Document:

EX-10.1

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS AGREEMENT shall be effective as of January 5, 2009 (“the Effective Date”), and
is made between SPARTON CORPORATION, an Ohio corporation, whose headquarters are located at 2400
East Ganson, Jackson, Michigan 49203, hereafter called “the Corporation”, as the employer, and
Gordon Madlock, whose current address is ____________________, hereafter called
“the Executive”, as the employee.  

     WHEREAS:

	 	(a)	 	The Corporation wishes to retain the services of the Executive in the
capacity of Sr Vice President/Operations; and
	 
	 	(b)	 	the Executive wishes to be employed by the Corporation in that capacity; and
	 
	 	(c)	 	the parties desire to set forth the terms and conditions of the employment of
the Executive by the Corporation in writing;

     NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

ARTICLE I

EMPLOYMENT AND DUTIES

1.1 The Corporation hereby agrees to employ the Executive as Sr Vice President/Operations, and the
Executive agrees to such employment, all in accordance with the express terms, conditions, duties
and obligations set forth in this Agreement. The parties agree that the relationship between the
Corporation and the Executive created by this Agreement is that of employer and employee.

1.2 The Executive shall be based at the Corporation’s headquarters located at 2400 East Ganson, in
Jackson, Michigan. Some travel may be required, however, the Executive’s main place of employment
shall be the corporate headquarters in Jackson, Michigan.

1.3 The Executive shall, during the term of this Agreement:

	 	(a)	 	perform all duties and responsibilities assigned to him as Sr Vice
President/Operations, and shall report directly to Cary Wood, the Chief Executive
Officer. The Executive also will be required to perform such other

 

 

	 	 	 	related duties and responsibilities as may be assigned to the Executive by the CEO and
the President of the Corporation, or their designee, from time to time, which related
duties and responsibilities shall be in keeping with the general nature of the duties
of Sr Vice President/Operations.
	 
	 	(b)	 	devote the whole of his working time, attention and ability to the
performance of his employment duties and responsibilities as set out herein, and truly
and faithfully serve the best interests of the Corporation at all times.

1.4 The Executive agrees to comply with all applicable laws, exercise the utmost degree of
integrity, honesty, fidelity and good faith, and perform his duties with the utmost degree of
expertise, care and ability that may be expected of a person having the education, training and
experience equivalent to the education, training and experience of the Executive.

ARTICLE II

TERM

2.1 The Executive’s employment shall be ‘at will’ employment, with no set term. The employment
relationship may be terminated by either the Executive or the Corporation at any time, for any
reason or for no reason, as is further set forth herein.

ARTICLE III

COMPENSATION

3.1 The Executive shall be paid a base salary of One Hundred Ninety-Five Thousand ($195,000.00)
Dollars per year, (the “Base Salary”) subject to all applicable statutory withholding, and an
annual automobile allowance of Nine Thousand Six Hundred ($9,600.00) Dollars, both of which shall
be paid in accordance with the Corporation’s regular payroll periods. The compensation payable to
the Executive as contemplated by this Agreement shall be subject to annual review by the CEO.

3.2 In addition to the Base Salary provided for in Article 3.1 above, the Executive will be
eligible for a performance bonus of Forty (40%) percent of Executive’s Base Salary provided
certain target objectives, which will be established by the CEO, have been attained. The bonus
will be paid after a determination has been made regarding whether the required objectives were
met, but in any event not later than ninety days after the end of the particular fiscal year for
which the bonus is being paid.

ARTICLE IV

BENEFITS

4.1 The Executive shall be entitled to receive or to participate in all employee benefits offered
to the salaried employees of the Corporation for which he qualifies, under the same terms and
subject to the same conditions as are then in effect for other salaried employees, and as such
benefits may exist from time to time during the period of his employment, including, without
limitation, the Corporation’s health insurance coverage plan, disability plan, the 401K plan, and
any applicable incentive programs.

