FORM OF NOTE PURCHASE AGR
Published on October 9, 2007
Exhibit
99.1
NOTE
PURCHASE AGREEMENT
THIS
NOTE PURCHASE AGREEMENT (this
“Agreement”) is made and entered into as of the ___ day of September, 2007 by
and between Save the World Air, Inc., a Nevada corporation (the “Issuer”)
and those individuals and entities who sign and deliver an executed
copy of this Agreement to the Issuer (each, a “Purchaser” and collectively, the
“Purchasers”), with reference to the following:
RECITALS
A. Purchasers
desire to purchase from Issuer and Issuer desires to sell to Purchaser certain
of Issuer’s Convertible Promissory Notes in the aggregate face amount of at
least $100,000 and up to $300,000 in the form of Exhibit A attached
hereto (individually, a “Note” and collectively, the “Notes”) and Stock Purchase
Warrants, each to purchase up to a certain number of shares of the common stock
(the “Common Stock”) of the Issuer equal to 50% of the number of shares
initially issuable on conversion of the Notes, in the form of Exhibit B
attached hereto (individually, the “Warrants” and collectively with the Notes,
the “Securities”). The face amount of Convertible Promissory Notes
each Purchaser has committed to purchase, and the amount of the purchase price
thereof to be paid to the Issuer by the Purchaser (a “Commitment”) is listed on
the signature page such Purchaser executes and delivers to the
Issuer.
B. Issuer’s
sale of the Securities to the Purchasers will be made in reliance upon the
provisions of Section 4(2) under the Securities Act of 1933, as amended (the
"Securities Act"), Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission (the ”SEC”) thereunder, and other applicable rules and
regulations of the SEC and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to the
transactions contemplated hereby.
C. At
any time when any amount of principal or interest of the Notes shall be
outstanding, such unpaid amounts shall be convertible into shares of the
Issuer’s, at the election of the purchaser Common Stock at a price per share
equal to the average closing bid price of a share of the Issuer’s Common stock
for the five (5) trading days prior to the Closing, as defined herein (the
“Conversion Price”).
D. The
Warrants shall be issued at the same time each Note is issued to the Purchaser
hereunder and shall exercisable at $0.50 per share as the Conversion Price
(the
“Exercise Price”), for such number of shares equal to 50% of result obtained by
dividing (i) the face amount of the Notes issued simultaneously with the Warrant
by (ii) the Conversion Price (the “Exercisable Amount”).
AGREEMENT
NOW
THEREFORE, in consideration of the
foregoing recitals, which shall be considered an integral part of this
Agreement, the covenants and agreements set forth hereafter, and other good
and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchasers and the Issuer hereby agree as follows
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1. Purchase
of the Notes and Warrants. On the terms and subject to the
conditions set forth in this Agreement, the Purchasers shall purchase from
the
Issuer and the Issuer shall sell to the Purchaser the Securities.
2.
Purchaser’s
Representations, Warranties and Covenants. In order to induce the Issuer to
sell and issue the Securities to the Purchaser under one or more exemptions
from
registration under the Securities Act, the Purchasers, severally and not
jointly, represent and warrant to the Issuer, and covenant with the Issuer,
that:
(a) (i)
Such Purchaser has the requisite power and authority to enter into and perform
this Agreement, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to purchase the Securities
in
accordance with the terms hereof and thereof.
(ii)
The execution and delivery of the
Transaction Documents by the Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by
the
Purchaser's organizational documents and no further consent or authorization
is
required by the Purchaser.
(iii)
The Transaction Documents have
been duly and validly executed and delivered by the Purchaser.
(iv)
The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity
or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(b)
The execution, delivery and
performance of the Transaction Documents by the Purchaser and the consummation
by the Purchaser of the transactions contemplated thereby will not conflict
with
or constitute a default under any agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound.
