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<SEC-DOCUMENT>0000950129-04-002642.txt : 20040430
<SEC-HEADER>0000950129-04-002642.hdr.sgml : 20040430
<ACCEPTANCE-DATETIME>20040430171018
ACCESSION NUMBER:		0000950129-04-002642
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040524
FILED AS OF DATE:		20040430
EFFECTIVENESS DATE:		20040430

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SAVE THE WORLD AIR INC
		CENTRAL INDEX KEY:			0001103795
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070]
		IRS NUMBER:				522088326
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29185
		FILM NUMBER:		04770652

	BUSINESS ADDRESS:	
		STREET 1:		29229 CANWOOD STREET
		STREET 2:		SUITE 206
		CITY:			AGOURA HILLS
		STATE:			CA
		ZIP:			91301
		BUSINESS PHONE:		818.865.3500

	MAIL ADDRESS:	
		STREET 1:		29229 CANWOOD STREET
		STREET 2:		SUITE 206
		CITY:			AGOURA HILLS
		STATE:			CA
		ZIP:			91301
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>v98378ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Save the World Air, Inc. dated May 24, 2004</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>SCHEDULE 14A</B>


<P align="center" style="font-size: 10pt">Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities Exchange Act of 1934<BR>
(Amendment No. <U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U>)


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Filed by the Registrant <FONT face="Wingdings">&#120;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Filed by a Party other than the Registrant <FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Check the appropriate box:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Preliminary Proxy Statement</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#120;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Proxy Statement</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Additional Materials</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Soliciting Material Pursuant to &#167;240.14a-11(c) or (S)&nbsp;240.14a-12</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 24pt"><B>Save the World Air, Inc.</B>

<DIV align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%">
<B>(Name of Registrant as Specified In Its Charter)</B></DIV>



<P align="center" style="font-size: 10pt">&nbsp;



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%">


<DIV align="center" style="font-size: 10pt"><B>(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">Payment of
Filing Fee
(Check the
appropriate
box):</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#120;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left">No fee required.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left">Fee computed on table below per
Exchange Act Rules&nbsp;14a-6(i)(4) and 0-11.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(1</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title of each class of securities to which transaction applies:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(2</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Aggregate number of securities to which transaction applies:</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(3</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule&nbsp;0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(4</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(5</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Total fee paid:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Fee paid previously with preliminary materials.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Check box if any part of the fee is offset as
provided by Exchange Act Rule&nbsp;0-11(a)(2) and
identify the
filing for which the offsetting fee was
paid previously. Identify the previous
filing by registration
statement number, or the Form or
Schedule and the date of its filing.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(1</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amount Previously Paid:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(2</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(3</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filing Party:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(4</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date Filed:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left"><HR align="center" size="1" noshade width="100%"></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Notes:


<P align="left" style="font-size: 10pt">Reg. (S)&nbsp;240.14a-101<BR>
SEC 1913 (3-99)



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">SAVE THE WORLD AIR, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">5125 Lankershim Boulevard</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">North Hollywood, CA 91601</FONT></B>
</DIV>

<P align="center">
<B>NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS</B>

<DIV align="center">
<B>To Be Held on May&nbsp;24, 2004</B>
</DIV>

<P align="left">
<FONT size="2">To Our Stockholders:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You are cordially invited to attend the 2004
Annual Meeting of Stockholders of Save the World Air, Inc. The
Annual Meeting will be held on Monday, May&nbsp;24, 2004, at
10:00&nbsp;a.m. local time, at the Hilton Hotel located at 555
Universal Hollywood Drive, Universal City, California.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The matters to be voted on at the Annual Meeting
are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Election of Edward L. Masry, Eugene E. Eichler,
    Bruce H. McKinnon, Robert F. Sylk, John Brown, John F. Price and
    Joseph Helleis as directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ratification of Weinberg&nbsp;&#38; Company, P.A.
    as independent auditors;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approval of the 2004 Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These matters are described more fully in the
proxy statement accompanying this notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our stockholders will also act upon such other
business as may properly come before the meeting or any
adjournment or postponement thereof. The Board is not aware of
any other business to be presented to a vote of the stockholders
at the 2004 Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board has fixed the close of business on
April&nbsp;22, 2004 as the record date (the &#147;Record
Date&#148;) for determining those stockholders who will be
entitled to notice of and to vote at the 2004 Annual Meeting.
The stock transfer books will remain open between the Record
Date and the date of the 2004 Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Representation of at least a majority in voting
interest of our Common Stock either in person or by proxy is
required to constitute a quorum for purposes of voting on each
proposal to be voted on at the 2004 Annual Meeting. Accordingly,
it is important that your shares be represented at the 2004
Annual Meeting. <B>WHETHER OR NOT YOU PLAN TO ATTEND THE 2004
ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.</B> Your
proxy may be revoked at any time prior to the time it is voted
at the 2004 Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Please read the accompanying proxy material
carefully. Your vote is important and we appreciate your
cooperation in considering and acting on the matters presented.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included with the Proxy Statement is a copy of
our Annual Report on Form&nbsp;10-KSB for the fiscal year ended
December&nbsp;31, 2003. We encourage you to read the
Form&nbsp;10-KSB. It includes our audited financial statements
and information about our business, technology and devices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your vote is important. Whether or not you plan
to attend the meeting, please complete, sign, date, and return
the accompanying proxy card in the enclosed postage-paid
envelope. Returning the proxy card will ensure your
representation at the meeting but does NOT deprive you of your
right to attend the meeting and to vote your shares in person.
The Proxy Statement explains more about the proxy voting. Please
read it carefully. We look forward to seeing you at the Annual
Meeting.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="v98378dv9837800.gif" alt="(-s- Edward L. Masry)"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">EDWARD L. MASRY
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chairman of the Board and</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chief Executive Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">May&nbsp;3, 2004
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PROXY STATEMENT FOR 2004 ANNUAL MEETING OF STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">GENERAL INFORMATION ABOUT THE ANNUAL MEETING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">PROPOSAL ONE: ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">CORPORATE GOVERNANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">PROPOSAL THREE: APPROVAL OF THE 2004 STOCK OPTION PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">EXECUTIVE COMPENSATION AND OTHER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">OPTION GRANTS IN LAST FISCAL YEAR</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 AND YEAR-END OPTION VALUES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">COMPENSATION COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">AUDIT COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">STOCKHOLDER PROPOSALS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">ANNUAL REPORT ON FORM 10-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">OTHER MATTERS</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">SAVE THE WORLD AIR, INC.</FONT></B>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<DIV>&nbsp;</DIV>

<!-- link1 "PROXY STATEMENT FOR 2004 ANNUAL MEETING OF STOCKHOLDERS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center">
<B>PROXY STATEMENT FOR 2004</B>
</DIV>

<DIV align="center">
<B>ANNUAL MEETING OF STOCKHOLDERS</B>
</DIV>

<P align="center">
<B><FONT size="2">INFORMATION CONCERNING SOLICITATION AND
VOTING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The enclosed Proxy is solicited on behalf of the
Board of Directors of Save the World Air, Inc. (&#147;the
Company&#148;), for use at the Annual Meeting of Stockholders to
be held on Monday, May&nbsp;24, 2004 at 10:00&nbsp;a.m. local
time, and at any postponement or adjournment thereof. The Annual
Meeting will be held at the Hilton Hotel located at 555
Universal Hollywood Drive, Universal City, California 91608. The
purposes of the Annual Meeting are set forth in the accompanying
Notice of Annual Meeting of Stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These proxy solicitation materials and the
enclosed Annual Report on Form&nbsp;10-KSB for the fiscal year
ended December&nbsp;31, 2003, including financial statements,
were first mailed on or about May&nbsp;3, 2004
to&nbsp;all&nbsp;stockholders entitled to vote at the Annual
Meeting. Our principal executive offices are located at
5125&nbsp;Lankershim Boulevard, North Hollywood, California
91601, and our telephone number is (818)&nbsp;487-8000.
</FONT>

