDA ” shall mean, for the subject period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) Net Income, plus (b) Interest Expense deducted in the calculation of such Net Income, plus (c) all income taxes deducted in the calculation of such Net Income, plus (d) depreciation and amortization expense deducted in the calculation of such Net Income, plus (e) other non-cash charges and expenses deducted in the calculation of such Net Income, excluding accruals for operating expenses made in the ordinary course of business.

“ Eligible Account ” shall mean the face amount of each trade Account of the Borrower or a Domestic Subsidiary (if same has executed a Guaranty Agreement and become a party to the Collateral Agreement) for services rendered or goods and products sold in the ordinary course of the Business Operations which the Lender, in its Permitted Discretion, deems to be an Eligible Account; provided , however , that an Account shall not be deemed an Eligible Account unless it meets all of the following conditions:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Excess Cash Proceeds ” has the meaning set forth in Section 6.18 below.

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

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

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

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

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

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

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

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

“ GPP ” shall mean General Pacific Partners LLC, a California limited liability company.

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

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

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

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

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

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

“ Island ” shall mean Island Environmental Services, Inc., a California corporation, which is a Wholly-Owned Subsidiary.

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

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

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

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

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

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

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

“ Maximum Revolver Amount ” shall mean $1,700,000.

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

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

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

“ Obligations ” shall mean the collective reference to all Indebtedness and other liabilities and obligations of every kind and description owed by the Borrower to the Lender from time to time under or pursuant to this Agreement, the Notes, the Security Documents and the other Loan Documents (excluding the Warrant and Registration Rights Agreement, other than amounts payable (a) under Section 1.4 of the Warrant based upon exercise of the Put Option thereunder prior to or at the time of the repayment in full of all other Obligations, and (b) from time to time pursuant to Section 2(c) of the Registration Rights Agreement), and/or otherwise in respect of the Loans, however evidenced, created or incurred, fixed or contingent, now or hereafter existing, due or to become due.

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

“ Original Agreement ” shall have the meaning ascribed thereto in the second “WHEREAS” paragraph above.

“ Original Closing Date ” shall mean August 31, 2008, which was the “Closing Date” under, as defined in and for purposes of the Original Agreement.

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

“ Participant ” has the meaning set forth in Section 8.01 below.

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

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

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

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

“ Purchase Money Note ” shall mean the Purchase Money Note dated August 17, 2009 in the principal amount of $5,600,000 issued by MTS Acquisition Company, Inc. to GEM-DE, as same may be amended, modified, supplemented and/or restated from time to time (subject to any required consent under this Agreement).

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

“ Register ” has the meaning set forth in Section 8.03(a) below.

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

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

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

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

“ Royalty Provisions ” shall mean Section 2.2 of the Stock Purchase Agreement, as same may be amended, modified, supplemented and/or restated from time to time (subject to any required consent under this Agreement).

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

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

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

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

“ Seller ” shall mean Randy Costales and Gloria Costales.

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

“ Stock Purchase Agreement ” shall mean the Stock Purchase Agreement dated as of August 17, 2009 by and among the Borrower, GEM-DE, GEM Mobile Treatment Services, Inc., and MTS Acquisition Company, Inc., as same may be amended, modified, supplemented and/or restated from time to time (subject to any required consent under this Agreement).

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

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

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

“ Term Loan ” shall mean the term loan in the face amount of $5,600,000 described in Section 2.02(a)(i) below.

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

“ Third Party Payment ” shall have the meaning ascribed thereto in Section 2.08(a) below.

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

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

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

“ Warrant ” shall mean the amended and restated warrant to purchase an aggregate of 2,700,000 shares of Common Stock (subject to adjustment), such warrant to be issued by the Borrower to the Lender on the Closing Date.

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

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

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

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

II.             GENERAL TERMS

Section 2.01. Revolving Credit Loans .

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

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

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

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

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

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

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

(h)           The Lender and the Borrower hereby agree that, after giving effect to the restructuring of the credit facilities pursuant to this Agreement, the outstanding principal amount of Advances on September 4, 2009 is $1,700,000.

Section 2.02.  Term Loans .

(a)           Subject at all times to all of the terms and conditions of this Agreement, the Lender hereby agrees (i) to convert a portion of the outstanding Advances and a portion of the outstanding term loan under the Original Agreement into a Term Loan in the principal amount of $5,600,000, and (ii) to convert a portion of the outstanding Advances and outstanding term loan under the Original Agreement into a convertible term loan in the principal amount of $6,314,699.59.  Such conversion shall become effective on the Closing Date, and any amounts repaid in respect of the Term Loan and the Convertible Term Loan may not be reborrowed.