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ARTICLE V

VACATION

5.1 The Executive shall be eligible for two weeks of vacation, immediately upon the Effective
Date of this Agreement. Eligibility for additional vacation time will be reviewed after the first
year of employment. Any accrued but unused vacation remaining at the end of each year shall be
subject to the Corporation’s policy regarding accrual of paid time off.

ARTICLE VI

TERMINATION

6.1 Either the Executive or the Corporation shall be entitled, upon written notice to the other
party, to terminate this Agreement at any time, for any reason or for no reason, as the Executive’s
employment is ‘at will’. The Executive’s employment with the Corporation also may be terminated by
the Corporation at any time, for “just cause”. For the purposes of this Agreement “just cause”
shall mean any of the following: the commission of any illegal act; the commission of any act of
dishonesty, fraud, gross negligence, or willful deceit in connection with his employment; use of
alcohol or drugs to the extent such use adversely affects the Executive’s ability to perform his
duties or adversely affects the business reputation of the Executive or the Corporation; a material
and willful failure of the Executive to perform his assigned duties; use of illegal drugs or
conviction of a crime which is a felony or which involves theft, dishonesty, unethical conduct, or
moral turpitude; willful violation of any of the provisions of the Sarbanes-Oxley Act which are
applicable to the Executive; willful and material violation of the Corporation’s written policies;
or a willful and material breach of this Agreement by Executive.

6.2 In the event of the death or disability of the Executive, the Corporation shall be entitled to
terminate this Agreement. Upon such termination, the Corporation shall pay to the Executive, or in
the event termination is due to death, to his legal personal representative, that portion of the
Executive’s Base Salary owed up to and including the date of termination. This payment will be
made within thirty days following termination of employment. Following such payment, the
Corporation shall have no further obligation to the Executive or his heirs and beneficiaries, under
this Agreement. For the purposes of this Agreement, Disability shall be defined as the inability
of the Executive to effectively perform his duties due to physical or mental illness or injury, in
the sole judgment of the Corporation, for a total of 90 days out of any 180 day period.
Eligibility for any benefits which may be available to the Executive or his survivors through any
employee plans or benefit programs of the Corporation due to death or disability, will be
determined in accordance with the terms of such plans or programs.

6.3 If the Corporation terminates the Executive’s employment for any reason other than just cause,
death, or disability, the Corporation shall pay to the Executive a one-time, lump-sum payment of up
to twelve 12 weeks severance in accordance with company policy, less applicable withholding, which
payment is conditioned upon receipt from the

3

 

Executive of a signed release, releasing all claims against the corporation arising out of the
Executive’s employment and the return to the Corporation of any property belonging to the
Corporation which is in the Executive’s possession or under his control.

6.4 Unless otherwise consented to by the Corporation in writing, the Executive shall be entitled,
upon thirty (30) days written notice to the Corporation, to terminate this Agreement and his
employment with the Corporation for any reason or for no reason, and in the event of such
termination the Corporation shall only be required to pay the Executive, on a pro-rata basis, his
Base Salary which has accrued up to the date of termination.

6.5 Upon termination of this Agreement for whatever reason, the Executive shall immediately deliver
to the Corporation, all property of the Corporation which the Executive has in his possession or
under his control.

ARTICLE VII

CONFIDENTIALITY AND COVENANT-NOT-TO-COMPETE 

7.1 The Executive will execute the confidentiality agreement(s) and any such other agreements as
are normally required to be executed by other Sparton salaried employees. During the period of his
employment and thereafter, the Executive will abide by the terms of the said agreements and keep
confidential all confidential information pertaining to the Corporation which the Executive learned
while employed by the Corporation, as such confidential information is defined in the applicable
confidentiality agreement(s). The promises, rights and obligations stated in Article VII shall
survive the termination of this Agreement.

