EXHIBIT
10.1
SAVE
THE WORLD AIR, INC.
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (“
Agreement
”) is made as of
November 26, 2009, by and between Save The World Air, Inc., a company organized
under the laws of the State of Nevada (the “
Company
”), and the purchasers
who execute the Purchaser Signature Page (as hereinafter defined) hereto (each,
a “
Purchaser
”).
R
E
C
I
T
A
L
S
A. The
Company desires to obtain funds from each Purchaser in order to provide working
capital to fund the Company’s general working capital needs.
B.
In order
to obtain such funds, the Company is borrowing and in exchange therefore issuing
Units (the “
Units
”),
each Unit comprised of (i) an unsecured $25,000 principal amount of 7%
Convertible Promissory Note, initially convertible at $.25 per share (as may be
adjusted from time to time, the “
Conversion Price
”) a form of
which is annexed hereto as
Exhibit
A
, (each a “
Note
,” and
collectively, the “
Notes
”), and (ii) Common Stock
Purchase Warrants, initially exercisable into at the $.30 per share, a form of
which is annexed hereto as
Exhibit
B
(the “
Warrants
”). The
Units being acquired herein are being acquired directly from the Company without
the benefit of an Escrow Agent or any Placement Agent and there is no minimum
required amount to be raised in order for the Company to conduct a Closing and
utilize the Purchaser’s funds for a subscription. The Purchaser
understands that the Company has raised over $300,000 of Units on its own, as
well as $75,000 of Notes through a placement agent (which agency has since
completed and terminated) and, that the Securities sold are
substantially similar to the Units. The Company is further offering
to the Purchaser and potential additional purchasers, additional Units through
January 15, 2010. The common stock, par value $.001 per share of the
Company (“
Common Stock
”)
into which the Notes are convertible are sometimes referred to herein as the
Conversion Shares, and the shares of Common Stock into which the Warrants are
exercisable are sometimes referred to herein as the “
Warrant
Shares
”. The Notes, Warrants, Conversion Shares and Warrant
Shares are sometimes referred to herein as the “
Securities
”.
C.
Purchasers
understand that there is a great deal or risk, illiquidity and uncertainty in
the Purchase of the Units herein and that no assurance can be made that the
Company will complete its business plans or, if completed, that it will be
successful in doing so or that the Company will be successful with its other
offerings. Purchasers also understand that the Company is dependant
on its ability to raise substantial additional capital and that additional
securities such as any one or more of the Securities, or securities at different
or senior or more favorable terms, may be sold.
D.
The
Purchasers are investing herein on an irrevocable basis, without the benefit of
an escrow agent or escrow account and without the benefit of any minimum closing
amount. All funds reflecting subscriptions are being deposited
immediately directly with the Company in accordance with the wire instructions
annexed hereto as
Exhibit
C
.
All funds deposited will
become immediately available for use by the Company or may be attacked or
attached by creditors upon deposit regardless of whether a closing has occurred
or the minimum has been raised
. The Purchaser’s
acknowledge and agree that their subscriptions are irrevocable and binding
commitments on the part of the Purchaser and that once their funds have been
tendered with appropriate subscription documents and the minimum offering amount
has been raised in accepted funds and subscriptions, the Company may conduct a
Closing without any consent of or notice to Purchasers. The
Company may reject any subscriptions in whole or in part for any reason or for
no reason but shall return funds to the extent not closed upon prior to January
15, 2010. This offering shall be terminated at January 15, 2010
unless earlier terminated by the Company.
AGREEMENT
NOW
THEREFORE, based on the mutual premises and consideration of the parties, it is
agreed as follows:
1.
PURCHASE AND
SALE OF NOTES.
1.1
Purchase and
Sale
. In reliance upon the representations and warranties of
the Company and each Purchaser contained herein and subject to the terms and
conditions set forth herein, at Closing (as hereinafter defined), each Purchaser
hereby agrees to purchase, and the Company shall sell and issue to each
Purchaser, the Units comprised of Notes and Warrants as set forth on the
signature page annexed to the end of this Agreement (the “
Purchaser Signature Page
”) at
a purchase price equal to the principal amount of Notes being acquired (the
“
Purchase Price
”) as set
forth in
Section
1.2
below. After the initial minimum amount of Units are sold
at a Closing in this offering, the Company may accept additional Purchasers in
Closings from time to time without notice to or consent of any investor, until
the maximum offering amount (inclusive of the overallotment option) is sold
hereby.
1.2
Notes and
Warrants
. At Closing, the Company will issue and deliver to
the Purchaser as listed on the Purchaser Signature Page hereto, the (i) Notes
for the principal amount of Notes subscribed for and,
(ii) Warrants to acquire such number of shares of
common stock of the Company (the “
Common Stock
”) as equals the
principal amount of Notes acquired and accepted divided by the initial
Conversion Price of $.25 per share (the “
Warrant Shares
”), and
exercisable at $.30 per share (the “
Exercise Price
”) commencing
six months after the issuance date at any time prior to the three year
anniversary of the first Closing of this offering. The Notes and
Warrants comprising the Units are substantially similar to those Notes and
Warrants offered and sold to other Purchasers in previously reported offerings
of the Company.
2.
CLOSING.
2.1
Date and
Time
.
(a) The
sale of Notes and Warrants will take place at the discretion of the Company,
upon receipt of cleared funds represented by subscriptions accepted by the
Company (the “
Closing
”)
subject to the satisfaction of all the parties hereto of their obligations
herein. There is no minimum offering amount to the number of Units
that may be sold prior to a closing of the sale of the Units
hereby. The Purchaser(s) shall each submit an executed copy of this
Agreement to the Company along with the Purchase Price in advance of Closing,
which shall be by the Company at the account set forth in
Exhibit
C
, which account is operated by the Company and is not a segregated
account. The Closing shall take place from time to time at the
discretion of the Company at such place as the Company shall agree in writing,
on or before January 15, 2010 unless otherwise terminated early by the Company
or extended by it for up to 30 days (the “
Termination
Date
”). In the event that the Company desires to extend
the offering period beyond January 15, 2010, consent of each Purchaser shall be
required.
(b)
There is no minimum offering
amount in this private offering and
p
urchasers will not have an
opportunity to approve of a Closing or request refund of any moneys held in
escrow until the final closing has occurred or offering period has
terminated.
In the event that funds are returned if a Closing
does not occur on such Purchaser’s investment, no interest shall be paid and
only the net amount received by the Company need by
repaid. Purchaser’s acknowledge and agree that their subscriptions
are irrevocable and binding commitments on the part of the Purchaser and that
once their funds have been tendered to escrow with the appropriate subscription
documents and the minimum offering amount has been raised in accepted funds and
subscriptions, the Company may conduct a closing and utilize funds
therefore. The Company may reject any subscriptions in whole or
in part for any reason or for no reason, or, retains the right to hold the same
in escrow for acceptance or rejection at a future closing, until termination of
the offering, at which time, any unused subscription funds shall be returned to
Purchaser.
3.
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
As a
material inducement to each Purchaser to enter into this Agreement and to
purchase the Units, the Company represents and warrants that the following
statements are true and correct in all material respects as of the date hereof
and will be true and correct in all material respects at Closing, except as
expressly qualified or modified herein or as specifically updated in the
Company’s recently filed Current Reports on Form 8-K, or Quarterly Report on
Form10-Q for the period ended September 30, 2009.
3.1
Organization and
Qualification
. The Company is duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the state of
Nevada, with the requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. The
Company is not in any violation of any of the provisions of its certificate of
incorporation, bylaws or other organizational or charter documents (the “
Company
Documents
”).
3.2
Authorization;
Enforcement
. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated under
this Agreement, the Notes and along with the Warrants (collectively as may be
amended or supplemented through each Closing, the “
Transaction Documents
”) herein
and otherwise to carry out its obligations hereunder. The execution
and delivery of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Company and no further action is
required by the Company in connection therewith. This Agreement and
the other Transaction Documents have been duly executed by the Company and, when
delivered in accordance with the terms hereof or thereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies, or (ii) laws relating to the availability of specific
performance, injunctive relief or other equitable principles of general
application.
3.3
SEC Reports; Financial
Statements
. The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof
(or such shorter period as the Company was required by law to file such reports)
(the foregoing materials, as finally amended being collectively referred to
herein as the
"SEC
Reports"
) on a timely basis or has timely filed a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports, as
amended, complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent that such SEC Reports may have been
subsequently amended or supplemented to correct such misstatement or omission or
to correct information relating to the Company’s internal
controls. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit
adjustments.
3.4
Certain Registration
Matters
. Assuming the accuracy of each Purchaser’s representations and
warranties, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Purchaser under this
Agreement.
