swta_10k-ex1077.htm


    Exhibit
10.77

     

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as
of January 30, 2009, by and between Save the World Air, Inc, a Nevada
corporation (the “Company”), whose address is 235 Tennant Avenue, Morgan Hill,
California 95037, and Cecil Bond Kyte (“Executive”), an individual,
whose address is 1267 Bel Air, Santa Barbara, California 93105, with reference
to the following:

     

    RECITALS

     

    A.
Executive has certain technical knowledge, skills and abilities pertaining to
the business in which the Company engages.

     

    B. The
Company wishes to employ Executive as its  Chief Executive Officer,
and Executive wishes to accept employment with the Company, all on the terms and
subject to the conditions set forth in this Agreement.

     

    AGREEMENT

     

    Accordingly,
the parties agree as follows:

     

    1. EFFECTIVE
DATE AND TERM. Unless sooner terminated as provided in this Agreement,
including as a result of the Company’s early termination of this Agreement as
provided in Section 4 below, the Company shall employ Executive for an
initial term commencing on a date to be agreed between the parties but not later
than January 30, 2009   (the “Effective Date”) and
continuing thereafter until the close of business on the day immediately
preceding the first anniversary of the Effective
Date.   Thereafter, this Agreement shall be renewed for
successive one year periods unless either party shall give written notice to the
other, not later than October 31th of the then-current year of the Term that
this Agreement shall not be renewed (the “Expiration Date”). This Agreement
shall in all respects terminate on the Expiration Date, except for those
obligations of either party that are expressly stated to continue after such
time or by nature will continue after such time. The period beginning on the
Effective Date and ending on the earlier of the Expiration Date or the date
Executive’s employment under this Agreement actually terminates is referred to
as the “Term.”

     

    2. POSITION
AND DUTIES.

     

    2.1 General
Duties. Executive shall serve as the Company’s  Chief Executive
Officer, and in such capacity shall be one of the Company’s senior executive
officers. Executive’s duties shall be consistent with such position. In carrying
out his duties, Executive shall use Executive’s best efforts, skills, judgment
and abilities, and shall at all times promote the Company’s interests and
perform and discharge well and faithfully, those duties. Executive shall report
directly to the Company’s Board of Directors. In acting on the Company’s behalf,
Executive shall observe and be governed by all of the Company’s rules and
policies, In addition, Executive shall abide by all of the requirements of the
Securities and Exchange Commission, and adhere to the policies and requests of
the Company with respect thereto, as the same may exist from time to time,
applicable to executive officers of public companies.

     

    2.2 Full-Time
Employment. At all times during the Term, Executive shall devote
Executive’s entire business time, attention and energies to the Company’s
business, and shall furnish services for the Company and for its subsidiaries,
affiliates and divisions. During the Term, Executive shall not engage in any
activity that would materially interfere with or adversely affect Executive’s
performance of Executive’s duties under this Agreement or which could reasonably
be expected to be competitive with or adverse to the business of the Company or
any of its subsidiaries, affiliates or divisions.

    


    2.3 Place of
Performance. In connection with Executive’s employment under this
Agreement, Executive shall be based at the Company’s offices where the same are
from time to time located during the term of this Agreement, and which are, on
the date hereof, in Morgan Hill, California.


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


     

    3. COMPENSATION.

     

    3.1 “Compensation”. “Compensation” means the Base
Salary (as defined below) and bonus, if any, pursuant to this
Section 3.

     

    3.2 Base
Salary. For all services rendered pursuant to this Agreement to the
Company and any of its subsidiaries and affiliates, commencing on the Effective
Date Executive shall receive a base salary (as may be adjusted from time to
time, the “Base Salary”)
of $200,000 per year. On or prior to each anniversary of the Effective Date, the
Company’s Board of Directors, or the appropriate committee thereof, shall review
the performance of the Executive hereunder and shall consider whether or not to
alter the Base Salary; provided that the Base Salary shall not be reduced unless
such reduction is in proportion to, and on all of the other terms and conditions
promulgated in connection with, a reduction in salaries paid to other senior
executives of the Company generally.

    


    3.3 Bonus.
Executive shall be eligible to receive an annual cash bonus in an amount equal
to 2% of the Company’s net profit, if any, for its most recently completed
fiscal year, computed in accordance with generally accepted accounting
principles applied consistently with prior periods.  The bonus shall
be payable, if at all, on the anniversary date of employment of each year of the
term; provided that no bonus shall be payable if the Executive is not, on such
payment date, in the employ of the Company.

