FORM OF SECURITIES PURCHASE AGREEMENT
Published on April 8, 2010
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
Convertible
Promissory Notes and
Stock
Purchase Warrants
THIS SECURITIES PURCHASE AGREEMENT
(this “Agreement”) is made and entered into as of the 15th day of February,
2010, by and between Save the World Air, Inc., a Nevada corporation (the
“Issuer”) and those individuals and entities who sign and deliver an executed
copy of this Agreement to the Issuer (each, a “Purchaser” and collectively, the
“Purchasers”), with reference to the following:
RECITALS
A. Purchasers
desire to purchase from Issuer and Issuer desires to sell to Purchaser certain
of Issuer’s Convertible Promissory Notes, in the aggregate face amount of at
least $10,000 and up to $700,000 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 100% 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, into Common Stock at a price of
$0.40 per share (the “Conversion Price”).
D. The
Warrants shall be issued at the same time each Note is issued to the Purchaser
hereunder and shall be exercisable at $0.40 per share (the “Exercise Price”),
for such number of shares equal to 100% of result obtained by dividing (i) the
face amount of the Notes issued simultaneously with the Warrant by (ii) the
Conversion Price (the “Exercisable Amount”).
AGREEMENT
NOW
THEREFORE, in consideration of the foregoing recitals, which shall be considered
an integral part of this Agreement, the covenants and agreements set forth
hereafter, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Purchasers and the Issuer
hereby agree as follows
1. Purchase of the Notes and
Warrants. On the terms and subject to the conditions set forth
in this Agreement and in the Notes and Warrants, the Purchasers shall purchase
from the Issuer and the Issuer shall sell to the Purchaser the
Securities.
2. Purchaser’s Representations,
Warranties and Covenants. In order to induce the Issuer to sell and issue
the Securities to the Purchaser under one or more exemptions from registration
under the Securities Act, the Purchasers, severally and not jointly, represent
and warrant to the Issuer, and covenant with the Issuer, that:
(a) (i)
Such Purchaser has the requisite power and authority to enter into and perform
this Agreement, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to purchase the Securities in
accordance with the terms hereof and thereof.
(ii) The execution and delivery of the
Transaction Documents by the Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by the
Purchaser's organizational documents and no further consent or authorization is
required by the Purchaser.
(iii) The Transaction Documents have
been duly and validly executed and delivered by the Purchaser.
(iv) The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(b) The execution,
delivery and performance of the Transaction Documents by the Purchaser and the
consummation by the Purchaser of the transactions contemplated thereby will not
conflict with or constitute a default under any agreement or instrument to which
the Purchaser is a party or by which the Purchaser is bound.
(c) The Purchaser is
acquiring the Securities for investment for its own account, and not with a view
toward distribution thereof, and with no present intention of dividing its
interest with others or reselling or otherwise transferring or disposing all or
any portion of either the Notes or Warrants. The undersigned has not offered or
sold a participation in this purchase of either the Notes or Warrants, and will
not offer or sell any interest therein. The Purchaser further acknowledges that
the Purchaser does not have in mind any sale of either the Notes or Warrants
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined events or consequence; and
that it has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of either the Notes or Warrants and is not aware of any
circumstances presently in existence that are likely in the future to prompt a
disposition thereof.
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(d) The Purchaser
acknowledges that the Securities have been offered to it in direct communication
between itself and the Issuer and not through any advertisement, article, notice
or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over the television or radio or presented
in any seminar or any other general solicitation or general
advertisement.
(e) 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.