3.5
Capitalization
. The
Company is authorized to issue 200,000,000 shares of Common Stock, of which,
prior to the date of this Agreement, there are 65,355,858 shares issued and
outstanding, with an additional 14,947,583 shares currently underlying warrants,
options and convertible notes or other securities, in addition to other shares
and warrants as a result of consummation of the recent offerings of
Units. There are no shares of preferred stock or other securities or
convertible securities. All outstanding shares of the company’s
capital stock have been duly authorized and validly issued, and are fully paid
and non-assessable, and are free of any preemptive rights. The
Company has not entered into any agreement, or granted any right to any party,
that results or would result in, the Company’s obligation to redeem or
repurchase any securities or issue any dividends. The shares issuable
upon conversion of the Notes and upon exercise of the Warrants are, duly
authorized and reserved for issuance and, upon issuance upon due conversion of
the Notes or due exercise of the Warrants, will be deemed validly issued and
fully paid.
3.6
Securities Law
Compliance
. Assuming the accuracy of the representations and
warranties of each Purchaser set forth in this Agreement and the Questionnaire,
the offer, issue, sale and delivery of the Notes and Warrants will constitute an
exempted transaction under the Securities Act of 1933, as amended and now in
effect (the “
Securities
Act
”), and registration of the Notes, Warrants, or the issuance of the
Conversion Shares (upon conversion of the Note) or Warrant Shares (upon due
exercise thereof), under the Securities Act is not required. The
Company shall make such filings as may be necessary to comply with the Federal
securities laws and the “blue sky” laws of any state or other jurisdictions
where filings must be made, which filings will be made in a timely
manner.
3.7
Tax
Matters
. The Company has timely prepared and filed all tax
returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes shown thereon or otherwise owed
by it. The charges, accruals and reserves on the books of the Company
in respect of taxes for all fiscal periods are adequate in all material
respects, and there are no material unpaid assessments against the Company nor,
to the Company’s Knowledge, any basis for the assessment of any additional
taxes, penalties or interest for any fiscal period or audits by any federal,
state or local taxing authority except for any assessment which is not material
to the Company, taken as a whole. All taxes and other assessments and
levies that the Company is required to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity or
third party when due. For the purposes of this agreement, “Company’s
Knowledge” means the actual knowledge of the executive officers (as defined in
Rule 405 under the Securities Act) of the Company, after due
inquiry.
3.8
Title to
Properties
. The Company has good and marketable title to all real
properties and all other properties and assets owned by it (if any), in each
case free from liens, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or currently planned to
be made thereof by them; the Company holds any leased real or personal property
under valid and enforceable leases with no exceptions that would materially
interfere with the use made or currently planned to be made thereof by
them.
3.9
Litigation
. There
are no pending actions, suits or proceedings against or affecting the Company,
its subsidiaries or any of its or their properties; and to the Company’s
Knowledge, no such actions, suits or proceedings are threatened or
contemplated.
3.10
No Directed Selling Efforts
or General Solicitation
. Neither the Company, nor any Person
acting on its or their behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.
3.11
No Integrated
Offering
. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on
Section
4(2)
for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
Securities Act. For purposes of this Agreement, “
Affiliate
” means, with respect
to any Person, any other Person which directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with, such
Person.
3.12
Questionable
Payments
. Neither the Company nor, to the Company’s
Knowledge, any of their respective directors, executive officers, employees, or
other Persons acting at the direction of the Company or any subsidiary, has on
behalf of the Company or any subsidiary or in connection with their respective
businesses: (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payments to any governmental officials or
employees from corporate funds; (iii) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (iv) made any false or
fictitious entries on the books and records of the Company or any subsidiary; or
(v) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of any nature.
3.13
Transactions with
Affiliates
. None of the officers or directors of the Company
is presently a party to any transaction with the Company or any subsidiary
(other than as holders of stock options and/or warrants, and for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the Company’s
Knowledge, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
3.14
Disclosures
. The
written materials delivered to the Purchasers in connection with the
transactions contemplated by the Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
4.
REPRESENTATIONS AND
WARRANTIES OF EACH PURCHASER.
Each
Purchaser hereby represents, warrants and covenants with the Company as
follows. For avoidance of doubt, these warranties and representations
are made to Purchasers:
4.1
Legal
Power
. Each Purchaser has the requisite individual, corporate,
partnership, limited liability company, trust, or fiduciary power, as
appropriate, and is authorized, if such Purchaser is a corporation, partnership,
limited liability company, or trust, to enter into this Agreement, to purchase
the Units hereunder, and to carry out and perform its obligations under the
terms of the Transaction Documents to which it is a party.
4.2
Due
Execution
. This Agreement and the other Transaction Documents
have been duly authorized, if such Purchaser is a corporation, partnership,
limited liability company, trust or fiduciary, executed and delivered by such
Purchaser, and, upon due execution and delivery by the Company, this Agreement
and such other Transaction Documents will be a valid and binding agreement of
such Purchaser.
4.3
Access to
Information
.
Purchaser has thoroughly reviewed
this Agreement including, without limitation, Section 3 which discloses certain
material information about the Company and Section 6
. Each
Purchaser represents that such Purchaser has been given full and complete access
to the Company and to all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Notes and Warrants and the issuance of Conversion Shares and/or Warrant Shares
upon conversion or exercise thereof, which have been requested by Purchaser or
its advisors. Each Purchaser represents that such Purchaser has been
afforded the opportunity to ask questions of, and has inquired with, the
officers of the Company regarding its business prospects and the Notes, all as
such Purchaser or such Purchaser’s qualified representative have found necessary
to make an informed investment decision to purchase the
Units. Neither such inquiries nor any other due diligence
investigation conducted by Purchaser or any of its advisors or representatives
shall modify, amend or affect purchaser’s right to rely on the Company’s
representations and warranties contained herein. The Purchaser
understands that an investment in the Units involves a significant degree of
risk and illiquidity. The Purchaser understands further that the
Conversion Shares and Warrant Shares when issued will also be restricted
securities, and may only be re-sold pursuant to an exemption from the
registration requirements of the Securities Act that may or may not be available
at such time, and, that even if the Company is successful and succeeds with its
business plan, no assurance can be made that the securities of the Company will
be liquid or will increase in market price.
4.4
Restricted
Securities
.
4.4.1
Each
Purchaser has been advised that none of the Notes,
Warrants, Conversion Shares or Warrant Shares (collectively, the
“
Securities
”) have been
registered under the Securities Act or any other applicable securities laws and
that Securities are being offered and sold pursuant to Section 4(2) of the
Securities Act and/or Rule 506 of Regulation D thereunder or such other
exemption as may be available from the Securities Act registration requirements
as may be available from time to time, and that the Company’s reliance upon
Section 4(2) and/or Rule 506 of Regulation D is predicated in part on such
Purchaser’s representations as contained herein. Each Purchaser
acknowledges that the Notes and Warrants, and upon conversion or exercise
thereof, the Conversion Shares and the Warrant Shares when issued, will be
issued as “restricted securities” as defined by Rule 144 promulgated pursuant to
the Securities Act. None of the Securities may be resold in the
absence of an effective registration thereof under the Securities Act and
applicable state securities laws unless, in the opinion of the Company’s
counsel, an applicable exemption from registration is available.
4.4.2
Each
Purchaser represents that such Purchaser is acquiring the Securities for such
Purchaser’s own account, and not as nominee or agent, for investment purposes
only and not with a view to, or for sale in connection with, a distribution, as
that term is used in Section 2(11) of the Securities Act, in a manner which
would require registration under the Securities Act or any state securities
laws.
4.4.3
Each
Purchaser understands and acknowledges that the Notes and Warrants, and if and
when issued, the Conversion Shares will bear substantially the following
legend:
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
4.4.4
Each
Purchaser acknowledges that an investment in any of the Securities are not
liquid and are transferable only under limited conditions. Each
Purchaser acknowledges that such securities must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Each Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of restricted securities subject to the satisfaction of certain
conditions and that such Rule is not now available and, in the future, may not
become available for resale of any of the Notes or Conversion
Shares.
4.4.5
Each
Purchaser is an “accredited investor” as defined under Rule 501(a) of Regulation
D of the Securities Act (an “
Accredited
Investor
”).
4.4.6
The
representations made by each Purchaser on the Purchaser Signature Page and in
the questionnaire immediately preceding the same (the “
Questionnaire
”) are true and
correct and do not omit any material information.
4.5
Purchaser Sophistication and
Ability to Bear Risk of Loss
. Each Purchaser acknowledges that
it is able to protect its interests in connection with the acquisition of the
Notes and Warrants and other Securities and can bear the economic risk of
investment in such Securities without producing a material adverse change in
such Purchaser’s financial condition. Each Purchaser, either alone or
with such Purchaser’s representative(s), otherwise has such knowledge and
experience in financial or business matters that such Purchaser is capable of
evaluating the merits and risks of the investment in the Notes.
