SAVETHE WORLD AIR, INC. SECURITIESPURCHASE AGREEMENT

           This Securities Purchase Agreement (“Agreement”) is made as of October __, 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”).

 
 

A. The Company desires to obtain funds from each Purchaser in order to fund the Company’s general working capital needs.

 

 

NOW THEREFORE, based on the mutual premises and consideration of the parties, it is agreed as follows:

2.1  Date and Time.

(a) The sale of Notes and Warrants will take place only after the Escrow Agent has advised of at least $75,000 cleared funds represented by subscriptions accepted by the Company (the “Closing”) subject to the satisfaction of all the parties hereto of their obligations herein.  The Purchasers shall each submit an executed copy of this Agreement to the Placement Agent along with the Purchase Price in advance of Closing which shall be held in escrow by an escrow agent (the “Escrow Agent”) appointed by the Company and Placement Agent.  Once $75,000 of subscriptions acceptable to the Company have been provided during the Offering Period, along with cleared funds therefore in escrow as advised by the Escrow Agent, the Closing of the sale of Notes contemplated by this Agreement may take place.  The Closing shall take place at the offices of counsel to the Company, or at such other place as the Company and the Placement Agent (as hereinafter defined) shall agree in writing, on or before October 31, 2009, unless this Offering is extended by the Company for up to a further period of thirty (30) days ending November 30, 2009 (the “Termination Date”).

(b)  Placement Agent and the Company have consented to the appointment of M&T Bank as independent Escrow Agent and have all accepted the terms of the non-interest bearing Escrow Agreement.  Purchasers will not have an opportunity to approve of a Closing or request refund of any moneys held in escrow after a Closing has occurred if such Closing is held during the offering period.  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 during the Offering Period, the Escrow Agent may, at the request of the Placement Agent and Company together, disburse funds from escrow and conduct a Closing without any consent or notice to Purchasers.  The Placement Agent or Company may reject any subscriptions in whole or in part for any reason or for no reason and shall cause the Escrow Agent to return funds (i.e. amounts willfully received net subscribers banks’ fees) to the Purchaser to the extent of such non accepted funds, 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.  Additionally, in the event that the minimum offering amount of $100,000 in cleared funds representing accepted subscriptions is not raised by the Termination Date, the Escrow Agent shall return all funds to the Purchasers, without deduction.

 

 

           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.  For avoidance of doubt, these warranties and representations are made to Purchasers and, to both Sandgrain Securities, Inc. and Wellfleet Partners, Inc., as third party beneficiaries hereto.

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.  Capitalization of the Company is as set forth in the Information Memorandum and incorporated by reference therein.  There are no shares of preferred stock or other securities or convertible securities outstanding other than as disclosed.  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.  Without consideration of the actions of the Placement Agent (as defined in Section 8 herein), and 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.

3.14  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.

Each Purchaser hereby represents warrants and covenants with the Company as follows.  For avoidance of doubt, these warranties and representations are made to Purchasers and, to both Sandgrain Securities, Inc. and Wellfleet Partners, Inc., as third party beneficiaries hereto:

 

 

         

 

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, Information Memorandum 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.

 

 

4.4.4 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.

 

           

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 Placement Agent fees) for general working capital purposes only.

 

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.  The Company shall, on or before the Closing, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Purchasers at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to each Purchaser on or prior to the Closing Date.

 

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.

 

 

5.8. 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, if any, 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 the same 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.

 

5.9  Preemptive Rights With Respect to Conversion Shares and Note Shares.  From the date hereof until the earliest to occur of (i) the closing of any Public Offering or Follow On Offering of greater than $5,000,000 (together, a “Qualified Offering”),  or (ii) the date that is 24 months from the first Closing of this offering, or (iii) the sale of all or substantially all of the assets of the Company in a transaction wherein the Notes are being repaid, or (iv) such time as less than 75% of the aggregate amount of Notes offered hereby are still outstanding, in the event that the Company conducts a private or other offering  any Common  Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock, other than any Exempted Issuances (each, a “Subsequent Placement”)  the Company shall have first complied with this Section 5.9.