    


    3.4 Benefits.
Executive shall be eligible to receive employee benefits during the Term, at
such times and on such terms and conditions as such benefits are made available
to the senior employees of the Company generally.  In addition,
Executive shall receive paid vacation of four weeks per year. Executive shall be
entitled to participate in the Company’s stock option plan as determined by the
Compensation Committee of the Board of Directors (the “Compensation Committee”)
in its sole, full and absolute discretion, such participation to be in addition
to the stock option grant provided for pursuant to Section 3.7 below. The
Company shall provide to the Executive an unaccountable monthly automobile
allowance of $900.00, which amount shall be payable on the  last day
of each month during the Term. Notwithstanding the provisions of the first
sentence of this Section 3.4, the Executive may elect not to participate in any
group health insurance plan which may be offered to employees of the
Company.  If the Executive elects not to participate in such group
health insurance plan, the Executive shall be paid on the last day of each month
during the Term the lesser of (i) the premium the Company would have paid to
include the Executive as a participant in the Company’s group health insurance
plan and (ii) the sums paid by the Executive in connection with maintaining
private health insurance for the Executive.

    


    3.5 Expenses.
The Company shall reimburse Executive for all reasonable and ordinary expenses
determined in the Company’s sole discretion that Executive incurs or pays during
the Term in performing Executive’s services under this
Agreement.   Ordinary expenses reimbursable to the Executive
pursuant to this Section 3.5 shall include the reasonable costs paid by the
Executive for maintaining dsl Internet access and other direct costs of
maintaining an office at the home of the Executive, but only until such time as
the Company shall provide to the Executive an office at a location reasonably
acceptable to the Executive. The Company shall, however, be required to make any
such reimbursement only after Executive presents appropriate written expense
statements, vouchers or such other supporting information in accordance with the
Company’s reimbursement policies, as the Company may adopt from time to time.
The Company shall notify Executive of any dispute with respect to any such
expenses within three months of any request for reimbursement or the expense
shall be classified as non-recoverable. Reimbursements shall be in arrears
unless other arrangements are made in advance.

     

    3.6 Payment
of Compensation. All Compensation and other amounts payable to Executive
under this Agreement, whether for a period during or after the Term, shall be
paid in such installments and on such schedule as the Company may from time to
time implement for general payroll purposes, provided that the Base Salary shall
be paid at least monthly. Any Base Salary required to be paid to Executive upon
a termination of Executive’s employment in excess of amounts accrued through the
Date of Termination (as defined in Section 4.1.1 below) shall be paid in the
same manner that Base Salary is paid during the Term, but not more than 30 days
from the Date of Termination. Any payments made by the Company shall be
designated by the Company as applied towards base compensation, bonus payment or
other remuneration as the case may be. Any payments made prior to the effective
date of this Agreement shall not be applied to any calculations called for in
this Agreement.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


     

    3.7 Stock
Option Grant.  Subject to the final decision of the
Compensation Committee, the Company will use its reasonable efforts to cause to
be granted to Executive:

     

      An
option (the “ Option”) to purchase a number of shares (the “Supplemental Option
Shares”) of the Company’s common stock equal to the result of (A) 100,000
divided by (B) the closing price per share of the Company’s Common Stock for the
five trading days preceding the first anniversary of the Effective Date.
The  Option shall be an incentive stock option, shall be exercisable
at the closing price per share on the first anniversary of the Effective Date,
shall be exercisable for ten years from the date of grant and shall vest on the
second anniversary of the Effective Date.

     

    Consistent
with the foregoing, the precise terms and conditions of the agreements
evidencing the Option and the (“Stock Option Agreement”) to be entered into
between the Company and the Executive shall be as determined by the Board of
Directors and/or the Compensation Committee.

    


     

    4. TERMINATION
AND COMPENSATION UPON TERMINATION.

     

    4.1 Definitions.

     

    4.1.1
“Date of Termination”
has the following meaning: (a) in the case of a termination of Executive’s
employment pursuant to this Agreement due to Executive’s death or Disability (as
defined below), the date Executive dies or the date on which it is determined
that Executive has suffered a Disability, as applicable; and (b) in the
case of any other termination of Executive’s employment pursuant to this
Agreement, the date specified for termination of Executive’s employment in the
Notice of Termination (as defined below), provided that the date specified shall
be no earlier than the time the Notice of Termination is delivered.

     

    4.1.2
“Notice of Termination”
means a written document delivered by the party terminating this Agreement to
the other party that specifies (i) the section of this Agreement pursuant
to which termination is being made and (ii) (the Date of
Termination.

     

    4.2 Effectiveness
of Termination. Termination of Executive’s employment, for any reason,
shall be effective upon the Date of Termination.