4.6
Preexisting
Relationship
. Each Purchaser has a preexisting personal or
business relationship with the Company, one or more of its officers, directors,
or controlling persons.
4.7
Purchases by
Groups
. Each Purchaser represents, warrants and covenants that
it is not acquiring the Securities as part of a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
4.8
Placement Agent
Review
. Each Purchaser acknowledges that placement agent or
representative of the purchasers has independently verified the
accuracy, completeness, materiality or otherwise, of any information,
representation or warranty contained in this Purchase Agreement or any offering
documents provided, that such placement agent related entities and their
principals shall have no liability for any representation (express or implied)
contained in, or for any omissions from, the Purchase Agreement or any offering
documents provided or any other written or oral communications transmitted to
the recipient in the course of his or her evaluation of the investment, and that
it is understood that each prospective investor will make an independent
investigation and analysis of a potential investment in the Company and will be
relying upon same in making any such investment.
5.
COVENANTS OF
THE COMPANY.
5.1
Use of
Proceeds
. The Company intends to employ the net proceeds from
the purchase and sale of the Units (after legal, blue-sky, and related fees) for
general working capital purposes and research and development only (inclusive or
repayment of payables incurred in the ordinary course of business).
5.2
Best
Efforts
. The parties shall use their best efforts to satisfy
timely each of the conditions described herein as applicable to
them.
5.3
Form D; Blue Sky
Laws
. The Company agrees to file a Form D with respect to the
Notes and Warrants as required under Regulation D and to provide a copy thereof
to each Purchaser promptly after such filing.
5.4
Financial
Information
. For as long as the Notes are outstanding, the
Company agrees to remain current with the filings of its SEC
Reports.
5.5
Reservation of
Shares
. The Company shall, as a condition to any merger or
business combination (and in addition to other restrictions that may arise),
require the provisions of this Agreement and the Notes and Warrants (including
issuance of shares upon conversion or exercise thereof) to be assumed by the
surviving parent company.
5.6
Covenants Relating to
Promissory Note
. For so long as any principal or interest is
outstanding on the Notes the Company shall not, without consent of holders of a
majority of the outstanding principal amount of Notes that will be outstanding
immediately after the consummation of taking such action:
5.6.1
effect a
merger or consolidation, share exchange, asset purchase or similar transaction
resulting in a Change of Control (as hereinafter defined) with an entity without
causing the assumption of the obligations herein and under the Notes and
Warrants by such surviving entity. The term “
Change of Control
” shall mean
any merger or consolidation, business transaction or similar transaction in
which securities possessing more then fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior
to such transaction, whether or not the Company or a subsidiary is the surviving
corporation or other transaction wherein the Company becomes a material or
controlling stockholder of any other corporation. Notwithstanding the
foregoing, the Company may raise capital in the form of debt, convertible debt
or equity financings;
5.6.2
sell,
transfer or otherwise dispose of more than 50% of the consolidated assets of the
Company (computed either on the basis of book value, as determined in accordance
with generally accepted accounting principles consistently applied, or fair
market value) in any transaction or series of related transactions outside of
the ordinary course of the Company’s business consistent with past
practice;
5.6.3
sell or
transfer in any transaction or series of related transactions, any of the
Company’s assets to any person or entity that is an Affiliate of the Company,
other then a sale or transfer in the ordinary course of business or such assets
as are immaterial to the business purpose of the Company;
5.6.4
declare or
pay any distribution or dividend, in cash or otherwise on any of the Shares of
the Company, or redeem, purchase or otherwise acquire any of its Shares now or
hereafter outstanding;
provided
,
however
, that the
Company may take any of the foregoing actions without the consent of the
Purchasers in connection with, if contemporaneous with the consummation of such
action, the Notes are converted in accordance with their terms, and Section 5.5
above is complied with.
5.7
Conversion of
Notes.
5.7.1
Upon the
conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all commercially reasonable action, including obtaining and
delivering, an opinion of counsel to assure that the Company's transfer agent
shall issue stock certificates in the name of Purchaser (or its permitted
nominee) or such other persons as designated by Purchaser and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion. The Company warrants that
no instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the certificates
representing such shares shall contain no legend other than the usual Securities
Act restriction from transfer legend.
5.7.2
A Purchaser
will give notice of its decision to exercise its right to convert the Note,
interest, or part thereof by telecopying, or otherwise delivering a completed
Notice of Conversion (a form of which is annexed as “
Exhibit A
” to the
Note) to the Company via confirmed telecopier transmission or otherwise pursuant
to Section 13(a) of this Agreement. Such Purchaser will not be
required to surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to
the Company in accordance with the provisions hereof by 6 PM Eastern Time
(“
ET
”) (or if received
by the Company after 6 PM ET or at any time or a non-business day then the next
business day) shall be deemed a “
Conversion
Date
.” The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Shares issuable upon conversion of the Note to such Purchaser via express
courier for receipt by such Purchaser within ten (10) business days after
receipt by the Company of the Notice of Conversion (such seventh day being the
"
Delivery
Date
"). In the event the Conversion Shares are electronically
transferable, then delivery of the Shares
must
be made by
electronic transfer provided request for such electronic transfer has been made
by the Purchaser. A Note representing the balance of the Note
not so converted will be provided by the Company to such Purchaser if requested
by Purchaser, provided such Purchaser delivers the original Note to the
Company. In the event that a Purchaser elects not to surrender a Note
for reissuance upon partial payment or conversion of a Note, such Purchaser
hereby indemnifies the Company against any and all loss or damage attributable
to a third-party claim in an amount in excess of the actual amount then due
under the Note.
5.7.3
Delivery of
Shares
.
In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of a Purchaser, so long as the certificates therefore do not bear a
legend and the Purchaser is not obligated to return such certificate for the
placement of a legend thereon, the Company will undertake commercially
reasonable efforts cause its transfer agent to electronically transmit the
Unlegended Shares by crediting the account of Purchaser’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission system,
if such transfer agent participates in such DWAC system. Such
delivery must be made on or before the Unlegended Shares Delivery
Date.
5.8.
Exchange of Notes for New
Securities Issued in Subsequent Offering
. In the event the Company
conducts any subsequent financings (each, a “
Follow On Offering
”) of any
kind other than an offering of Units or securities substantially similar hereto
as is currently being offered by the Company through one or more placement
agents and other than any Exempted Issuances (as hereinafter defined), the Notes
may, at the discretion of each holder thereof, be exchanged in whole
or in part to the extent of outstanding principal and/or interest in such Note,
into the securities offered in the Follow On Offering, by applying and
exchanging the outstanding principal and interest of such Notes towards the
purchase price of the securities offered in such Follow On Offering, at the
price offered for such units or securities to other investors
generally. In lieu of offering cash, such Note holder shall tender
the Note with the duly executed subscription documents provided to all investors
in such Follow On Offering, and a notice indicating the dollar amount of
principal and interest being applied, and the Company shall, at closing of such
Follow On Offering, issue to such holder any securities acquired by such holder
in such offering, and a Note certificate reflecting the remaining principal and
interest owed, if any. In the event that the holder of the Notes
elects not to so convert, such holder may do so in whole or in part from time to
time, until the Note is either repaid or fully exchanged for securities issued
in Follow On Offerings. Nothing herein shall be deemed to
prohibit any early repayment of the Notes without penalty.
5.9
No pre-emptive
Rights
. Holders of Notes and Warrants shall not have
pre-emptive or other rights of a shareholders, notwithstanding that other
investors or prospective investors may receive the benefit of such
rights.
5.10
Third Party
Beneficiaries
. There are no third party beneficiaries to the warranties
or covenants made by the Company in this agreement.
6.
CONDITIONS.
6.1
Conditions Precedent to the
Obligation of the Company to Close and to Sell the Notes
. The
obligation hereunder of the Company to close and issue and sell the Units to the
Purchasers at a Closing is subject to the satisfaction or waiver, at or before
such Closing of the conditions set forth below. These conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion.
6.1.1
Accuracy of the Purchasers’
Representations and Warranties
. The representations and
warranties of each Purchaser herein and in the Questionnaire attached hereto
shall be true and correct in all material respects as of the date when made and
as of such Closing as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be true
and correct in all material respects as of such date.
6.1.2
Performance by the
Purchasers
. Each Purchaser shall have performed, satisfied,
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Purchasers at or prior to such Closing.
6.1.3
No
Injunction
. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
6.1.4
Delivery of Purchase
Price
. The Purchase Price for the Units shall have been
delivered to the Company on or before such Closing.
6.1.5
Delivery of Transaction
Documents
. The Transaction Documents shall have been duly
executed and delivered by the Purchasers to the Company.
