EXHIBIT 10.1


 








	 	STWA, Inc.
	 	735 State Street, Suite 500
	 	Santa Barbara, CA 93101
	 	Toll Free	+1(877) USA-STWA
	 	Main	+1(805) 845-3581
	 	Fax	+1(805) 845-4377
	 	Web	www.stwa.com
	 	 	 
	 	Lease Agreement No.     TBD












 


 


EQUIPMENT LEASE/OPTION TO PURCHASE AGREEMENT


 


THIS EQUIPMENT LEASE/OPTION TO PURCHASE AGREEMENT (the "Lease")
is made effective the day of July 15, 2014 ("Effective Date")


 


BETWEEN:


 


Save The World Air, Inc.


(the "Lessor")


- and -


Kinder Morgan Crude & Condensate
LLC


("Kinder Morgan")


collectively, the "Parties" or
individually, a "Party")


 


RECITALS


 


WHEREAS Kinder Morgan
operates a high pressure oil pipeline and related facilities and the Lessor has developed certain technology known as "Applied
Oil TechnologyTM (AOTTM) ("Technology");


 


AND WHEREAS Kinder
Morgan wishes to lease and test the effectiveness of Lessor's Technology and Equipment (as described below);


 


AND WHEREAS the
Lessor is prepared to lease the Equipment to Kinder Morgan on the terms and conditions set forth in this Lease, which
includes an option for Kinder Morgan to purchase the Equipment during or upon termination of the Initial Term or Extended
Term, if any (defined below).


 


NOW, THEREFORE in consideration
of the covenants set forth below and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by the Parties, the Parties agree, as follows:


 


		1.	Equipment Leased.



 


The Lessor hereby leases, non-exclusively,
to Kinder Morgan and Kinder Morgan leases from the Lessor the equipment, along with the equipment attached thereto or contained
therein as specified in Schedule A attached to this Lease and made a part hereof (the "Equipment"), together with
all parts, components, accessories, replacements, substitutions, additions and improvements now or in the future attached to or
forming a part thereof.


 


 




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		2.	Delivery, Installation, Data Collection and Maintenance of the Equipment.



 


		A.	The Lessor, at Lessor's expense, shall deliver the Equipment to Kinder Morgan at a location designated
by Kinder Morgan by a date no later than December 31, 2014. This date may be extended by mutual written consent of the Parties.



 


		B.	Installation shall be performed by and at the expense of Kinder Morgan in a professional and workmanlike
manner in conformance with all recommendations of Lessor, and in compliance with good construction and engineering practices.



 


		C.	The Lessor shall provide Kinder Morgan with instructional service in the installation and operation
of the Equipment.



 


		D.	Any alterations or modifications to the Equipment may be made only upon consultation with and written
approval by the Lessor, which approval shall not be unreasonably withheld.



 


		E.	Kinder Morgan, at its expense, shall keep and maintain the Equipment in good working order and
repair. In the event the Equipment, during the Term hereof, is lost, damaged, destroyed, in whole or in part, or stolen, Kinder
Morgan shall pay to Lessor the replacement cost of the Equipment, and the obligations of this Lease shall end.



 


		F.	All repairs and maintenance of the Equipment shall be performed promptly by Kinder Morgan. Kinder
Morgan shall supply labor, at Kinder Morgan's cost, and all materials shall be provided by Lessor, at Lessor's cost. Lessor shall
provide Kinder Morgan with a designated person to assist in Kinder Morgan's repairs and maintenance of the Equipment.



 


		G.	Data acquisition will be collaborative and transparent between Lessor and Kinder Morgan, including,
but is not limited to data described in Schedule C. All data collected will be subject to mutually binding confidentiality and
nondisclosure agreements. Subject to Section 4 of that certain Mutual Confidentiality Agreement between the Parties of even date
herewith data cannot be shared or released to any outside entity (other than Lessor or Kinder Morgan) or third party without the
written consent of both Parties.



 


		H.	Lessor or Kinder Morgan may, from time to time, make changes, alterations, modifications or improvements
to the Equipment ("Improvements"). Any such Improvements will be the sole intellectual property of Lessor. Kinder Morgan
may not make any Improvements to the Equipment without the express written consent of Lessor.