(c)
The Purchaser is acquiring the
Securities for investment for its own account, and not with a view toward
distribution thereof, and with no present intention of dividing its interest
with others or reselling or otherwise transferring or disposing all or any
portion of either the Notes or Warrants. The undersigned has not offered or
sold
a participation in this purchase of either the Notes or Warrants, and will
not
offer or sell any interest therein. The Purchaser further acknowledges that
the
Purchaser does not have in mind any sale of either the Notes or Warrants
currently or after the passage of a fixed or determinable period of time or
upon
the occurrence or non-occurrence of any predetermined events or consequence;
and
that it has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of either the Notes or Warrants and is not aware of any
circumstances presently in existence that are likely in the future to prompt
a
disposition thereof.
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(e)
The Purchaser acknowledges that the
Securities have been offered to it in direct communication between itself and
the Issuer and not through any advertisement of any kind.
(f)
The Purchaser acknowledges that the
Issuer has given it access to all information relating to the Issuer’s business
that it has requested. The Purchaser has reviewed all materials
relating to the Issuer's business, finance and operations which it has requested
and the Purchaser has reviewed all of such materials as the Purchaser, in the
Purchaser’s sole and absolute discretion shall have deemed necessary or
desirable. The Purchaser has had an opportunity to discuss the business,
management and financial affairs of the Issuer with the Issuer's
management. Specifically but not by way of limitation, the
Purchaser acknowledges the Issuer’s publicly available filings made periodically
with the SEC, which filings are available at www.sec.gov and which
filings the Purchaser acknowledges reviewing or having had the opportunity
of
reviewing.
THE
PURCHASER EXPRESSLY ACKNOWLEDGES THAT THE ISSUER IS NOT CURRENT IN ITS FILINGS
WITH THE SEC AND HAS NOT FILED THE INFORMATION REQUIRED TO BE INCLUDED IN PART
THREE OF ITS ANNUAL REPORT ON FORM 10-KSB FOR ITS YEAR ENDED DECEMBER 31,
2006. THE PUCHASER EXPRESSLY WAIVES ANY RIGHTS THE PURCHASER MAY HAVE
TO RECEIVE SUCH INFORMATION. FURTHER, IN ORDER TO INDUCE THE ISSUER
TO ENTER INTO THIS AGREEMENT AND TO SELL TO THE PURCHASER THE SECURITIES THE
PURCHASER HAS ELECTED TO ENTER INTO THIS AGREEMENT AND PURCHASE THE SECURITIES
NOTWITHSTANDING THAT THE PURCHASER HAS NEITHER RECEIVED NOR REVIEWED SUCH
INFORMATION.
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Issuer’s
Initials
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Purchaser’s
Initials
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(g)
The
Purchaser acknowledges that it has, by reason of its business and financial
experience, such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that it is
capable of (i) evaluating the merits and risks of an investment in the
Securities and making an informed investment decision I connection therewith;
(ii) protecting its own interest; and (iii) bearing the economic risk of such
investment for an indefinite period of time for Securities which are not
transferable or freely tradable. Based on the foregoing, the
undersigned hereby agrees to indemnify the Issuer thereof and to hold each
of
such persons and entities, and the officers, directors and employees thereof
harmless against all liability, costs or expenses (including reasonable
attorneys’ fees) arising by reason of or in connection with any
misrepresentation or any breach of such warranties of the undersigned, or
arising as a result of the sale or distribution of the Securities or the Common
Stock issuable upon conversion of the Notes or exercise of the Warrants, by
the
undersigned in violation of the Securities Act, the Securities Exchange Act
of
1934, as amended (the “Exchange Act”), or any other applicable law, either
federal or state. This subscription and the representations and
warranties contained herein shall be binding upon the heirs, legal
representatives, successors and assigns of the Purchaser
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(h)
The
Purchaser is familiar with the definition of an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Securities Act and
represents and warrants to the Issuer that it is an accredited investor as
so
defined. If the Purchaser is not a resident of the United States, the
Purchaser is not a “U.S. person[s]” as that term is defined in Rule 902 of
Regulation S promulgated under the Securities Act of 1933, as
amended.
(i)
During the term of this Agreement
and the other Transaction Documents, the Purchaser will comply with the
provisions of Section 9 of the Exchange Act, and the rules and regulations
promulgated thereunder, with respect to transactions involving the Common Stock.
