Form: 10KSB

Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]

March 25, 2004

EXHIBIT 10.1

Published on March 25, 2004


EXHIBIT 10.1

COMMERCIAL SUBLEASE


This sublease is made between KZG (hereinafter "Sublessor") and Save the World
Air, Inc. (hereinafter "Sublessee").

Sublessee hereby leases from Sublessor the following premises on the following
terms and conditions.

1. DESCRIPTION OF SUBLET PROPERTY.

Sublessor sublets the following premises:

a. One office in the Executive Suite in the building located at 5125
Lankershim Blvd., North Hollywood, CA 91601.

b. Non-exclusive and shared use of the following common areas in said
building: executive suite conference room, large sale conference room,
kitchen, bathrooms, lobby and hallways.

c. Use of parking area for parking automobiles.

2. TERM AND RENT.

Sublessor demises the above premises for a term of two years, commencing
November 1, 2003 and terminating on October 31, 2005, or sooner as provided
herein at the annual rental of twenty four thousand dollars ($24,000) payable in
equal installments in advance on the first day of each month in the sum of
$2,000 per month during the term of this sublease.

3. USE.

Sublessee shall use and occupy the premises for the purpose of general
administration of its business.

4. Care and Maintenance and Services.

Sublessor shall provide the maintenance, cleaning and care of the premises and
shall maintain the premises in good order and repair. Sublessor shall also
provide telephone receptionist to answer Sublessee's phones during normal
business hours.

5. Alterations.

Sublessee shall not, without first obtaining the written consent of Sublessor,
make any alterations, additions, or improvements, in, to or about the premises.

6. Ordinances and Statutes.



Sublessee shall comply with all statutes, ordinances, and requirements of all
municipal, state and federal authorities now in force, or which may hereafter be
in force, pertaining to the premises, occasioned by or affecting the use thereof
by Sublessee.

7. Assignment and Subletting.

Lessee shall not assign this sublease or sublet any portion of the premises
without prior written consent of the Sublessor, which shall not be unreasonably
withheld. Any such assignment or subletting without consent shall be void and at
the option of the Sublessor, may terminate this Sublease.

8. Utilities.

Sublessor shall pay all utilities except telephone and fax which expenses shall
be Sublessee's expense.

9. Indemnification of Sublessor.

Sublessor shall not be liable for any damage or injury to Sublessee or any other
person (on the premises at the request of or for the benefit of Sublessee) or to
any property, occurring on the demised premises or any part thereof, and
Sublessee agrees to hold Sublessor harmless from any claims for damages, no
matter how caused.

10. Insurance.

Sublessee, at its expense, shall maintain public liability insurance including
bodily injury and property damage insuring Sublessee and Sublessor with minimum
coverage as follows:

Sublessee shall provide Sublessor with a Certificate of Insurance
showing Sublessor as an additional insured. The Certificate shall provide for a
ten-day written notice to Sublessor in the event of cancellation or material
change of coverage. To the maximum extent permitted by insurance policies which
may be owned by Sublessor or Sublessee, Sublessee and Sublessor, for the benefit
of each other, waive any and all rights of subrogation which might otherwise
exist.

11. Eminent Domain

If the premises or any part thereof or any estate therein, or any other part of
the building materially affecting Sublessee's use of the premises, shall be
taken by eminent domain, this lease shall terminate on the date when title vest
pursuant to such taking.

12. Destruction of Premises.

In the event of partial destruction of the premises during the term hereof, from
any cause, Sublessor shall forthwith repair the same, provided that such repairs
can be made within sixty (60) days under existing governmental laws and
regulations, but such partial



destruction shall not terminate this Sublease, except that Sublessee shall be
entitled to a proportionate reduction of rent during repairs based on the extent
the repairs interfere with the business of Sublessee on the premises. If repairs
cannot be made within sixty (60) days, Sublessor at its option may terminate
this Sublease.

13. Sublessor's Remedies on Default.

If Sublessee defaults in the payment of rent, or any additional rent, or
defaults in the performance of any of the other covenants or conditions hereof,
Sublessor may give Sublessee notice of such default and if Sublessee does not
cure any such default within three (3) business days, Sublessor at its sole
option may terminate the Sublease and Sublessee shall quit and surrender the
premises to Sublessor, without extinguishing Sublessees's liability. If this
Sublease shall have been so terminated by Sublessor, Sublessor may at any time
thereafter resume possession of the premises by any lawful means and remove
Sublessee or other occupants and their effects. No failure to enforce any term
shall be deemed a waiver.

14. Attorneys fees.

In case suit should be brought for recovery of the premises, or for any sum due
hereunder, or because of any act which may arise out of the possession of the
premises by either party, the prevailing party shall be entitled to all costs
incurred in connection with such action, including reasonable attorneys fees.

15. Waiver.

No failure of Sublessor to enforce any term hereof shall be deemed to be a
waiver.

16. Notices.

Any notice which either party may or is required to give, shall be given by
e-mail and shall be considered given on the day the e-mail is sent.

17. Heirs, Assigns, Successors.

This Sublease is binding upon and inures to the benefit of the heirs, assigns
and successors in interest to the parties.

18. Option to Renew.

Provided that Sublessee is not in default in the performance of this lease,
Sublessee shall have the option to renew the Sublease for an additional term of
two years commencing at the expiration of the initial lease term. All of the
terms and conditions of the Sublease shall apply during the renewal term except
that the Sublease payment shall be 10% greater which would be equal to $2,200
per month. The option shall be exercised by a



written notice given to Sublessor not less than sixty (60) days prior to the
expiration of the initial Sublease term. If notice is not timely given, this
option will expire.

19. Radon Gas Disclosure.
As required by law, Sublessor makes the following disclosure: "Radon Gas" is a
naturally occurring radioactive gas that, when it has accumulated in a building
in sufficient quantities, may present health risks to persons who are exposed to
it over time. Levels of radon that exceed federal and state guidelines have been
found in buildings in California. Additional information regarding radon and
radon testing may be obtained from your county public health unit.

20. Entire Agreement.

The foregoing constitutes the entire agreement between the parties and may be
modified only by a writing signed by both parties.

Signed this 16th day of October, 2003 in North Hollywood, California:

SAVE THE WORLD AIR, INC. KZG


/s/ EUGENE E. EICHLER /s/ JENNIFER KING
- --------------------------- ----------------------------------------
By: Gene Eichler By: Jennifer King
Title: CFO Title: President