7.2 The Executive shall not, directly or indirectly, within the territory comprising the United
States and Canada, for a period of two (2) years following the date of termination of his
employment for whatever reason, either individually or in partnership or jointly or in conjunction
with any person or persons, firm, association, joint venture, syndicate, company or corporation as
principal, agent, shareholder, employee, or consultant, engage in any of the same business
endeavors engaged in by Sparton Corporation and any of its subsidiaries, or:

	 	(a)	 	induce or attempt to influence or induce any of the employees of the
Corporation (including its subsidiaries) to leave their employment; or
	 
	 	(b)	 	hire, employ or utilize the services of any employee of the Corporation
(including its subsidiaries).

7.3 It is agreed between the parties that the terms of this section are reasonable and that the
Executive has received adequate consideration for the covenants and obligations undertaken by him,
as contained herein. The Executive acknowledges that a breach or threatened breach by the Executive
of the provisions of this Article may result in the Corporation suffering irreparable harm which
cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly,
the Executive agrees that the Corporation shall be entitled to interim or permanent injunctive
relief, specific

4

 

performance and other equitable remedies, in addition to any other relief to which the Corporation
may become entitled, in the event of any such breach.

ARTICLE VIII

NOTICE

8.1 Any notice required to be given hereunder shall be in writing and may be delivered
personally or sent by facsimile transmission or other means of recorded electronic communications
or sent by registered mail to the parties hereto at the following addresses:

To the Corporation:

          Sparton Corporation

          2400 East Ganson

          Jackson, MI 49203

          Attention: Cary Wood, CEO

To the Executive:

          Gordon Madlock

                                                  

                                                  

     Any notice given shall be deemed to have been given and received on the business day on which
it was so delivered, and if not a business day, then on the business day next following the day of
delivery, and, if sent by electronic communications or facsimile shall be deemed to have been
received on the next business day following the date of transmission and if mailed, shall be deemed
to have been given and received on the fifth day following the day on which it was so mailed.

8.2 Either party may change their address for notice in the aforesaid manner.

ARTICLE IX

GENERAL

9.1 Time shall be of the essence in the performance of this Agreement.

9.2 This Agreement constitutes the entire agreement between the parties hereto with respect to
the matters contained herein and supersedes and replaces any previous agreements, contracts, oral
understandings or discussions. This Agreement may not be

5

 

amended or modified in any respect except by written instrument signed by the parties hereto.

9.3 This Agreement shall be construed and enforced in accordance with the laws of the State of
Michigan, without regard to choice of law or conflicts of laws principles, and the parties hereby
irrevocably consent to the jurisdiction of the Courts of the County of Jackson, Michigan, or for
those matters which would be properly brought in federal court, to the jurisdiction of the Federal
Courts of the Eastern District of Michigan

9.4 This language of this Agreement reflects the mutual intent of the parties and shall not be
strictly construed against either party, therefore no rule of strict construction shall apply in
construing the terms of this Agreement.

9.5 This is a personal services agreement and may not be assigned by either party without the prior
written consent of the other party.

9.6 This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, legal personal representatives, successors and permitted assigns.

9.7 If for any reason, any provision or part of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining provisions or part
provisions of this Agreement shall not in any way be affected or impaired thereby.

9.8 The waiver by either party of any breach of the provisions of this Agreement shall not operate
or be construed as a waiver by that party of any other breach of the same or any other provision of
this Agreement.

9.9 Except as specifically altered in this Agreement, nothing in this Agreement shall detract from,
alter, modify or amend any obligations or duties owed by the Executive to the Corporation, pursuant
to any statute, regulation, or at common law or equity.

9.10 This Agreement may be executed in any number of counter-parts, all of which when taken
together, shall constitute one original Agreement.

