UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): September 28,
2007
(Exact
name of registrant as specified in charter)
|
|
|
|
|
|
|
Nevada
|
|
0-29185
|
|
52-2088326
|
|
(State
or other
jurisdiction
of
incorporation)
|
|
(Commission
File
Number)
|
|
(IRS
Employer
Identification
No.)
|
235
Tennant Avenue #5, Morgan Hill, California 95037
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (818) 487-8000
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Item
1.01
Entry
Into A Material Definitive Agreement.
From
August 8, 2007 through September
27, 2007, Save the World Air, Inc. (the “Company”) conducted a private offering
(the “Summer 2007 Offering”) of up to $300,000 aggregate face amount of its
convertible notes (the “Summer 2007 Notes”) with a small number of accredited
investors. Of this amount, $330,000 aggregate face amount of the
Summer 2007 Notes were sold for an aggregate purchase price of
$281,800. While the stated interest rate on the Summer 2007 Notes is
0%, the actual interest rate on the Summer 2007 Notes is 10%. The
Summer 2007 Notes mature on the first anniversary of their date of issuance,
i.e. September 28, 2007. The Summer 2007 Notes are convertible, at
the option of the noteholder, into shares of common stock of the Company (the
“Conversion Shares”) at a conversion price equal to the average of the closing
bid price of the Company’s Common Stock for the five trading days preceding the
closing date of the Summer 2007 Offering (the “Conversion
Prices”). Up to 837,784 Conversion Shares are issuable at a
Conversion Price of $0.37 per share.
Each
of the investors in the Summer
2007 Offering received, for no additional consideration, a warrant (the “Summer
2007 Warrants”), entitling the holder to purchase a number of shares of the
Company’s common stock equal to 50% of the number of shares of common stock into
which the Summer 2007 Notes are convertible (the “Warrant Shares”). Each Summer
2007 Warrant is exercisable on a cash basis only at a price of $0.50 per share,
and is exercisable for a period of two years from the date of issuance, i.e.
September 28, 2007. Up to 418,892 Warrant Shares are initially
issuable on exercise of the Summer 2007 Warrants.
The
Company received $281,800 gross and net proceeds in the 2007 Summer
Offering. The proceeds of the Summer 2007 Offering will be used for
general corporate purposes and working capital.
Item
9.01
Financial
Statements and Exhibits
99.1 Form
of Note Purchase Agreement
99.2 Form
of Spring 2007 Notes
99.3 Form
of Spring 2007 Warrants
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
SAVE
THE WORLD AIR,
INC.
|
|
|
|
|
|
|
|
Date:
October 8,
2007
|
By:
|
/s/
Charles R. Blum
|
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
2
Exhibit
99.1
NOTE
PURCHASE AGREEMENT
THIS
NOTE PURCHASE AGREEMENT (this
“Agreement”) is made and entered into as of the ___ day of September, 2007 by
and between Save the World Air, Inc., a Nevada corporation (the “Issuer”)
and those individuals and entities who sign and deliver an executed
copy of this Agreement to the Issuer (each, a “Purchaser” and collectively, the
“Purchasers”), with reference to the following:
RECITALS
A. Purchasers
desire to purchase from Issuer and Issuer desires to sell to Purchaser certain
of Issuer’s Convertible Promissory Notes in the aggregate face amount of at
least $100,000 and up to $300,000 in the form of
Exhibit A
attached
hereto (individually, a “Note” and collectively, the “Notes”) and Stock Purchase
Warrants, each to purchase up to a certain number of shares of the common stock
(the “Common Stock”) of the Issuer equal to 50% of the number of shares
initially issuable on conversion of the Notes, in the form of
Exhibit B
attached hereto (individually, the “Warrants” and collectively with the Notes,
the “Securities”). The face amount of Convertible Promissory Notes
each Purchaser has committed to purchase, and the amount of the purchase price
thereof to be paid to the Issuer by the Purchaser (a “Commitment”) is listed on
the signature page such Purchaser executes and delivers to the
Issuer.
B. Issuer’s
sale of the Securities to the Purchasers will be made in reliance upon the
provisions of Section 4(2) under the Securities Act of 1933, as amended (the
"Securities Act"), Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission (the ”SEC”) thereunder, and other applicable rules and
regulations of the SEC and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to the
transactions contemplated hereby.
C. At
any time when any amount of principal or interest of the Notes shall be
outstanding, such unpaid amounts shall be convertible into shares of the
Issuer’s, at the election of the purchaser Common Stock at a price per share
equal to the average closing bid price of a share of the Issuer’s Common stock
for the five (5) trading days prior to the Closing, as defined herein (the
“Conversion Price”).
D. The
Warrants shall be issued at the same time each Note is issued to the Purchaser
hereunder and shall exercisable at $0.50 per share as the Conversion Price
(the
“Exercise Price”), for such number of shares equal to 50% of result obtained by
dividing (i) the face amount of the Notes issued simultaneously with the Warrant
by (ii) the Conversion Price (the “Exercisable Amount”).
