Document:

exv10w1

 

Exhibit 10.1

INCREASE NOTICE, CONSENT AND

SECOND AMENDMENT TO CREDIT AGREEMENT

          This Increase Notice, Consent and Second Amendment to Credit Agreement (this
“Amendment”) is entered into as of May ___, 2007, among Madison Capital Funding LLC, as
Agent for the Lenders, the undersigned Lenders, and Compass Group Diversified Holdings LLC, a
Delaware limited liability company (“Borrower”).

WITNESSETH

          WHEREAS, Borrower, Agent and Lenders are parties to that certain Credit Agreement dated as of
November 21, 2006 (as amended to date, the “Credit Agreement”; capitalized terms used
herein and not otherwise defined herein shall have the respective meanings given to them in the
Credit Agreement);

          WHEREAS, Borrower has requested that Agent and Lenders agree to an increase in the Revolving
Loan Commitment in the amount of $45,000,000 (the “Revolver Increase”) pursuant to Section
2.1.2 of the Credit Agreement and, further, that Lenders waive their right to participate, to the
extent of their respective Pro Rata Shares, in such Revolver Increase except to the extent of the
participations in the Revolver Increase that are detailed herein;

          WHEREAS, Borrower has requested that Agent and Lenders consent to CBS purchasing from the
chief executive officer of CBS 50,000 shares of CBS’ stock for a total price of $875,500 (the
“Redemption”), notwithstanding that such stock redemption would otherwise be prohibited
under Section 7.4(b) of the Credit Agreement;

          WHEREAS, Borrower has requested that Agent and Lenders agree to amend the definition of
“Permitted Eligible Acquisitions” under the Credit Agreement to revise the terms under which a
Portfolio Company may make certain Permitted Eligible Acquisitions that are add-on acquisitions;
and

          WHEREAS, Borrower, Agent and Lenders have further agreed to amend the Credit Agreement in
certain other respects, subject to the terms and conditions contained herein.

          NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, the parties hereto agree as follows:

          1. Revolver Increase. Pursuant to Section 2.1.2 of the Credit Agreement, Agent and
Lenders hereby consent to the Revolver Increase and Lenders hereby waive their right to
participate, to the extent of their respective Pro Rata Shares, in such Revolver Increase except to
the extent of the participations in the Revolver Increase that are detailed herein. Borrower,
Agent and Lenders hereby agree the Revolver Increase shall be effective immediately upon the
effectiveness of this amendment pursuant to the provisions of Section 7 hereof (the “Effective
Date”). After giving effect to the Revolver Increase on the Effective Date, the aggregate
amount of the Revolving Loan Commitments is $300,000,000 and all

 

 

references in the Credit Agreement and the other Loan Documents to the Revolving Loan
Commitment shall be considered a reference to the Revolving Loan Commitment as increased hereby.
Borrower acknowledges and agrees that such Revolver Increase shall become part of the Revolving
Loan Commitments for all purposes under the Credit Agreement and under the Collateral Documents and
shall be secured by the Collateral in all respects.

          2. Additional Lenders; Allocation of Revolver Increase. In reliance on the
representations and warranties of Additional Lenders (as defined below) set forth in Section 6
below, Borrower, Agent, and Lenders hereby acknowledge and agree that by executing this Amendment
each of First Horizon Bank, a Division of First Tennessee Bank National Association (“First
Horizon”), Allied Irish Banks, p.l.c. (“AIB”) and NewStar Arcturus CLO I Ltd.
(“Arcturus”); together with First Horizon and AIB, each an “Additional Lender” and
collectively the “Additional Lenders”) hereby become “Lenders” under the Credit Agreement
and assume all the rights and obligations of a Lender under the Credit Agreement and the other Loan
Documents as of the Effective Date. Such Additional Lenders share of the Revolving Loan
Commitments and their Pro Rata Share shall be the applicable amount specified opposite such
Lender’s name on Annex I hereto. In addition, the parties hereto hereby agree that the
share of the Revolving Loan Commitment of US Bank National Association shall be increased by
$7,000,000, and that its new share of the Revolver Commitment and Pro Rata Share are set forth
opposite its name on Annex I hereto. Annex I sets forth the aggregate Revolver
Commitment and Pro Rata Share for each Lender after giving effect to the Revolver Increase.