     

    4.3 Death.
Upon Executive’s death, this Agreement shall automatically forever
terminate.

     

    4.4 Disability.
The Company may, acting in its sole and absolute discretion, terminate
Executive’s employment under this Agreement because of Executive’s Disability by
delivering to Executive of a Notice of Termination, which termination shall be
effective 30 days after delivery of such Notice of Termination. For purposes of
this Agreement, “Disability” means Executive’s
physical or mental incapacity or illness rendering Executive unable to perform
Executive’s duties under this Agreement on a long-term basis (i) as
evidenced by Executive’s failure or inability to perform Executive’s duties
under this Agreement for a total of 90 days in any 360 day period, or
(ii) as determined by an independent and licensed physician whom the
Company selects, or (iii) as determined without recourse by the Company’s
disability insurance carrier, if any.

     

    4.5 Termination
by Company Without Cause. The Company may, acting in its sole and
absolute discretion, at any time terminate Executive’s employment under this
Agreement, upon no notice without Cause (as defined below), or for any reason
whatsoever or for no reason, by delivering to Executive a Notice of
Termination.

    


    4.6 Termination
for Cause. The Company may at any time terminate Executive’s employment
for Cause by delivering to Executive a Notice of Termination. For purposes of
this Agreement, “Cause”
means that the Company, reasonably and in good faith, forms the belief that
Executive has (i) committed any act or omission constituting a material
breach of this Agreement; (ii) engaged in gross negligence or willful
misconduct in connection with the Company’s business; (iii) been convicted
of, or plead guilty or nolo
contendre in connection with, fraud or any crime that constitutes a
felony or that involves moral turpitude or theft; or (iv) undertaken any
act injurious to the Company’s business, including insubordination or failure to
follow a directive of any of Executive’s superiors.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


     

    4.7 Voluntary
Termination. Executive may terminate Executive’s employment with the
Company at any time, for any reason whatsoever, by giving the Company a Notice
of Termination, which termination shall be effective on the sooner of (i) 30
days after delivery of such Notice of Termination or (ii) the Company’s notice
to the Executive that it has accepted the Notice of Termination delivered by the
Executive.

     

    4.8 Involuntary
Termination. The Company may terminate this Agreement in conjunction with
a Change of Control, merger, acquisition, bankruptcy or dissolution of the
Company. The Company shall pay Executive the amounts provided for in
Section 4.9 below upon any termination pursuant to this Section
4.8.  For purposes of this Agreement, “Change of Control” means the
occurrence of one or more of the following events:

     

    (i) the
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if more than fifty percent
(50%) of the combined voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other reorganization;
or

     

    (ii) the
sale, transfer or other disposition of all or substantially all of the Company’s
assets.

     

    4.9 Payment
Upon Termination. If Executive’s employment under this Agreement is
terminated by the Company pursuant to Section 4.8, Executive shall be
entitled to receive (i) all Compensation that has accrued through the Date
of Termination, plus (ii) a severance payment equal to one year’s
Compensation, plus the Executive shall be entitled to continue to participate in
the Company’s employee benefit programs offered to other senior management
employees of the Company for a period of 12 months following the Date of
Termination; provided, however, that if at
any time while the Company is required to pay severance to Executive pursuant to
clause (ii) of this paragraph any event occurs that would cause the
termination of Executive’s employment (for example, Executive dies) or give rise
to the right of the Company to terminate this Agreement for Cause or due to
Executive’s Disability were Executive still employed pursuant to this Agreement,
then the Company’s obligation to pay such severance shall thereupon immediately
terminate.  If Executive’s employment under this Agreement is
terminated  for any other reason except for termination pursuant to
Section 4.8, Executive (or in the case of Executive’s death, Executive’s
estate or other legal representative) shall only be entitled to receive the
Compensation accrued through the Date of Termination.

     

    4.10
Effect of
Termination. The amounts payable
to Executive pursuant to Section 4.9 upon a termination of Executive’s
employment shall upon payment constitute full and complete satisfaction of the
Company’s obligations to Executive in connection with this Agreement and the
Company’s employment of Executive. Executive shall have no further rights or
remedies with respect to or against the Company in connection with this
Agreement or the Company’s employment of Executive. Notwithstanding anything to
the contrary in this Agreement, Executive’s representations, warranties,
covenants, duties and other obligations set forth under Sections 5, 6, 7,
10 and 11 of this Agreement shall survive and continue after any termination of
this Agreement, regardless of the reason for the termination.