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     IN WITNESS WHEREOF the parties hereto acknowledge and agree that they have read and understand
the terms of this Agreement, and that they have executed this Agreement of their own free act, on
the dates set forth below, to be effective as of the Effective Date set forth herein.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	SPARTON CORPORATION
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Cary Wood, CEO
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 	 	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Gordon Madlock
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

7stwa_8k-ex1001.htm

    EXHIBIT
10.1

    

    NOTE
PURCHASE AGREEMENT

    

    THIS NOTE PURCHASE AGREEMENT (this
“Agreement”) is made and entered into as of the ___ day of_______, 2009, by and
between Save the World Air, Inc., a Nevada corporation (the “Issuer”)
and  those individuals and entities who sign and deliver an executed
copy of this Agreement to the Issuer (each, a “Purchaser” and collectively, the
“Purchasers”), with reference to the following:

    

    RECITALS

    

    A.           Purchasers
desire to purchase from Issuer and Issuer desires to sell to Purchaser certain
of Issuer’s Convertible Promissory Notes in the aggregate face amount of at
least $10,000 and up to $250,000 in the form of Exhibit A attached
hereto (individually, a “Note” and collectively, the “Notes”) and Stock Purchase
Warrants, each to purchase up to a certain number of shares of the common stock
(the “Common Stock”) of the Issuer equal to 50% of the number of shares
initially issuable on conversion of the Notes, in the form of Exhibit B attached
hereto (individually, the “Warrants” and collectively with the Notes, the
“Securities”).  The face amount of Convertible Promissory Notes each
Purchaser has committed to purchase, and the amount of the purchase price
thereof to be paid to the Issuer by the Purchaser (a “Commitment”) is listed on
the signature page such Purchaser executes and delivers to the
Issuer.

    

    B.           Issuer’s
sale of the Securities to the Purchasers will be made in reliance upon the
provisions of Section 4(2) under the Securities Act of 1933, as amended (the
"Securities Act"), Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission (the ”SEC”) thereunder, and other applicable rules and
regulations of the SEC and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to the
transactions contemplated hereby.

    

    C.           At
any time when any amount of principal or interest of the Notes shall be
outstanding, such unpaid amounts shall be convertible into shares of the
Issuer’s, at the election of the Purchaser, Common Stock at a price per share
equal to the average closing bid price of a share of the Issuer’s Common stock
for the five (5) trading days prior to the Closing, as defined herein (the
“Conversion Price”).

    

    D.           The
Warrants shall be issued at the same time each Note is issued to the Purchaser
hereunder and shall be exercisable at $0.50 per share as the Conversion Price
(the “Exercise Price”), for such number of shares equal to 50% of result
obtained by dividing (i) the face amount of the Notes issued simultaneously with
the Warrant by (ii) the Conversion Price (the “Exercisable
Amount”).

    

    AGREEMENT

    

    NOW THEREFORE, in consideration of the
foregoing recitals, which shall be considered an integral part of this
Agreement, the covenants and agreements set forth hereafter, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchasers and the Issuer hereby agree as follows

    

    1.           Purchase of the Notes and
Warrants.  On the terms and subject to the conditions set forth
in this Agreement and in the Notes and Warrants, the Purchasers shall purchase
from the Issuer and the Issuer shall sell to the Purchaser the
Securities.

     

    2. Purchaser’s Representations,
Warranties and Covenants. In order to induce the Issuer to sell and issue
the Securities to the Purchaser under one or more exemptions from registration
under the Securities Act, the Purchasers, severally and not jointly, represent
and warrant to the Issuer, and covenant with the Issuer, that:

     

     (a)           (i)
Such Purchaser has the requisite power and authority to enter into and perform
this Agreement, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to purchase the Securities in
accordance with the terms hereof and thereof.

     

    (ii) The execution and delivery of the
Transaction Documents by the Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by the
Purchaser's organizational documents and no further consent or authorization is
required by the Purchaser.

     

    (iii) The Transaction Documents have
been duly and validly executed and delivered by the Purchaser.

     

    (iv) The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.