          3. Consent to Redemption. In reliance upon the representations and warranties of
Borrower set forth in Section 5 below and subject to the satisfaction of the conditions set forth
in Section 7 below, Agent and the Lenders party hereto hereby consent to the consummation of the
Redemption by CBS. This consent is a limited consent and shall not be deemed to constitute a
consent with respect to any other current or future departure from the requirements of any
provision of the Credit Agreement or any other Loan Documents.

          4. Amendments to Credit Agreement. In reliance upon the representations and warranties
of Borrower set forth in Section 5 below and subject to the satisfaction of the conditions set
forth in Section 7 below, the parties hereto hereby agree to amend the Credit Agreement as follows:

          (a) The definition of “Permitted Eligible Acquisition” contained in Section 1.1 to the Credit
Agreement is hereby amended and restated in its entirety as follows:

     “Permitted Eligible Acquisition means any Acquisition by (i) an
Acquisition Subsidiary of Borrower of all or substantially all of the assets of a
Person as a New Portfolio Company of Borrower, or of all or substantially all of any
business or division of a Person as a New Portfolio Company of Borrower, (ii)
Borrower of no less than a voting majority of the capital stock, partnership
interests, membership interests or equity of any Person as a New

 

 

Portfolio Company of Borrower, (iii) a Portfolio Company (or an Acquisition
Subsidiary of such Portfolio Company) of all or substantially all of the assets of a
Person as an add-on acquisition for such Portfolio Company, or of all or
substantially all of any business or division of a Person as an add-on acquisition
for such Portfolio Company or (iv) a Portfolio Company of no less than 100% of the
capital stock, partnership interests, membership interests or equity of any Person
as an add-on acquisition for such Portfolio Company, in each case to the extent that
each of the conditions precedent set forth in Annex III shall have been satisfied;
provided, however, that if such Acquisition is otherwise a Permitted
Eligible Acquisition under clauses (iii) or (iv) hereof and the aggregate
consideration to be paid in such Acquisition is $5,000,000 or less, then the
conditions set forth in clauses (1), (4), (8) and (10) of Annex III shall not be
required to be satisfied and the condition set forth in clause (12) of Annex III
shall not be required to be satisfied until thirty (30) days after giving effect to
such Acquisition; and provided, further, that in the case of any
such Acquisition, (x) the Target shall be assigned the same multiple for purposes of
Availability as the Portfolio Company consummating such Acquisition and (y) there
shall be no Pro Forma EBITDA of the Target included in the Existing Portfolio
Company EBITDA (or New Portfolio Company EBITDA, as applicable) of the Portfolio
Company consummating such Acquisition, with Existing Portfolio Company EBITDA (or
New Portfolio Company EBITDA, as applicable) for the Target being acquired to be
limited to periods after the consummation of such Acquisition. It is agreed and
understood that the SES Add-On Acquisition shall be a Permitted Eligible Acquisition
within the foregoing clause (iii) so long as (x) the SES Add-On Acquisition is
consummated on or within 10 Business Days of the Closing Date and (y) no Event of
Default exists either before or after giving effect to the SES Add-On Acquisition.”

          (b) Section 6.1.2 of the Credit Agreement is hereby amended by deleting the first clause and
replacing it with the following:

          “Promptly when available and in any event within 45 days after the end of each
month (including months that correspond to the end of a Fiscal Quarter),”

          (c) Section 6.1.6 of the Credit Agreement is hereby amended by replacing the phrase “dated as
of the end of the most recently ended month” with the phrase “dated as of the end of the most
recently ended month covered by such interim report”.

          (d) Annex I to the Credit Agreement is deleted in its entirety and replaced with Annex
I attached hereto.