<!-- link1 "GENERAL INFORMATION ABOUT THE ANNUAL MEETING" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center">
<B><FONT size="2">GENERAL INFORMATION ABOUT THE ANNUAL
MEETING</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Who May Vote</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">You may vote if our records showed that you owned
    shares of the Company&#146;s Common Stock as of April&nbsp;22,
    2004 (the &#147;Record Date&#148;). At the close of business on
    that date, we had a total of 34,816,821&nbsp;shares of Common
    Stock issued and outstanding, which were held of record by
    approximately 987&nbsp;stockholders. As of the Record Date, we
    had no shares of Preferred Stock outstanding. You are entitled
    to one vote for each share that you own.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Voting Your Proxy</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If a broker, bank or other nominee holds your
    shares, you will receive instructions from them that you must
    follow in order to have your shares voted. The instructions from
    your broker, bank or other nominee will indicate if Internet and
    telephone voting is available. If a bank, broker or other
    nominee holds your shares and you wish to attend the Annual
    Meeting and vote in person, you must obtain a &#147;legal
    proxy&#148; from the record holder of the shares giving you the
    right to vote the shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If you hold your shares in your own name as a
    holder of record, you may instruct the proxy holders how to vote
    your Common Stock by signing, dating and mailing the proxy card
    in the postage paid envelope that we have provided. The proxy
    holders will vote your shares in accordance with your
    instructions. If you sign and return a proxy card without giving
    specific voting instructions, your shares will be voted as
    recommended by our Board of Directors. You may also choose to
    attend the Annual Meeting and vote your shares in person.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Matters to be Presented</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We are not aware of any matters to be presented
    other than those described in this Proxy Statement. If any
    matters not described in the Proxy Statement are properly
    presented at the Annual Meeting, the proxy holders will use
    their own judgment to determine how to vote your shares. If the
    Annual Meeting is adjourned, the proxy holders can vote your
    shares on the new
    </FONT></TD>
</TR>

</TABLE>

<P align="center">

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">meeting date as well, unless you have revoked
    your proxy instructions, as described below under &#147;Changing
    Your Vote.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Changing Your Vote</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">To revoke your proxy instructions if you are a
    holder of record, you must (i)&nbsp;advise our Corporate
    Secretary in writing before the proxy holders vote your shares,
    (ii)&nbsp;deliver later proxy instructions or (iii)&nbsp;attend
    the Annual Meeting and vote your shares in person. If your
    shares are held by a bank, broker or other nominee, you must
    follow the instructions provided by the bank, broker or nominee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Cost of This Proxy Solicitation</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Company will pay the cost of this proxy
    solicitation. We may, on request, reimburse brokerage firms and
    other nominees for their expenses in forwarding proxy materials
    to beneficial owners. In addition to soliciting proxies by mail,
    we expect that our directors, officers and employees may solicit
    proxies in person or by telephone or facsimile. None of these
    individuals will receive any additional or special compensation
    for doing this, although we will reimburse these individuals for
    their reasonable out-of-pocket expenses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">How Votes are Counted</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Annual Meeting will be held if a quorum, or a
    majority of the outstanding Common Stock entitled to vote, is
    represented in person or by proxy at the Annual Meeting. If you
    have returned valid proxy instructions or attend the Annual
    Meeting in person, your Common Stock will be counted for the
    purpose of determining whether there is a quorum, even if you
    wish to abstain from voting on some or all matters at the
    meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Abstentions and Broker Non-Votes</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Shares that are voted &#147;WITHHELD&#148; or
    &#147;ABSTAIN&#148; are treated as being present for purposes of
    determining the presence of a quorum and as entitled to vote on
    a particular subject matter at the Annual Meeting. If you hold
    your Common Stock through a bank, broker or other nominee, the
    broker may be prevented from voting shares held in your account
    on some proposals (a &#147;broker non-vote&#148;) unless you
    have given voting instructions to the bank, broker or nominee.
    Shares that are subject to a broker non-vote are counted for
    purposes of determining whether a quorum exists but not for
    purposes of determining whether a proposal has passed.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Our Voting Recommendations</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">When proxies are properly dated, executed and
    returned, the shares represented by such proxies will be voted
    at the Annual Meeting in accordance with the instructions of the
    stockholder. However, if no specific instructions are given, the
    shares will be voted in accordance with the following
    recommendations of our Board of Directors:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;&#147;FOR&#148; the election of
    Edward L. Masry, Eugene E. Eichler, Bruce H. McKinnon, Robert F.
    Sylk, John Brown, John F. Price and Joseph Helleis to the Board
    of Directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;&#147;FOR&#148; ratification of
    Weinberg&nbsp;&#38; Company, P.A. our independent auditors for
    fiscal year 2004;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;&#147;FOR&#148; approval of the 2004
    Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Deadline for Receipt of Stockholder
    Proposals</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Stockholders may present proposals for action at
    a future meeting only if they comply with the requirements of
    the proxy rules established by the Securities and Exchange
    Commission (&#147;SEC&#148;). Stockholder proposals that are
    intended to be included in our Proxy Statement and form of Proxy
    relating to the meeting for our 2005 Annual Meeting of
    Stockholders under rules set forth in the Securities Exchange
    Act of 1934, as amended (the &#147;Exchange Act&#148;) must be
    received by us no later than January&nbsp;10, 2005 to be
    considered for inclusion in the next year&#146;s Proxy Statement.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "PROPOSAL ONE: ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">PROPOSAL ONE:</FONT></B>

<P align="center">
<B><FONT size="2">ELECTION OF DIRECTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors currently consists of
eight directors. On July&nbsp;30, 2002, one of our directors,
Jeffrey Muller, was prohibited by court order from acting as an
officer or director. At each Annual Meeting of stockholders,
directors are elected until their respective successors are duly
elected and qualified.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Nominees</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    of the Board of Directors selected, and the Board of Directors
    approved, Edward L. Masry, Eugene E. Eichler, Bruce H. McKinnon,
    Robert F. Sylk, John Brown, John F. Price and Joseph Helleis as
    nominees for election at the Annual Meeting to the Board of
    Directors. If elected, they will each serve as a director until
    their respective successors are elected and qualified or their
    earlier resignation or removal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Unless otherwise instructed, the proxy holders
    will vote the proxies received by them for each of these
    nominees. If any nominee is unable or declines to serve as a
    director at the time of the Annual Meeting, the proxies will be
    voted for another nominee designated by the Board of Directors.
    We are not aware of any reason that any nominee would be unable
    or unwilling to serve as a director.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Vote Required</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If a quorum is present, the nominees receiving
    the highest number of votes will be elected to the Board of
    Directors. Abstentions and broker non-votes will have no effect
    on the election of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The Board of Directors unanimously recommends
that stockholders vote &#147;FOR&#148; the election of Edward L.
Masry, Eugene E. Eichler, Bruce H. McKinnon, Robert F. Sylk,
John Brown, John F. Price and Joseph Helleis to the Board of
Directors.</FONT></B>