AGREEMENT
NOW
THEREFORE, in consideration of the
foregoing recitals, which shall be considered an integral part of this
Agreement, the covenants and agreements set forth hereafter, and other good
and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchasers and the Issuer hereby agree as follows
1.
Purchase
of the Notes and Warrants.
On the terms and subject to the
conditions set forth in this Agreement, the Purchasers shall purchase from
the
Issuer and the Issuer shall sell to the Purchaser the Securities.
2.
Purchaser’s
Representations, Warranties and Covenants.
In order to induce the Issuer to
sell and issue the Securities to the Purchaser under one or more exemptions
from
registration under the Securities Act, the Purchasers, severally and not
jointly, represent and warrant to the Issuer, and covenant with the Issuer,
that:
(a) (i)
Such Purchaser has the requisite power and authority to enter into and perform
this Agreement, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to purchase the Securities
in
accordance with the terms hereof and thereof.
(ii)
The execution and delivery of the
Transaction Documents by the Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by
the
Purchaser's organizational documents and no further consent or authorization
is
required by the Purchaser.
(iii)
The Transaction Documents have
been duly and validly executed and delivered by the Purchaser.
(iv)
The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity
or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(b)
The execution, delivery and
performance of the Transaction Documents by the Purchaser and the consummation
by the Purchaser of the transactions contemplated thereby will not conflict
with
or constitute a default under any agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound.
(c)
The Purchaser is acquiring the
Securities for investment for its own account, and not with a view toward
distribution thereof, and with no present intention of dividing its interest
with others or reselling or otherwise transferring or disposing all or any
portion of either the Notes or Warrants. The undersigned has not offered or
sold
a participation in this purchase of either the Notes or Warrants, and will
not
offer or sell any interest therein. The Purchaser further acknowledges that
the
Purchaser does not have in mind any sale of either the Notes or Warrants
currently or after the passage of a fixed or determinable period of time or
upon
the occurrence or non-occurrence of any predetermined events or consequence;
and
that it has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of either the Notes or Warrants and is not aware of any
circumstances presently in existence that are likely in the future to prompt
a
disposition thereof.
(e)
The Purchaser acknowledges that the
Securities have been offered to it in direct communication between itself and
the Issuer and not through any advertisement of any kind.
(f)
The Purchaser acknowledges that the
Issuer has given it access to all information relating to the Issuer’s business
that it has requested. The Purchaser has reviewed all materials
relating to the Issuer's business, finance and operations which it has requested
and the Purchaser has reviewed all of such materials as the Purchaser, in the
Purchaser’s sole and absolute discretion shall have deemed necessary or
desirable. The Purchaser has had an opportunity to discuss the business,
management and financial affairs of the Issuer with the Issuer's
management. Specifically but not by way of limitation, the
Purchaser acknowledges the Issuer’s publicly available filings made periodically
with the SEC, which filings are available at
www.sec.gov
and which
filings the Purchaser acknowledges reviewing or having had the opportunity
of
reviewing.
THE
PURCHASER EXPRESSLY ACKNOWLEDGES THAT THE ISSUER IS NOT CURRENT IN ITS FILINGS
WITH THE SEC AND HAS NOT FILED THE INFORMATION REQUIRED TO BE INCLUDED IN PART
THREE OF ITS ANNUAL REPORT ON FORM 10-KSB FOR ITS YEAR ENDED DECEMBER 31,
2006. THE PUCHASER EXPRESSLY WAIVES ANY RIGHTS THE PURCHASER MAY HAVE
TO RECEIVE SUCH INFORMATION. FURTHER, IN ORDER TO INDUCE THE ISSUER
TO ENTER INTO THIS AGREEMENT AND TO SELL TO THE PURCHASER THE SECURITIES THE
PURCHASER HAS ELECTED TO ENTER INTO THIS AGREEMENT AND PURCHASE THE SECURITIES
NOTWITHSTANDING THAT THE PURCHASER HAS NEITHER RECEIVED NOR REVIEWED SUCH
INFORMATION.
|
______________
|
|
______________
|
|
Issuer’s
Initials
|
|
Purchaser’s
Initials
|
(g)
The
Purchaser acknowledges that it has, by reason of its business and financial
experience, such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that it is
capable of (i) evaluating the merits and risks of an investment in the
Securities and making an informed investment decision I connection therewith;
(ii) protecting its own interest; and (iii) bearing the economic risk of such
investment for an indefinite period of time for Securities which are not
transferable or freely tradable. Based on the foregoing, the
undersigned hereby agrees to indemnify the Issuer thereof and to hold each
of
such persons and entities, and the officers, directors and employees thereof
harmless against all liability, costs or expenses (including reasonable
attorneys’ fees) arising by reason of or in connection with any
misrepresentation or any breach of such warranties of the undersigned, or
arising as a result of the sale or distribution of the Securities or the Common
Stock issuable upon conversion of the Notes or exercise of the Warrants, by
the
undersigned in violation of the Securities Act, the Securities Exchange Act
of
1934, as amended (the “Exchange Act”), or any other applicable law, either
federal or state. This subscription and the representations and
warranties contained herein shall be binding upon the heirs, legal
representatives, successors and assigns of the Purchaser
(h)
The
Purchaser is familiar with the definition of an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Securities Act and
represents and warrants to the Issuer that it is an accredited investor as
so
defined. If the Purchaser is not a resident of the United States, the
Purchaser is not a “U.S. person[s]” as that term is defined in Rule 902 of
Regulation S promulgated under the Securities Act of 1933, as
amended.