          (e) Annex II to the Credit Agreement is hereby amended by adding the notice and payment
addresses listed on Annex II attached hereto to the end thereof.

 

 

          (f) Annex III to the Credit Agreement is hereby amended by replacing the phrase “recomputed
for the most recently ended month of Borrower” in clause (5) thereof with the phrase “recomputed
for the most recent Computation Period of Borrower”.

          5. Representations and Warranties of Borrower. Borrower hereby represents and
warrants to Agent and Lenders that, both before and after giving effect to this Amendment:

          (a) The execution, delivery and performance of this Amendment has been duly authorized by all
requisite corporate action on the part of Borrower;

          (b) No Default or Event of Default has occurred and is continuing; and

          (c) The representations and warranties of Borrower set forth in the Credit Agreement, as
amended hereby, and in the other Loan Documents, as amended hereby, are true and correct in all
material respects as of the date hereof, with the same effect as though made on the date hereof
(except to the extent such representations and warranties expressly refer to an earlier date, in
which case they are true and correct in all material respects as of such earlier date).

          6. Representations and Warranties of Additional Lenders. Each Additional Lender
hereby represents and warrants to Agent and Lenders that, both before and after giving effect to
this Amendment, that such Additional Lender:

          (a) is legally authorized to enter into this Amendment;

          (b) has received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant thereto and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into this Amendment;

          (c) agrees that it will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Credit Agreement;

          (d) appoints and authorizes Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to Agent by the terms thereof, together
with such powers as are reasonably incidental thereto;

          (e) agrees that it will perform in accordance with their terms all obligations which by the
terms of the Credit Agreement are required to be performed by it as a Lender;

          (f) represents that on the date of this Amendment it is not presently aware of any facts that
would cause it to make a claim under the Credit Agreement; and

 

 

          (g) if organized under the laws of a jurisdiction outside the United States, has delivered to
Agent the forms prescribed by the Internal Revenue Service of the United States, which have been
duly executed, certifying as to such Additional Lender’s exemption from United States withholding
taxes with respect to all payments to be made to such Additional Lender under the Credit Agreement
or such other documents as are necessary to indicate that all such payments are subject to such tax
at a rate reduced by an applicable tax treaty.

          7. Conditions Precedent to Effectiveness. The effectiveness of this Amendment is
subject to the prior or concurrent consummation of each of the following conditions:

          (a) Agent shall have received a fully executed copy of this Amendment, together with such
other documents, agreements and instruments as Agent may reasonably require or request, including
any documents, agreements or instruments that may be required to be delivered by either Additional
Lender to Agent;

          (b) all proceedings taken in connection with the transactions contemplated by this Amendment
and all documents, instruments and other legal matters incident thereto shall be reasonably
satisfactory to Agent and its legal counsel; and

          (c) no Default or Event of Default shall have occurred and be continuing or shall be caused by
the transactions contemplated by this Amendment.

          8. Miscellaneous.

          (a) Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS.

          (b) Counterparts. This Amendment may be executed in any number of counterparts, and
by the parties hereto on the same or separate counterparts, and each such counterpart, when
executed and delivered, shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Amendment.

          (c) Reference to Credit Agreement. Each reference in the Credit Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each reference in the
Credit Agreement or in any other Loan Document, or other agreements, documents or other instruments
executed and delivered pursuant to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended by this Amendment.

          (d) Costs and Expenses. Borrower acknowledges that Section 10.4 of the Credit
Agreement applies to this Amendment and the transactions, agreements and documents contemplated
hereunder.exv10w13

 

SEPARATION AGREEMENT AND

GENERAL MUTUAL RELEASE OF CLAIMS

     This Separation Agreement and General Mutual Release of Claims dated as of November 9, 2006
(this “Agreement”) is made between Save the World Air, Inc. (the “Company”) and Eugene E. Eichler,
an individual (“Eichler”). The Company and Eichler are sometimes referred to collectively herein as
the “Parties”.