6.2
Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the
Notes
. The obligation hereunder of the Purchasers to purchase
the Units and consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver, at or before such Closing, of each of the
conditions set forth below. These conditions are for the Purchasers’
sole benefit and may be waived by the Purchasers at any time in their sole
discretion.
6.2.1
Accuracy of the Company’s
Representations and Warranties
. Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects as of such Closing,
except for representations and warranties that speak as of a particular date,
which shall be true and correct in all material respects as of such
date.
6.2.2
Performance by the
Company
. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to such Closing.
6.2.3
No
Injunction
. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
6.2.4
No Proceedings or
Litigation
. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been initiated, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
6.2.5
Notes and
Shares
. At the Closing, the Company shall have delivered to
the Purchasers the Notes in such denominations as each Purchaser may
request.
6.2.6
Closing
Date
. In the event that no Closing occurs by the Termination
Date, then the Company shall return to each Purchaser the net amount of all of
the funds for subscription amounts of such Purchaser without interest or set
off, other than any check or wire or similar fees.
7.
PLACEMENT
AGENT/LEGAL FEES.
7.1
Placement Agent’s
Commission
. The Company and each Purchaser represent
that there are no other parties entitled to receive fees, commissions, or
similar payments in connection with the offering described in this Agreement
other than legal, accounting, blue sky filing, printing or similar offering
expenses. The parties also agree and acknowledge hereby that such
fees shall not be deemed as interest or fees relating to the Note.
7.2
Legal
Fees
. The Purchasers and the Company shall each bear
their own legal fees in connection with this Agreement.
8.
MISCELLANEOUS.
8.1
Indemnification
. Each
Purchaser agrees to defend, indemnify and hold the Company harmless against any
liability, costs or expenses arising as a result of any dissemination of any of
the Shares by such Purchaser in violation of the Securities Act or applicable
state or Cayman securities law.
8.2
Governing Law
-
Waiver of Stay,
Extension or Usury Laws
. This Agreement shall be governed by
and construed under the laws of the State of New York. The Company
represents and warrants that it deems the sale of the Units hereby as an
Investment and does not consider the sale of the Units together with the payment
of all fees and expenses in connection herewith to be usurious under the usury
laws of the State of New York (“
Applicable
Law
”). If, from any circumstances whatsoever, interest (or any
original issue discount that would be determined to be interest) would otherwise
be payable to any holder of the Notes in excess of the maximum amount
permissible under Applicable Law, the interest payable to such holder shall be
reduced to the maximum amount permissible under Applicable Law, and if from any
circumstances such holder shall ever receive anything deemed interest by the
Applicable Law in excess of the maximum amount permissible under the Applicable
Law, an amount equal to the excessive interest shall be applied to the reduction
of the principal hereof and not to the payment of interest, or if such excessive
amount of interest exceeds the unpaid principal balance of principal hereof,
such excess shall be refunded to the Company as applicable. All
interest paid or agreed to be paid to the holders of the Notes shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout full period (including any renewal or extension) until payment in
full of the principal so that the interest hereon for such full period shall not
exceed the maximum amount permissible under the Applicable Law.
8.3
Successors and
Assigns
. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties
hereto.
8.4
Entire
Agreement
. This Agreement and the Exhibits hereto and thereto,
and the other documents delivered pursuant hereto and thereto, constitute the
full and entire understanding and agreement among the parties with regard to the
subjects hereof and no party shall be liable or bound to any other party in any
manner by any representations, warranties, covenants, or agreements except as
specifically set forth herein or therein. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto and their respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided herein.
8.5
Severability
. In
case any provision of this Agreement shall be invalid, illegal, or
unenforceable, it shall to the extent practicable, be modified so as to make it
valid, legal and enforceable and to retain as nearly as practicable the intent
of the parties, and the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
8.6
Amendment and
Waiver
. Except as otherwise provided herein, any term of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), with
the written consent of the Company and the Purchasers holding a majority of the
outstanding principal amount of Notes, or, to the extent such amendment affects
only one Purchaser, by the Company and such Purchaser. Any amendment
or waiver effected in accordance with this Section shall be binding upon each
future holder of any security purchased under this Agreement (including
securities into which such securities have been converted) and the
Company.
8.7
Notices
. All
notices and other communications required or permitted hereunder shall be in
writing and shall be effective when delivered personally, or sent by telex or
telecopier (with receipt confirmed), provided that a copy is mailed by
registered mail, return receipt requested, or when received by the addressee, if
sent by Express Mail, Federal Express or other nationally recognized overnight
courier service (receipt requested) in each case to the appropriate address set
forth below:
|
|
If to the
Company:
|
Save the
World Air, Inc.
235
Tennant Avenue
Morgan
Hill, California 95037
Attn: Cecil
Bond Kyte
Tel: (408)
778-0101
Fax:
(408) 778-8585
|
|
|
With a copy
to:
|
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32
nd
Floor
New
York, NY 10006
Attn:
Greg Sichenzia
Fax:
(212) 930-9725
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|
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|
|
|
|
If
to the Purchaser:
|
At
the address set forth on the Purchaser’s Signature
Page
|
8.8
Faxes and
Counterparts
. This Agreement may be executed in one or more
counterparts. Delivery of an executed counterpart of the Agreement or
any exhibit attached hereto by facsimile transmission shall be equally as
effective as delivery of an executed hard copy of the same. Any party
delivering an executed counterpart of this Agreement or any exhibit attached
hereto by facsimile transmission shall also deliver an executed hard copy of the
same, but the failure by such party to deliver such executed hard copy shall not
affect the validity, enforceability or binding nature effect of this Agreement
or such exhibit.
8.9
Consent of
Purchasers
. As used in the Agreement, “consent of the
Purchasers” or similar language means the consent of holders of not less than
50% of the total principal and interest outstanding on the Notes owned by
Purchasers on the date consent is requested.
8.10
Titles and
Subtitles
. The titles of the paragraphs and subparagraphs of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
[Counterpart
Signature Page to Securities Purchase Agreement of Save the World Air,
Inc.]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth on the Purchase Signature Page hereto.
|
|
PURCHASER
(By
Counterpart Form - See Purchaser Signature
Pages
following the Questionnaire)
COMPANY
SAVE
THE WORLD AIR, INC
(By
Execution of Acceptance Page following
Certificate
of Signatory)
|
QUESTIONNAIRE
The
undersigned Purchaser has read the Securities Purchase Agreement of Save the
World Air, Inc., dated as of ______ __, 2009, and acknowledges that the
completion of this Questionnaire and the execution of the Purchaser Signature
Page that follows shall constitute the undersigned’s execution of such
Agreement. This Questionnaire is and shall remain part of the
Agreement. All capitalized terms used herein shall be as defined in
such Agreement
I hereby
subscribe for the 7% Convertible Promissory Note in the aggregate principal
amount of
$__________________,
and Common Stock Purchase Warrants to purchase
___________________
shares
(each as subject to adjustment) and tender a purchase price of
$_______________
therefore.
I am a
resident of the State of __________________.
Please
print above the exact name(s) in which the Notes are to be held
[continued]
I agree
to keep information relating to the Company strictly confidential and not to
discuss or exploit or distribute any of the information herein except to my
professional advisors or as necessary to comply with law.
I
acknowledge that the offering of the Units is subject to the Federal securities
laws of the United States and state securities laws of those states in which the
Notes are offered, and that, pursuant to the U.S. Federal securities laws and
state securities laws, the Units may be purchased by persons who come within the
definition of an “
Accredited
Investor
” as that term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act (“
Regulation D
”).
By
initialing one of the categories below, I represent and warrant that I come
within the category so initialed and have truthfully set forth the factual basis
or reason I come within that category. All information in response to
this paragraph will be kept strictly confidential. I agree to furnish
any additional information that the Company deems necessary in order to verify
the answers set forth below.
NOTE: You
must either initial that at least
ONE
category.
Individual
Purchaser:
(A
Purchaser who is an individual may initial either Category I, II, or
III)
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|
______
|
I
am a director or executive officer of the
Company.
|
|
|
|
I
am an individual (not a partnership, corporation, etc.) whose individual
net worth, or joint net worth with my spouse, presently exceeds
$1,000,000.
Explanation.
In calculation of net
worth, you may include equity in personal property and real estate,
including your principal residence, cash, short term investments, stocks
and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt
secured by such property.
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|
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|
I
am an individual (not a partnership, corporation, etc.) who had an
individual income in excess of $200,000 in 2007 and 2008, or joint income
with my spouse in excess of $300,000 in 2007 and 2008, and I have a
reasonable expectation of reaching the same income level in
2009.
|
[continued]
Entity
Purchasers:
(A Purchaser which is a corporation,
limited liability company, partnership, trust, or other entity may
initial either Category IV, V, VI,
VII or VIII)
|
|
|
The
Purchaser is an entity in which all of the equity owners are “
Accredited Investors
” as
defined in Rule 501(a) of Regulation D.