     

    5. WORK MADE
FOR HIRE

     

    5.1 Assignment.  Executive
and/or designates of the Executive shall promptly and fully inform the Company
of, and disclose to the Company, any and all ideas, processes, trademarks, trade
names, service marks, service mark applications, copyrights, mask work rights,
fictitious business names, technology, patents, know-how, trade secrets,
computer programs, original works of authorship, formulae, concepts, themes,
inventions, designs, creations, new works, derivative works and discoveries, and
all applications, improvements, rights and claims related to any the foregoing,
and all other intellectual property, proprietary rights and work product,
whether or not patentable or copyrightable, registered or unregistered or
domestic or foreign, and whether or not relating to a published work, that
Executive develops, makes, creates, conceives or reduces to practice during the
Term, whether alone or in collaboration with others (collectively, “Invention
Ideas”). Executive hereby assigns to the Company exclusively in perpetuity
throughout the world all right, title and interest (choate or inchoate) in
(i) the Invention Ideas, (ii) all precursors, portions and work in
progress with respect thereto and all inventions, works of authorship, mask
works, technology, information, know-how, materials and tools relating thereto
or to the development, support or maintenance thereof and (iii) all
copyrights, patent rights, trade secret rights, trademark rights, mask works
rights, sui generis
database rights and all other intellectual and industrial property rights of any
sort and all business, contract rights, causes of action, and goodwill in,
incorporated or embodied in, used to develop, or related to any of the foregoing
(collectively “Intellectual Property”). All copyrightable Invention Ideas are
intended by Executive to be a “work-made-for-hire” by Executive for the Company
and owned by the Company pursuant to Section 201 (b) of Title 17 of
the United States Code.  Executive 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 Company may reasonably request in order to obtain patent or copyright
registration on all Invention Ideas and Intellectual Property, and shall execute
and deliver all documents, instruments and agreements, including the formal
execution of an assignment of copyright and/or patent application or issued
patent, and do all things necessary or requested by the Company, in order to
enable the Company to ultimately and finally obtain and enforce full and
exclusive title to all Invention Ideas and Intellectual Property and all rights
assigned pursuant to this Section 5. Executive hereby appoints the Company
as Executive’s irrevocable attorney-in-fact for the purpose of executing and
delivering all such documents, instruments and agreements, and performing all
such acts, with the same legal force and effect as if executed and delivered and
taken by Executive.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    


    5.2 License.  If
for any reason the foregoing assignment is determined to be unenforceable
Executive grants to the Company a perpetual, irrevocable, worldwide,
royalty-free, exclusive, sub-licensable right and license to exploit and
exercise all such Invention Ideas and Intellectual Property.

     

    5.3 Presumptions.  Because
of the difficulty of establishing when Executive first conceives of or develops
Intellectual Property, proprietary rights or work product or whether such
Intellectual Property, proprietary rights or work product results from access to
the Company’s confidential and proprietary information or equipment, facilities
or data, Executive agrees that any Intellectual Property, proprietary rights and
work product shall be presumed to be an Invention Idea if it is conceived,
developed, used, sold, exploited or reduced to practice by Executive or with the
aid of Executive within one year after the normal termination of
Executive’s employment with the Company. Executive can rebut that presumption if
Executive proves that the intellectual property, proprietary rights and work
product (i) was first conceived or developed after termination of
Executive’s employment with and by the Company; (ii) was conceived or
developed entirely on Executive’s own time without using the Company’s
equipment, supplies, facilities or confidential and proprietary information; and
(iii) did not result from any work performed by Executive for or on behalf
of the Company.

     

    5.4 Exclusions.  Executive
acknowledges that there is no intellectual property, proprietary right or work
product that Executive desires not to be deemed Invention Ideas or Intellectual
Property and thus to exclude from the above provisions of this Agreement. To the
best of Executive’s knowledge, there is no other existing contract in conflict
with this Agreement or any other contract to assign ideas, processes,
trademarks, service marks, inventions, technology, computer programs, original
works of authorship, designs, formulas, discoveries, patents or copyrights that
is now in existence between Executive and any other person or
entity.

     

    5.5 Labor
Code.  This Section 5 shall not operate to require
Executive to assign to the Company any of Executive’s rights to inventions,
intellectual properties or work products that would not be assignable under the
provisions of California Labor Code Section 2870. Executive represents and
warrants to the Company that this paragraph constitutes the Company’s written
notification to Executive of the provisions of Section 2870 of the
California Labor Code, and Executive represents and warrants to the Company that
Executive has reviewed Section 2870 of the California Labor
Code.