 


		3.	Term and Lease Payment.



 


		3.1	The term of this Lease of Equipment shall be for a period of four (4) months (the "Initial
Term"), commencing on the date of successful completion of the Equipment's direct current power supply is successfully
energized by Lessor following installation pre-startup safety review (PSSR) by Kinder Morgan, which shall be completed by Kinder
Morgan no later than thirty (30) days following Lessor's delivery and Kinder Morgan's acceptance of the Equipment in accordance
with Section 5.1 below. On sixty (60) days' written notice prior to the expiration of the Initial Term, Kinder Morgan shall have
an option to extend the Lease for a minimum of twelve (12) and a maximum of eighty-four (84) additional months ("Extended
Term"), subject to Kinder Morgan's exercise, if at all, of its option to purchase the Equipment in accordance with Section
12, below.



 




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		3.2	During the Initial Term and Extended Term, if any, Kinder Morgan shall pay to the Lessor, a monthly
lease fee in U.S. Dollars in the amount of Twenty Thousand Dollars ($20,000) ("Monthly Lease Payment"). In the
event the Equipment is removed from service at its initial location and re-installed to a new location during the Initial Term
of the Lease, the Monthly Lease Payment during the Initial Term of the Lease shall be reduced to $5,000 per month ("Standby
Lease Payment") until the Equipment is placed back in service at its new location, at which time the Monthly Lease Payments
shall again be Twenty Thousand Dollars ($20,000). If the Equipment is in service for a partial month, the Monthly Lease Payment
and Standby Lease Payment shall be calculated and paid on a pro rata per day basis.



 


		3.3	Kinder Morgan shall pay each Monthly Lease Payment to the Lessor within 15 days of invoicing by
Lessor during the Initial Term and Extended Term, if any, of this Lease.



 


		3.4	Kinder Morgan shall pay each Monthly Lease Payment to a bank account designated by the Lessor.



 


		3.5	Kinder Morgan shall be responsible for payment of all licensing and registration fees in respect
of the Equipment.



 


		4.	Title.



 


The Parties agree that title and ownership
to the Equipment shall remain at all times with the Lessor, unless purchased by Kinder Morgan in accordance with Section 12, below.


 


		5.	Acceptance of Delivery.



 


		5.1	Upon receipt of Equipment delivery, Kinder Morgan shall inspect Equipment and either promptly report
any deficiencies to Lessor or accept possession. By accepting possession of the Equipment under this Lease, Kinder Morgan accepts
the condition of the Equipment.



 


		5.2	Upon consultation with and written approval by Lessor, the Parties agree that Kinder Morgan is
authorized, at its sole expense, to furnish or install on the Equipment new or renewed replacement parts and to make any additions
or improvements which Kinder Morgan deems necessary for the proper maintenance and operation of the Equipment. All such parts,
additions and Improvements shall be deemed a part of the Equipment, and subject to Section 4, above. Notwithstanding anything to
the contrary, contained herein, installation materials and components such as hardware, pipe, flanges, fittings, valves, wiring,
computers, controllers and electronics procured and installed by Kinder Morgan, as necessary to install the Equipment to Kinder
Morgan's pipeline, shall remain property of Kinder Morgan. Installation materials and components as described above procured and
installed by Lessor, shall remain property of Lessor.



 




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		6.	Operating Use.



 


Kinder Morgan shall operate the Equipment
during the Initial Term and Extended Term, if any, for the purpose only as set forth in the Recitals, above.


 


		7.	Limitations of Liability.



 


		7.1	Each Party shall be liable to the other Party, its agents and employees for all losses or damages
arising out of or attributable to the acts or omissions, willful misconduct or breach of this Lease by such Party.



 


		7.2	Kinder Morgan acknowledges that Kinder Morgan will obtain the Equipment on an "as is where
is basis" without relying on the Lessor. The Lessor makes no warranty or representation, express or implied, statutory or
otherwise, as to the design, quality, capacity or fitness of the Equipment for any particular purpose.



 


		7.3	Kinder Morgan agrees that no defect or unfitness of the Equipment shall relieve Kinder Morgan of
the obligation to pay the Monthly Lease Payments throughout the Initial Term and Extended Term, if any, hereof.



 


		7.4	Kinder Morgan acknowledges and agrees that the Lessor shall not be liable or responsible for any
non-compliance with any statute, law, ordinance, rule or regulation relating to the installation, operation, use or maintenance
of the Equipment, it being expressly understood that all such liability shall be the responsibility of Kinder Morgan. Lessor shall
be responsible to confirm the manufacturing of the Equipment is within compliance with all applicable state and federal regulations
and codes.



 


		7.5	IN NO EVENT SHALL EITHER PARTY HERETO BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT CONSEQUENTIAL
OR PUNITIVE DAMAGE, WHETHER BASED ON TORT OF CONTRACT.