<P align="center"><FONT size="2">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Information About the Directors and
Nominees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding our directors and the nominees as of April&nbsp;26,
2004:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Director Since</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward L. Masry,&nbsp;Esq.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Executive Officer and
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chairman of the Board
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene E. Eichler, CPA(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">President, Chief Financial
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Officer, Treasurer and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bruce H. McKinnon(1)(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Operating Officer,
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Executive Vice President and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert F. Sylk
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hon. J. Joseph Brown, AO(2)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John F. Price, Ph.D(1)(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph Helleis(1)(2)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeffrey A. Muller(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Member of the Audit Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Member of the Compensation Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Member of the Nominating and Corporate Governance
    Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">On July&nbsp;30, 2002, Jeffrey Muller was
    prohibited by court order from acting as an officer or director.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no family relationships between any
director and executive officer of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Edward L.
Masry,&nbsp;Esq.</FONT></I><FONT size="2"> has served as our
Chairman of the Board of Directors and Chief Executive Officer
since October 2001. From October 2001 until February 2004,
Mr.&nbsp;Masry served as our President. Mr.&nbsp;Masry has been
a member of the law firm of Masry&nbsp;&#38; Vititoe since 1986
and was Mayor of Thousand Oaks City, California and is currently
a member of the Thousand Oaks City Council. From 1960 to 1986,
he was a partner of various law firms. Mr.&nbsp;Masry was
corporate director of Merlin Olsen Porsche Audi from 1970 to
1988 and corporate director of Gabriel Olsen Volkswagen from
1969 to 1973. Mr.&nbsp;Masry received a J.D. from Loyola Law
School, Los Angeles.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Eugene E. Eichler, CPA
</FONT></I><FONT size="2">has served as our Chief Financial
Officer and Treasurer since October 2001 and as a director since
May 2002. From October 2001 to February 2004, Mr.&nbsp;Eichler
served as our Chief Operating Officer. Mr.&nbsp;Eichler was the
Chief Financial Officer and Firm Administrator of the law firm
Masry&nbsp;&#38; Vititoe from 1982 to October 2001. From 1974 to
1982, Mr.&nbsp;Eichler provided financial consulting services to
Foundation for HMO&#146;s, Acne Care Medical Clinics and Earth
Foods, Inc. From 1960 to 1974, Mr.&nbsp;Eichler headed financial
consulting services for Milburn Industries and Brown,
Eichler&nbsp;&#38; Company. From 1953 to 1960, he held the
position of Chief Budgets and Forecasts at North American
Aviation. From 1951 to 1953, Mr.&nbsp;Eichler held various audit
positions at the Atomic Energy Commission. Mr.&nbsp;Eichler
received a B.A. from University of Montana.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Bruce H. McKinnon
</FONT></I><FONT size="2">has served as a director since May
2002, our Executive Vice-President of Business Development since
December 2003 and as our Chief Operating Officer since February
2004. Mr.&nbsp;McKinnon has served as Chief Executive Officer
and President of KZ Golf, Inc., an international golf equipment
company, since 1994. From 1990 to 1994, he was President and
Chief Executive Officer of TTL Corporation and Novaterra, Inc.,
environmental remediation and technology corporations. Prior to
1990, Mr.&nbsp;McKinnon was an owner, Chairman and Chief
Executive Officer of several international trading and
manufacturing corporations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert F. Sylk </FONT></I><FONT size="2">has
served as a director since October 2001 and our Vice President
of Investor Relations since May 2002. He currently is one of the
board of directors of the La&nbsp;Quinta, California Chamber of
Commerce and Chairman of its Ambassadors Committee. From 1991 to
2003, he has served as a senior
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">executive of Mirage Resorts. He was a delegate to
the California Tourism and Trade Commission from 1994 to 1998.
From 1993 to 1997, he was Senior Vice President of the Marina
Del Rey Chamber of Commerce. He was a board member for the Los
Angeles County Department of Beaches and Harbors and on the
Board of the United Service Organizations (U.S.O.) from 1993 to
2000. Mr.&nbsp;Sylk is presently a director for the Agua
Caliente Casino, located in Rancho Mirage, Calif.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Hon. J. Joseph Brown, AO
</FONT></I><FONT size="2">has served as a director since May
2002. He has served as Chairman of the Australian Tourism Task
Force since 1989 and currently is a professional consultant to
Service Corporation International Australia. Mr.&nbsp;Brown has
also served as director of Macquarie Tourism and Leisure since
1990. From 1983 to 1988, Mr.&nbsp;Brown was Minister for Sport
and Tourism for the Australian government and from 1987 to 1988
he was the Minister for the Environment. He was a member of the
Olympics bid teams for Brisbane (1992), Melbourne
(1996)&nbsp;and the successful Sydney bid (2000). Mr.&nbsp;Brown
was Founding Director of the Sydney Olympic Games Organizing
Committee in 1992 and the Sydney Paralympic Organizing Committee
in 1998.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">John F. Price, PhD
</FONT></I><FONT size="2">has served as a director since May
2002. He co-founded and has served as Chairman of the Board of
Conscious Investing Pty Ltd., a software company, since May
2001. In June 1998, Mr.&nbsp;Price founded Price Value, Inc., a
software company to market software that he developed. He has
served as Chairman of the Board of Price Value, Inc. since 1998.
Since October 1997, Mr.&nbsp;Price has held various teaching
positions in mathematics and physics at University of New South
Wales. From 1990 to 1998, he was professor and head of the
Mathematics Department at Maharishi University of Management.
Mr.&nbsp;Price received a B.Sc. and M.Sc. from the University of
Melbourne and a Ph.D. from the Australian National University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Joseph Helleis </FONT></I><FONT size="2">has
served as a director since May 2002. Since 2002, he has been
operating his own financial services consulting firm, Joseph
Helleis and Associates. From 2000 to 2002, he was President/
Chief Executive Officer with Bank of Whittier, California. From
1981 to 2000, he served in senior executive capacities as
Chairman/ CEO, President/ CEO, and Chief Credit Officer with
number of financial institutions in the southern California
region. After his honorable discharge from the United States
Navy in 1960, Mr.&nbsp;Helleis served with Citibank in
New&nbsp;York City until 1981 where his last position was Vice
President/ Senior Credit Officer for the New&nbsp;York State
Business Banking Region. Mr.&nbsp;Helleis has an AA degree from
the National Institute of Credit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jeffrey A. Muller
</FONT></I><FONT size="2">was elected as a director in February
1999. In July 2002, he was enjoined by court order from acting
as a director or officer of our company. (See &#147;Certain
Relationships and Related Transactions&#148;.) Mr.&nbsp;Muller
is the Company&#146;s founder and served as our President from
February 1999 until July 2002.
</FONT>