If relying upon this category
alone, each equity owner must complete a separate copy of this
Agreement.
_____________________________________________________
_____________________________________________________
|
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_____________________________________________________
|
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|
|
The
Purchaser is a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Units offered, whose
purchase is directed by a “
Sophisticated Person
” as
described in Rule 506(b)(2)(ii) of Regulation
D.
|
|
|
|
The
Purchaser is an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the Units, with total assets in excess of
$5,000,000.
|
_____________________________________________________
_____________________________________________________
|
|
_____________________________________________________
|
|
Category
VII
|
______
|
The
Purchaser is a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
_____________________________________________________
_____________________________________________________
|
|
|
_____________________________________________________
|
(describe
entity)
Executed
this _____ day of _________, 2009 at ____________________,
________________.
[Purchasers'
Signature Page follows]
PURCHASER
SIGNATURE PAGE
(For
Individual Purchasers)
This
Securities Purchase Agreement of Save the World Air, Inc. (including the
Questionnaire) is hereby executed and entered into by the below
Purchaser.
|
Principal
Amount of Note $_____________
No.
of Warrants_____________________
|
______________________________________
Signature
(Individual)
______________________________________
Name
(Print)
______________________________________
Street
address
______________________________________
City,
State and Zip Code
|
|
|
|
|
|
______________________________________
Tax
Identification or Social Security Number
(______)_______________________________
Telephone
Number
(______)_______________________________
Facsimile
Number
|
|
|
Address
to Which Correspondence Should Be
Directed
(if different from above)
______________________________________
c/o
Name
______________________________________
Street
Address
|
|
|
______________________________________
City,
State and Zip Code
(______)_______________________________
Telephone
Number
(______)_______________________________
Facsimile
Number
|
PURCHASER
SIGNATURE PAGE
(for
Corporation, Partnership, Trust or Other Entities)
This Securities Purchase Agreement of
Save the World Air, Inc. (including the Questionnaire) is hereby
executed and entered into by the below Purchaser:
|
Principal
Amount of Note $_____________
No.
of Warrants_____________________
|
______________________________________
Name
of Entity
______________________________________
Type
of Entity (i.e., corporation, partnership, etc.)
|
|
|
|
|
|
______________________________________
Tax
Identification or Social Security Number
______________________________________
State
of Formation of Entity
______________________________________
Name of
Signatory Typed or Printed
Its:____________________________________
Title
|
|
|
Address
to Which Correspondence Should Be
Directed
(if different from above)
______________________________________
c/o
Name
______________________________________
Street
Address
|
|
|
______________________________________
City,
State and Zip Code
(______)_______________________________
Telephone
Number
(______)_______________________________
Facsimile
Number
|
*If
Notes are being subscribed for by an entity, the Certificate of Signatory that
follows must also be completed.
CERTIFICATE
OF SIGNATORY
To be
completed if Units are being subscribed for by an
entity.
I,__________________________________,
am the ___________________________ of
___________________________________________
(the
“
Entity
”).
I certify
that I am empowered and duly authorized by the Entity to execute and carry out
the terms of the Securities Purchase Agreement and to purchase and hold the
Notes and Shares. The Securities Purchase Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN
WITNESS WHEREOF, I have hereto set my hand this ______ day of _________,
2009.
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______________________________________________
Signature
|
ACCEPTANCE
PAGE TO SECURITIES PURCHASE AGREEMENT OF
SAVE
THE WORLD AIR, INC
The
foregoing subscriptions for an aggregate of $___________ principal amount of 7%
Convertible Promissory Notes and Warrants, in accordance with the foregoing
Securities Purchase Agreement, AGREED AND ACCEPTED;
provided, however
, that the
Company may accept additional subscriptions from time to time without consent of
Purchasers until the maximum offering amount (plus the over-allotment option, if
any) are accepted and Closed upon, in accordance with this
Agreement:
SAVE
THE WORLD AIR, INC
By:_____________________________________
Name:
Title:
Date: September
__, 2009
EXHIBIT
A
Form
of 7% Convertible Promissory Note
EXHIBIT
B
Form
of Common Stock Purchase Warrant
EXHIBIT
C
Wire
Instructions
Exhibit
10.2
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
|
Principal
Amount: $[__________]
|
Issue
Date: January 15, 2010
|
7% CONVERTIBLE PROMISSORY
NOTE
FOR VALUE
RECEIVED,
SAVE THE WORLD AIR,
INC.,
a Nevada corporation (hereinafter called “
Borrower
”), hereby promises to
pay to
[ ],
[ ], (the
“
Holder
”) or its
registered assigns or successors in interest or order, without demand, the sum
of
[ ]
($[ ]) (“
Principal Amount
”), with
interest compounded quarterly at the annual rate of seven percent (7%) on
January 15
,
2012
(the “
Maturity Date
”), if not sooner
paid.
This Note
has been entered into pursuant to the terms of a Securities Purchase Agreement
between the Borrower, the Holder and certain other holders (the “
Other Holders
”) of convertible
promissory notes (the “
Other
Notes
”) and Common Stock Purchase Warrants, dated of even date herewith
(the “
Subscription
Agreement
”), and shall be governed by the terms of such Subscription
Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to
this Note:
ARTICLE
I
INTEREST
1.1.
Interest
Rate
. Interest on this Note shall compound quarterly and
shall accrue at the annual rate of seven percent (7%). Interest will
be payable commencing January 15, 2010 and on the last business day of each
calendar quarter thereafter and on the Maturity Date, accelerated or otherwise,
when the principal and remaining accrued but unpaid interest shall be due and
payable, or sooner as described below. Interest will be payable in
cash, or at the election of the Borrower, and subject to Section 2.2, with
shares of Common Stock at a per share value equal to the Conversion Price set
forth in Section 2.1. Interest may be paid at the Company’s election
in cash, registered Common Stock or Common Stock immediately to the extent
resellable pursuant to Rule 144 to the extent such share issuance is not limited
by transfer or volume restrictions.
1.2.
Default Interest
Rate
. Following the occurrence and during the continuance of
an Event of Default, which, if susceptible to cure is not cured within the cure
periods (if any) set forth in
Article III
,
otherwise then from the first date of such occurrence until cured, the annual
interest rate on this Note shall (subject to Section 4.7) be ten percent (10%),
and be due on demand.
ARTICLE
II
CONVERSION
RIGHTS
2.1.
Holder’s Conversion
Rights
. Subject to Section 2.2, for so long as this Note
remains outstanding and not fully paid, the Holder shall have the right, but not
the obligation, to convert all or any portion of the then aggregate outstanding
Principal Amount of this Note, together with interest, into shares of Common
Stock, subject to the terms and conditions set forth in this Article III, at the
rate of
$0.25 per
share of Common Stock (“
Conversion Price
”), as the
same may be adjusted pursuant to this Note. The Holder may exercise
such right by delivery to the Borrower of a written Notice of Conversion
pursuant to Section 2.3.
2.2.
Conversion
Limitation
. Neither Holder nor the Borrower may convert
on any date that amount of the Note Principal or interest in connection with
that number of shares of Common Stock which would be in excess of the sum of (i)
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates on a Conversion Date, (ii) any Common Stock issuable in connection
with the unconverted portion of the Note, and (iii) the number of shares of
Common Stock issuable upon the conversion of the Note with respect to which the
determination of this provision is being made, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock of the Borrower on such Conversion Date. For
the purposes of the provision to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited
to aggregate conversions of only 4.99% and aggregate conversion by the Holder
may exceed 4.99%. The Holder shall have the authority and obligation
to determine whether the restriction contained in this Section 2.2 will limit
any conversion hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of which portion
of the Notes are convertible shall be the responsibility and obligation of the
Holder. The Holder may waive the conversion limitation described in
this Section 2.2, in whole or in part, upon and effective after 61 days prior
written notice to the Borrower to increase such percentage to up to
9.99%. Once a Holder has waived this limitation, the same shall be
deemed waived for all other future conversions, warrant exercises, or share
issuances by the Holder.
2.3.
Mechanics of Holder’s
Conversion
.
(a) In
the event that the Holder elects to convert any amounts outstanding under this
Note into Common Stock, the Holder shall give notice of such election by
delivering an executed and completed notice of conversion (a “
Notice of Conversion
”) to the
Borrower, which Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and amounts being
converted. The original Note is not required to be surrendered to the
Borrower until all sums due under the Note have been paid. On each
Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records. Each
date on which a Notice of Conversion is delivered or telecopied to the Borrower
in accordance with the provisions hereof shall be deemed a “Conversion
Date.” A form of Notice of Conversion to be employed by the Holder is
annexed hereto as
Exhibit
A
.