 


		8.	Indemnity.



 


		8.1	Each Party ("Indemnitor") shall indemnify and hold harmless the other Party "(Indemnitee"),
its affiliates and each of their representatives, directors, officers, employees and agents from and against all claims, demands,
losses, costs (including attorneys' fees), damages, suits or proceedings by third parties (collectively referred to as "Claims")
that arise out of or are attributable to:



 


		(i)	Kinder Morgan's installation, operation and maintenance of the Equipment;



 


		(ii)	any breach of this Lease by the Indemnitor, or its personnel, agents or subcontractors;



 


		(iii)	Kinder Morgan's obligations to pay taxes and fees as a result of this Lease, and any related penalties
imposed by any governmental or other authority having jurisdiction.



 


		(iv)	in the case of Lessor, any claim or suit for alleged infringement of any patent, industrial design,
license, copyright or trademark resulting from or arising in connection with the manufacture, sale, or use or other disposition
of the Equipment. If the Equipment or any portion thereof constitutes an infringement, Lessor shall, in addition to its other obligations
under this Agreement, at its own expense and as directed by Kinder Morgan, either procure for Kinder Morgan the right to continue
using such Equipment without liability for such infringement, or modify or replace such Equipment with non-infringing Equipment
accomplishing the same purpose as the replaced Equipment.



 




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		8.2	The Indemnitor will assume on behalf of the Indemnitee, and conduct with due diligence and in good
faith, the defense of any Claims with counsel reasonably satisfactory to the Indemnitee; provided that the Indemnitee and their
insurer shall have the right to be represented therein by advisory counsel of their own selection and at their own expense; provided
further that if the defendants in any such action include both the Indemnitor and the Indemnitee, and if the Indemnitee will have
reasonably concluded that there may be legal defenses available to it which are different from, additional to, or inconsistent
with those available to the Indemnitor, then the Indemnitee and their insurer shall have the right to select separate cousel to
participate in the defense of such Claims on its own behalf and that the Indemnitor's expense. Without the prior consent of the
Indemnitee, the Indemnitor will not enter into any settlement of any Claim which would lead to liability or create any financial
or other obligation on the part of the Indemnitee.



 


		9.	Insurance.



 


Kinder Morgan shall bear the
risk, responsibility and liability for the installation, operation and maintenance of the Equipment. Kinder Morgan shall maintain,
at its cost, all such insurance on the Equipment with losses payable to Lessor against fire, theft, destruction, property damage,
personal injury, general liability and other risks as are appropriate and specified by Lessor. Kinder Morgan shall provide Lessor
proof of such insurance.


 


		10.	Default.



 


		10.1	Kinder Morgan shall be in default hereunder if Kinder Morgan fails to pay the Monthly Lease Payment
as required hereunder within fifteen (15) business days of the due date thereof.



 


		10.2	Either Party will be in default under this Lease if the Party defaults in the performance of an
obligation required from the Party under this Lease.



 


		10.3	If either Party defaults in performance of any of its obligations under this Lease, the other Party
shall provide a written notice of the default to the defaulting Party and if the defaulting Party does not remedy the default within
ten (10) business days after the receipt of such notice, the other Party may rely on any legal or equitable remedy available in
law or equity.



 




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		11.	Return Condition.



 


		11.1	Subject to Kinder Morgan's option to purchase under Section 12, below, upon the expiration or termination
of this Lease, Kinder Morgan shall, at Kinder Morgan's expense, disconnect and prepare the Equipment. The Equipment shall be free
and clear of oil and in substantially the same condition as received except for ordinary wear and tear. Lessor will retrieve Equipment
from the site at Lessor's expense.



 


		12.	Option to Purchase.



 


		12.1	Provided Kinder Morgan is not in default with respect to any obligations or payments required to
be made under this Lease, the Lessor grants to Kinder Morgan, during the Initial Term and Extended Term, if any, hereof, an option
to purchase the Lessor's interest in the Equipment for the amounts set forth in the attached Schedule B.



 


		12.2	This option may be exercised by Kinder Morgan giving the Lessor written notice (the "Notice")
of its intention to exercise the option. The Notice shall set forth the time for the closing of the sale which shall be the date
which is sixty (60) days after the date of the notice or in the event there are less than sixty (60) days remaining in the Initial
Term or Extended Term, if any, at the end of such term (the "Closing date"). On the Closing Date, Kinder Morgan shall
pay the purchase price set forth in Schedule B to the Lessor by way of certified check or money order and the Lessor shall transfer
its interest in the Equipment to Kinder Morgan whereupon this Lease shall cease.