(f) The Purchaser
acknowledges that it has, by reason of its business and financial experience,
such knowledge, sophistication and experience in financial and business matters
and in making investment decisions of this type that it is capable of (i)
evaluating the merits and risks of an investment in the Securities and making an
informed investment decision in connection therewith; (ii) protecting its own
interest; and (iii) bearing the economic risk of such investment for an
indefinite period of time for Securities which are not transferable or freely
tradable. The undersigned hereby agrees to indemnify the Issuer
thereof and to hold each of such persons and entities, and the officers,
directors and employees thereof harmless against all liability, costs or
expenses (including reasonable attorneys’ fees) arising by reason of or in
connection with any misrepresentation or any breach of warranties of the
undersigned contained in this Agreement, or arising as a result of the sale or
distribution of the Securities or the Common Stock issuable upon conversion of
the Notes or exercise of the Warrants, by the undersigned in violation of the
Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any other applicable law, either federal or state. This
subscription and the representations and warranties contained herein shall be
binding upon the heirs, legal representatives, successors and assigns of the
Purchaser.
(g) 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 either (i) an accredited investor at such time
it was offered the Securities and on each date which it converts any of the
Notes or exercises any of the Warrants as so defined or (ii) a “qualified
institutional buyer” as defined in Rule 144A under the Securities
Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange act. 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.
(h) 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. Commencing on the date on which the Purchaser received a term
sheet from the Company or any representative or agent of the Company (written or
oral) setting forth the material terms of the transactions contemplated
hereunder until the date hereof and 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.
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(i) The Purchaser
is aware that the Notes and the Warrants, and the shares of Common Stock
issuable upon conversion of the Notes or exercise of the Warrants may only be
disposed of in compliance with state and federal securities laws. In
connection with any transfer of the Notes and thee Warrants, and the shares of
Common Stock issuable upon conversion of the Notes or exercise of the Warrants
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an affiliate of the Purchaser, the Company may require the
transferor thereof to provide to the Company an opinion of counsel, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. Further, the Purchaser 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.
(j) 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.
(k) The Purchaser
understands and acknowledges that the Issuer has neither filed a registration
statement with the SEC or any state authorities nor agreed to do so, nor
contemplates doing so in the future for the transactions contemplated by this
Agreement or the other Transaction Documents, and in the absence of such a
registration statement or exemption, the undersigned may have to hold the Notes,
the Warrants and any shares of Common Stock issuable upon conversion of the
Notes or exercise of the Warrants, indefinitely and may be unable to liquidate
any of them in case of an emergency.
(l) 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).
(m) 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.
(n) The Purchaser
understands and acknowledges that proceeds raised in connection with this
Agreement will be used by Issuer for general working capital purposes, including
without limitation, the payment of salaries and professional fees.
(o) 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.
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(p) 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.
(q) Purchaser
hereby agrees and acknowledges that it has been informed of the
following: (i) there are factors relating to the subsequent transfer
of any of the Securities or shares of Common Stock underlying the Notes and
Warrants that could make the resale of such Securities or shares of Common Stock
underlying the Notes and Warrants difficult; and (ii) there is no guarantee that
the Purchaser will realize any gain from the purchase of the
Securities. The purchase of the Securities involves a high degree of
risk and is subject to many uncertainties. These risks and
uncertainties may adversely affect the Company’s business, operating results and
financial condition. In such an event, the trading price for the
Common Stock could decline substantially and Purchaser could lose all or part of
its investment.
3. Issuer’s Representations,
Warranties and Covenants. The Issuer represents and warrants to the
Purchaser that:
(a) The Issuer is a
corporation duly organized and validly existing in good standing under the laws
of the State of Nevada, and has the requisite corporate power and authorization
to own its properties and to carry on its business as now being
conducted.
(b) (i)
The Issuer has the requisite corporate power and authority to enter into and
perform this Agreement, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by the
Transaction Documents, and to issue the Notes and Warrants in accordance with
the terms hereof and thereof.
(ii) the execution and delivery of the
Transaction Documents by the Issuer and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation the
reservation for issuance and the issuance of the Notes and Warrants pursuant to
this Agreement, have been duly and validly authorized by the Issuer's Board of
Directors and no further consent or authorization is required by the Issuer, its
Board of Directors, or its shareholders.
(iii) The Transaction Documents have
been duly and validly executed and delivered by the Issuer.