     

    (b) The execution, delivery and
performance of the Transaction Documents by the Purchaser and the consummation
by the Purchaser of the transactions contemplated thereby will not conflict with
or constitute a default under any agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) The Purchaser is acquiring the
Securities for investment for its own account, and not with a view toward
distribution thereof, and with no present intention of dividing its interest
with others or reselling or otherwise transferring or disposing all or any
portion of either the Notes or Warrants. The undersigned has not offered or sold
a participation in this purchase of either the Notes or Warrants, and will not
offer or sell any interest therein. The Purchaser further acknowledges that the
Purchaser does not have in mind any sale of either the Notes or Warrants
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined events or consequence; and
that it has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of either the Notes or Warrants and is not aware of any
circumstances presently in existence that are likely in the future to prompt a
disposition thereof.

     

    (e) The Purchaser acknowledges that the
Securities have been offered to it in direct communication between itself and
the Issuer and not through any advertisement of any kind.

     

    (f) The Purchaser acknowledges that the
Issuer has given it access to all information relating to the Issuer’s business
that it has requested.  The Purchaser has reviewed all materials
relating to the Issuer's business, finance and operations which it has requested
and the Purchaser has reviewed all of such materials as the Purchaser, in the
Purchaser’s sole and absolute discretion shall have deemed necessary or
desirable. The Purchaser has had an opportunity to discuss the business,
management and financial affairs of the Issuer with the Issuer's
management.   Specifically but not by way of limitation, the
Purchaser acknowledges the Issuer’s publicly available filings made periodically
with the SEC, which filings are available at www.sec.gov and which
filings the Purchaser acknowledges reviewing or having had the opportunity of
reviewing.

     

     (g) The Purchaser
acknowledges that it has, by reason of its business and financial experience,
such knowledge, sophistication and experience in financial and business matters
and in making investment decisions of this type that it is capable of (i)
evaluating the merits and risks of an investment in the Securities and making an
informed investment decision in connection therewith; (ii) protecting its own
interest; and (iii) bearing the economic risk of such investment for an
indefinite period of time for Securities which are not transferable or freely
tradable.  The undersigned hereby agrees to indemnify the Issuer
thereof and to hold each of such persons and entities, and the officers,
directors and employees thereof harmless against all liability, costs or
expenses (including reasonable attorneys’ fees) arising by reason of or in
connection with any misrepresentation or any breach of warranties of the
undersigned contained in this Agreement, or arising as a result of the sale or
distribution of the Securities or the Common Stock issuable upon conversion of
the Notes or exercise of the Warrants, by the undersigned in violation of the
Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any other applicable law, either federal or state.  This
subscription and the representations and warranties contained herein shall be
binding upon the heirs, legal representatives, successors and assigns of the
Purchaser.

     

    (h) The
Purchaser is familiar with the definition of an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Securities Act and
represents and warrants to the Issuer that it is an accredited investor as so
defined.  If the Purchaser is not a resident of the United States, the
Purchaser is not a “U.S. person[s]” as that term is defined in Rule 902 of
Regulation S promulgated under the Securities Act of 1933, as
amended.

     

    (i) During the term of this Agreement
and the other Transaction Documents, the Purchaser will comply with the
provisions of Section 9 of the Exchange Act, and the rules and regulations
promulgated thereunder, with respect to transactions involving the Common Stock.
During the term of this Agreement and the other Transaction Documents, the
Purchaser agrees not to sell the Issuer's Common Stock short or engage in any
hedging transactions in the Issuer’s Common Stock, either directly or
indirectly, through its affiliates, principals, agents or advisors.

     

    (j) The Purchaser is aware of the
restrictions of transferability of both the Notes and the Warrants, and the
shares of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, and further understands and acknowledges that any certificates
evidencing the Notes, the Warrants or the shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants will bear the legends in
substantially the following form:

     

    THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE
SECURITIES LAWS (COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL
APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER,
SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF SUCH SECURITIES LAWS.