<!-- link1 "CORPORATE GOVERNANCE" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">CORPORATE GOVERNANCE</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Board Meetings</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Board of Directors held two meetings during
    2003. All directors attended at least 75% of the total number of
    meetings of the Board of Directors and all committees on which
    they served during 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Committees of the Board of Directors</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Board of Directors has Audit, Nominating and
    Corporate Governance, and Compensation Committees. Each of these
    committees operates under a written charter. Copies of the Audit
    and Nominating and Corporate Governance Committee charters are
    attached as Appendix&nbsp;A and B, respectively. In addition, we
    will provide a copy of any of these documents without charge to
    any stockholder upon written request made to Corporate
    Secretary, Save the World Air, Inc., 5125&nbsp;Lankershim
    Boulevard, North Hollywood, California 91601. All members of the
    committees are appointed by the Board of Directors. These
    committees were
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">formed at the end of 2003, and there were no
    committee meetings held in 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Audit Committee</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee presently consists of
    Messrs.&nbsp;Eichler, Mc&nbsp;Kinnon, Price and Helleis.
    Mr.&nbsp;Eichler serves as chairman of the Audit Committee. The
    Board of Directors has determined that Mr.&nbsp;Eichler is an
    audit committee financial expert, as that term is defined in
    Item&nbsp;401(h) of Regulation&nbsp;S-K of the Exchange Act. The
    Board of Directors has also determined that each of
    Messrs.&nbsp;Price and Helleis is independent within the meaning
    of Item&nbsp;7(d)(3)(iv) of Schedule&nbsp;14A of the Exchange
    Act and the requirements of the Nasdaq Stock Market as currently
    in effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee oversees the accounting,
    financial reporting and audit processes; makes recommendations
    to the Board of Directors regarding the selection of independent
    auditors; reviews the results and scope of audit and other
    services provided by the independent auditors; reviews the
    accounting principles and auditing practices and procedures to
    be used in preparing our financial statements; and reviews our
    internal controls. The Audit Committee charter is attached as
    Appendix&nbsp;A.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee works closely with management
    and our independent auditors. The Audit Committee also meets
    with our independent auditors in an executive session, without
    the presence of our management, on a quarterly basis, following
    completion of their quarterly reviews and annual audit, to
    review the results of their work. The Audit Committee also meets
    with our independent auditors to approve the annual scope of the
    audit services to be performed.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee Report is included below on
    page&nbsp;25.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Pre-Approval Policy</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">As part of its responsibility, the Audit
    Committee is required to pre-approve audit and non-audit
    services performed by our independent auditor in order to assure
    that the provision of such services does not impair the
    independent auditor&#146;s independence. The Audit
    Committee&#146;s Pre-Approval Policy establishes a policy
    requiring the Audit Committee to review and approve (a)&nbsp;all
    audit services, (b)&nbsp;permitted non-audit services,
    (c)&nbsp;tax services and (d)&nbsp;all other services to be
    performed by our independent auditor or its affiliates. Unless a
    type of service to be provided by our independent auditor or its
    affiliates has received general pre-approval, it requires
    specific pre-approval by the Audit Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee pre-approves both scope and
    fee levels for all services to be provided by our independent
    auditor or its affiliates within specified categories of
    services. Any proposed services exceeding pre-approval scope or
    cost levels require specific pre-approval by the Audit
    Committee. The term of any pre-approval is twelve months from
    the date of pre-approval, unless the Audit Committee
    specifically provides for a different period.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">6
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The following summarizes the pre-approval
    policies and procedures:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;Any of the services described above
    to be provided to the company by our independent auditor or its
    affiliates must be submitted to the Audit Committee for review
    and approval. The proposed services are submitted to the Audit
    Committee in writing by both our independent auditor and our
    Chief Financial Officer, with a description of the services to
    be performed, fees to be charged, and affirmation that the
    services are not prohibited under Section&nbsp;201 of the
    Sarbanes-Oxley Act of 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;The Audit Committee in its sole
    discretion then approves or disapproves the proposed services
    and documents such approval in writing. Pre-approval actions
    taken during Audit Committee meetings are recorded in the
    minutes of the meetings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;Any audit or non-audit service to be
    provided to the company which is proposed between meetings of
    the Audit Committee is submitted to the Audit Committee chairman
    in writing for the chairman&#146;s review and pre-approval and
    is included as an agenda item at the next scheduled Audit
    Committee meeting, or is approved in the form of a written
    consent of the Audit Committee, in the discretion of the Audit
    Committee chairman.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Audit Committee may periodically revise the
    list of pre-approved services, based on subsequent
    determinations. The Audit Committee does not delegate to
    management its responsibilities to pre-approve services
    performed by the independent auditor or its affiliates.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Prior to the adoption of this policy, management
    had the implicit pre-approval of the Audit Committee to engage
    Weinberg&nbsp;&#38; Company, P.A., or any other professional
    service firm, to perform tax and other services. The Audit
    Committee has since assumed responsibility for pre-approving all
    auditing services and permitted non-auditing services, including
    the related fees and terms thereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Nominating and Corporate Governance</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    presently consists of Messrs.&nbsp;Brown and Helleis.
    Mr.&nbsp;Helleis serves as chairman of the Nominating and
    Corporate Governance Committee. Both members of the Nominating
    and Corporate Governance Committee meet the independence
    requirements of the Nasdaq Stock Market as currently in effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    considers and periodically reports on matters relating to the
    identification, selection and qualification of the Board of
    Directors and candidates nominated to the Board of Directors and
    its committees; develops and recommends governance principles
    applicable to us; and oversees the evaluation of the Board of
    Directors and management.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Director Qualifications</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    uses a variety of criteria to evaluate the qualifications and
    skills necessary for members of our Board of Directors. Under
    these criteria, members of the Board of Directors should have
    the highest professional and personal ethics and values,
    consistent with the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">7
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Company&#146;s values and standards. They should
    have broad experience at the policy-making level in business,
    government, education, technology or public interest. They
    should be committed to enhancing stockholder value and should
    have sufficient time to carry out their duties and to provide
    insight and practical wisdom based on experience. Their service
    on other boards of public companies should be limited to a
    number that permits them, given their individual circumstances,
    to perform responsibly all director duties. Each director must
    represent the interests of our stockholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Identification and Evaluation of Nominees for
    Directors</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    utilizes a variety of methods for identifying and evaluating
    nominees for director. The Nominating and Corporate Governance
    Committee regularly assesses the appropriate size of the Board
    of Directors, and whether any vacancies on the Board of
    Directors are expected due to retirement or otherwise. In the
    event that vacancies are anticipated, or otherwise arise, the
    Nominating and Corporate Governance Committee considers various
    potential candidates for director. Candidates may come to the
    attention of the Nominating and Corporate Governance Committee
    through current members of the Board of Directors, professional
    search firms, stockholders or other persons. These candidates
    are evaluated at regular or special meetings of the Nominating
    and Corporate Governance Committee, and may be considered at any
    point during the year. The Nominating and Corporate Governance
    Committee considers properly submitted stockholder
    recommendations for candidates for the Board of Directors. In
    evaluating such recommendations, the Nominating and Corporate
    Governance Committee uses the qualifications standards discussed
    above and seeks to achieve a balance of knowledge, experience
    and capability on the Board of Directors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Stockholder Nominations</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    seeks out appropriate candidates to serve as directors of the
    company, and the Nominating and Corporate Governance Committee
    interviews and examines director candidates and makes
    recommendations to the Board regarding candidate selection. In
    considering candidates to serve as director, the Nominating and
    Corporate Governance Committee evaluates various minimum
    individual qualifications, including strength of character,
    maturity of judgment, relevant technical skills or financial
    acumen, diversity of viewpoint and industry knowledge, as well
    as the extent to which the candidate would fill a present need
    on the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Nominating and Corporate Governance Committee
    will consider stockholder nominations for director. Nominations
    for director submitted to this committee by stockholders are
    evaluated according to the company&#146;s overall needs and the
    nominee&#146;s knowledge, experience and background. A
    nominating stockholder must give appropriate notice to the
    company of the nomination not less than 90&nbsp;days prior to
    the first anniversary of the preceding year&#146;s annual
    meeting. In the event that the date of the annual meeting is
    advanced by more than 30&nbsp;days or delayed by more than
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">8
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">60&nbsp;days from the anniversary date of the
    preceding year&#146;s annual meeting, the notice by the
    stockholder must be delivered not later than the close of
    business on the later of the 60th day prior to such annual
    meeting or the tenth day following the day on which public
    announcement of the date of such annual meeting is first made.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The stockholders&#146; notice shall set forth, as
    to:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;each person whom the stockholder
    proposes to nominate for election as a director:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;the name, age, business address and
    residence address of such person,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;the principal occupation or
    employment of the person,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;the class and number of shares of the
    company which are beneficially owned by such person, if
    any,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;any other information relating to
    such person which is required to be disclosed in solicitations
    for proxies for election of directors pursuant to
    Regulation&nbsp;14A under the Exchange Act, and the rules
    thereunder;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;the stockholder giving the notice:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;the
    name and record address of the stockholder and the class and
    number of shares of the company which are beneficially owned by
    the stockholder,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;a
    description of all arrangements or understandings between such
    stockholder and each proposed nominee and any other person or
    persons (including their names) pursuant to which nomination(s)
    are to be made by such stockholder,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;a
    representation that such stockholder intends to appear in person
    or by proxy at the meeting to nominate the persons named in its
    notice,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;any
    other information relating to such person which is required to
    be disclosed in solicitations for proxies for election of
    directors pursuant to Regulation&nbsp;14A under the Exchange
    Act, and the rules thereunder.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The notice must be accompanied by a written
    consent of the proposed nominee to be named as a director.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Stockholder Communications with <BR>
     the Board</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The following procedures have been established by
    the Board in order to facilitate communications between our
    stockholders and the Board:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;Stockholders may send correspondence,
    which should indicate that the sender is a stockholder, to the
    Board or to any individual director, by mail to Corporate
    Secretary, Save the World Air, Inc., 5215&nbsp;Lankershim
    Boulevard, North Hollywood, California 91601.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;Our Secretary will be responsible for
    the first review and logging of this correspondence and will
    forward the communication to the director or directors to whom
    it is addressed unless it is a
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">9
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">type of correspondence which the Board has
    identified as correspondence which may be retained in our files
    and not sent to directors. The Board has authorized the
    Secretary to retain and not send to directors communications
    that: (a)&nbsp;are advertising or promotional in nature
    (offering goods or services), (b)&nbsp;solely relate to
    complaints by clients with respect to ordinary course of
    business customer service and satisfaction issues or
    (c)&nbsp;clearly are unrelated to our business, industry,
    management or Board or committee matters. These types of
    communications will be logged and filed but not circulated to
    directors. Except as set forth in the preceding sentence, the
    Secretary will not screen communications sent to directors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;The log of stockholder correspondence
    will be available to members of the Board for inspection. At
    least once each year, the Secretary will provide to the Board a
    summary of the communications received from stockholders,
    including the communications not sent to directors in accordance
    with the procedures set forth above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Compensation Committee</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Compensation Committee consists of
    Messrs.&nbsp;Helleis, Brown, Price and McKinnon.
    Mr.&nbsp;Helleis serves as chairman of the Compensation
    Committee. Mr.&nbsp;Helleis and Mr.&nbsp;Price meet the
    independence requirements of the Nasdaq Stock Market as
    currently in effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Compensation Committee oversees and makes
    recommendations to the Board of Directors regarding our
    compensation and benefits policies; and oversees, evaluates and
    approves compensation plans, policies and programs for our
    executive officers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Compensation Committee Report is included
    below on page&nbsp;23.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Compensation Committee Interlocks and Insider
    Participation</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">During fiscal year 2003, two members of the
    Compensation Committee were either an officer or consultant of
    the Company. No member of the Compensation Committee or
    executive officer of the Company served as a member of the Board
    of Directors or Compensation Committee of any entity that has an
    executive officer serving as a member of our Board of Directors
    or Compensation Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Annual Meeting Attendance</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Each director is encouraged to attend annual
    meetings of the Company&#146;s stockholders and to be available
    to answer any questions posed by stockholders to such director.
    The Company did not hold an annual meeting in 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Code of Ethics</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Company has adopted a code of ethics that
    complies with the standards mandated by the Sarbanes-Oxley Act
    of 2002. This code applies to the Company&#146;s chief executive
    officer and its senior financial officers, including its chief
    financial officer and treasurer.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If the Company amend or grant any waiver,
    including an implicit waiver, from a provision of the code of
    ethics that applies to the Company&#146;s directors and
    executive officers, including its chief executive officer and
    its senior financial officers, the Company will
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">10
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">publicly disclose such amendment or waiver as
    required by applicable law and regulations or post such
    amendment or waiver on the Company&#146;s website at
    <I>www.savetheworldair.com</I>. The information on the
    Company&#146;s website is not, and shall not be deemed to be, a
    part of this proxy statement or incorporated by reference into
    this or any other filing the Company makes with the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Corporate Governance Documents</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">By the date of the 2004 Annual Meeting,
    management hopes to have the Company&#146;s code of ethics,
    Board committee charters and certain other corporate governance
    documents and policies available on the Company&#146;s website
    at <I>www.savetheworldair.com</I>. In addition, the Company will
    provide a copy of any of these documents without charge to any
    stockholder upon written request made to Corporate Secretary,
    Save the World Air, Inc., 5125&nbsp;Lankershim Boulevard, North
    Hollywood, California 91601.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND</FONT></B>