(iv) The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(c) The execution,
delivery and performance of the Transaction Documents by the Issuer and the
consummation by the Issuer of the transactions contemplated thereby will not
conflict with or constitute a default under any agreement or instrument to which
the Issuer is a party or under any organizational documents of the
Purchaser.
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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 March 31, 2010 copies of this Agreement executed by each
respective Purchaser and providing that the total Commitments equal or exceed
$10,000, there shall be a closing or closings (each, a “Closing”) at
which:
(i) each
Purchaser shall deliver to the Issuer (“Save The World Air, Inc.”) immediately
available funds, by check or by wire transfer (Bank wiring instructions as set
forth in Exhibit C) in an amount equal to the amount of such Purchaser’s
Commitment as set forth beside the name of such Purchaser on such Purchaser’s
signature page hereto; and
(ii) the
Issuer shall deliver to the Purchaser (x) a Note, in the face amount equal to
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
$500,000 or (ii) on or before March 31, 2010, whichever shall first
occur.
5. Miscellaneous.
(a) Each party shall pay
the fees and expenses of its own advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of the
Transactions Documents.
(b) This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature or signature transmitted by e-mail shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original
signature.
(c) The headings
of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. Whenever required by the
context of this Agreement, the singular shall include the plural and neutral
shall include the masculine and feminine.
(d) If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) This
Agreement and the Notes and Warrants represent the final agreement between the
Purchasers and the Issuer with respect to the terms and conditions set forth
herein, and, the terms of this Agreement and the Notes and Warrants may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. No provision of this Agreement and the
Notes and Warrants may be amended other than by an instrument in writing signed
by the Purchaser and the Issuer, and no provision hereof or thereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought.
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(f) Any notices
or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If
to the Issuer:
Save the
World Air, Inc.
235
Tennant Avenue
Morgan
Hill, CA 95037
Telephone:
(408) 778-0101
Facsimile:
(408) 778-8585
with
a copy to:
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd
Floor
New York,
NY 10006
Telephone
(212) 930-9700
Facsimile:
(212) 930-9725
Attn: Gregory
Sichenzia, Esq.
If
to a Purchaser:
to the
address set forth on the Purchaser’s signature page hereto.
Each
party shall provide five (5) days prior written notice to the other party of any
change in address or facsimile number.
(g) This Agreement may
not be assigned by Purchaser.
(h) This
Agreement is intended for the benefit of the parties hereto and is not for the
benefit of, nor may any provision hereof be enforced by, any other
person.
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(i) The
representations and warranties of the Purchaser and the Issuer contained herein
shall survive each of the Closings and the termination of this Agreement and the
other Transaction Documents.
(j) The Purchaser
and the Issuer shall consult with each other in issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
hereby and no party shall issue any such press release or otherwise make any
such public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law or the rules and
regulations of the SEC.
(k) Each party
shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.
(l) The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be
applied against any party, as the parties mutually agree that each has had a
full and fair opportunity to review this Agreement and the other Transaction
Documents and seek the advice of counsel on it and them.
(m) The Purchaser and
the Issuer each shall have all rights and remedies set forth in this Agreement
and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which the Purchaser
has by law. Any person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any default or breach of any
provision of this Agreement, including the recovery of reasonable attorneys fees
and costs, and to exercise all other rights granted by law.
(n) This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed wholly within such
state.
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blank]
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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: /s/ Cecil Bond
Kyte
Cecil
Bond Kyte
Its: Chief
Executive Officer
| THE PURCHASER | |
| _______________________________________ | _______________________________________ |
| Name (signature) | Amount of Commitment |
| (U.S. Dollars) | |
| _______________________________________ | |
| Print Name | _______________________________________ |
| Date | |
| _______________________________________ | |
| Address | |
| _______________________________________ | |
| Address | |
| _______________________________________ | |
| Phone Number | |
| _______________________________________ | |
| Fax Number | |
| _______________________________________ | |
| Social Security Number | |
| _______________________________________ | |
| E-mail Address |
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