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:





1.
            Definitions.





All
      terms
      not defined herein shall have the meaning ascribed to them in the Offering
      Memorandum.





2.
            Registration
                Rights.





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.





3.
            Interest
                Rate of Notes.





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.





4.
            Conversion
                Price.





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.
            Warrants.





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.





6.
            Filing
                Delays.





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.





7.
            Other
                Provisions Unaffected.





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.





8.
            Counterparts.





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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      of
      page intentionally left blank]




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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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