     WHEREAS, Eichler wishes to resign as an officer of the Company, including without limitation,
as its Chief Executive Officer and Chief Financial Officer, as the sole result of a medical
disability; and

     WHEREAS, the Company wishes to accept the resignation of Eichler as on officer of the Company,
including without limitation, as its Chief Executive Officer and Chief Financial Officers, as the
sole result of a medical disability; and

     WHEREAS, the Parties wish to provide for clarity, finality and certainty as to the basis for
Eichler’s resignation, and the terms of cash and non-cash compensation to which Eichler is entitled
following such resignation; and

     WHEREAS, Eichler wants to release any and all claims that he may have or which exist, or may
exist, by him against the Company, known and unknown, including, but not necessarily limited to,
all known and unknown claims arising out of Eichler’s service to the Company as an officer or
employee of the Company or any subsidiary thereof; and

     WHEREAS, the Company wants to release any and all claims that it may have or which exist, or
may exist, by him against Eichler, known and unknown, including, but not necessarily limited to,
all known and unknown claims arising out of Eichler’s service to the Company as an officer or
employee of the Company or any subsidiary thereof;

     THEREFORE, in consideration of the promises in this Agreement, the adequacy of which is
acknowledged, the Parties agree as follows:

     1. Resignation

     1.1 Basis for Resignation. Eichler has represented to the Company that he
suffers from a medical disability (a “Disability”) rendering him unable to continue to
discharge his day-to-day responsibilities as an officer of the Company and its subsidiary,
STWA Asia Pte. Limited (“Subsidiary”). The Company accepts such representation and
acknowledges and agrees that Eichler has a Disability and such Disability is a
“Disability” as defined in that certain Amended and Restated Employment Agreement
dated as of October 5, 2005 between the Parties (the “Employment Agreement”), a copy
of which is attached hereto as Exhibit A, without any further requirement of medical
proof thereof.

     1.2 Resignation as Officer. As the sole result of his Disability, Eichler hereby
tenders his resignation pursuant to Section 6 of the Employment Agreement, as Chief
Executive Officer, Chief Financial Officer and any and all other offices he holds with the

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Company or its subsidiary. Eichler’s resignation as Chief Executive Officer is effective on
November 20, 2006. Eichler’s resignation as Chief Financial Officer is effective upon the
appointment by the Board of Directors of the Company (the “Board”) of his successor, but in no
event later than January 31, 2007. Eichler’s resignation from any and all other offices held holds
with the Company or the Subsidiary is effectives on November 20, 2006. Notwithstanding anything
contained herein to the contrary, the Company does not regard the deferred resignation of Eichler
as Chief Financial Officer, as provided in the foregoing sentence, as inconsistent with Eichler’s
Disability and waives any right to claim that Eichler’s separation as provided in this Agreement is
for any reason other than Disability. During the period that Eichler continues to serve as Chief
Financial Officer, (i) he shall do so primarily from his home and shall not be  required to be
present at the Company’s principal offices and (ii) his duties and responsibilities shall be no
greater than necessary for him to discharge the obligations described herein.

     1.3 Resignation as Director. Eichler hereby tenders his resignation as a
director of Subsidiary effective November 20, 2006. Eichler is not tendering his resignation as a
director of the Company and shall continue to serve as a director of the Company with all the
rights, privileges, prerogatives and responsibilities attendant thereto, including without
limitation, compensation therefore, until he has resigned, been removed by the stockholders or not
been re-elected to the Board.

     2. Termination Benefits

     2.1 Cash Compensation. Notwithstanding anything provided in the
Employment Agreement to the contrary, the Parties agree that Eichler shall be paid cash
compensation at the rate of Three Hundred Thousand Dollars ($300,000) per annum, for
the period commencing November 20, 2006 and continuing thereafter to and including
December 31, 2007 (the “Remaining Term”), which period constitutes the remaining
term of the Employment Agreement, all such amounts to be paid in accordance with the
Company’s normal pay policies applicable to senior officers of the Company; provided,
however, that the Company may not declare a moratorium on any payment hereunder to
Eichler as part of cash management by the Company, or any other reason, without
Eichler’s prior written consent. All such sums paid hereunder shall be subject to
appropriate withholding as required by applicable laws and regulations.