(b) Pursuant
to the terms of a Notice of Conversion, the Borrower will issue instructions to
the transfer agent accompanied by an opinion of counsel (if so required by the
Borrower’s transfer agent), to issue the Conversion Shares as provided in the
Subscription Agreement.
2.4.
Adjustments to Conversion
Price
.
(a) The
number of shares of Common Stock to be issued upon each conversion of this Note
pursuant to this
Article II
shall be
determined by dividing that portion of the Principal Amount and interest and
fees to be converted, if any, by the then applicable Conversion
Price. Notwithstanding the foregoing, in the event that any principal
or interest is applied towards an investment in a Follow On Offering, the
principal and interest shall entitle the Holder converting the same to the
securities offered in such Follow On Offering at the same price offered to other
investors therein as provided in the Subscription Agreement.
(b) The
Conversion Price and number and kind of shares or other securities to be issued
upon conversion shall be subject to adjustment from time to time as described in
the Subscription Agreement and upon the happening of certain events while this
conversion right remains outstanding, as follows:
A.
Merger, Sale of Assets,
etc
. If (A) the Company effects any merger
or consolidation of the Company with or into another entity, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange
offer (whether by the Company or another entity) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, (D) the Company consummates a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "
person
" or "
group
" (as these terms are
used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall
become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate Common Stock of the Company
(other than through open market purchases), or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a
"Fundamental Transaction"), this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to convert into such number and kind of shares or other
securities and property as would have been issuable or distributable on account
of such Fundamental Transaction, upon or with respect to the securities subject
to the conversion right immediately prior to such Fundamental
Transaction. The foregoing provision shall similarly apply to
successive Fundamental Transactions of a similar nature by any such successor or
purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such Fundamental Transaction.
B.
Reclassification,
etc
. If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes, this Note, as to the unpaid principal
portion hereof and accrued interest hereon, shall thereafter be deemed to
evidence the right to convert into an adjusted number of such securities and
kind of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.
C.
Stock Splits, Combinations
and Dividends
. If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.
(c) Whenever
the Conversion Price is adjusted pursuant to Section 2.4(b) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring such
adjustment.
(d) Nothing
herein shall be deemed a waiver or consent of the Holders to the taking of any
action by the Company set forth in Section 5 of the Subscription
Agreement.
2.5.
Reservation
. During
the period the conversion right exists, Borrower will make best efforts, to
reserve from its authorized and unissued Common Stock not less than
one
hundred and ten percent (
120
%)
of the number of shares to provide for the issuance of Common Stock upon the
full conversion of this
Note. Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Borrower acknowledges that it may be
required to amend its Articles of Incorporation so as to increase its authorized
capital from time to time in order to satisfy this covenant, and agrees to make
best efforts to make such filings, proxy or information statement distributions,
and obtain such board, shareholder or other third party consents as are
necessary from time to time to maintain the adequate number of Common Stock
reserved and available for issuance.
2.6
Issuance of Replacement
Note
. Upon any partial conversion of this Note, a replacement
Note containing the same date and provisions of this Note shall, at the written
request of the Holder, be issued by the Borrower to the Holder for the
outstanding Principal Amount of this Note and accrued interest which shall not
have been converted or paid, provided Holder has surrendered an original Note to
the Borrower. In the event that the Holder elects not to surrender a
Note for reissuance upon partial payment or conversion, the Holder hereby
indemnifies the Borrower against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note, and the Borrower is hereby expressly authorized to offset any such amounts
mutually agreed upon by Borrower and Holder or pursuant to a judgment in
Borrower’s favor against amounts then due under the Note.
ARTICLE
III
EVENTS
OF DEFAULT
The
occurrence of any of the following events of default (“
Event of Default
”) shall, at
the option of the Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:
3.1
Failure to Pay Principal or
Interest
. The Borrower fails to pay any installment of
Principal Amount, interest or other sum due under this Note when due and such
failure continues for a period of eight (8) business days after the due
date.
3.2
Breach of
Covenant
. The Borrower breaches any material covenant or other
term or condition of the Subscription Agreement in any material respect and such
breach, if subject to cure, continues for a period of ten (10) business days
after written notice to the Borrower from the Holder. Notwithstanding
the foregoing, in the event that the provisions of Section 2.2 wherein the
Borrower does not have sufficient number of shares available for issuance
pursuant to its Articles of Incorporation, as amended, then the default shall be
deemed cured at the time of the initial filing of a preliminary information
statement or proxy statement, provided, that the Company makes best efforts to
obtain effectiveness of the same and complete the filing of any Amendment to the
Articles of Incorporation (or amended and restated Articles of Incorporation)
within 45 days thereafter.
3.3
Breach of Representations
and Warranties
. Any material representation or warranty of the
Borrower made herein or in the Subscription Agreement, or in any agreement,
statement or certificate given in writing pursuant hereto or in connection
herewith or therewith shall be false or misleading in any material respect as of
the Closing Date.
3.4
Receiver or
Trustee
. The Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for them or for a substantial part of their property or business; or
such a receiver or trustee shall otherwise be appointed.
3.5
Judgments
. Any
money judgment, writ or similar final process shall be entered or filed against
Borrower States or any subsidiary of Borrower in the United or any of their
property or other assets in the United States for more than $300,000, and shall
remain unvacated, unbonded, unappealed, unsatisfied, or unstayed for a period of
forty-five (45) days.
3.6
Non-Payment
. A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $300,000 for more than twenty (20) days after the
due date, unless the Borrower is contesting the validity of such obligation in
good faith and has segregated cash funds equal to not less than one-half of the
contested amount.
3.7
Bankruptcy
. Bankruptcy,
insolvency, reorganization, or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or
against the Borrower or any Subsidiary of Borrower and if instituted against
them are not dismissed within forty-five (45) days of initiation.
3.8
Delisting
. Delisting
of the Common Stock from any Principal Market for a period of seven consecutive
trading days; or notification from a Principal Market that the Borrower is not
in compliance with the conditions for such continued listing on such Principal
Market.
3.9
Stop
Trade
. An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Borrower’s Common Stock that lasts for five
or more consecutive trading days.
3.10
Failure to Deliver Common
Stock or Replacement Note
. Borrower’s failure to timely
deliver Common Stock to the Holder pursuant to and in the form required by this
Note or the Subscription Agreement, or if required, a replacement
Note.
3.11
[Omitted]
3.12
Reservation
Default
. Failure by the Borrower to have reserved for
issuance upon conversion of the Note the amount of Common Stock as set forth in
this Note and the Subscription Agreement.
3.13
Financial Statement
Restatement
. The restatement of any financial statements
filed by the Borrower for any date or period from two years prior to the Issue
Date of this Note and until this Note is no longer outstanding, if the result of
such restatement would, by comparison to the unrestated financial statements,
have constituted a Material Adverse Effect.
ARTICLE
IV
MISCELLANEOUS
4.1
Failure or Indulgence Not
Waiver
. No failure or delay on the part of Holder hereof in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
4.2
Notices
. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: (i) if to the Borrower to: Save the
World Air, Inc., 235 Tennant Avenue, Morgan Hill, California 95037,
Attn: Cecil Bond Kyte, CEO, Tel: (408)778- 0101, Fax:
(408) 778-8585, and (ii) if to the Holder, to the name, address and facsimile
number set forth on the front page of this Note.
4.3
Amendment
Provision
. The term “
Note
” and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.
4.4
Assignees
. This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
assigns.
4.5
Cost of
Collection
. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys’ fees.
4.6
Governing
Law
. This Note shall be governed by and construed in
accordance with the laws of the State of New York,
including, but not limited to, New
York statutes of limitations
. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the civil or state courts of New York or in
the federal courts located in the State and county of New York. Both
parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other decision in favor of the Holder.
4.7
Maximum
Payments
. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to
the Borrower.
4.8.
Construction
. Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
4.9
Redemption
. This
Note may not be redeemed or called without the consent of the Holder except as
described in this Note.
4.10
Shareholder
Status
. The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this
Note. However, the Holder will have the rights of a shareholder of
the Borrower with respect to the Shares of Common Stock to be received after
delivery by the Holder of a Conversion Notice to the Borrower.
4.11
Non-Business
Days
. Whenever any payment or any action to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due or action shall be required on the
next succeeding business day and, for such payment, such next succeeding day
shall be included in the calculation of the amount of accrued interest payable
on such date.
IN WITNESS WHEREOF
, Borrower
has caused this Note to be signed in its name by an authorized officer as of the
____ day of January , 2010.
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SAVE
THE WORLD AIR, INC.