     

    6. UNFAIR
COMPETITION AND PROTECTION OF PROPRIETARY INFORMATION.

     

    6.1 Proprietary
Information.  Executive shall not at any time (including after
Executive’s employment with the Company terminates) divulge, furnish or make
accessible to anyone any of the Company’s Proprietary Information, or use in any
way any of the Company’s Proprietary Information other than as reasonably
required to perform Executive’s duties under this Agreement. Executive shall not
undertake any other acts or omissions that would reduce the value to the Company
of the Company’s Proprietary Information. The restrictions on Executive’s use of
the Company’s Proprietary Information shall not apply to knowledge or
information that Executive can prove is part of the public domain through no
fault of Executive. Executive agrees that such restrictions are fair and
reasonable.

    


    6.2 Injunctive
Relief.  Executive agrees that the Company’s Proprietary
Information constitutes a unique and valuable asset of the Company that the
Company acquired at great time and expense, and which is secret and confidential
and will only be available to or communicated to Executive in confidence in the
course of Executive’s provision of services to the Company. Executive also
agrees that any disclosure or other use of the Company’s Proprietary Information
other than for the Company’s sole benefit would be wrongful, would constitute
unfair competition and will cause irreparable and incalculable harm to the
Company and to its subsidiaries, affiliates and divisions. In addition to all
other remedies the Company may have, it shall have the right to seek and obtain
appropriate injunctive and other equitable relief, including emergency relief,
to prevent any violations of this Section 6.

     

    6.3 Non-Solicitation.  Executive
agrees that the Company’s employees constitute a valuable asset of the Company.
Executive agrees that Executive shall not, during the Term and for a period of
two years thereafter, directly or indirectly, for Executive or on behalf of any
other person or entity, solicit any person who was an employee of or consultant
to the Company (at any time while Executive is performing any services for the
Company, or at any time within twelve months prior to or after such
solicitation) for a competing business or otherwise induce or attempt to induce
any such persons to terminate their employment or relationship with the Company
or otherwise to disrupt or interfere, or attempt to disrupt or interfere, with
the Company’s employment or relationships with such persons. Executive agrees
that any such solicitation, inducement or interference would be wrongful and
would constitute unfair competition, and will cause irreparable and incalculable
harm to the Company. Further, Executive shall not engage in any other unfair
competition with the Company. Executive agrees that such restrictions are fair
and reasonable.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


     

    6.4 Privacy.  Executive
recognizes and agrees that Executive has no expectation of privacy with respect
to Company’s telecommunications, networking or information processing systems
(including stored computer files, e-mail messages and voice messages), and that
Executive’s activity, and any files or messages, on or using any of those
systems may be monitored at any time without notice.

     

    6.5 Definition.  As
used in this Agreement, “Company’s Proprietary Information” means any knowledge,
trade secrets (including “trade secrets” as defined in Section 3426.1 of
the California Civil Code), Invention Ideas, proprietary rights or proprietary
information, intangible assets or property, and other intellectual property
(whether or not copyrighted or copyrightable or patented or patentable),
information and materials (including processes, trademarks, trade names, service
marks, service mark applications, copyrights, mask work rights, technology,
patents, patent applications and works of authorship), in whatever form,
including electronic form, and all goodwill relating or appurtenant thereto,
owned or licensed by the Company or any of its subsidiaries, affiliates or
divisions, or directly or indirectly useful in any aspect of the business of the
Company or its subsidiaries, affiliates or divisions, whether or not marked as
confidential or proprietary and whether developed by Executive, by the Company
or its subsidiaries, affiliates or divisions or by others. Without limiting the
foregoing, the Company’s Proprietary Information includes (a) the names,
locations, practices and requirements of any of the Company’s customers,
prospective customers, vendors, suppliers and personnel and any other persons
having a business relationship with the Company; (b) confidential or secret
development or research work of the Company or its subsidiaries, affiliates or
divisions, including information concerning any future or proposed services or
products; (c) the Company’s accounting, cost, revenue and other financial
records and documents and the contents thereof; (d) the Company’s
documents, contracts, agreements, correspondence and other similar business
records; (e) confidential or secret designs, software code, know how,
processes, formulae, plans and devices; and (f) any other confidential or
secret aspect of the business of the Company or its subsidiaries, affiliates or
divisions.