     2.2 Non-Cash Compensation Previously Granted. Notwithstanding anything
provided in the Employment Agreement to the contrary, the Parties further agree that the
vesting of all stock options or warrants heretofore granted to Eichler for services rendered
(“Options”), shall be accelerated and shall become fully vested on November 20, 2006.
Moreover, such Options may be exercised by Eichler at any time and from time to time,
until November 20, 2007, after which time any Options that remain unexercised shall be
cancelled and rendered null and void, other than in the event of Eichler’s prior death, in
which case such Options shall be exercisable in accordance with the agreements entered
into in connection with each such Option.

     2.3 Additional Non-Cash Compensation. Notwithstanding anything provided
in the Employment Agreement to the contrary, the Parties further agree that Eichler shall
be granted for 2007, at the time that grants are made to officers and employees of the
Company, the lesser of (i) the aggregate number of stock options Eichler was granted in
2006 or (ii) the highest number of the aggregate of incentive stock options and non-

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qualified stock options granted to any of the then Chief Executive Officer, President or Chief
Financial Officer of the Company on an annualized basis, on terms no less favorable to Eichler as
granted to such other person; provided, however, that such options granted to Eichler shall be
fully vested upon grant and shall be exercisable for one year from the date of grant.

     2.4 Other Compensation. Eichler shall be entitled to any additional amounts,
in the form of cash or non-cash compensation, as the Compensation Committee of the
Board, or the Board, may determine, in their sole and absolute discretion, or nothing as
the Compensation Committee of the Board or the Board may determine. Eichler shall not
be entitled to receive any compensation granted generally to directors, during his
remaining term(s) on the Board.

     2.5 Other Benefits. Eichler shall be entitled to all other benefits not expressly
provided for herein, pursuant to Section 6 of the Employment Agreement for the
Remaining Term.

     3. Claims

     3.1 Waiver of Claims. Eichler acknowledges that the consideration provided
for pursuant to Section 2 of this Agreement is provided to him in full and complete
satisfaction and discharge of any and all claims that he may have against the Company,
its parents, subsidiaries, directors, officers and agents, whether asserted or unasserted,
known or unknown, occurring up to and including the date of execution of this
Agreement. The Company acknowledges that Eichler’s agreements and releases set forth
in this Agreement are provided to the Company in full and complete satisfaction and
discharge of any and all claims that the Company, its parents, subsidiaries, directors,
officers and agents may have against Eichler, whether asserted or unasserted, known or
unknown, occurring up to and including the date of execution of this Agreement.

     3.2 Section 1542. With respect to the waivers set forth in Section 3.1 above,
the Parties and each of them acknowledges and expressly waives any and all rights he or
it may have under California Civil Code Section 1542 which provides as follows:

A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known to him must have materially
affected his settlement with the debtor.

     3.3 No Other Relief. Each of the Parties understands and agrees that all other
entities released herein shall neither make nor cause to be made any additional relief to
the other Party, except as specifically referenced herein. Should any third party,
including any state or federal agency, bring any action or claim against the Company on
Eichler’s behalf, either collectively or individually, Eichler acknowledges and agrees that
this Agreement provides him with full relief and that he will not request any other relief.
Should any third party, including any state or federal agency, bring any action or claim
against Eichler on the Company’s behalf, either collectively or individually, the
Company acknowledges and agrees that this Agreement provides it with full relief and
that it will not request any other relief.

3

 

     3.4 Indemnification by the Company. The Company agrees to indemnify and
hold Eichler harmless from any “Damages” (as defined in Section 3.7 below) which
Eichler suffers as a result of the agreements made in the Employment Agreement, this
Agreement or anything else arising from, or in connection with, Eichler’s service as an
employee of the Company.