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By:________________________________
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Name:
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Title:
CEO
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WITNESS:
______________________________________
[Print
Name]
Chief
Financial Officer
NOTICE OF
CONVERSION
(To be
executed by the Registered Holder in order to convert the Note)
The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by Save the World Air, Inc. on November
[ ], 2009 into Shares of Common Stock of Save the World Air, Inc.
(the “
Borrower
”)
according to the conditions set forth in such Note, as of the date written
below.
Date of
Conversion:____________________________________________________________________
Conversion
Price:______________________________________________________________________
Number of Shares of Common
Stock Beneficially Owned on the Conversion Dat
e: Less than 5% of the outstanding Common Stock of Save
the World Air, Inc.
Shares To
Be
Delivered:_________________________________________________________________
Signature:____________________________________________________________________________
Print
Name:__________________________________________________________________________
Address:_____________________________________________________________________________
____________________________________________________________________________
Exhhibit 10.3
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
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Right
to Purchase ____________ shares of Common Stock of Save the World Air,
Inc. (subject to adjustment as provided
herein)
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FORM
OF COMMON STOCK PURCHASE WARRANT
|
Warrant
September –[001]
|
Issue
Date: January___, 2010
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SAVE THE
WORLD AIR, INC., a corporation organized under the laws of the State of Nevada
(the “
Company
”), hereby
certifies that, for value received, ____________________________________,
______________________________________________, or its assigns (the “
Holder
”), is entitled, subject
to the terms set forth below, to purchase from the Company at any time
commencing six months after the Issue Date until 5:00 p.m., E.S.T on January __,
2013 (the “
Expiration
Date
”), up to ____________ fully paid and nonassessable shares of Common
Stock at a per share purchase price of $0.30. The afore described
purchase price per share, as adjusted from time to time as herein provided, is
referred to herein as the "
Purchase
Price."
The number and character of such shares of Common
Stock and the Purchase Price are subject to adjustment as provided
herein. The Company may reduce the Purchase Price for some or all of
the Warrants, temporarily or permanently. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the “
Subscription Agreement
”),
dated as of November 26, 2009, entered into by the Company and the
Holder.
As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term “
Company
” shall
include Save the World Air, Inc. and any corporation which shall succeed or
assume the obligations of Save the World Air, Inc. hereunder.
(b) The
term “
Common Stock
”
includes (a) the Company's Common Stock, $.001 par value per share, as
authorized on the date of the Subscription Agreement, and (b) any other
securities into which or for which any of the securities described in
(a) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The
term “
Other Securities
”
refers to any stock (other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.
(d) The
term “
Warrant Shares
”
shall mean the Common Stock issuable upon exercise of this Warrant.
1.
Exercise of
Warrant
.
1.1.
Number of Shares Issuable
upon Exercise
. From and after the Issue Date through and
including the Expiration Date, the Holder hereof shall be entitled to receive,
upon exercise of this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
1.2.
Full
Exercise
. This Warrant may be exercised in full by the Holder
hereof by delivery of an original or facsimile copy of the form of subscription
attached as
Exhibit A
hereto (the “
Subscription
Form
”) duly executed by such Holder and delivery within two days
thereafter of payment, in cash, wire transfer or by certified or official bank
check payable to the order of the Company, in the amount obtained by multiplying
the number of shares of Common Stock for which this Warrant is then exercisable
by the Purchase Price then in effect. The original Warrant is not
required to be surrendered to the Company until it has been fully
exercised.
1.3.
Partial
Exercise
. This Warrant may be exercised in part (but not for a
fractional share) by delivery of a Subscription Form in the manner and at the
place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by the Holder in
the Subscription Form by (b) the Purchase Price then in
effect. On any such partial exercise provided the Holder has
surrendered the original Warrant, the Company, at its expense, will forthwith
issue and deliver to or upon the order of the Holder hereof a new Warrant of
like tenor, in the name of the Holder hereof or as such Holder (upon payment by
such Holder of any applicable transfer taxes) may request, the whole number of
shares of Common Stock for which such Warrant may still be
exercised.
1.4.
Fair Market Value
.
Fair Market Value of a share of Common Stock as of a particular date (the "
Determination Date
") shall
mean:
(a) If
the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ
Global Market, Nasdaq Global Select Market, the NASDAQ Capital Market, the New
York Stock Exchange, the American Stock Exchange, LLC, OTC Bulletin Board, or
Pink Sheets LLC, then the average of the closing or last sale prices,
respectively, reported for the ten trading days immediately preceding the
Determination Date;
(b) If
the Company's Common Stock is not traded on an exchange or on the NASDAQ Global
Market, Nasdaq Global Select Market, the NASDAQ Capital Market, the New York
Stock Exchange, the American Stock Exchange, LLC, OTC Bulletin Board, or Pink
Sheets LLC, but is traded in the over-the-counter market, then the average of
the closing bid and ask prices reported for the ten trading days immediately
preceding the Determination Date;
(c) Except
as provided in clause (d) below and Section 3.1, if the Company's Common
Stock is not publicly traded, then as the Holder and the Company agree, or in
the absence of such an agreement, by arbitration in accordance with the rules
then standing of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided with such arbitration to be
conducted in New York City, New York; or
(d) If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company's charter, then all amounts to be payable per share to holders of
the Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.
1.5.
Company
Acknowledgment
. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights.
1.6.
Trustee for Warrant
Holders
. In the event that a bank or trust company shall have been
appointed as trustee for the Holder of the Warrants pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and
duties of a warrant agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
1.7
Delivery of Stock
Certificates, etc. on Exercise
. The Company agrees that the shares of
Common Stock purchased upon exercise of this Warrant shall be deemed to be
issued to the Holder hereof as the record owner of such shares as of the close
of business on the date on which delivery of a Subscription Form shall have
occurred and payment made for such shares as aforesaid. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
ten (10) business days thereafter (“
Warrant Share Delivery Date
”),
the Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder
hereof, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and non-assessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share of Common
Stock, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company understands that
a delay in the delivery of the Warrant Shares after the Warrant Share Delivery
Date could result in economic loss to the Holder. The Company shall
not, however, be responsible for any out of pocket or potential lost profits as
a result of a decline in stock price during any delay. Furthermore,
in addition to any other remedies which may be available to the Holder, in the
event that the Company fails for any reason to effect delivery of the Warrant
Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of
the relevant Warrant exercise by delivery of a notice to such effect to the
Company, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the exercise of the relevant portion
of this Warrant.
2.
Cashless
Exercise
.
(a) This
Warrant may be exercised in whole or in part either in (i) cash, wire
transfer or by certified or official bank check payable to the order of the
Company equal to the applicable aggregate Purchase Price, (ii) by delivery of
Common Stock issuable upon exercise of the Warrants in accordance with
Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of Common Stock specified in such form (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this
Warrant) and the holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value of one share
of Common Stock is greater than the Purchase Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant for cash, the holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Subscription
Form in which event the Company shall issue to the holder a number of shares of
Common Stock computed using the following formula:
X=
Y (A-B)
A
|
Where
|
X=
|
the number of shares of Common Stock to be issued to the
holder
|
|
|
Y=
|
the
number of shares of Common Stock purchasable under the Warrant or, if only
a portion of the Warrant is being exercised, the portion of the Warrant
being exercised (at the date of such
calculation)
|
|
|
A=
|
the
average of the closing sale prices of the Common Stock for the ten (10)
Trading Days immediately prior to (but not including) the Exercise Date,
or Fair Market Value, whichever is
less
|
|
|
B=
|
Purchase
Price (as adjusted to the date of such
calculation)
|
For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Subscription
Agreement.
3.
Adjustment for
Reorganization, Consolidation, Merger, Subsequent Share Issuances
etc.
3.1.
Fundamental
Transaction
. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger
or consolidation of the Company with or into another
entity, (B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender
offer or exchange offer (whether by the Company or another entity) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, (D) the Company consummates
a stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more persons or entities whereby such other persons or
entities acquire more than the 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by such other persons or entities
making or party to, or associated or affiliated with the other persons or
entities making or party to, such stock purchase agreement or other business
combination), (E) any "person" or "group" (as these terms are used for purposes
of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate Common Stock of the Company, or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "
Fundamental Transaction
"),
then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at
the option of the Holder, (a) upon exercise of this Warrant, the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the "
Alternate
Consideration
") receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in (1) a
transaction where the consideration paid to the holders of the Common Stock
consists solely of cash, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the 1934 Act, or (3) a transaction involving a person or entity not traded
on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq
Global Market or the Nasdaq Capital Market, cash equal to the Black-Scholes
Value. For purposes of any such exercise, the determination of the
Purchase Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Purchase Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder's right to exercise such
warrant into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 3.1 and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction. “Black-Scholes Value” shall be
determined in accordance with the Black-Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg L.P. using (i) a price per share of Common
Stock equal to the VWAP of the Common Stock for the Trading Day immediately
preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of
such request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the Trading
Day immediately following the public announcement of the applicable Fundamental
Transaction.