<DIV align="center">
<B><FONT size="2">RELATED STOCKHOLDER MATTERS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding the beneficial ownership of our common stock as of
March&nbsp;31, 2004 as to
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each of the executive officers named in the
    Summary Compensation Table (&#147;Named Executive
    Officers&#148;),
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each director and nominee for director,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each person who is known by us to own
    beneficially more than five percent of our outstanding common
    stock&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all directors and Named Executive Officers as a
    group.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise indicated, the address of each
listed stockholder is c/o&nbsp;Save the World Air, Inc.,
5125&nbsp;Lankershim Boulevard, North Hollywood, California
91601. As of March&nbsp;31, 2004, there were
34,691,821&nbsp;shares of common stock outstanding.
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficially Owned(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Owned(2)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Named Executive Officers and
    Directors</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward L. Masry,&nbsp;Esq.(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene Eichler, CPA(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bruce H. McKinnon(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">409,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nathan Shelton
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert F. Sylk
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">4143 Via Marina,&nbsp;#1118<BR>
    Marina Del Rey, CA 90292
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hon. J. Joseph Brown, AO
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Level&nbsp;10, Westfield Towers<BR>
    100 William Street<BR>
    Sydney NSW 2011<BR>
    Australia
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John F. Price, PhD
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">14/2 New McLean Street<BR>
    Edgecliff, NSW 2027<BR>
    Australia
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph Helleis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2639 Barefoot Lane<BR>
    Rowland Heights, CA 91748
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Janice Holder
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeffrey Muller(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">41 Murlong Crescent,<BR>
    Palm Beach<BR>
    Queensland, Australia 4221
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Five Percent Stockholders</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Edward Skoda(7)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">1773 Nelson Street, Suite&nbsp;101<BR>
    Vancouver, BC<BR>
    Canada V6G 1M6
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cecil Kyte(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,261,855</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2934 Torito Road<BR>
    Santa&nbsp;Barbara, CA 93108
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">All Directors and Named Executive Officers as
    a Group (10&nbsp;persons)(9)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,385,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents beneficial ownership of less than one
    percent.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Except as indicated by footnote, and subject to
    community property laws where applicable, the persons named in
    the table have sole voting and investment power with respect to
    all shares of common stock shown as beneficially owned by them.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Percentage of beneficial ownership is based upon
    34,691,821&nbsp;shares of our Common Stock outstanding as of
    March&nbsp;31, 2004. Beneficial ownership is determined in
    accordance with the rules of the SEC and generally includes
    voting or investment power with respect to securities. Shares of
    common stock subject to options and warrants currently
    exercisable or convertible, or exercisable or convertible within
    60&nbsp;days, are deemed outstanding for determining the number
    of shares beneficially owned and for computing the percentage
    ownership of the person holding such options, but are not deemed
    outstanding for computing the percentage ownership of any other
    person.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes stock options to
    purchase&nbsp;2,000,000&nbsp;shares of our Common Stock
    exercisable either currently or within 60&nbsp;days after
    March&nbsp;31, 2004. Also includes 2,000,000&nbsp;shares and
    warrants to purchase an aggregate 2,000,000&nbsp;shares held by
    Masry&nbsp;&#38; Vititoe, PC, with respect to which
    Mr.&nbsp;Masry disclaims beneficial ownership except to the
    extent of his proportional share therein. Mr.&nbsp;Masry, our
    Chairman and Chief Executive Officer, is a member of
    Masry&nbsp;&#38; Vititoe, PC, and may be deemed a beneficial
    owner of the shares held by such entity because of his status as
    a member.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes stock options to
    purchase&nbsp;250,000&nbsp;shares of our Common Stock
    exercisable either currently or within 60&nbsp;days after
    March&nbsp;31, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;McKinnon is a participant in the KZ
    Golf, Inc. Defined Benefit Pension Plan, which is the owner of
    9,100&nbsp;shares of our Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes stock options to
    purchase&nbsp;10,000,000&nbsp;shares of our Common Stock. These
    shares and options held by Mr.&nbsp;Muller are subject to
    pending litigation. Management has previously refused requests
    by Mr.&nbsp;Muller to exercise these options. See &#147;Certain
    Relationships and Related Transactions&#148;.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These shares are subject to pending litigation in
    the United States District Court, Southern District of
    New&nbsp;York, against Jeffrey Muller, our former Chief
    Executive Officer, his immediate family and various other
    persons and entities. We believe that Edward Skoda acted in
    concert with Mr.&nbsp;Muller with respect to these shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes warrants to
    purchase&nbsp;1,060,000&nbsp;shares of our Common Stock
    exercisable either currently or within 60&nbsp;days after
    March&nbsp;31, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares of our Common Stock issuable upon
    exercise of stock options or warrants currently exercisable
    within 60&nbsp;days after March&nbsp;31, 2004, as well as shares
    held by Masry&nbsp;&#38; Vititoe, PC, with which Mr.&nbsp;Masry
    is affiliated.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">PROPOSAL TWO:</FONT></B>

<P align="center">
<B><FONT size="2">RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has selected
Weinberg&nbsp;&#38; Company, P.A. to audit our financial
statements for the fiscal year ending December&nbsp;31, 2004.
Although ratification by stockholders is not required by law,
the Board of Directors has determined that it is desirable to
request approval of this selection by the stockholders.
Notwithstanding its selection, the Board of Directors, in its
discretion, may appoint new independent auditors at any time
during the year if the Board of Directors believes that such a
change would be in the best interest of the Company and its
stockholders. If the stockholders do not ratify the appointment
of Weinberg&nbsp;&#38; Company, P.A. the Board of Directors may
reconsider its selection.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Weinberg&nbsp;&#38; Company, P.A. was first
appointed in fiscal year 2003, and has audited our financial
statements for fiscal years 2002 and 2003. Certain additional
information regarding changes in our independent auditors in
2002 and 2003 can be found in Part&nbsp;II, Item&nbsp;8 of our
Annual Report on Form&nbsp;10-KSB, a copy of which accompanies
this proxy statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors expects that
representatives of Weinberg&nbsp;&#38; Company, P.A. will be
present at the Annual Meeting to respond to appropriate
questions and to make a statement if they so desire.
</FONT>

<P align="left">
<B><FONT size="2">Audit and Other Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the fees charged
by Weinberg&nbsp;&#38; Company, P.A. for certain services
rendered to the company during 2002 and 2003.
Weinberg&nbsp;&#38; Company, P.A. was retained in December 2003
to audit the Company&#146;s financial statements and provide
audit-related services for fiscal years 2002 and 2003. Because
of the date of the engagement, Weinberg&nbsp;&#38; Company, P.A.
did not commence its audit and audit-
</FONT>