     

    (k) The Purchaser understands and
acknowledges that following the purchase of the Notes, the Warrants and any
shares of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, each may only be disposed of pursuant to either (i) an effective
registration statement under the Securities Act or (ii) an exemption from the
registration requirements of the Securities Act.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (l) The Purchaser understands and
acknowledges that the Issuer has neither filed a registration statement with the
SEC or any state authorities nor agreed to do so, nor contemplates doing so in
the future for the transactions contemplated by this Agreement or the other
Transaction Documents, and in the absence of such a registration statement or
exemption, the undersigned may have to hold the Notes, the Warrants and any
shares of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, indefinitely and may be unable to liquidate any of them in case of an
emergency.

     

    (m) The Purchaser is purchasing the
Notes and Warrants, and will acquire any shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants, for its own account for
investment purposes and not with a view towards distribution and agrees to
resell or otherwise dispose of any of the Notes or the Warrants, or any shares
of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, in accordance with the registration provisions of the Securities Act
(or pursuant to an exemption from such registration provisions).

     

    (n) The Purchaser is not and will not
be required to be registered as a "dealer" under the Exchange Act, either as a
result of its execution and performance of its obligations under this Agreement
or otherwise.

     

    (o)  The Purchaser
understands and acknowledges that proceeds raised in connection with this
Agreement will be used by Issuer for general working capital purposes, including
without limitation, the payment of salaries and professional fees and payments
to Temple University in connection with the Issuers’ License
Agreements.

     

    (p) The Purchaser understands that it
is liable for its own tax liabilities and has obtained no tax advice from the
Issuer in connection with the purchase of the Securities.

     

    (q) The Purchaser will not pay or
receive any finder’s fee or commission in respect of the consummation of the
transactions contemplated by this Agreement.

     

    3. Issuer’s Representations,
Warranties and Covenants. The Issuer represents and warrants to the
Purchaser that:

     

    (a) The Issuer is a corporation duly
organized and validly existing in good standing under the laws of the State of
Nevada, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted.

     

    (b)           (i)
The Issuer has the requisite corporate power and authority to enter into and
perform this Agreement, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by the
Transaction Documents, and to issue the Notes and Warrants in accordance with
the terms hereof and thereof.

     

    (ii) the execution and delivery of the
Transaction Documents by the Issuer and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation the
reservation for issuance and the issuance of the Notes and Warrants pursuant to
this Agreement, have been duly and validly authorized by the Issuer's Board of
Directors and no further consent or authorization is required by the Issuer, its
Board of Directors, or its shareholders.

     

    (iii) The Transaction Documents have
been duly and validly executed and delivered by the Issuer.

     

    (iv) The Transaction Documents, and
each of them, constitutes the valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.

     

    (c) The execution, delivery and
performance of the Transaction Documents by the Issuer and the consummation by
the Issuer of the transactions contemplated thereby will not conflict with or
constitute a default under any agreement or instrument to which the Issuer is a
party or under any organizational documents of the Purchaser.

     

    4.           Closing and
Deliverables.

    

    (a) Subject to the provisions of
Section 4(b) below, provided that the Issuer shall have received on or prior to
January 31, 2009 copies of this Agreement executed by each respective Purchaser
and providing that the total Commitments equal or exceed $10,000, there shall be
a closing or closings (each, a “Closing”) at which:

    

    (i) each Purchaser shall deliver to
the Issuer (“Save The World Air, Inc.”) immediately available funds, by wire
transfer to the Issuer’s account at the Bank of America, 954 Westlake Boulevard,
Westlake Village, California 91361, Routing Number 0260-0959-3 , Account Number
06687-19702, in an amount equal to the amount of such Purchaser’s Commitment as
set forth beside the name of such Purchaser on such Purchaser’s signature page
hereto; and

    

    (ii) the Issuer shall deliver to the
Purchaser (x) a Note, in the face amount equal to the Purchaser’s Commitment and
(y) a Warrant to purchase the Exercisable Amount of the Issuer’s Common Stock at
the Exercise Price.

