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): January 26,
2009
SAVE
THE WORLD AIR, INC.
(Exact
name of registrant as specified in charter)
Nevada
(State
or other jurisdiction
of
incorporation)
|
|
0-29185
(Commission
File Number)
|
|
52-2088326
(IRS
Employer
Identification
No.)
|
235
Tennant Avenue
Morgan
Hill, California 95037
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (408) 778-0101
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):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
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
Convertible Note Offering
From
January 13, 2009, through January 26, 2009, Save the World Air, Inc. (the
“Company”) conducted and concluded a private offering (the “Winter 2009
Offering”) of up to $250,000 aggregate face amount of its convertible notes (the
“Winter 2009 Notes”) with 8 accredited investors. A total of $250,000 aggregate
face amount of the Winter 2009 Notes were sold for an aggregate purchase price
of $250,000. The Winter 2009 Notes bear interest at 10% per annum,
payable at maturity. The Winter 2009 Notes mature on the first anniversary of
their date of issuance. The Winter 2009 Notes are convertible, at the option of
the noteholder, into shares of common stock of the Company (the “Conversion
Shares”) at an initial 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 dates of the Winter 2009 Offering (the “Conversion Price”). Up to
694,444 Conversion Shares are initially issuable at a Conversion Price of $0.36
per share.
Each of
the investors in the Winter 2009 Offering received, for no additional
consideration, a warrant (the “Winter 2009 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 Winter 2009 Notes are
convertible (the “Warrant Shares”). Each Winter 2009 Warrant is
exercisable on a cash basis only at an initial price of $0.50 per share, and is
exercisable immediately upon issuance and for a period of two (2) years from the
date of issuance. Up to 347,722 Warrant Shares are initially issuable on
exercise of the Winter 2009 Warrants.
The
Company received $250,000 in net proceeds in the Winter 2009 Offering which will
be used for general corporate purposes and working capital.
(d)
Exhibits
Exhibit
No.
|
|
Description
|
|
|
|
10.1
|
|
Form
of Winter 2009 Note Purchase Agreement
|
|
|
|
10.2
|
|
Form
of Winter 2009 Notes
|
|
|
|
10.3
|
|
Form
of Winter 2009 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.
|
|
|
|
|
Date:
January 29, 2009
|
SAVE
THE WORLD AIR, INC.
|
|
|
By:
|
/s/
Charles R. Blum
|
|
|
|
Charles
R. Blum
|
|
|
|
President
and Chief Executive Officer
|
|
Exhibit
Index
Exhibit
No.
|
|
Description
|
|
|
|
10.1
|
|
Form
of Fall 2008 Note Purchase Agreement
|
|
|
|
10.2
|
|
Form
of Fall 2008 Notes
|
|
|
|
10.3
|
|
Form
of Fall 2008 Warrants
|
EXHIBIT
10.1
NOTE
PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this
“Agreement”) is made and entered into as of the ___ day of_______, 2009, 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 $10,000 and up to $250,000 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 be 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 and in the Notes and Warrants, 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.
(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 in 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. 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 warranties of the
undersigned contained in this Agreement, 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 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.
(o) The Purchaser
understands and acknowledges that proceeds raised in connection with this
Agreement will be used by Issuer for general working capital purposes, including
without limitation, the payment of salaries and professional fees and payments
to Temple University in connection with the Issuers’ License
Agreements.
(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
January 31, 2009 copies of this Agreement executed by each respective Purchaser
and providing that the total Commitments equal or exceed $10,000, there shall be
a closing or closings (each, a “Closing”) at which:
(i) each Purchaser shall deliver to
the Issuer (“Save The World Air, Inc.”) 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 equal to the amount of such Purchaser’s Commitment as
set forth beside the 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 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 $250,000 or (ii) on or before January 31, 2009, whichever shall first
occur.
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
or signature transmitted by e-mail 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 and the Notes and
Warrants represent 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 and the Notes and Warrants may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the
parties. No provision of this Agreement and the Notes and Warrants
may be amended other than by an instrument in writing signed by the Purchaser
and the Issuer, and no provision hereof or thereof 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:
Gartenberg
Gelfand Wasson & Selden, LLP
801
Figueroa, Suite 2170
Los
Angeles, California 90017.
Telephone:
213-542-2100
Facsimile:
213-542-2101
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
by Purchaser.
(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:__________________________
Eugene
E. Eichler
Its: Chief
Financial Officer
THE
PURCHASER
_______________________________ ________________________
Name
(signature) Amount
of Commitment
(U.S.
Dollars)
_______________________________
Print
Name
_______________________________
Address
_______________________________
Address
_______________________________
Phone
Number
_______________________________
Fax
Number
_______________________________
Social
Security Number
_______________________________
E-mail
Address
-6-
EXHIBIT
10.2
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
|
January
__, 2009
|
(“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 Three
Months from the date hereof (the “Maturity Date”). The Note will bear
interest at the rate of 10% per annum payable on 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% 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 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:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
(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)
-5-
EXHIBIT
10.3
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.
X
XXXX
|
January __,
2009
|
SAVE
THE WORLD AIR, INC.
WARRANT TO PURCHASE COMMON
STOCK
VOID
AFTER 5:00 P.M. P.S.T. ON ____________,___, 2011
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 Morgan
Hill, 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)
Modifications.
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
Title: Chief
Executive Officer
NOTICE
OF EXERCISE
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)
-5-