During the term of this Agreement and the other Transaction Documents, the
Purchaser agrees not to sell the Issuer's Common Stock short or engage in any
hedging transactions in the Issuer’s Common Stock, either directly or
indirectly, through its affiliates, principals, agents or advisors.
(j)
The Purchaser is aware of the
restrictions of transferability of both the Notes and the Warrants, and the
shares of Common Stock issuable upon conversion of the Notes or exercise of
the
Warrants, and further understands and acknowledges that any certificates
evidencing the Notes, the Warrants or the shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants will bear the legends in
substantially the following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE
SECURITIES LAWS (COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL
APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY
TO
THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER,
SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF SUCH SECURITIES LAWS.
(k)
The Purchaser understands and
acknowledges that following the purchase of the Notes, the Warrants and any
shares of Common Stock issuable upon conversion of the Notes or exercise of
the
Warrants, each may only be disposed of pursuant to either (i) an effective
registration statement under the Securities Act or (ii) an exemption from the
registration requirements of the Securities Act.
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(l)
The Purchaser understands and
acknowledges that the Issuer has neither filed such a registration statement
with the SEC or any state authorities nor agreed to do so, nor contemplates
doing so in the future for the transactions contemplated by this Agreement
or
the other Transaction Documents, and in the absence of such a registration
statement or exemption, the undersigned may have to hold the Notes, the Warrants
and any shares of Common Stock issuable upon conversion of the Notes or exercise
of the Warrants, indefinitely and may be unable to liquidate any of them in
case
of an emergency.
(m)
The Purchaser is purchasing the
Notes and Warrants, and will acquire any shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants, for its own account for
investment purposes and not with a view towards distribution and agrees to
resell or otherwise dispose of any of the Notes or the Warrants, or any shares
of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, in accordance with the registration provisions of the Securities
Act
(or pursuant to an exemption from such registration provisions).
(n)
The Purchaser is not and will not
be required to be registered as a "dealer" under the Exchange Act, either as
a
result of its execution and performance of its obligations under this Agreement
or otherwise.
(p)
The Purchaser understands that it
is liable for its own tax liabilities and has obtained no tax advice from the
Issuer in connection with the purchase of the Securities.
(q)
The Purchaser will not pay or
receive any finder’s fee or commission in respect of the consummation of the
transactions contemplated by this Agreement.
3.
Issuer’s
Representations,
Warranties and Covenants. The Issuer represents and warrants to the
Purchaser that:
(a)
The Issuer is a corporation duly
organized and validly existing in good standing under the laws of the State
of
Nevada, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted.
(b) (i)
The Issuer has the requisite corporate power and authority to enter into and
perform this Agreement, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by the
Transaction Documents, and to issue the Notes and Warrants in accordance with
the terms hereof and thereof.
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(ii)
the execution and delivery of the
Transaction Documents by the Issuer and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation
the
reservation for issuance and the issuance of the Notes and Warrants pursuant
to
this Agreement, have been duly and validly authorized by the Issuer's Board
of
Directors and no further consent or authorization is required by the Issuer,
its
Board of Directors, or its shareholders.
(iii)
The Transaction Documents have
been duly and validly executed and delivered by the Issuer.
(iv)
The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(c)
The execution, delivery and
performance of the Transaction Documents by the Issuer and the consummation
by
the Issuer of the transactions contemplated thereby will not conflict with
or
constitute a default under any agreement or instrument to which the Issuer
is a
party or under any organizational documents of the Purchaser.
4. Closing
and Deliverables.