    

    (b) The
Issuer may continue to accept Commitments from Purchasers and issue and sell
Securities to Purchasers at Closings on the terms and subject to the conditions
set forth in this Agreement until (i) the aggregate amount of the Commitments
equals $250,000 or (ii) on or before January 31, 2009, whichever shall first
occur.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    5.           Miscellaneous.

     

    (a). Each party shall pay the fees and
expenses of its own advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transactions
Documents.

     

    (b) This Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party; provided that a facsimile signature
or signature transmitted by e-mail shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original signature.

     

    (c) The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and neutral shall include the
masculine and feminine.

     

    (d) If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.

     

    (e) This Agreement and the Notes and
Warrants represent the final agreement between the Purchasers and the Issuer
with respect to the terms and conditions set forth herein, and, the terms of
this Agreement and the Notes and Warrants may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the
parties.  No provision of this Agreement and the Notes and Warrants
may be amended other than by an instrument in writing signed by the Purchaser
and the Issuer, and no provision hereof or thereof may be waived other than by
an instrument in writing signed by the party against whom enforcement is
sought.

     

    (f) Any notices or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

     

    If
to the Issuer:

    

    Save the
World Air, Inc.

    235
Tennant Avenue

    Morgan
Hill, CA 95037

    Telephone:
(408) 778-0101

    Facsimile:
(408) 778-8585

    

    with
a copy to:

    

    Gartenberg
Gelfand Wasson & Selden, LLP

    801
Figueroa, Suite 2170

    Los
Angeles, California 90017.

    Telephone:
213-542-2100

    Facsimile:
213-542-2101

    

    

    If
to a Purchaser:

    

    to the
address set forth on the Purchaser’s signature page hereto.

     

    Each
party shall provide five (5) days prior written notice to the other party of any
change in address or facsimile number.

     

    (g) This Agreement may not be assigned
by Purchaser.

     

    (h) This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

     

    (i) The representations and warranties
of the Purchaser and the Issuer contained herein shall survive each of the
Closings and the termination of this Agreement and the other Transaction
Documents.

     

    (j) The Purchaser and the Issuer shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law or the rules and regulations of the
SEC.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (k) Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.

     

    (l) The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party,
as the parties mutually agree that each has had a full and fair opportunity to
review this Agreement and the other Transaction Documents and seek the advice of
counsel on it and them.

     

    (m) The Purchaser and the Issuer each
shall have all rights and remedies set forth in this Agreement and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which the Purchaser has by law. Any
person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any default or breach of any provision of this
Agreement, including the recovery of reasonable attorneys fees and costs, and to
exercise all other rights granted by law.

     

     

    

     

     

    

     

    [remainder of page intentionally left
blank]

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (n)  This Agreement and the
other Transaction Documents shall be construed and governed by the laws of the
State of California with respect to agreements wholly performed therein, and
without regard to the doctrine known as conflicts of law.

     

    IN WITNESS WHEREOF the Purchasers and
the Issuer have executed this Agreement as of the date first above
written.

    

    THE
ISSUER

    

    SAVE
THE WORLD AIR, INC.

    

    

    By:__________________________

          Eugene
E. Eichler

    Its:  Chief
Financial Officer

    

    

    THE
PURCHASER

    

    

    _______________________________                                                       ________________________

    Name
(signature)                                                                                                Amount
of Commitment

            (U.S.
Dollars)

    _______________________________

    Print
Name

    

    _______________________________

    Address

    

    _______________________________

    Address

    

    _______________________________

    Phone
Number

    

    _______________________________

    Fax
Number

    

    _______________________________

    Social
Security Number

    

    _______________________________

    E-mail
Address

     

    -6-

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