     

    7. RESTRICTION
OF EXECUTIVE’S ACTIVITIES. During the Term, including any period during
which the Company is making any payments to Executive pursuant to this
Agreement, neither Executive nor any person or entity acting with or on
Executive’s behalf, nor any person or entity under the control of or affiliated
with Executive, shall, directly or indirectly, in any way Compete with the
Company. Executive agrees that, if Executive has any business to transact on
Executive’s own account that is similar to the business entrusted to Executive
by the Company, Executive shall notify the Company and always give preference to
the Company’s business. Executive agrees that such restrictions are fair and
reasonable. For purposes of this Agreement, “Compete” means doing any of
the following: (i) selling products or services to any person or entity
that was or is (at any time, including during the Term and the period when the
provisions of this paragraph are in effect) a client or customer of the Company
(or its subsidiaries, affiliates or divisions) or on a list of prospective
clients or customers of the Company, or calling on, soliciting, taking away or
accepting any such person or entity as a client or customer, or any attempt or
offer to do any of the foregoing; (ii) entering into, or any attempt or
offer to enter into, any business, enterprise or activity that is in any way
similar to or otherwise competitive with the business that the Company (or its
subsidiaries, affiliates or divisions) conducted at any time during the Term or
any time the provisions of this paragraph are in effect, or (iii) directly
or indirectly assisting any person or entity to take or attempt or offer to take
any of the actions described in the foregoing clauses (i) or
(ii).

     

    8. NOTICES.
Any notice, statement, request or consent made hereunder shall be in writing and
shall be given as follows: (a) to Executive by Federal Express, or any
other nationally recognized overnight carrier, addressed to Executive at his
address stated as set forth in the preamble paragraph of this Agreement or at
such other address as Executive may designate by notice to the Company as
provided herein, and (b) to the Company by Federal Express or any other
nationally recognized overnight carrier to the Company’s s address stated as set
forth in the preamble paragraph of this Agreement or to such other address as
the Company may designate by notice to Executive as provided herein. Any such
communication shall be deemed to have been given to Executive or the Company on
the first business day following that mailing. In addition, any such
communication may also be given by (i) personal delivery which shall be
deemed to have been given upon delivery; (ii) facsimile which shall be
deemed to have been given upon telephonic confirmation of successful
transmission; or (iii) first class certified mail, return receipt
requested, postage prepaid, addressed to the party to whom that notice is to be
given and when notice is given in this manner it shall be deemed received on the
third day after that notice was deposited with the United States Postal
Service.

    



    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    9. ASSIGNMENT;
SUCCESSORS

     

    9.1 By
Company. This Agreement is fully assignable by the Company to any person
or entity, including any successor entity; provided, however, that any
such person or entity shall assume the Company’s obligations under this
Agreement in accordance with its terms.

     

    9.2 By
Executive. Executive may not assign this Agreement or any part of this
Agreement without the Company’s prior written consent, which consent may be
given or withheld by the Company acting in its sole and absolute
discretion.

     

    10. REMEDIES.

     

    10.1
Uniform
Trade Secrets Act. If Executive breaches any provision of Section 6
of this Agreement, the Company shall have the right to invoke any and all
remedies provided under the California Uniform Trade Secrets Act (California
Civil Code §§3426, et
seq.) or other statutes or common law remedies of similar
effect.

     

    10.2
Non-Exclusive
Remedies. The remedies provided to the Company in this Section 10
are cumulative, and not exclusive, of any other remedies that may be available
to the Company.

     

    10.3
Arbitration.
Any controversy, dispute or claim between the parties to this Agreement,
including any claim arising out of, in connection with, or in relation to the
formation, interpretation, performance or breach of this Agreement or
Executive’s employment with the Company, shall be settled exclusively by
arbitration, before a single arbitrator, in accordance with this Section and the
then most applicable rules of the American Arbitration Association, except as
modified by this Section 10.3, but only if one (or both) of the parties
requests such arbitration. The arbitrator shall be bound by the express
provisions of this Agreement and by the laws of the jurisdiction chosen by the
parties to be the law governing the interpretation of this Agreement. The
arbitrator shall permit such discovery as required by applicable law and as
sufficient to adequately arbitrate Executive’s statutory claims (if any have
been asserted), including access to essential documents and witnesses where
required by applicable law. Judgment upon any award rendered by the arbitrator
may be entered by any state or federal court having jurisdiction thereof.
Notwithstanding the foregoing, to the extent permitted by applicable law either
party may in an appropriate manner apply to a court pursuant to California Code
of Civil Procedure Section 1281.8, or any comparable provision, for
provisional relief, including a temporary restraining order or a preliminary or
permanent injunction (such as specified in Section 10.1 of this Agreement),
on the ground that the award to which the applicant may be entitled in
arbitration may be rendered ineffectual without provisional relief. Nor shall
anything in this Section 10 (to the extent permitted by applicable law)
prevent any party from (i) joining any party as a defendant in any action
brought by or against a third party; (ii) bringing an action in court to
effect any attachment or garnishment; or (iii) bringing an action in court
to compel arbitration as required by this Section 10.