<P align="center"><FONT size="2">13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">related services until early 2004. Accordingly,
no fees were billed by Weinberg&nbsp;&#38; Company, P.A. to the
Company in either 2002 or 2003.
</FONT>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Amount Billed and Paid</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Type of Fee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit Related(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All Other(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This category consists of fees for the audit of
    our annual financial statements included in the Company&#146;s
    annual report on Form&nbsp;10-KSB and review of the financial
    statements included in the Company&#146;s quarterly reports on
    Form&nbsp;10-QSB. This category also includes advice on audit
    and accounting matters that arose during, or as a result of, the
    audit or the review of interim financial statements, statutory
    audits required by non-U.S.&nbsp;jurisdictions and the
    preparation of an annual &#147;management letter&#148; on
    internal control matters.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents services that are normally provided by
    the independent auditors in connection with statutory and
    regulatory filings or engagements for those fiscal years,
    aggregate fees charged for assurance and related services that
    are reasonably related to the performance of the audit and are
    not reported as audit fees. These services include consultations
    regarding Sarbanes-Oxley Act requirements, various SEC filings
    and the implementation of new accounting requirements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents aggregate fees charged for
    professional services for tax compliance and preparation, tax
    consulting and advice, and tax planning.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents aggregate fees charged for products
    and services other than those services previously reported.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Vote Required</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If a quorum is present, the affirmative vote of a
    majority of the shares present and entitled to vote at the
    Annual Meeting will be required to ratify the appointment of
    Weinberg&nbsp;&#38; Company, P.A. as our independent auditors.
    Abstentions will have the effect of a vote &#147;against&#148;
    the ratification of Weinberg&nbsp;&#38; Company, P.A. as our
    independent auditors. Broker non-votes will have no effect on
    the outcome of the vote.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The Board of Directors unanimously recommends
that stockholders vote &#147;FOR&#148; the ratification of
Weinberg&nbsp;&#38; Company, P.A. as the Company&#146;s
independent auditors for the fiscal year ending
December&nbsp;31, 2004.</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "PROPOSAL THREE: APPROVAL OF THE 2004 STOCK OPTION PLAN" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="center">
<B><FONT size="2">PROPOSAL THREE:</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">APPROVAL OF THE 2004 STOCK OPTION
PLAN</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are asking our stockholders to approve the
2004 Stock Option Plan (the &#147;2004 Plan&#148;) so that we
can attract and retain the best available personnel for service
as employees as well as non-employee directors and to encourage
their continued service with us. On March&nbsp;2, 2004, the
Board of Directors approved the 2004 Plan, subject to approval
from our stockholders at the Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is only a summary of the principal
provisions of the 2004 Plan. The summary is qualified in its
entirety by reference to the 2004 Plan, which is attached as
Appendix&nbsp;C.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Purpose of the Plan</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The 2004 Plan is intended to benefit and
    strengthen the Company and its stockholders by:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;encouraging stock ownership by
    selected key employees, directors, consultants and advisers
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;assisting the Company in attracting
    and retaining key personnel;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;providing to participating personnel
    added incentive for high level of performance
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Administration</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A committee (the &#147;Committee&#148;) of three
    or more people selected by the Board of Directors administers
    the 2004 Plan. The Board has designated the Compensation
    Committee as the administrator of the 2004 Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Number of Shares of Common Stock Available
    Under the Plan</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A total of 1,500,000&nbsp;shares of our Common
    Stock, subject to adjustment in the event of certain changes in
    our capitalization. If an option terminates or expires for any
    reason without having vested and been exercised, the related
    shares of Common Stock will again become available for grant.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Eligibility</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">All employees, directors, consultants and
    advisers of the Company are eligible to receive option grants
    under the 2004 Plan. As of March&nbsp;30, 2004, approximately
    two Named Executive Officers, two employee directors, four
    non-employee directors and approximately three other employees
    were eligible to be selected by the Compensation Committee to
    receive grants under the 2004 Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Types and Terms of Stock Options</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Compensation Committee may grant either
    incentive stock options qualified with respect to Internal
    Revenue Code Section&nbsp;422 (&#147;ISOs&#148;) or options not
    qualified under any section of the Internal Revenue Code
    (&#147;non-qualified options&#148;). All ISOs granted under the
    2004 Plan must have an exercise price that is at least equal to
    the fair market value of our Common Stock on the grant date and,
    in the case of a person who is a 10% or greater stockholder, the
    exercise price must be at least 100% of the fair marketing value
    of our Common Stock on the grant date. The exercise price of a
    non-qualified option shall be determined by the Board or the
    Compensation Committee. As of March&nbsp;31, 2004, the fair
    market value of a share of our Common Stock, determined by the
    closing price per share on that date as quoted on Pink Sheets,
    was $1.50. No stock option granted under the 2004 Plan may have
    a term longer than ten years and, in the case of a person who is
    a 10% or greater stockholder, the stock option may not have a
    term longer than five years. The exercise price of stock options
    may be paid in cash, or, if the Compensation Committee permits,
    by tendering shares of common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Vesting</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Compensation Committee has the authority to
    determine the amounts and period of time over which a stock
    option shall become exercisable (vest). However, the fair market
    value with respect to which an ISO is exercisable by an optionee
    during any calendar year may not exceed $100,000.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Stock Options to be Granted to Certain
    Individuals</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The number of options that an individual may
    receive under the 2004 Plan will be in the discretion of the
    Committee and therefore cannot be determined in advance.
    However, the following table sets forth (a)&nbsp;the aggregate
    1,172,652&nbsp;shares subject to options granted by the Board of
    Directors on March&nbsp;2, 2004, and (b)&nbsp;the average per
    share exercise price of such options.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name of Individual or Group</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward L. Masry
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene E. Eichler
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bruce H. McKinnon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph Helleis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John J. Brown
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert F. Sylk
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nathan Shelton
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Janice Holder
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Evelyn Updyke
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Philip Bryan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All executive officers, as a group (4 persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">902,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors who are not executive officers, as
    a group (4&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All employees, including officers who are not
    executive officers, as a group (3&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<HR size="1" width="18%" align="left" noshade>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">All of these options are subject to stockholder
    approval of the 2004 Plan at the Annual Meeting.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Federal Income Tax Consequences</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The following summary is intended only as a
    general guide to the United States federal income tax
    consequences under current law of incentive stock options and
    non-qualified stock options, which are authorized for grant
    under the 2004 Plan. It does not attempt to describe all
    possible federal or other tax consequences of participation in
    the 2004 Plan or tax consequences based on particular
    circumstances. The tax consequences may vary if options are
    granted outside the United States.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Incentive Stock
    Options.</FONT></I><FONT size="2"> An option holder recognizes
    no taxable income for regular income tax purposes as a result of
    the grant or exercise of an incentive stock option qualifying
    under Internal Revenue Code Section&nbsp;422. Option holders who
    dispose of the shares acquired under an incentive stock option
    after two years following the date the option was granted and
    after one year following the exercise of the option will
    normally recognize a capital gain or loss upon a sale of the
    shares equal to the difference, if any, between the sale price
    and the purchase price of the shares. If an option holder
    satisfies such holding periods upon a sale of the shares, the
    company will not be entitled to any deduction for federal income
    tax purposes. If an option holder disposes of shares within two
    years after the date of grant or within one year after the date
    of exercise (a &#147;disqualifying disposition&#148;), the
    difference between the fair market value of the shares on the
    exercise date and the option exercise price (not to exceed the
    gain realized on the sale if the disposition is a transaction
    with respect to which a loss, if sustained, would be recognized)
    will be taxed as ordinary income at the time of disposition. Any
    gain in excess of that
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">amount will be a capital gain. If a loss is
    recognized, there will be no ordinary income, and such loss will
    be a capital loss. Any ordinary income recognized by the option
    holder upon the disqualifying disposition of the shares
    generally will result in a deduction by the company for federal
    income tax purposes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Non-Qualified
    Options.</FONT></I><FONT size="2"> Options not designated or
    qualifying as incentive stock options will be non-qualified
    options having no special tax status. An optionee generally
    recognizes no taxable income as the result of the grant of such
    an option. Upon exercise of a non-qualified option, the optionee
    normally recognizes ordinary income in the amount of the
    difference between the option exercise price and the fair market
    value of the shares on the exercise date. If the optionee is an
    employee, such ordinary income generally is subject to
    withholding of income and employment taxes. Upon the sale of
    stock acquired by the exercise of a non-qualified option, any
    gain or loss, based on the difference between the sale price and
    the fair market value on the exercise date, will be taxed as a
    capital gain or loss. No tax deduction is available to the
    company with respect to the grant of a non-qualified option or
    the sale of the stock acquired pursuant to such grant. The
    Company generally should be entitled to a deduction equal to the
    amount of ordinary income recognized by the optionee as a result
    of the exercise of a non-qualified option.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Other
    Considerations.</FONT></I><FONT size="2"> The Internal Revenue
    Code allows publicly-held corporations to deduct compensation in
    excess of $1&nbsp;million paid to the corporation&#146;s chief
    executive officer and its four other most highly compensated
    executive officers in office at the end of the tax year if the
    compensation is payable solely based on the attainment of one or
    more performance goals and certain statutory requirements are
    satisfied. We intend for compensation arising from grants of
    awards under the 2004 Plan which are based on performance goals,
    including stock options and stock appreciation rights granted at
    fair market value, to be deductible by us as performance-based
    compensation not subject to the $1&nbsp;million limitation on
    deductibility.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Transferability</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">All ISOs are non-transferable other than by will
    or the laws of descent and distribution and shall be exercisable
    during an optionee&#146;s lifetime only by the optionee. The
    Compensation Committee may provide that a non-qualified option
    may be transferred under certain terms and conditions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Extraordinary Events</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In the event of a sale of more than half the fair
    market value of the assets of the Company, the acquisition by a
    group or entity of more than 30% of the voting securities of the
    Company, or the dissolution or liquidation of the Company, all
    stock options not exercised shall terminate as of the date such
    transaction or event takes place, unless the stock options are
    assumed. The vesting of unvested stock options shall be
    accelerated in certain circumstances in connection with the
    acquisition of the assets or stock of the Company and the
    optionee shall be entitled to receive cash equal to the
    difference between the exercise price of the stock option and
    value of the consideration attributable to the transaction.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Amendment and Termination</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The Board or the Compensation Committee may
    suspend, amend or terminate the 2004 Plan at any time, but no
    such action may be taken without stockholder approval if such
    approval is required by law or if such action increases the
    maximum number of shares that may be issued under the 2004 Plan,
    reduces the exercise price of an ISO, increases the maximum term
    of an ISO or permits stock options to be granted to anyone not
    eligible to be granted options at the time of the adoption of
    the 2004 Plan. The Board of Directors may, with the consent of
    an optionee, make modifications of the terms and conditions of
    that person&#146;s stock option, other than as described in the
    preceding sentence, in which case stockholder approval is also
    required.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Vote Required</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If a quorum is present, the affirmative vote of a
    majority of the shares present and entitled to vote at the
    Annual Meeting will be required to approve the 2004 Plan.
    Abstentions will have the effect of a vote &#147;against&#148;
    the approval of the 2004 Plan. Broker non-votes will not be
    considered as present and entitled to vote on this proposal but
    will be counted as present for the purpose of determining a
    quorum.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The Board of Directors unanimously recommends
that stockholders vote &#147;FOR&#148; the approval of the 2004
Plan.</FONT></B>

