MODIFICATION AGREEMENT
Published on November 20, 2007
EXHIBIT
10.1
MODIFICATION
AGREEMENT
THIS
MODIFICATION AGREEMENT (the “Agreement”) is made and entered into as of August
29, 2007 by and between Save the World Air, Inc. (the “Company”) and the
individuals and entities whose signatures are set forth below at the end of
this
Agreement (the “Investors”).
WHEREAS,
pursuant to the Confidential Private Placement Memorandum dated January 12,
2007, (the “Offering Memorandum”), the Company entered into promissory notes
(the “Notes”) with the Investors pursuant to which the Company borrowed a total
of $400,000 from the Investors; and
WHEREAS,
among other things, the Company was obligated to file a registration statement
(the “Registration Statement”) registering the Conversion Shares and Warrant
Shares on or before July 2, 2007, and such Registration Statement was not filed
by such date, resulting in certain consequences thereafter; and
WHEREAS,
the Company and the Investors desire to modify certain of the terms and
provisions of the Notes as set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, the Company and the Investors agree as
follows:
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1.
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Definitions.
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All
terms
not defined herein shall have the meaning ascribed to them in the Offering
Memorandum.
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2.
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Registration
Rights.
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Promptly,
but no later than November 30, 2007, the Company shall file the Registration
Statement with the Securities and Exchange Commission (the “SEC”) to register
the Conversion Shares and the Warrant Shares.
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3.
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Interest
Rate of Notes.
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In
consideration of this Agreement, effective August 1, 2007, the interest rate
on
the Notes shall be increased to 18% per annum until such time as the
Registration Statement is declared effective by the SEC.
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4.
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Conversion
Price.
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In
consideration of this Agreement, the Conversion Price for all Conversion Shares
shall be amended to be $0.45 per share.
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5.
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Warrants.
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In
consideration of this Agreement, each Investor shall receive, for no additional
consideration, Warrants (“Additional Warrants”) in an amount equal to an
additional 50% of the Warrants originally issued pursuant to the terms of the
Offering Memorandum. The Additional Warrants shall have the same registration
rights as are described in the Offering Memorandum applicable to the Warrants,
shall be exercisable immediately upon issuance, shall remain exercisable for
a
period of five years from the date of this Agreement, on a cash basis only,
at
an initial exercise price of $0.45 per share and shall, in all other respects,
have the same terms and conditions, and be in the same form, as the
Warrants.
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6.
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Filing
Delays.
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If
the
Company does not file the Registration Statement with the SEC by November 30,
2007, each Investor shall receive, for no additional consideration, Warrants
(“Delay Warrants”) in an amount equal to an additional 50% of the Warrants
originally issued pursuant to the terms of the Offering Memorandum. The Delay
Warrants shall have the same registration rights as are described in the
Offering Memorandum applicable to the Warrants, shall be exercisable immediately
upon issuance, shall remain exercisable for a period of five years from the
date
of this Agreement, on a cash basis only, at an initial exercise price of $0.45
per share and shall, in all other respects, have the same terms and conditions,
and be in the same form, as the Warrants.
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7.
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Other
Provisions Unaffected.
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The
terms
and conditions of the Offering Memorandum, the Notes and the Warrants, to the
extent not expressly amended in this Agreement, shall remain in full force
and
effect.
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8.
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Counterparts.
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This
Agreement may be executed in counterpart copies, all of which taken together
shall be deemed to be a single agreement.
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IN
WITNESS WHEREOF, each of the Company and the Investors has caused this Agreement
to be executed as of the date first set forth hereinabove.
THE
COMPANY:
SAVE
THE
WORLD AIR, INC.
/s/
CHARLES R. BLUM
Name: Charles
R. Blum
Title:
President and Chief Executive Officer
INVESTORS:
/s/ PHILLIP
A. COLE
Name: Phillip
A. Cole
/s/ RICHARD
BINS
Name: Richard
Bins
/s/ LOIS
A. BINS
Name: Lois
A. Bins
/s/ HENRY
ARNEBOLD
Name: Henry
Arnebold
/s/ NANCY
ARNEBOLD
Name: Nancy
Arnebold
/s/ FRANK
JORDAN
Name: Frank
Jordan
/s/ ROBERT
KATZ
Name: Robert
Katz
/s/ JAN
FREDRIKSSON
Name: Jan
Fredriksson
/s/ EARL
POMBERG
Name: Earl
Pomberg
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