 


		12.3	Kinder Morgan shall pay any and all taxes, license or registration fees, or other fees, costs,
or charges payable in connection with any such sale and purchase of the Equipment. The bill of sale from the Lessor to Kinder Morgan
shall contain warranties on the part of the Lessor that it has done not act nor created any security interest in the Equipment
that would adversely affect the title to it.



 


		13.	Encumbrances, Taxes and Other Laws.



 


Kinder Morgan shall keep the
Equipment free and clear of any liens or other encumbrances, and shall not permit any act where Lessor's title or rights may be
negatively affected. Kinder Morgan shall be responsible for complying with and conforming to all laws, regulations, ordinances
and statutes relating to the possession, use, operation or maintenance of the Equipment. Furthermore, Kinder Morgan shall promptly
pay all taxes, fees, licenses and governmental charges, together with any penalties or interest thereon, relating to the possession,
use, operation or maintenance of the Equipment.


 


		14.	Termination.



 


During the Initial Term, either
Party may terminate this Agreement at any time for any reason on forty-five (45) days written notice to the other.


 




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		15.	Mutual Representations and Warranties. Each Party agrees, represents and warrants to the
other Party that:



 


		(a)	This Lease constitutes a valid and legally binding obligation of the Party, enforceable against
the Party in accordance with its terms and all applicable laws;



 


		(b)	Neither the entering into or the delivery of this Lease nor the completion of the transactions
contemplated in this Lease by the Party will result in the violation of any agreement or other instrument to which the Party is
a party or by which the Party is bound or in a violation of any laws applicable to the Party;



 


		(c)	Lessor owns all right, title and interest in and to the Equipment and any parts, additions and
Improvements made thereon or thereto.



 


		16.	Address.



 


Any notice or documentation required
under this Lease must be provided either by personal service to the address below, or e-mail to the address below, or delivery
by registered mail to the Party's address below.


 





	 	To Kinder Morgan:	 
	 	Kinder Morgan	 
	 	1435 Windward Concourse	 
	 	Alpharetta, GA 30005	 


 


	 	Attention:	Shawn Cox
	 	Telephone:	770.751.4099 (office)
	 	 	678.296.4680 (mobile)
	 	email:	shawn_cox@kindermorgan.com


 


 


	 	To the Lessor:	 
	 	STWA, Inc.	 
	 	735 State Street, Suite 500	 
	 	Santa Barbara, CA 93101	 


 


	 	Attention:	Gregg M. Bigger, President and CEO
	 	Telephone:	805.729.1815
	 	email:	gregg.bigger@stwa.com
	 	Attention:	Bjorn D. Simundson, CTO
	 	Telephone:	805.705.4472
	 	Email:	simundson@stwa.com


 


		17.	General Provisions.



 


		17.1	In this Lease, the words importing the singular will include the plural and vice versa.



 


		17.2	Unless something in the subject matter is inconsistent therewith, all references to Articles, Sections or Schedules refer to
Articles, Sections or Schedules of this Lease.



 




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		17.3	A waiver by any Party of the strict performance of any covenant or provision of this Lease will not of itself constitute a
waiver or any subsequent breach of such covenant or provision or of any other covenant, provision or term of this Lease. A waiver
will be effective if it is in writing an signed by a duly authorized representative of the Party granting the waiver.



 


		17.4	Each Party will from time to time and at all times do all such further acts and execute and deliver all such further documents
and assurances as shall be reasonably required in order to fully perform and carry out the terms of this Lease.



 


		17.5	Time is of the essence in all respects of this Lease.



 


		17.6	This Lease may be amended from time to time upon mutual agreement. All amendments must be in writing and signed by duly authorized
representatives of the parties.



 


		17.7	This Lease, including Schedules A, B and C, constitutes the entire agreement between the Parties with respect to its subject
matter. There are no other agreements, representations, warranties, conditions, terms or understandings, written, verbal, express
or implied between the Parties, unless mutually agreed to and confirmed in writing subsequent to the date of this Lease.



 


		17.8	In the event, and to the extent, of conflict between any of the terms of this Lease and Schedule A, Schedule B or Schedule
C, the terms of this Lease shall prevail.



 


		17.9	If any one or more provisions of this Lease are found to be invalid, unenforceable or void by any court or tribunal of competent
jurisdiction, the remaining terms and provisions will be deemed to be severable from the part so found and remain in full force
and effect.