<!-- link1 "EXECUTIVE COMPENSATION AND OTHER MATTERS" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">EXECUTIVE COMPENSATION AND OTHER
MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth compensation
information for our Chief Executive Officer and our other Named
Executive Officers as of the end of our last three fiscal years
ended December&nbsp;31, 2003.
</FONT>

<P align="left">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Long-term Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Under-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">lying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Award(s)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(4)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward L. Masry,&nbsp;Esq.(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">950,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene Eichler, CPA(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chief Operating Officer,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chief Financial Officer and
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treasurer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Masry was appointed President and Chief
    Executive Officer in October 2001 at no annual salary. Prior to
    being appointed President and Chief Executive Officer,
    Mr.&nbsp;Masry was not an executive officer of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Eichler was appointed Chief Operating
    Officer, Chief Financial Officer and Treasurer in October 2001.
    Prior to being appointed to these positions, Mr.&nbsp;Eichler
    was not an executive officer of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The law firm Masry&nbsp;&#38; Vititoe, PC paid
    for Mr.&nbsp;Eichler&#146;s salary for 2002 and 2003 pursuant to
    an arrangement under which we reimbursed Masry&nbsp;&#38;
    Vititoe, PC for a portion of his salary. The portion reimbursed
    by us is shown in the table above.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The number and value of vested and unvested
    restricted stock based upon the closing market price of the
    common stock at December&nbsp;31, 2003 ($1.25) were as follows:
    Mr.&nbsp;Masry, 1,000,000 vested shares valued at $1,250,000;
    and Mr.&nbsp;Eichler, 500,000 vested shares valued at $625,000.
    Mr.&nbsp;Masry&#146;s shares vested at the time of grant.
    Mr.&nbsp;Eichler&#146;s shares vested in October 2003.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "OPTION GRANTS IN LAST FISCAL YEAR" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">OPTION GRANTS IN LAST FISCAL YEAR</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No options were granted to the Named Executive
Officers in 2003.
</FONT>

<DIV>&nbsp;</DIV>

<!-- link1 "AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 AND YEAR-END OPTION VALUES" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center">
<B><FONT size="2">AGGREGATED OPTION EXERCISES IN FISCAL YEAR
2003</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">AND YEAR-END OPTION VALUES</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information with
respect to the Named Executive Officers concerning exercised and
unexercised options held as of December&nbsp;31, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">On</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options&nbsp;at&nbsp;Fiscal&nbsp;Year-End&nbsp;(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">In-the-Money Options($)(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward Masry, Esq
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene Eichler, CPA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">312,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Market value of our common stock at fiscal
    year-end minus the exercise price. The market value of our
    common stock on December&nbsp;31, 2003 was $1.25&nbsp;per share.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">EQUITY COMPENSATION PLAN INFORMATION FOR
2003</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding outstanding options and shares reserved for future
issuance under our equity compensation plans as of
December&nbsp;31, 2003:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining Available</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">for Future Issuance</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Under Equity</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to be Issued upon</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation Plans</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(excluding Securities</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reflected in the</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Column)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by security
    holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans not approved by
    security holders(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents options granted to Jeffrey&nbsp;A.
    Muller, Edward&nbsp;L. Masry and a consultant pursuant to Board
    action in 2001. The Company is presently engaged in litigation
    against Mr.&nbsp;Muller regarding the options for 10,000,000
    shares granted to him. See &#147;Certain Relationships and
    Related Transactions.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Employment Agreements</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Agreement with Edward L.
    Masry.</FONT></I><FONT size="2"> On December&nbsp;1, 2003, the
    Company entered into an employment agreement with Edward L.
    Masry, pursuant to which he serves as our Chief Executive
    Officer. The initial term of the agreement expires on
    December&nbsp;31, 2007 and renews automatically for additional
    one-year terms unless either party has given notice of
    non-extension prior to the end of a term. The agreement provides
    for a base compensation of $1.00&nbsp;per year. Mr.&nbsp;Masry
    is eligible to participate in the Company&#146;s incentive and
    benefit plans, including eligibility to receive grants of stock
    options under the 2004 Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">19
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;Masry&#146;s employment is terminated
    by us without cause or as a result of his disability or death,
    he or his estate, as the case may be, will be entitled to
    receive an amount equal to the greater of the aggregate
    bonus(es), if any, paid to him with respect to one of the two
    years immediately preceding the year in which the termination
    occurs. In addition, Mr.&nbsp;Masry and his dependents will be
    entitled to continue to participate at the same levels in the
    Company&#146;s benefit plans for a period of one year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;Masry&#146;s employment is terminated
    by him for good reason or as a result of a change of control, he
    will be entitled to receive all accrued salary, bonus and
    benefits for a period of three years from the date of
    termination. If Mr.&nbsp;Masry&#146;s employment is terminated
    by us for cause or by Mr.&nbsp;Masry without good reason, he
    will only be entitled to receive accrued salary and benefits
    through the date of termination.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Agreement with Eugene E.
    Eichler.</FONT></I><FONT size="2"> On December&nbsp;1, 2003, the
    Company entered into an employment agreement with Eugene E.
    Eichler, pursuant to which he serves as our Chief Operating
    Officer. The initial term of the agreement expires on
    December&nbsp;31, 2007 and renews automatically for additional
    one-year terms unless either party has given notice of
    non-extension prior to the end of a term. The agreement provides
    for a base compensation of $192,000 in 2004, which amount is
    reviewable by the Board of Directors in subsequent years of the
    term. Mr.&nbsp;Eichler is eligible to participate in the
    Company&#146;s incentive and benefit plans, including
    eligibility to receive grants of stock options under the 2004
    Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;Eichler&#146;s employment is
    terminated by us without cause or as a result of his disability
    or death, he or his estate, as the case may be, will be entitled
    to receive an amount equal to the greater of (i)&nbsp;his
    highest base compensation paid to him with respect to one of the
    two years immediately preceding the year in which the
    termination occurs or (ii)&nbsp;his base compensation in effect
    immediately prior to the date of termination, for a period of
    one year beginning on the date of termination. In addition, he
    will be entitled to receive an amount equal to the greater of
    the aggregate bonus(es), if any, paid to him with respect to one
    of the two years immediately preceding the year in which the
    termination occurs. Mr.&nbsp;Eichler and his dependents will be
    entitled to continue to participate at the same levels in the
    Company&#146;s benefit plans for a period of one year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;Eichler&#146;s employment is
    terminated by him for good reason or as a result of a change of
    control, he will be entitled to receive all accrued salary,
    bonus and benefits for a period of three years from the date of
    termination. If Mr.&nbsp;Eichler&#146;s employment is terminated
    by us for cause or by Mr.&nbsp;Eichler without good reason, he
    will only be entitled to receive accrued salary and benefits
    through the date of termination.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <I><FONT size="2">Agreement with Bruce H.
    McKinnon.</FONT></I><FONT size="2"> On December&nbsp;1, 2003,
    the Company entered into an employment agreement with Bruce H.
    McKinnon, pursuant to which he serves as our Executive Vice
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">20
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">President of Business Development. The initial
    term of the agreement expires on December&nbsp;31, 2007 and
    renews automatically for additional one-year terms unless either
    party has given notice of non-extension prior to the end of a
    term. The agreement provides for a base compensation of $153,600
    in 2004, which amount is reviewable by the Board of Directors in
    subsequent years of the term. Mr.&nbsp;McKinnon is eligible to
    participate in the Company&#146;s incentive and benefit plans,
    including eligibility to receive grants of stock options under
    the 2004 Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;McKinnon&#146;s employment is
    terminated by us without cause or as a result of his disability
    or death, he, or his estate as the case may be, will be entitled
    to receive an amount equal to the greater of (i)&nbsp;his
    highest base compensation paid to him with respect to one of the
    two years immediately preceding the year in which the
    termination occurs or (ii)&nbsp;his base compensation in effect
    immediately prior to the date of termination, for a period of
    one year beginning on the date of termination. In addition, he
    will be entitled to receive an amount equal to the greater of
    the aggregate bonus(es), if any, paid to him with respect to one
    of the two years immediately preceding the year in which the
    termination occurs. Mr.&nbsp;McKinnon and his dependents will be
    entitled to continue to participate at the same levels in the
    Company&#146;s benefit plans for a period of one year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If Mr.&nbsp;McKinnon&#146;s employment is
    terminated by him for good reason or as a result of a change of
    control, he will be entitled to receive all accrued salary,
    bonus and benefits for a period of three years from the date of
    termination. If Mr.&nbsp;McKinnon&#146;s employment is
    terminated by us for cause or by Mr.&nbsp;McKinnon without good
    reason, he will only be entitled to receive accrued salary and
    benefits through the date of termination.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Directors&#146; Compensation</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In fiscal year 2003, we did not pay an annual
    retainer or meeting fees to non-employee directors for their
    services as members of the Board of the Directors. However, we
    reimburse non-employee directors for expenses in connection with
    attendance at meetings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In March 2004, upon the recommendation of the
    Compensation Committee following its review of market data and
    other considerations, the Board of Directors approved director
    compensation in the amount of $750&nbsp;per meeting of the Board
    of Directors. This compensation is effective for fiscal year
    2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Section&nbsp;16(a) Beneficial Ownership
    Reporting Compliance</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
    requires our executive officers, directors and ten percent
    stockholders to file reports of ownership and changes in
    ownership with the SEC. The same persons are required to furnish
    us with copies of all Section&nbsp;16(a) forms they file. Based
    solely on our review of such forms, we believe that all our
    executive officers, directors and ten percent stockholders
    complied with the applicable filing requirements, except that
    Jan Holder was late filing her Form&nbsp;3.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">21
</FONT>