(i)
During the term of this Agreement
and the other Transaction Documents, the Purchaser will comply with the
provisions of Section 9 of the Exchange Act, and the rules and regulations
promulgated thereunder, with respect to transactions involving the Common Stock.
During the term of this Agreement and the other Transaction Documents, the
Purchaser agrees not to sell the Issuer's Common Stock short or engage in any
hedging transactions in the Issuer’s Common Stock, either directly or
indirectly, through its affiliates, principals, agents or advisors.
(j)
The Purchaser is aware of the
restrictions of transferability of both the Notes and the Warrants, and the
shares of Common Stock issuable upon conversion of the Notes or exercise of
the
Warrants, and further understands and acknowledges that any certificates
evidencing the Notes, the Warrants or the shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants will bear the legends in
substantially the following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE
SECURITIES LAWS (COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL
APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY
TO
THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER,
SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF SUCH SECURITIES LAWS.
(k)
The Purchaser understands and
acknowledges that following the purchase of the Notes, the Warrants and any
shares of Common Stock issuable upon conversion of the Notes or exercise of
the
Warrants, each may only be disposed of pursuant to either (i) an effective
registration statement under the Securities Act or (ii) an exemption from the
registration requirements of the Securities Act.
(l)
The Purchaser understands and
acknowledges that the Issuer has neither filed such a registration statement
with the SEC or any state authorities nor agreed to do so, nor contemplates
doing so in the future for the transactions contemplated by this Agreement
or
the other Transaction Documents, and in the absence of such a registration
statement or exemption, the undersigned may have to hold the Notes, the Warrants
and any shares of Common Stock issuable upon conversion of the Notes or exercise
of the Warrants, indefinitely and may be unable to liquidate any of them in
case
of an emergency.
(m)
The Purchaser is purchasing the
Notes and Warrants, and will acquire any shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants, for its own account for
investment purposes and not with a view towards distribution and agrees to
resell or otherwise dispose of any of the Notes or the Warrants, or any shares
of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, in accordance with the registration provisions of the Securities
Act
(or pursuant to an exemption from such registration provisions).
(n)
The Purchaser is not and will not
be required to be registered as a "dealer" under the Exchange Act, either as
a
result of its execution and performance of its obligations under this Agreement
or otherwise.
(p)
The Purchaser understands that it
is liable for its own tax liabilities and has obtained no tax advice from the
Issuer in connection with the purchase of the Securities.
(q)
The Purchaser will not pay or
receive any finder’s fee or commission in respect of the consummation of the
transactions contemplated by this Agreement.
3.
Issuer’s
Representations,
Warranties and Covenants.
The Issuer represents and warrants to the
Purchaser that:
(a)
The Issuer is a corporation duly
organized and validly existing in good standing under the laws of the State
of
Nevada, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted.
(b) (i)
The Issuer has the requisite corporate power and authority to enter into and
perform this Agreement, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by the
Transaction Documents, and to issue the Notes and Warrants in accordance with
the terms hereof and thereof.
(ii)
the execution and delivery of the
Transaction Documents by the Issuer and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation
the
reservation for issuance and the issuance of the Notes and Warrants pursuant
to
this Agreement, have been duly and validly authorized by the Issuer's Board
of
Directors and no further consent or authorization is required by the Issuer,
its
Board of Directors, or its shareholders.
(iii)
The Transaction Documents have
been duly and validly executed and delivered by the Issuer.
(iv)
The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(c)
The execution, delivery and
performance of the Transaction Documents by the Issuer and the consummation
by
the Issuer of the transactions contemplated thereby will not conflict with
or
constitute a default under any agreement or instrument to which the Issuer
is a
party or under any organizational documents of the Purchaser.
4.
Closing
and Deliverables.
(a)
Subject to the provisions of
Section 4(b) below, provided that the Issuer shall have received on or prior
to
September 30, 2007 copies of this Agreement executed by each respective
Purchaser providing that the total Commitments equal or exceed $100,000, there
shall be a closing or closings (each, a “Closing”) at which:
(i)
each Purchaser shall deliver to
the Issuer immediately available funds, by wire transfer to the Issuer’s account
at the Bank of America, 954 Westlake Boulevard, Westlake Village, California
91361, Routing Number 0260-0959-3 , Account Number 06687-19702, in an amount
of
equal to the amount of such Purchaser’s Commitment as set forth on beside name
of such Purchaser on such Purchaser’s signature page hereto; and
(ii)
the Issuer shall deliver to the
Purchaser (x) a Note, in the face amount equal to 110% of the Purchaser’s
Commitment and (y) a Warrant to purchase the Exercisable Amount of the Issuer’s
Common Stock at the Exercise Price.
