SUBORDINATED COLLATERAL AGREEMENT

SUBORDINATED COLLATERAL AGREEMENT, dated as of August 17, 2009, by and among GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation (“ GEM-NV ”), GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation (“ GEM-DE ”), GENERAL ENVIRONMENTAL MANAGEMENT OF RANCHO CORDOVA LLC, a California limited liability company (“ GEMRC ”), GEM 6 ACQUISITIONS CORPORATION, a Delaware corporation (“ GEM 6 ”), ISLAND ENVIRONMENTAL SERVICES, INC., a California corporation (“ Island ”) and any and all Additional Grantors who may become a party to this Agreement from time to time (the Borrower, GEM-DE, GEMRC, GEM 6, Island and such Additional Grantors are each hereinafter referred to as a “ Grantor ” and collectively as the “ Grantors ”), and MTS ACQUISITION COMPANY, INC., a California corporation (the “ Secured Party ”).

On the date hereof, GEM-NV, GEM-DE and the Secured Party are consummating the transactions contemplated by the Purchase Agreement, and pursuant to the terms of the Purchase Agreement, GEM-NV and GEM-DE may hereafter become obligated to make indemnification payments to the Secured Party in accordance with Section 7 of the Purchase Agreement (the “ Obligations ”).

It is a condition precedent to the obligation of the Secured Party to consummate the transactions under the Purchase 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, each Grantor hereby agrees with the Secured Party, as follows:

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 ”.

(b)           Terms defined in the UCC and not otherwise defined herein 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.

“ 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).

“ Applicable Law ” means all applicable provisions of all (a) constitutions, statutes, ordinances, rules, regulations and orders of all governmental and/or quasi-governmental bodies, (b) authorizations, consents, non-actions, approvals, licenses or exemptions of, registration or filing with, or report to, any governmental or quasi-governmental department, agency, body or other unit, and (c) orders, judgments and decrees of all courts and arbitrators.

“ 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 .

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

“ 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.

“ 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.

“ 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.

“ Event of Default ” shall mean the failure of GEM-NV or GEM-DE to pay or cause to be paid any amount due and payable for indemnification under Section 7 of the Purchase Agreement as and when such obligation shall be determined pursuant to a written agreement of GEM-NV or GEM-DE or any judgment or arbitrator’s award.

“ Government Approval ” means any of the items described in clause (b) of the definition of “Applicable Law” above.

“ 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.

“ 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).

“ Liens ” has the meaning ascribed to such term in the Loan Agreement.

“ Loan Agreement ” means the Revolving Credit and Term Loan Agreement dated as of August 31, 2008 by and between CVC California, LLC and GEM-NV, as same may be amended, modified, supplemented and/or restated from time to time.

“ Material Adverse Effect ” means 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 GEM-NV and its Subsidiaries, taken as a whole, or (b) the validity or enforceability of, or the Secured Party’s rights and remedies under, this Agreement.

Obligations ” has the meaning ascribed to such term in the first recital paragraph above.

“ 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.

“ 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.

“ Permitted Liens ” has the meaning ascribed to such term in the Loan Agreement.

“ 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 Agreement ” means the Stock Purchase Agreement of even date herewith by and among GEM-NV, GEM-DE, GEM Mobile Treatment Services, Inc., and the Secured Party, as same may be amended, modified, supplemented and/or restated from time to time.

“ 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 .

“ Senior Liens ” shall mean the liens and security interests securing the Senior Obligations from time to time.

“ Senior Obligations ” means the “Obligations” under and as defined in the Loan Agreement.

“ Subsidiary ” shall mean any corporation, limited liability company or other entity of which 50% or more of the outstanding shares of capital 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 GEM-NV, directly or indirectly through one or more Subsidiaries of GEM-NV.

“ 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.

“ 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 California, 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 .  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.

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;

(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.

To induce the Secured Party to consummate the transactions under the Purchase Agreement, 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 (i) that the Senior Liens shall have absolute priority over the Security Interests, and (ii) 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 after the repayment in full of the Senior Obligations and termination of all lending commitments under the Loan Agreement, 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.

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 the Senior Liens and 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 the Senior Liens and 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 holder of the Senior Liens is entitled to possession of all possessory Collateral until the payment in full of the Senior Obligations and termination of all lending commitments under the Loan Agreement, (b) the Secured Party or its designee may have possession or Control of Collateral as contemplated hereby, (c) 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 holder of the Senior Liens or the Secured Party (as applicable), and (d) 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.

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 holder of the Senior Liens (while any Senior Obligations are outstanding or any lending commitment under the Loan Agreement remains in effect) or 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.

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, except for promissory notes issued by the Secured Party to GEM-DE, no Grantor holds any Instruments and is not named a payee of any promissory note or other evidence of indebtedness.

Until any outstanding Obligations shall have been indefeasibly paid in full and the earliest indemnification claims period under the Purchase Agreement has expired and all claims made within such claims period have been resolved, unless express written consent has been obtained from the Secured Party, 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.

(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 holder of the Senior Liens or 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, the Senior Liens 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.

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 made to the holder of the Senior Liens or waived in writing by the Secured Party.

Section 4.6.        Control Covenants .

(a)           Promptly following the payment in full of the Senior Obligations and termination of all lending commitments under the Loan Agreement, 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 ag