     3.5 Indemnification by Eichler. Eichler agrees to indemnify and hold the
Company harmless from any Damages which the Company suffers as a result of the
agreements made in the Employment Agreement, this Agreement or anything else arising
from, or in connection with, Eichler’s service as an employee of the Company.

     3.6 Statutory Indemnification. Notwithstanding anything to the contrary
contained in Sections 3.4 or 3.5 of this Agreement, Eichler shall be entitled to
indemnification in accordance with laws of the state of Nevada, and the Articles of
Incorporation and Bylaws of the Company, to the fullest extent provided by law.

     3.7 Definitions. As used in this Section 3, the term “Damages” shall mean (i) the
amount of any damages awarded against the Company in a judgment entered by any court of competent
jurisdiction pursuant to which judgment a finding has been made, (ii) all amounts paid in
settlement of any “Third Party Claim” (as defined below) and (iii) all legal fees and related costs
incurred in connection with defending any Third Party Claim. As used in this Section 3, the term
“Third Party Claim” shall mean any claim asserted by any person other than Eichler and the Company,
and shall also include claims asserted in the name of the Company in the nature of a derivative
claim.

     4. Miscellaneous

     4.1 Nondisclosure. The Parties hereto agree to keep the terms of this
Agreement and the transactions provided for herein strictly confidential, except as the
same may be required to be disclosed under the Rules and Regulations of the United
State Securities and Exchange Commission. No press release or other public statements
shall be issued or made by either Party without the prior written consent of the other
Party. The Parties further agree not to disparage each to any third person(s), either orally
or in writing. The Parties acknowledge that irreparable harm would occur to the non-breaching Party if the other Party violates the terms of this paragraph 4, and, accordingly,
the non-breaching Party may immediately seek legal and equitable relief, including
without limitation injunctive relief, against the Party who breaches any provision of this
paragraph 4.

     4.2 Severability. If any portion of this Agreement is void or deemed
unenforceable for any reason, the unenforceable portion shall be deemed severed from
the remaining portions of this Agreement, which shall otherwise remain in full force.

     4.3 Disputes; Applicable Law. Any dispute under this Agreement shall be
resolved by meditation and, if such meditation is not successful, by arbitration pursuant
to the rules of the Los Angeles Superior Court. This Agreement shall be interpreted in
accordance with California law without regard to conflict of laws principles.

     4.4 Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together shall constitute one
and the same instrument. Faxed copies shall be effective and enforceable.

4

 

     4.5 Authorization. Each of the Parties and each of the individuals signing this
Agreement on behalf of the Parties represents and warrants that the individuals executing
this Agreement on behalf of the Parties have the capacity and have been duly authorized to
execute this Agreement on behalf of the party so indicated. Each of the Parties shall
indemnify the other parties to this Agreement, and hold the other harmless, for, from and against any
and all damages, costs, attorneys’ fees, and other expenses, if the respective signatory
executing on behalf of such party is not so authorized.

     4.6 Conflicts. In the event of any conflict between the provisions of the
Employment Agreement and this Agreement, the provisions of this Agreement shall
govern.

[remainder of this page intentionally left blank]

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     4.7 Entire Agreement. This Agreement constitutes the entire agreement of the Parties
and that in executing this Agreement neither Party has relied upon any representation or statement
not set forth herein with regard to the subject matter, basis, or effect of this Agreement. Eichler
represents that he has been given adequate time to consider this Agreement before executing it and
that he executes this Agreement as his own free act and deed.

     WHEREFORE, the Parties, by their signatures below, acknowledge that there exist no other
promises, representations, or agreements relating to this Agreement, except as specifically set
forth herein and that they voluntarily enter into this Agreement with the intent to be legally
bound thereby, as of the date first above written.

	 	 	 	 	 
	 	SAVE THE WORLD AIR, INC.

 	 
	 	By:  	
 	 
	 	 	Bruce H. McKinnon      	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Eugene E. Eichler 	 
	 	 	 
	 

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