(b)
The
Issuer may continue to accept Commitments from Purchasers and issue and sell
Securities to Purchasers at Closings on the terms and subject to the conditions
set forth in this Agreement until (i) the aggregate amount of the Commitments
equals $300,000 or (ii) August 17, 2007, whichever shall first occur; except
that, notwithstanding anything contained herein to the contrary, the Issuer
may
extend the Offering one or more times and schedule one of more Closings to
a
date or dates not later than September 30, 2007.
5.
Miscellaneous.
(a).
Each party shall pay the fees and
expenses of its own advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transactions
Documents.
(b)
This Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and
the
same agreement and shall become effective when counterparts have been signed
by
each party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
(c)
The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and neutral shall include
the
masculine and feminine.
(d)
If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e)
This Agreement is the final
agreement between the Purchasers and the Issuer with respect to the terms and
conditions set forth herein, and, the terms of this Agreement may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Purchaser sand
the
Issuer or, and no provision hereof may be waived other than by an instrument
in
writing signed by the party against whom enforcement is sought.
(f)
Any notices or other communications
required or permitted to be given under the terms of this Agreement must be
in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) day after deposit with
a
nationally recognized overnight delivery service, in each case properly
addressed to the
party
to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If
to the Issuer:
Save
the
World Air, Inc.
235
Tennant Avenue
Morgan
Hill, CA 95037
Telephone:
(408) 778-0101
Facsimile:
(408) 778-8585
with
a copy to:
Lance
Jon
Kimmel, Esq.
SEC
Law
Firm
11693
San
Vicente Boulevard
Suite
357
Los
Angeles, CA 90049
Telephone:
(310) 557-3059
Facsimile:
(310) 388-1320
If
to a Purchaser:
to
the
address set forth on the Purchaser’s signature page hereto.
Each
party shall provide five (5) days prior written notice to the other party of
any
change in address or facsimile number.
(g)
This Agreement may not be
assigned.
(h)
This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(i)
The representations and warranties
of the Purchaser and the Issuer contained herein shall survive each of the
Closings and the termination of this Agreement and the other Transaction
Documents.
(j)
The Purchaser and the Issuer shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law or the rules and regulations of the
SEC.
(k).
Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out
the
intent and accomplish the purposes of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.
(l)
The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party,
as the parties mutually agree that each has had a full and fair opportunity
to
review this Agreement and the other Transaction Documents and seek the advice
of
counsel on it and them.
(m)
The Purchaser and the Issuer each
shall have all rights and remedies set forth in this Agreement and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which the Purchaser has by law.
Any
person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any default or breach of any provision of this
Agreement, including the recovery of reasonable attorneys fees and costs, and
to
exercise all other rights granted by law.
[remainder
of page intentionally left blank]
(n) This
Agreement and the other Transaction Documents shall be construed and governed
by
the laws of the State of California with respect to agreements wholly performed
therein, and without regard to the doctrine known as conflicts of
law.
IN
WITNESS WHEREOF the Purchasers and
the Issuer have executed this Agreement as of the date first above
written.
THE
ISSUER
SAVE
THE WORLD AIR, INC.
By:__________________________
Charles
R. Blum
Its: Chief
Executive Officer
THE
PURCHASER
_______________________________ ________________________
Name
(signature) Amount
of Commitment
_______________________________
Print
Name
_______________________________
Address
_______________________________
Address
_______________________________
Phone
Number
_______________________________
Fax
Number
_______________________________
Social
Security Number
10
Exhibit
99.2
FORM
OF CONVERTIBLE NOTE
THE
SECURITIES EVIDENCED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE
SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER,
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER, SALE OR OTHER
TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH
SECURITIES LAWS.
|
$_____
xxxxxx
_______
|
September___,
2007
|
|
|
(“Issuance
Date”)
|
FOR
VALUE
RECEIVED,
SAVE THE WORLD AIR, INC.
, a corporation organized
under the laws of the State of Nevada (the “Company”), promises to pay to the
order of “Investor”, as that term is defined on the Acknowledgement and
Acceptance page of this Note (hereafter, together with any subsequent holder
hereof, called “Holder”), at “Investor’s Address”, as that term is set forth on
such page or at such other place as Holder may direct, the “Subscription
Amount”, noted above (the “Loan”), payable in full on the first anniversary of
the date hereof (the “Maturity Date”).
If
this
Note is not paid in full on or prior to the Maturity Date the remaining balance
shall be increased by 10% as an initial penalty, and the Company shall pay
interest thereon at the rate of 10% per annum until all sums due hereunder
are
paid in full.