     

    If the
parties are unable to agree upon an arbitrator, the parties shall select a
single arbitrator from a list of nine arbitrators drawn by the parties at random
from the “Independent” (or “Gold Card”) list of retired judges. If the parties
are unable to agree upon an arbitrator from the list so drawn, then the parties
shall each strike names alternately from the list, with the first strike being
determined by lot. After each party has used four strikes, the remaining name on
the list shall be the arbitrator. If such person is unable to serve for any
reason, the parties shall repeat this process until an arbitrator is
selected.

     

    This
agreement to resolve any disputes by binding arbitration shall extend to claims
against any parent, subsidiary or affiliate of each party, and, when acting
within such capacity, any officer, director, shareholder, employee or agent of
each party, or of any of the above, and shall apply as well to claims arising
out of state and federal statutes and local ordinances as well as to claims
arising under the common law. In the event of a dispute subject to this
Section 10 the parties shall be entitled to reasonable discovery subject to
the discretion of the arbitrator. The remedial authority of the arbitrator shall
be the same as, but no greater than, would be the remedial power of a court
having jurisdiction over the parties and their dispute. The arbitrator shall,
upon an appropriate motion, dismiss any claim without an evidentiary hearing if
the party bringing the motion establishes that he or she would be entitled to
summary judgment if the matter had been pursued in court
litigation.

     

    To the
extent permitted by law, the initial fees and costs of the arbitrator shall be
borne by the Company, with the Company being responsible for the costs and fees
of the arbitration and the prevailing party shall be entitled to reimbursement
for legal fees and costs incurred by the other.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


     

    The
arbitrator shall render an award and written opinion, and the award shall be
final and binding upon the parties.

     

    Any
arbitration shall take place in the county of Los Angeles,
California.

     

    THE PARTIES UNDERSTAND THAT BY
AGREEING TO ARBITRATE IN THE MANNER REQUIRED BY THIS SECTION 10, THEY ARE
WAIVING THEIR RIGHTS TO HAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT OR
EXECUTIVE’S EMPLOYMENT BY THE COMPANY TRIED BEFORE AND ADJUDICATED BY A JURY,
INCLUDING DISPUTES RELATING TO ANY CLAIM EXECUTIVE MAY HAVE FOR UNLAWFUL
TERMINATION OF HER EMPLOYMENT OR FOR A VIOLATION OF ANY FEDERAL, STATE OR OTHER
LAW OR STATUTORILY PROTECTED RIGHTS, (SUCH AS, WITHOUT LIMITATION, AGE
DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, 29 U.S.C. §§ 621—634; OLDER
WORKERS BENEFIT PROTECTION ACT, AS AMENDED, 29 U.S. §§ 621, 623; TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, AS AMENDED, 42 U.S.C. §§ 2000E—2000E-17; THE FAIR
LABOR STANDARDS ACT OF 1938 AS AMENDED; THE EQUAL PAY ACT OF 1963, AS AMENDED,
29 U.S.C. §§ 206(D); THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, 29 U.S.C. §§ 1001—1461; THE WORKER ADJUSTMENT AND RETRAINING
NOTIFICATION ACT, AS AMENDED, 29 U.S.C. § 2101 ET
SEQ.; THE NATIONAL LABOR
RELATIONS ACT, AS AMENDED, 29 U.S.C. §§ 151-169; FAMILY AND MEDICAL LEAVE ACT OF
1993, AS AMENDED, 29 U.S.C. § 825 ET
SEQ. AMERICANS WITH
DISABILITY ACT OF 1990, AS AMENDED, 42 U.S.C. §§ 12101 ET. SEQ.; INFLICTION OF
EMOTIONAL DISTRESS, DEFAMATION, PERSONAL INJURY AND BREACH OF CONTRACT, WHICH
INCLUDE DISCRIMINATION ON THE BASIS OF AGE, RACE, GENDER, DISABILITY, ETHNIC
ORIGIN OR SEXUAL ORIENTATION). NEVERTHELESS, BOTH PARTIES AGREE TO WAIVE ALL SUCH RIGHTS THEY MAY HAVE
TO A JURY TRIAL AND TO SUBMIT ALL SUCH DISPUTES TO BINDING ARBITRATION IN
ACCORDANCE WITH THE TERMS OF THIS SECTION 10.

