EXHIBIT
10.2
FORM OF CONVERTIBLE
NOTE
THE
SECURITIES EVIDENCED BY THIS NOTE 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.
|
$
xxxxxx
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January __, 2009
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(“Issuance
Date”)
FOR VALUE RECEIVED, SAVE THE WORLD AIR,
INC. , a corporation organized under the laws of the State of
Nevada (the “Company”), promises to pay to the order of
“Investor”, as that term is defined on the
Acknowledgement and Acceptance page of this Note (hereafter,
together with any subsequent holder hereof, called
“Holder”), at “Investor’s Address”,
as that term is set forth on such page or at such other place as
Holder may direct, the “Subscription Amount”, noted
above (the “Loan”), payable in full Three Months from
the date hereof (the “Maturity Date”). The
Note will bear interest at the rate of 10% per annum payable on the
Maturity Date.
If this Note is not paid in full on or prior to
the Maturity Date the remaining balance shall be increased by 10%
and the Company shall pay interest thereon at the rate of 10% per
annum until all sums due hereunder are paid in full.
Payments of
both principal and interest will be made in immediately available
funds in lawful money of the United States of America to the Holder
at the Investor’s Address.
The
Note is subject to the following additional provisions:
1. The Company shall
be entitled to withhold from all payments of principal and/or
interest of this Note any amounts required to be withheld under the
applicable provisions of the U.S. Internal Revenue Code of 1986, as
amended, or other applicable laws at the time of such
payments.
2. This Note has been
issued subject to representations, warranties and covenants of the
original Holder hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended, and
applicable state and other securities laws. Prior to the due
presentment for such transfer of this Note, the Company and any
agent of the Company may treat the person in whose name this Note
is duly registered on the Company's Note register as the owner
hereof for the purpose of receiving payment as herein provided and
all other purposes, whether or not this Note is overdue, and
neither the Company nor any such agent shall be affected by notice
to the contrary. The transferee shall be bound, as the original
Holder by the same representations and terms described herein and
under the Agreement.
3. The Holder may, at
such Holder’s option, at any time while any sums are
outstanding and unpaid hereunder, convert the then-outstanding
principal amount of this Note or any portion thereof, and any
interest and any penalties accrued and unpaid thereon (the
“Conversion Amount”), into a number shares of fully
paid and nonassessable Common Stock of the Company (the
“Conversion Shares”) pursuant to the following formula:
the Conversion Amount divided by $__ XXX __ (as the same may
be adjusted from time to time pursuant to the provisions of this
Note, the “Conversion Price”). The Holder
may exercise the right to convert all or any portion of the
Conversion Amount by delivering to the Company (i) an executed and
completed notice of conversion in the form attached to this Note
(the "Notice of Conversion") to the Company and (ii) this
Note. The business day on which a Notice of Conversion
and this Note are delivered to the Company in accordance with the
provisions hereof shall be deemed a "Conversion Date". The Company
will transmit the certificates representing Conversion Shares
issuable upon such conversion of this Note (together with the
certificates representing the amount of this Note not so converted)
to the Holder via express courier within ten Business Days after
the Conversion Date. No fractional shares shall be
issued upon conversion of this Note. The amount of any
of the Conversion Amount which is less than a whole share of Common
Stock shall be paid to the Holder in cash. Any delay due
to such circumstance shall not be an event of default under this
Note. Company shall promptly take action to affect such
amendments to its charter.
4. The principal
amount of this Note, and any accrued interest thereon, shall be
reduced as per that principal amount indicated on the Notice of
Conversion upon the proper receipt by the Holder of such Conversion
Shares due upon such Notice of Conversion.
5. The number of
Conversion Shares shall be adjusted as follows:
a. If the
Company shall at any time after the Issuance Date subdivide its
outstanding shares of Common Stock into a greater number of shares
of Common Stock, the number of Conversion Shares in effect
immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately reduced.
b. If the
Company shall at any time or from time to time after the Issuance
Date makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and
in each such event the number of Conversion Shares issuable upon
conversion of this Note shall be proportionately increased;
provided, however, that if such record date is fixed and such
dividend is not fully paid, or if such distribution is not fully
made on the date fixed therefor, the number of Conversion Shares
shall be recomputed to reflect that such dividend was not fully
paid or that such distribution was not fully made.
c. If Company
at a