Payments
of both principal and interest
will be made in immediately available funds in lawful money of the United States
of America to the Holder at the Investor’s Address.
The
Note is subject to the following additional provisions:
1.
The
Company shall be entitled to withhold from all payments of principal and/or
interest of this Note any amounts required to be withheld under the applicable
provisions of the U.S. Internal Revenue Code of 1986, as amended, or other
applicable laws at the time of such payments.
2.
This
Note
has been issued subject to representations, warranties and covenants of the
original Holder hereof and may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended, and applicable state and other
securities laws. Prior to the due presentment for such transfer of this Note,
the Company and any agent of the Company may treat the person in whose name
this
Note is duly registered on the Company's Note register as the owner hereof
for
the purpose of receiving payment as herein provided and all other purposes,
whether or not this Note is overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary. The transferee shall be bound,
as
the original Holder by the same representations and terms described herein
and
under the Agreement.
3.
The
Holder may, at such Holder’s option, at any time while any sums are outstanding
and unpaid hereunder, convert the then-outstanding principal amount of this
Note
or any portion thereof, and any interest and any penalties accrued and unpaid
thereon (the “Conversion Amount”), into a number shares of fully paid and
nonassessable Common Stock of the Company (the “Conversion Shares”) pursuant to
the following formula: the Conversion Amount divided by
$__
XXX
__ (as the same may be adjusted from time to time
pursuant to the provisions of this Note, the “Conversion Price”). The
Holder may exercise the right to convert all or any portion of the Conversion
Amount by delivering to the Company (i) an executed and completed notice of
conversion in the form attached to this Note (the "Notice of Conversion") to
the
Company and (ii) this Note. The business day on which a Notice of
Conversion and this Note are delivered to the Company in accordance with the
provisions hereof shall be deemed a "Conversion Date". The Company will transmit
the certificates representing Conversion Shares issuable upon such conversion
of
this Note (together with the certificates representing the amount of this Note
not so converted) to the Holder via express courier within ten Business Days
after the Conversion Date. No fractional shares shall be issued upon
conversion of this Note. The amount of any of the Conversion Amount
which is less than a whole share of Common Stock shall be paid to the Holder
in
cash. Any delay due to such circumstance shall not be an event of
default under this Note. Company shall promptly take action to affect
such amendments to its charter.
4.
The
principal amount of this Note, and any accrued interest thereon, shall be
reduced as per that principal amount indicated on the Notice of Conversion
upon
the proper receipt by the Holder of such Conversion Shares due upon such Notice
of Conversion.
5.
The
number of Conversion Shares shall be adjusted as follows:
a.
If
the
Company shall at any time after the Issuance Date subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, the
number of Conversion Shares in effect immediately prior to such subdivision
shall be proportionately increased, and conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately reduced.
b. If
the Company shall at any time or from time to time after the Issuance Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the number of Conversion
Shares issuable upon conversion of this Note shall be proportionately increased;
provided, however, that if such record date is fixed and such dividend is not
fully paid, or if such distribution is not fully made on the date fixed
therefor, the number of Conversion Shares shall be recomputed to reflect that
such dividend was not fully paid or that such distribution was not fully
made.
c. If
Company at any time or from time to time after the Issuance Date makes, or
fixes
a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of Company
other
than shares of Common Stock, then and in each such event provision shall be
made
so that Holder shall receive upon exercise of the conversion right of this
Note,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of Company which Holder would have received had the
Conversion Amount of this Note been exercised on the date of such event and
had
it thereafter, during the period from the date of such event to and including
the date of conversion or purchase, retained such securities receivable during
such period.
d If
the Common Stock issuable upon the conversion of this Note or option to purchase
is changed into the same or a different number of shares of any class or classes
of stock, whether by recapitalization, reclassification or otherwise (other
than
a transaction described elsewhere in Section 5 of this Note), then, and in
any
such event, each Holder shall have the right thereafter, upon conversion of
this
Note or purchase pursuant to option to receive the kind and amount of stock
and
other securities and property receivable upon such reorganization or other
change, in an amount equal to the amount that Holder would have been entitled
to
had it immediately prior to such reorganization, reclassification or change
converted this Note, but only to the extent this Note is actually converted,
all
subject to further adjustment as provided herein.
6.
No
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, upon an Event of Default (as defined
below), to pay the principal of, and interest on this Note at the place, time,
and rate, and in the coin or currency herein prescribed.
7.