 

 

5.9.2  To accept an Offer, in whole or in part, such accepting Noteholder(s) must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after such Noteholder’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Noteholder’s Basic Amount that such Noteholder elects to purchase and, if such Noteholder shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Noteholder elects to purchase (in either case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all Noteholders are less than the total of all of the Basic Amounts, then each Noteholder who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Noteholder who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Noteholder bears to the total Basic Amounts of all Noteholders that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent its deems reasonably necessary.  Notwithstanding anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Noteholders a new Offer Notice (which shall be deemed to have replaced and restated the prior Offer Notice) and the Offer Period shall expire on the fifth (5th ) Business Day after such Noteholder’s receipt of such new Offer Notice.  The Noteholder agents and covenants to keep the offer notice and any transaction terms disclosed therein, completely confidential and further understands any disclosure of the same (other than to its professional representatives) may cause improbable harm to the Company.

 

5.9.3. The Company shall have 150 calendar days from the later of: (i) the expiration of the Offer Period above; or (ii) upon the written consent of the Noteholder, such longer period for which the Offered Securities are being offered to third parties as part of the Subsequent Placement, to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Noteholders (the “Refused Securities”), to any offerees (whether disclosed or not) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not materially more favorable to the acquiring person or persons or materially less favorable to the Company than those set forth in the Offer Notice and, to publicly announce as required the execution of definitive agreements relating to the closing of the Subsequent Placement and all other related required disclosure that the Company deems appropriate or necessary in its sole discretion, and (x) the consummation of the transactions contemplated by such Subsequent Placement or (y) the termination of definitive agreements relating to the Subsequent Placement.

 

5.9.4 In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified above), then each Noteholder may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Noteholder elected to purchase pursuant above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Noteholder as set forth above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities.  In the event that any  Noteholder so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Noteholder in accordance with this Section 5.9.

5.9.5 Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Noteholders shall acquire from the Company, and the Company shall issue to the Noteholders, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced under Section 5.9.4 above if the Noteholders have so elected, upon the terms and conditions specified in the Offer.  The purchase by the Noteholders of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Noteholders of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Noteholders and their respective counsel.

 

 

 

5.9.6  The Noteholder may, at its/his discretion, apply outstanding portions of the Note or interest towards the purchase of any Offered Securities as provided in Section 5 above with respect to Follow On Offerings, or may utilize new funds.  The Noteholder, at such time, will be required to execute all subscription or other documents as provided to other investors in such Subsequent Offering in order exercise its rights under this Section 5.9 and, to the extent the Note is no longer outstanding (if the Note is used for such purchase) shall not be deemed a Noteholder subject to the provisions of this Agreement or the Note.

5.9.7 Notwithstanding anything herein to the contrary, no violation, default or breach of this Section 5.9  shall be deemed an Event of Default under the Note.

 

 
 

 

 

 

 

 

 

 

 

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:

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth on the Purchase Signature Page hereto.

 

(By Counterpart Form - See Purchaser Signature

Pages following the Questionnaire)

 

 

 

(By Execution of Acceptance Page following

Certificate of Signatory)

 

 

 

           The undersigned Purchaser has read the Securities Purchase Agreement of Save the World Air, Inc., dated as of October __, 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 ____ Units, each Unit constituting a $25,000 7% Convertible Promissory Note and ______________________ Common Stock Purchase Warrants to purchase 100,000 share at $.30 per share, for an aggregate principal amount of $__________________, and Common Stock Purchase Warrants and tender a purchase price of $_______________ therefore.

           I am a resident of the State of __________________.

 

 

My address is:      ________________________________________________________

________________________________________________________

________________________________________________________

 

 

 

 

                                

                                

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.

 

 

 

 

 

Category IV	____		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.
			_____________________________________________________   _____________________________________________________   _____________________________________________________
			(describe entity)
Category V	____		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.
Category VI	____		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.
			_____________________________________________________   _____________________________________________________   _____________________________________________________
			(describe entity)
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)

 

 

(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   (            )                           < /font> 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

 

 

 

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

 

 

 

                    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.

____________________________________ Signature

The foregoing subscriptions for ________ Units, for an aggregate of $___________ principal amount of 7% Convertible Promissory Notes and Warrants at a purchase price of $25,000 per Unit, 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:

By: ___________________________________________________________

Name:

Title:

Date:  _______________ __, 2009

 

 

[This Exhibit is Included in the Memorandum as Part of Exhibit B]

 

 

 

[This Exhibit is Included in the Memorandum as Part of Exhibit B]

 

 

 

Form of Executed Escrow Agreement Between Sandgrain Securities, Inc., Save the World Air, Inc., and Manufacturers and Traders Trust Company, as Escrow Agent

[This Exhibit is Included in the Memorandum as Part of Exhibit B]