     

    
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Company

            	 
      	
              
                /s/            

              

            	 
      	 
      	 
      	
              Executive

            	 
      	
              
                /s/           

              

            
	 
      	 
      	
              (initials)

            	 
      	 
      	 
      	 
      	 
      	
              (initials)

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      


    

     

    11. NO
CONFLICT. Executive represents and warrants that neither his execution of
this Agreement nor his performance under this Agreement will (i) violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event that, with notice or lapse of time, or both, would constitute a
default) under, any contract or other obligation to which Executive is a party
or by which he is bound; or (ii) violate any judgment or other order
applicable to Executive. Executive shall indemnify, defend and hold harmless the
Company from and against any and all claims, liabilities, lawsuits, judgments,
losses, costs, fees and expenses (including reasonable attorneys’ fees, costs
and expenses) that the Company or any of its agents, affiliates, employees,
shareholders, officers or directors may suffer or incur as a result of
Executive’s breach or alleged or threatened breach of any of the representations
and warranties set forth in this paragraph.

     

    12. GENERAL.

     

    12.1
Captions.
The section headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.

     

    12.2
Entire
Agreement. This Agreement sets forth the entire agreement and
understanding of the parties with regard to the subject matter hereof and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.

     

    12.3
Amendments;
Waivers. This Agreement may be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants of this Agreement may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision of this Agreement
shall in no manner affect such party’s right at a later time to enforce such
performance. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    


     

    


     

    12.4
No
Other Representations. No representation, promise or inducement has been
made by either party that is not embodied in this Agreement, and neither party
shall be bound by or be liable for any alleged representation, promise or
inducement not so set forth.

     

    12.5
Severability.
If any of the provisions of this Agreement (including Section 10) are
determined to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Agreement,
and this Agreement shall be reformed to the extent necessary to carry out its
provisions to the greatest extent possible and, with respect to reformation of
any provision of Section 10, to ensure that the resolution of all conflicts
between the parties (including those arising out of statutory claims) shall be
resolved by neutral, binding arbitration. If a court should find that any
provision set forth in Section 10 is not absolutely binding, the parties
intend that any arbitration decision and award with respect to this Agreement be
fully admissible in evidence in any subsequent action, given great weight by any
finder of fact, and treated as determinative to the maximum extent permitted by
law.

     

    12.6
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making proof of this
Agreement, to produce or account for more than one such
counterpart.

     

    12.7
Withholding.
Notwithstanding anything in this Agreement to the contrary, all payments that
the Company is required to make under this Agreement to Executive or Executive’s
estate or beneficiaries shall be subject to the withholding of such amounts
relating to taxes as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.

     

    12.8
Tax
Consequences. The Company shall have no obligation to any person entitled
to the benefits of this Agreement with respect to any tax obligation any such
person incurs as a result of or attributable to this Agreement, including any
supplemental agreements, stock option plans or employee benefit plans, or
arising from any payments made or to be made under this Agreement or
thereunder.

     

    12.9
Consent
to Jurisdiction. The parties to this Agreement agree that all actions or
proceedings arising directly or indirectly from this Agreement shall be
arbitrated or litigated before arbitrators or in courts having a situs within
Loa Angeles, California; hereby consent to the jurisdiction of any local, state
or federal court in which such an action or proceeding is commenced that is
located in Los Angeles County, California; agree not to disturb such choice of
forum (including waiving any argument that venue in any such forum is not
convenient); agree that any litigation initiated by any party hereto in
connection with this Agreement may be venued in either the state or federal
courts located in Orange County, California; agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law;
and waive the personal service of any and all process upon them and consent that
all such service of process may be made by certified or registered mail, return
receipt requested, addressed to the respective parties at the address set forth
above.

     

    12.10
Gender
References. References in this Agreement to any gender shall include the
masculine, feminine and neuter genders.

     

     

     [remainder
of page intentionally left blank]


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


     

    


     

    12.11
Construction.
In all instances when appearing in this Agreement, the terms “including,”
“include” and “includes” shall be deemed to be followed by “without
limitation.”

    


     

    IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first above
written.

     

    
      
        	 
      	 
      	 
      	 
      	 
      
	
                SAVE
      THE WORLD AIR, INC.

              	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	
                
                      /S/  EUGENE
      E. EICHLER

                

              	 
      	 
      
	
                Title:

              	 
      	
                Interim
      Chief Financial Officer

              	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                EXECUTIVE:

              	 
      	 
      
	 
      	 
      
	
                
                   /S/
      CECIL BOND KYTE

                

              	 
      	 
      
	
                Cecil
      Bond Kyte

              	 
      	 
      


      

    

    


     

     

    10