Events
of
Default. Each of the following occurrences is hereby defined as an
“Event of Default”:
|
|
Nonpayment
. The
Company shall fail to make any payment of principal, interest, or
other
amounts payable hereunder when and as due;
or
|
|
|
Dissolutions,
etc
. The Company or any subsidiary shall fail to comply
with any provision concerning its existence or any prohibition against
dissolution, liquidation, merger, consolidation or sale of assets;
or
|
|
|
Noncompliance
with this Agreement
. The Company shall fail to comply in
any material respect with any provision hereof, which failure does
not
otherwise constitute an Event of Default;
or
|
|
|
Insolvency
. The
institution of bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy
law or
any law for the relief of debtors shall be instituted by or against
Company, which proceedings shall not have been vacated by appropriate
court order within sixty (60) days of such
institution.
|
If
one or
more "Events of Default" shall occur, then, or at any time thereafter, and
in
each and every such case, unless such Event of Default shall have been waived
in
writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) or cured as provided herein, at the option of the Holder,
and in the Holder's sole discretion, the Holder may elect to consider this
Note
(and all interest through such date) immediately due and payable. In order
to so
elect, the Holder must deliver written notice of the election and the amount
due
to the Company via certified mail, return receipt requested, at the Company’s
address as set forth herein (or any other address provided to the Holder),
and
thereafter the Company shall have ten (10) business days upon receipt to cure
the Event of Default or pay this Note, or convert the amount due on the Note
pursuant to the conversion formula set forth above.
8.
In
case
any provision of this Note is held by a court of competent jurisdiction to
be
excessive in scope or otherwise invalid or unenforceable, such provision shall
be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired
thereby.
9.
This
Note
does not entitle the Holder hereof to any voting rights or other rights as
a
shareholder of the Company prior to the conversion into Common Stock thereof,
except as provided by applicable law. If, however, at the time of the surrender
of this Note and conversion the Holder hereof shall be entitled to convert
this
Note, the Conversion Shares so issued shall be and be deemed to be issued to
such holder as the record owner of such shares as of the close of business
on
the Conversion Date.
10. The
Holder shall pay all issue and transfer taxes and other incidental expenses
in
respect of the issuance of certificates for Conversion Shares upon the
conversion of this Note, and such certificates shall be issued in the name
of
the Holder of this Note.
11. This
Note may be prepaid in whole or in part at any time or from time to time without
premium or penalty upon 10 days’ prior written notice from the Company to the
Holder.
12. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Note, and in case of loss, theft or
destruction of this Note, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any
such mutilation, upon surrender and cancellation of such Note, and upon
reimbursement to the Company of all reasonable expenses incidental thereto,
the
Company will make and deliver to the Holder, in lieu thereof, a new Note in
substantially identical form and dated as of such cancellation.
13. If
the last or appointed day for the taking of any action or the expiration of
any
right required or granted herein shall be a Saturday or a Sunday or shall be
a
legal holiday in the United States or the State of California, then such action
may be taken or such right may be exercised on the next succeeding business
day.
14.
(a) This Note
shall be governed by and construed in accordance with the laws of the State
of
California applicable to contracts made and to be performed wholly within such
state.
(b) Except
as otherwise provided herein, any notice or demand which, by the provisions
hereof, is required or which may be given to or served upon the parties hereto
shall be in writing and, if by telegram, telecopy or telex, shall be deemed
to
have been validly served, given or delivered when sent, if by personal delivery,
shall be deemed to have been validly served, given or delivered upon actual
delivery and, if mailed, shall be deemed to have been validly served, given
or
delivered three (3) business days after deposit in the United States mails,
as
registered or certified mail, with proper postage prepaid and addressed to
the
party or parties to be notified.
(c) The
Holder acknowledges that the Conversion Shares acquired upon the exercise of
this Note may have restrictions upon its resale imposed by state and federal
securities laws.
(d) With
regard to any power, remedy or right provided herein or otherwise available
to
any party hereunder (i) no waiver or extension of time shall be effective unless
expressly contained in a writing signed by the waiving party; and (ii) no
alteration, modification or impairment shall be implied by reason of any
previous waiver, extension of time, delay or omission in exercise, or other
indulgence.
[remainder
of page intentionally left blank]
(e) This
Note constitutes the Company’s and Holder’s entire agreement with respect to the
subject matter hereof and supersedes all agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof. This Note may not be
amended, altered or modified except by a writing signed by the Company and
the
Holder.
IN
WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed by an officer thereunto duly authorized.
SAVE
THE WORLD AIR, INC.
By_____
SPECIMEN
_____________
Name: Charles
R. Blum
Title: Chief
Executive Officer
ACKNOWLEDGED
AND ACCEPTED:
_______________________________
Investor
Name (Signature)
______________________________
Print
Name
___________________________
Investor
Address
NOTICE
OF EXERCISE OF CONVERSION RIGHT
TO: SAVE
THE WORLD AIR, INC.
(1) The
undersigned hereby elects to convert $______________ of the attached Note into
______________ shares of Common Stock (the "Shares") of Save the World Air,
Inc.
pursuant to the terms of the attached Note.