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

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

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

(e)           In the event and to the extent that, at any time and from time to time, (i) the Borrower, GEM-DE and/or any other Person (including, without limitation, the Lender as collateral assignee) shall receive any prepayment under or in respect of the Purchase Money Note, an equal prepayment shall immediately be made under and pursuant to the Term Note, (ii) any payment is received by the Borrower, GEM-DE and/or any other Person (including, without limitation, the Lender as collateral assignee) under the Royalty Provisions, then an equal prepayment shall immediately be made under and pursuant to the Convertible Term Note, and (iii) the Borrower shall receive payment (other than by offset) in respect of any indemnification claim under the Acquisition Agreement, (A) the Borrower shall immediately give written notice to the Lender upon receipt of such indemnification payment, stating the date and amount of such payment, and (B) the Borrower shall, upon demand by the Lender, make a prepayment on the Convertible Term Note in an amount equal to the net after-tax amount of the indemnification payment received by the Borrower.  Any prepayment under this Section 2.02(e) shall not require payment of any prepayment premium.  In the event and to the extent that, at any time and from time to time, the Lender (as collateral assignee) shall receive (A) any scheduled payment under or in respect of the Purchase Money Note, the Lender shall apply same to the corresponding payment under the Term Note, (B) any prepayment under or in respect of the Purchase Money Note, the Lender shall apply same as a prepayment under the Term Note, and (C) any payment under the Royalty Provisions, the Lender shall apply same as a prepayment under the Convertible Term Note; and any such application of payments by the Lender shall be deemed to constitute a payment by the Borrower of the corresponding obligations under the subject Note.

Section 2.03.  Fees and Premiums .

(a)            [Reserved] .

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

(c)           In the event of any prepayment of all or any portion of the Term Loan or the Convertible Term Loan (other than a prepayment (i) pursuant to Section 2.02(e) above, or (ii) made with the proceeds received from the sale of any business unit or units, promptly upon receipt of such proceeds), in addition to the payment of the subject principal amount and all unpaid accrued interest thereon, the Borrower shall be required to pay to the Lender a prepayment premium in an amount equal to (A) two (2%) percent of the principal amount being prepaid if the prepayment is made on or prior to February 28, 2010, and (B) one (1%) percent of the principal amount being prepaid if such prepayment is made subsequent to February 28, 2010 and prior to August 1, 2011.

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

Section 2.04.  Use of Proceeds .  The Borrower shall utilize the proceeds of the Loans solely for working capital and other general corporate purposes of the Borrower, and for the payment of fees and expenses associated with the consummation of the transactions contemplated by this Agreement.

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

Section 2.06.  Application of Payments .  All amounts paid to or received by the Lender in respect of the Loans from whatever source (whether from the Borrower, any Subsidiary pursuant to a Guaranty Agreement, any realization upon any Collateral, or otherwise) shall, except as otherwise provided in Section 2.02(e) above, unless otherwise directed by the Borrower with respect to any particular payment (unless an Event of Default shall then be continuing, in which event the Lender may disregard Section 2.02(e) and/or disregard the Borrower’s direction), be applied (a) first, to reimburse the Lender for all out-of-pocket costs and expenses incurred by the Lender which are reimbursable to the Lender in accordance with this Agreement, the Notes and/or any of the other Loan Documents, (e) next, to any accrued but unpaid fees or prepayment premiums, and amounts payable under Section 2(c) of the Registration Rights Agreement, (c) next, to unpaid accrued interest on the Convertible Term Loan, (d) next, to unpaid accrued interest on the Term Loan, (e) next, to unpaid accrued interest on the Advances, (f) next, to the outstanding principal of the Convertible Term Loan, to the extent then due and payable, (g) next, to the outstanding principal of the Advances, (h) next, to the payment of any unpaid Option Purchase Price under the Warrant, (i) next, to the outstanding principal of the Term Loan, to the extent then due and payable, and (j) finally, to the payment of any other outstanding Obligations; and after payment in full of the Obligations, any further amounts paid to or received by the Lender in respect of the Loans shall be paid over to the Borrower or such other Person(s) as may be legally entitled thereto.

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

Section 2.08.  Obligations Unconditional .

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

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

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

III.            REPRESENTATIONS AND WARRANTIES

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

Section 3.01.  Financial Matters .

(a)           The Borrower has heretofore furnished to the Lender (i) the audited consolidated financial statements (including balance sheets, statements of income, statements of cash flows and statements of stockholders’ equity) of the Borrower and its Subsidiaries as at December 31, 2006, 2007 and 2008, and for the Fiscal Years then ended, and (ii) the unaudited consolidated financial statements of the Borrower and its Subsidiaries as of June 30, 2009 and for the six (6) months then ended (collectively, the “ Financial Statements ”).

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

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

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

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

(ii)           there have been (A) no material write-downs in the val