3.2.
Dissolution
. In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and
other securities and property (including cash, where applicable) receivable by
the Holder of the Warrants after the effective date of such dissolution pursuant
to this Section 3 to a bank or trust company (a "Trustee") having its
principal office in New York, NY, as trustee for the Holder of the
Warrants. Such property shall be delivered only upon payment of the
Warrant exercise price.
3.3.
Continuation of
Terms
. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the transaction
described in this Section 3, then only in such event will the Company's
securities and property (including cash, where applicable) receivable by the
Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.
3.4.
Anti-Dilution
.
(a)
Anti
Dilution
. Other than in connection with an Excepted Issuance
(as defined below), if at any time while any part of the Warrants are
outstanding, the Company shall agree to or actually issue or grant the right to
receive any Common Stock or securities convertible, exercisable or exchangeable
for shares of Common Stock (or modify any of the foregoing which may be
outstanding) (“
Common Stock Equivalent
”) to
any person or entity at a price per share or conversion price or exercise price
per share which shall be less than the Warrant exercise price in respect of the
Warrant Shares then in effect (“
Lower Price Issuance
”),
without the consent of the Holder of such Warrant, then the Warrant exercise
price shall automatically and without further action be reduced to an amount
equal to the product of the Warrant exercise price then in effect multiplied by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding prior to such issuance plus the number of shares of Common Stock
which the aggregate purchase price or exercise price for such Common Stock
(plus, if applicable, the aggregate consideration received from the issuance of
the Common Stock Equivalents) would purchase at the then current Warrant
exercise price and the denominator shall be the number of shares of Common Stock
outstanding or deemed to be outstanding immediately after such
issuance. For so long as a Warrant is outstanding upon the occurrence
of a Lower Price Issuance, the Warrant exercise price shall be reduced to an
amount equal to the product of the Warrant exercise price then in effect
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding prior to such issuance plus the number of shares of
Common Stock which the aggregate purchase price or exercise price for such
Common Stock (plus, if applicable, the aggregate consideration received from the
issuance of the Common Stock Equivalents) would purchase at the then current
Warrant exercise price and the denominator shall be the number of shares of
Common Stock outstanding or deemed to be outstanding immediately after such
issuance.
(c)
Effective
Price
. For purposes of Section 3.4 in connection with
any issuance of any Common Stock Equivalents, (A) the maximum number of shares
of Common Stock potentially issuable at any time upon conversion, exercise or
exchange of such Common Stock Equivalents (the “
Deemed Number
”) shall be
deemed to be outstanding or subscribed for and required to be issued upon
issuance of such Common Stock Equivalents, (B) the deemed issue price (“
Effective Price
”) applicable
to such Common Stock shall equal the minimum dollar value of consideration
payable to the Company to purchase such Common Stock Equivalents and to convert,
exercise or exchange them into Common stock (net of any discounts, fees,
commissions and other expenses), divided by the Deemed number, and (C) no
further adjustment shall be made to the Conversion Price upon the actual
issuance of Common Stock upon conversion exercise or exchange of such Common
Stock Equivalents if issued at or higher than the Effective
Price. Common Stock issued or issuable by the Company for no
consideration will be deemed to have been issued or to be issuable for $0.0001
per share of Common Stock.
(d)
Excepted
Issuances
. The rights of each Warrant Holder set forth
in this Section 3.4 are in addition to any other rights the Holder has pursuant
to this Agreement, any Transaction Document, and any other agreement referred to
or entered into in connection herewith or to which such Holder and Company are
parties. For purposes of Section 3.4, “
Excepted Issuance
” shall mean
(i) the Company’s issuance of Common Stock or Common Stock Equivalent described
in Reports filed not later than five business days before the Closing Date, or
any notes or warrants similar in form to those Notes and Warrants sold to
Warrant holder, as being contemplated by the Company (ii) as a result of the
conversion of any the Notes or exercise of any of the Warrants issued
pursuant to the Subscription Agreement, (iii) other notes or convertible
indebtedness or convertible securities existing or otherwise disclosed at or
before the issuance hereof, (iv) any securities issued in connection with a
bonafide acquisition of a business, intellectual property or business assets, or
exercise of Warrants or conversion of Notes which are granted or issued pursuant
to this Agreement, or (v) as granted in connection with any existing board
approved stock option, incentive or similar plan or any stock option plan
approved by the Board of Directors of the Company.
4.
Extraordinary Events
Regarding Common Stock
. In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof, be entitled to receive shall
be adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4 be issuable
on such exercise by a fraction of which (a) the numerator is the Purchase Price
that would otherwise (but for the provisions of this Section 4 be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.
5.
Certificate as to
Adjustments
. In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder of the Warrant and any Warrant Agent
of the Company (appointed pursuant to Section 11 hereof).
6.
Reservation of Stock, etc.
Issuable on Exercise of Warrant; Financial
Statements
. The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. This Warrant entitles the
Holder hereof to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Company's Common
Stock.
7.
Assignment; Exchange of
Warrant
. Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "
Transferor
"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B
attached hereto (the “
Transferor Endorsement Form
")
and together with an opinion of counsel reasonably satisfactory to the Company
that the transfer of this Warrant will be in compliance with applicable
securities laws, the Company will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "
Transferee
"), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.
8.
Replacement of
Warrant
. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at the Holder’s expense, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
9.
Subscription
Agreement
. The terms of the Subscription Agreement are
incorporated herein by this reference.
10.
Maximum
Exercise
. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this
limitation is being made on an exercise date, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock on such date. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities 1934 Act , and Rule
13d-3 thereunder. Subject to the foregoing, the Holder shall not be
limited to aggregate exercises which would result in the issuance of more than
4.99%. The restriction described in this paragraph may be
waived, in whole or in part, upon sixty-one (61) days prior notice from the
Holder to the Company to increase such percentage to up to 9.99%, but not in
excess of 9.99%. The Holder may decide whether to convert a
Convertible Note or exercise this Warrant to achieve an actual 4.99% or up to
9.99% ownership position as described above, but not in excess of
9.99%.
11.
Warrant
Agent
. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a “
Warrant Agent
”) for the
purpose of issuing Common Stock (or Other Securities) on the exercise of this
Warrant pursuant to Section 1, exchanging this Warrant pursuant to
Section 7, and replacing this Warrant pursuant to Section 8, or any of
the foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such Warrant Agent.
12.
Transfer on the Company's
Books
. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.
13.
Notices
. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: if to the Company, to:
Save the World Air, Inc. 235 Tennant Avenue, Morgan Hill, California 95037,
Attn: Cecil Bond Kyte, CEO,Tel:(408)778-0101Fax:(408) 778-8585, and
(ii) if to the Holder, to the address and facsimile number listed on the first
paragraph of this Warrant, with a copy by facsimile only to: the Placement Agent
as set forth in the Subscription Agreement.
14.
Law Governing This
Warrant
. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Warrant shall be brought
only in the state courts of New York or in the federal courts located in the
state and county of New York. The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon
forum non
conveniens
. The Company and Holder waive trial by
jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event
that any provision of this Warrant or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
|
|
SAVE
THE WORLD AIR, INC.
By: ____________________________________________
Name:
Title:
|
Exhibit A
FORM OF
SUBSCRIPTION
(to be
signed only on exercise of Warrant)
TO: SAVE
THE WORLD AIR, INC.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):
___ ________
shares of the Common Stock covered by such Warrant; or
___ the
maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in Section 2.
The
undersigned herewith makes payment of the full purchase price for such shares at
the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or
boxes):
___ $__________
in lawful money of the United States; and/or
___ the
cancellation of such portion of the attached Warrant as is exercisable for a
total of _______ shares of Common Stock (using a Fair Market Value of $_______
per share for purposes of this calculation); and/or
___ the
cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2, to exercise this
Warrant with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in
Section 2.
The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to _____________________________________________________ whose
address is _________________________________________________
______________________________________
.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "
Securities
Act
"), or pursuant to an exemption from registration under the Securities
Act.
|
Dated:___________________
|
(Signature
must conform to name of holder as specified on the face of the
Warrant)
(Address)
|
Exhibit B
FORM OF
TRANSFEROR ENDORSEMENT
(To be
signed only on transfer of Warrant)
For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of SAVE THE WORLD AIR, INC. to which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of SAVE THE WORLD
AIR, INC. with full power of substitution in the premises.
|
Transferees
|
Percentage
Transferred
|
Number
Transferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: ______________,
___________
Signed
in the presence of:
(Name)
ACCEPTED
AND AGREED:
[TRANSFEREE]
(Name)
|
(Signature
must conform to name of holder as specified on the face of the
warrant)
(address)
(address)
|