(a)
Subject to the provisions of
Section 4(b) below, provided that the Issuer shall have received on or prior
to
September 30, 2007 copies of this Agreement executed by each respective
Purchaser providing that the total Commitments equal or exceed $100,000, there
shall be a closing or closings (each, a “Closing”) at which:
(i)
each Purchaser shall deliver to
the Issuer immediately available funds, by wire transfer to the Issuer’s account
at the Bank of America, 954 Westlake Boulevard, Westlake Village, California
91361, Routing Number 0260-0959-3 , Account Number 06687-19702, in an amount
of
equal to the amount of such Purchaser’s Commitment as set forth on beside name
of such Purchaser on such Purchaser’s signature page hereto; and
(ii)
the Issuer shall deliver to the
Purchaser (x) a Note, in the face amount equal to 110% of the Purchaser’s
Commitment and (y) a Warrant to purchase the Exercisable Amount of the Issuer’s
Common Stock at the Exercise Price.
(b)
The
Issuer may continue to accept Commitments from Purchasers and issue and sell
Securities to Purchasers at Closings on the terms and subject to the conditions
set forth in this Agreement until (i) the aggregate amount of the Commitments
equals $300,000 or (ii) August 17, 2007, whichever shall first occur; except
that, notwithstanding anything contained herein to the contrary, the Issuer
may
extend the Offering one or more times and schedule one of more Closings to
a
date or dates not later than September 30, 2007.
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5. Miscellaneous.
(a).
Each party shall pay the fees and
expenses of its own advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transactions
Documents.
(b)
This Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and
the
same agreement and shall become effective when counterparts have been signed
by
each party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
(c)
The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and neutral shall include
the
masculine and feminine.
(d)
If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e)
This Agreement is the final
agreement between the Purchasers and the Issuer with respect to the terms and
conditions set forth herein, and, the terms of this Agreement may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Purchaser sand
the
Issuer or, and no provision hereof may be waived other than by an instrument
in
writing signed by the party against whom enforcement is sought.
(f)
Any notices or other communications
required or permitted to be given under the terms of this Agreement must be
in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) day after deposit with
a
nationally recognized overnight delivery service, in each case properly
addressed to the
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party
to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If
to the Issuer:
Save
the
World Air, Inc.
235
Tennant Avenue
Morgan
Hill, CA 95037
Telephone:
(408) 778-0101
Facsimile:
(408) 778-8585
with
a copy to:
Lance
Jon
Kimmel, Esq.
SEC
Law
Firm
11693
San
Vicente Boulevard
Suite
357
Los
Angeles, CA 90049
Telephone:
(310) 557-3059
Facsimile:
(310) 388-1320
If
to a Purchaser:
to
the
address set forth on the Purchaser’s signature page hereto.
Each
party shall provide five (5) days prior written notice to the other party of
any
change in address or facsimile number.
(g)
This Agreement may not be
assigned.
(h)
This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(i)
The representations and warranties
of the Purchaser and the Issuer contained herein shall survive each of the
Closings and the termination of this Agreement and the other Transaction
Documents.
(j)
The Purchaser and the Issuer shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law or the rules and regulations of the
SEC.
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(k).
Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out
the
intent and accomplish the purposes of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.
(l)
The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party,
as the parties mutually agree that each has had a full and fair opportunity
to
review this Agreement and the other Transaction Documents and seek the advice
of
counsel on it and them.
(m)
The Purchaser and the Issuer each
shall have all rights and remedies set forth in this Agreement and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which the Purchaser has by law.
Any
person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any default or breach of any provision of this
Agreement, including the recovery of reasonable attorneys fees and costs, and
to
exercise all other rights granted by law.
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of page intentionally left blank]
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(n) This
Agreement and the other Transaction Documents shall be construed and governed
by
the laws of the State of California with respect to agreements wholly performed
therein, and without regard to the doctrine known as conflicts of
law.
IN
WITNESS WHEREOF the Purchasers and
the Issuer have executed this Agreement as of the date first above
written.
THE
ISSUER
SAVE
THE WORLD AIR, INC.
By:__________________________
Charles
R. Blum
Its: Chief
Executive Officer
THE
PURCHASER
_______________________________ ________________________
Name
(signature) Amount
of Commitment
_______________________________
Print
Name
_______________________________
Address
_______________________________
Address
_______________________________
Phone
Number
_______________________________
Fax
Number
_______________________________
Social
Security Number
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