(2) Please
issue a certificate or certificates representing the Shares in the name of
the
undersigned or in such other name as is specified below:
|
_______________________________
|
|
(Print
Name)
|
|
Address:
|
|
_______________________________
|
|
_______________________________
|
|
_______________________________
|
|
(3)
|
The
undersigned confirms that the Shares are being acquired for the account
of
the undersigned for investment only and not with a view to, or for
resale
in connection with, the distribution thereof and that the undersigned
has
no present intention of distributing or selling the
Shares.
|
|
(4)
|
The
undersigned accepts such shares subject to the restrictions on transfer
set forth in the attached Note.
|
|
____________________
|
|
_______________________
|
|
(Date)
|
|
(Signature)
|
|
|
|
|
|
|
|
|
|
|
|
_______________________
|
|
|
|
(Print
Name)
|
7
Exhibit
99.3
FORM
OF STOCK PURCHASE WARRANT
THIS
WARRANT AND ANY SHARES ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF
1933,
AS AMENDED (THE "ACT"), AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE
OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION OF ANY SHARES ISSUED UPON
EXERCISE HEREOF MAY BE AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE
TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT THE TRANSFER
OF
THIS WARRANT IS RESTRICTED AS SET FORTH HEREIN.
|
No.
__
XXXXX
___
|
|
September
___, 2007
|
SAVE
THE WORLD AIR, INC.
WARRANT
TO PURCHASE COMMON STOCK
VOID
AFTER 5:00 P.M. P.S.T. ON September ___, 2009
THIS
CERTIFIES that, for the value received, the holder identified on the last page
of this Warrant (the "Holder") is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after the date of this
Warrant and on or prior to 5:00 p.m. P.S.T. on the second anniversary of the
date of this Warrant (the "Expiration Time"), but not thereafter, to subscribe
for and purchase, from SAVE THE WORLD AIR, INC., a Nevada corporation (the
"Company"), up to ____
XXXX
_____ shares of the Company's Common
Stock (the "Shares") at a purchase price per share equal to $0.50 (the "Exercise
Price").
1.
Exercise
of Warrant.
(a)
The
purchase rights represented by this Warrant are exercisable by the Holder,
in
whole or in part, at any time after the date of this Warrant and
before the Expiration Time by the surrender of this Warrant and the Notice
of
Exercise annexed hereto duly executed at the office of the Company, in North
Hollywood, California (or such other office or agency of the Company as it
may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), and upon payment of an amount equal
to
the aggregate Exercise Price for the number of Shares thereby purchased (by
cash
or by check or certified bank check payable to the order of the Company in
an
amount equal to the purchase price of the shares thereby purchased); whereupon
the Holder shall be entitled to receive a stock certificate representing the
number of Shares so purchased. The Company agrees that if at the time of the
surrender of this Warrant and purchase of the Shares, the Holder shall be
entitled to exercise this Warrant, the Shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such Shares as of
the
close of business on the date on which this Warrant shall have been exercised
as
aforesaid.
Upon
partial exercise of this Warrant, the Holder shall be entitled to receive from
the Company a new Warrant in substantially identical form for the purchase
of
that number of Shares as to which this Warrant shall not have been exercised.
Certificates for Shares purchased hereunder shall be delivered to the Holder
within a reasonable time after the date on which this Warrant shall have been
exercised as aforesaid.
2.
No
Fractional Shares or Scrip.
No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon the exercise of this Warrant,
an amount equal to such fraction multiplied by the then current fair market
value at which each Share may be purchased hereunder shall be paid in cash
to
the Holder.
(a)
For
purposes of this Section 2, the fair market value of the Shares shall mean
the
average closing price of a share of the Company's Common Stock on a national
stock exchange on which the Common Stock is listed at the time of exercise
on
the last business day prior to the date of exercise of this Warrant pursuant
to
Section l or, if the Company's Common Stock is not so listed, the fair market
value of the Common Stock (without regard to the restrictions on transfer or
number of Shares) as determined in good faith by the Company's Board of
Directors.
3.
Charges, Taxes and Expenses.
The Holder shall pay all issue and transfer
taxes and other incidental expenses in respect of the issuance of certificates
for Shares upon the exercise of this Warrant, and such certificates shall be
issued in the name of the Holder of this Warrant.
4.
No
Rights as a Stockholder.
This Warrant does not entitle the Holder to any
voting rights or other rights as a stockholder of the Company prior to the
exercise hereof.
5.
Loss, Theft, Destruction or Mutilation of Warrant.
Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction of this Warrant, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any
such mutilation, upon surrender and cancellation of such Warrant, and upon
reimbursement to the Company of all reasonable expenses incidental thereto,
the
Company will make and deliver to the Holder, in lieu thereof, a new Warrant
in
substantially identical form and dated as of such cancellation.
6.
Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday in the United States
or the State of California, then such action may be taken or such right may
be
exercised on the next succeeding business.
7.
Merger, Reclassification, etc
.
(a)
Merger, etc.