 


		17.10	This Lease is subject to and shall be construed in accordance with the laws in force in the State of Texas. The federal or
state courts located in Harris County, Texas shall have exclusive jurisdiction over any disputes arising under this Lease.



 


		17.11	This Lease may be executed in counterparts, each of which will be deemed an original and all of which will together constitute
one and the same instrument. Delivery of this Lease may be made by facsimile or other electronic format attached to email.



 


[Signature Page Follows]


 


 


 


 


 


 


 


 


 


 


 


 




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IN WITNESS WHEREOF the Parties have executed this Lease as of
the day and year first above written.


 


	Kinder Morgan Crude & Condensate LLC	 	STWA, Inc.
	 	 	 
	Per:
    /s/ James Holland	 	Per: /s/ Gregg Bigger
	Name: James Holland	 	Name:Greggory M. Bigger
	Title: V.P.
    Technical Services	 	Title: Chief Executive Officer
	 	 	 


 


 




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Schedule A


 


The Equipment is generally described as follows:


 


		·	AOTTM Midstream, skid mounted ; Quantity = 1



 


		·	Header assembly: 12" 600 series nozzles; Quantity = 2 (intake
and outtake)



 


		·	AOTTM Power Supply; Quantity = 1



 


	DESCRIPTION	 	MAKE	 	MANUFACTURER	 	MODEL	 	YEAR	 	Serial #	 	License #
	AOT Pressure Vessel	 	361D-18-VCOF-1200-12 REV 2	 	Power Service, Inc.	 	36/1200/12	 	2013	 	926	 	N/A
	DC Power Supply	 	LH 19: 6U Rack Mount	 	Glassman HV	 	PS/LH070R072-21	 	2013	 	N368284-01	 	N/A
	HV specialty cable	 	HVC050	 	Glassman HV	 	DS2124	 	2013	 	N/A	 	N/A
	12" 600# Spool Pieces	 	STWA	 	Industrial Screen & Maintenance, Inc.	 	12" 600#	 	2013	 	N/A	 	N/A



 


 




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Schedule B


 


Option to Purchase Leased Equipment


 


Kinder Morgan may, at its option, purchase the Equipment during
the Initial Term of the Lease for a fixed price of One Million Two Hundred U.S. Dollars ($1,200,000).


 


If Kinder Morgan extends the Lease for twelve (12) months, Kinder
Morgan may, at its option, at the expiration of the twelve (12) month extended term, purchase the Equipment for $1,050,000. If
Kinder Morgan extends the Lease for eighty-four (84) months, the purchase price for the Equipment at the expiration of the eighty-four
(84) month extended term shall be $600,000. If the Lease is extended for any period of time greater than twelve (12) months up
to a maximum of eighty-four (84) months, the purchase price shall be equal to $1,050,000, less the sum of $6,250 for each month
during any such extended term through the date of purchase.


 


 




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Schedule C


 


DATA COLLABORATION


 


STWA, Inc.'s AOTTM Midstream operation requires collaborative
access to specific data points for the successful implementation of the Equipment and for testing purposes. Data points are required
from immediately upstream and downstream of the Equipment and installation point, currently described in Schedule A to determine
the safe and successful operation of the devices as installed by Kinder Morgan to the Sweeney Lateral Pipeline. The data points
desired for collaborative real-time access and recording from the signals and data acquisition SCACA/PLC includes but is not limited
to the following:


 


1. Pipeline Engineering Hydraulic Engineering data Report/Profile


2. System time and date


3. Pump station status


4. Main pipeline temperature directly upstream of pump station


5. Main pipeline pressure directly upstream of pump station


6. Product Density


7. Ground Temperature as available


8. Pipeline Thermal Profile, if available


9. Wax/Hydrate Deposition Laboratory and Field Data/Details


10. Wax/Hydrate Composition Laboratory and Field Data


11. Electrical Conductivity Profile vs. Time of Wax/Hydrate
after treatment


12. Cathodic Protection Profile over 120day period post initial
energization, if available


13. Pump motor variable frequency drive (VFD)


14. Pump station pipeline flow rate


15. Oil pressure Upstream/Pump Discharge/Downstream


16. Oil temperature Upstream/Pump Discharge/Downstream


17. Oil temperature directly downstream of pump station


18. Oil pressure directly downstream of pump station


19. Pipeline pressure differential profile/Deltas


20. Flow summary, data and graphs


 


 








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