If at any time the Company proposes (A) the acquisition of
the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger,
consolidation or stock issuance) that results in the transfer of fifty percent
(50%) or more of the then outstanding voting power of the Company; or (B) a
sale
of all or substantially all of the assets of the Company, then the Company
shall
give the Holder ten (10) days notice of the proposed effective date of the
transaction. If, in the case of such acquisition of the Company, and the Warrant
has not been exercised by the effective date of the transaction, this Warrant
shall be exercisable into the kind and number of shares of stock or other
securities or property of the Company or of the entity resulting from such
merger or acquisition to which such Holder would have been entitled if
immediately prior to such acquisition or merger, it had exercised this Warrant.
The provisions of this Section 7(a) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(b)
Reclassification, etc.
If the Company at any time shall, by subdivision,
combination or reclassification of securities or otherwise, change any of the
securities to which purchase rights under this Warrant exist into the same
or a
different number of securities of any class or classes, this Warrant shall
thereafter be to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which
were
subject to the purchase rights under this Warrant immediately prior to such
subdivision, combination, reclassification or other change. If the Shares are
subdivided or combined into a greater or smaller number of Shares, the Exercise
Price under this Warrant shall be proportionately reduced in case of subdivision
of shares or proportionately increased in the case of combination of shares,
in
both cases by the ratio which the total number of Shares to be outstanding
immediately after such event bears to the total number of Shares outstanding
immediately prior to such event.
(c)
Cash Distributions.
No adjustment on account of cash dividends or
interest on the Shares or other securities purchasable hereunder will be made
to
the Exercise Price under this Warrant.
8.
Restrictions on Transfer.
(a)
Restrictions on Transfer of Shares.
In no event will the Holder make a
disposition of this Warrant or the Shares unless and until, if requested by
the
Company, it shall have furnished the Company with an opinion of counsel
satisfactory to the Company and its counsel to the effect that appropriate
action necessary for compliance with the Securities Act of 1933, as amended
(the
"Act") relating to sale of an unregistered security has been taken.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of the Shares shall terminate as to any particular Share when (i) such security
shall have been sold without registration in compliance with Rule 144 under
the
Act, or (ii) a letter shall have been issued to the Holder at its request by
the
staff of the Securities and Exchange Commission or a ruling shall have been
issued to the Holder at its request by such Commission stating that no action
shall be recommended by such staff or taken by such Commission, as the case
may
be, if such security is transferred without registration under the Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required, or (iii) such security shall have been registered under the Act and
sold by the Holder thereof in accordance with such registration.
(b)
Subject to the provisions of Section 8(a) hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of the Warrant
with a properly executed assignment at the principal office of the
Company.
(c)
Restrictive Legends.
The stock certificates representing the Shares and
any securities of the Company issued with respect thereto shall be imprinted
with legends restricting transfer except in compliance with the terms hereof
and
with applicable federal and state securities laws.
9.
Miscellaneous.
(a)
Governing Law.
This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
made
and to be performed wholly within such state.
(b)
Restrictions.
The Holder acknowledges that the Shares acquired upon the
exercise of this Warrant may have restrictions upon its resale imposed by state
and federal securities laws.
(c)
Waivers Strictly Construed.
With regard to any power, remedy or right
provided herein or otherwise available to any party hereunder (i) no waiver
or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and (ii) no alteration, modification or impairment
shall be implied by reason of any previous waiver, extension of time, delay
or
omission in exercise, or other indulgence.
[remainder
of page intentionally left blank]
(d)
Complete Agreement and Modifications.
This Warrant constitutes the
Company's and Holder's entire agreement with respect to the subject matter
hereof and supersedes all agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Warrant may not be amended, altered or modified
except by a writing signed by the Company and the Holder of this
Warrant.
IN
WITNESS WHEREOF, SAVE THE WORLD AIR, INC. has caused this Warrant to be executed
by its duly authorized representative dated as of the date first set forth
above.
|
|
SAVE
THE WORLD AIR, INC.
|
|
|
235
Tennant Avenue
|
|
|
Morgan
Hill, CA 95037
|
|
|
|
|
|
By:
____
SPECIMEN
________
|
|
|
Name:
Charles R. Blum
|
|
|
Title:
Chief Executive Officer
|
TO: SAVE
THE WORLD AIR, INC., a Nevada corporation
(1) The
undersigned hereby elects to purchase ______________shares of Common Stock
(the
"Shares") of Save the World Air, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
(2) Please
issue a certificate or certificates representing the Shares in the name of
the
undersigned or in such other name as is specified below:
_______________________________________________
(Print
Name)
Address:
_______________________________________________
_______________________________________________
_______________________________________________
(3) The
undersigned confirms that he is an “accredited investor” as defined by Rule
501(a) under the Securities Act of 1933, as amended, at the time of execution
of
this Notice.
(4) The
undersigned confirms that the Shares are being acquired for the account of
the
undersigned for investment only and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned has no
present intention of distributing or selling the Shares.
(5) The
undersigned accepts such Shares subject to the restrictions on transfer set
forth in the attached Warrant.
|
Date:_____________________
|
|
________________________
(Signature)
|
|
|
|
|
|
|
|
________________________
|
|
|
|
(Print
Name)
|
6