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<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, we entered into an agreement with
Edward L. Masry, our Chairman of the Board and Chief Executive
Officer, for the reimbursement of a $500,000 loan made by
Masry&nbsp;&#38; Vititoe, PC, of which Mr.&nbsp;Masry is a
member, to us. In June 2003, we paid this loan in full by
issuing an aggregate 2,000,000&nbsp;shares at a price per share
of $0.25 and warrants to purchase an aggregate
2,000,000&nbsp;shares at an exercise price of $0.50, exercisable
for a five-year period. Also during 2003, $49,651 of billed
legal fees by Masry&nbsp;&#38; Vititoe, PC, was paid by us in
the form of issuing warrants to purchase&nbsp;83,414&nbsp;shares
of our Common Stock. The warrants are exercisable at $
..50&nbsp;per share for a five-year period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2003, we entered into a lease
agreement with KZ Golf, Inc. to lease office space for our
primary administrative facility. Jennifer J. King, the wife of
Mr.&nbsp;McKinnon, one of our directors, is the indirect
principal stockholder of KZ Golf, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2002, after an investigation by our newly
constituted board of directors, we commenced litigation against
Jeffrey Muller, the Company&#146;s founder and former President,
and others, seeking injunctive relief, disgorgement and
financial restitution for a variety of acts and omissions in
connection with sales of our Common Stock and other transactions
occurring between 1998 and 2002. We are also seeking a court
order allowing us to cancel all of the approximately
8,716,710&nbsp;shares of our Common Stock which we believe are
controlled, directly or indirectly, by Mr.&nbsp;Muller,
divesting Mr.&nbsp;Muller of any right to exercise options for
10,000,000&nbsp;shares of our Common Stock and a monetary
judgment against Muller and others in the amount of several
million dollars. On July&nbsp;30, 2002, the U.S.&nbsp;Federal
District Court, Southern District of New&nbsp;York, granted our
application for a preliminary injunction against Mr.&nbsp;Muller
and others, which prevents Mr.&nbsp;Muller and the other
defendants from selling, transferring, or encumbering any of our
assets and property, from selling or transferring any of our
Common Stock that they may own or control, or from taking any
action to injure us or our business and stockholders. The order
also prevents Mr.&nbsp;Muller from exercising any control over
our company and serving as an officer or director of our
company. The litigation is pending.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<!-- link1 "COMPENSATION COMMITTEE REPORT" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following Report of the Compensation
Committee and the Performance Graph that follows do not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of our other filings under
the Securities Act of 1933, as amended (the &#147;Securities
Act&#148;), or the Exchange Act, except to the extent that we
specifically incorporate this report or the performance graph by
reference therein.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee has furnished this
report on executive compensation for the 2003 fiscal year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee has the authority to
review and determine the salaries and bonuses of senior
executive officers of the company, including the Chief Executive
Officer, and to establish the general compensation policies for
such individuals. The Compensation Committee also has the sole
and exclusive authority to make discretionary option grants to
all of the company&#146;s employees under the 2004 Plan, if the
Plan is approved by our stockholders at the 2004 Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee believes that the
compensation programs for the Company&#146;s executive officers
should reflect the company&#146;s performance and the value
created for the Company&#146;s stockholders. In addition, the
compensation programs should support the short-term and
long-term strategic goals and values of the company, reward
individual contribution to the Company&#146;s success and align
the interests of the Company&#146;s officers with the interests
of its stockholders. The Company is engaged in a very
competitive industry, and the Company&#146;s success depends
upon its ability to attract and retain qualified executives
through the competitive compensation packages it offers to such
individuals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal factors that were taken into
account in establishing each executive officer&#146;s
compensation package for the 2003 fiscal year are described
below. However, the Compensation Committee may in its discretion
apply entirely different factors, such as different measures of
financial performance, for future fiscal years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Chief Executive Officer
Compensation.</FONT></I><FONT size="2"> Edward L. Masry, who
served as our President and Chief Executive Officer in 2003,
received no compensation for 2003. Mr.&nbsp;Masry&#146;s
principal compensation came from his law firm, Masry&nbsp;&#38;
Vititoe. That law firm also provides legal work for us. Because
of the terms of Mr.&nbsp;Masry&#146;s employment agreement, the
Compensation Committee did not consider specific factors in
connection with Mr.&nbsp;Masry&#146;s compensation. Because the
Company is in the development stage, the Compensation Committee
did not award a bonus to Mr.&nbsp;Masry for 2003. We entered
into an employment agreement with Mr.&nbsp;Masry in December
2003, under which his base compensation will be $1.00 per year
for each year of the term of the agreement, commencing in 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Senior Executive Officer
Compensation.</FONT></I><FONT size="2"> Eugene E. Eichler, who
served as our Chief Operating Officer, Chief Financial Officer
and Treasurer in 2003, was paid his compensation by
Masry&nbsp;&#38; Vititoe. Masry&nbsp;&#38; Vititoe billed us 90%
of that amount, reflecting the approximate allocation of
Mr.&nbsp;Eichler&#146;s time devoted to the affairs of our
Company. Because the Company is in the development stage, the
Compensation Committee did not award a bonus to Mr.&nbsp;Eichler
for 2003. We entered into an employment agreement with
Mr.&nbsp;Eichler in December 2003, under which his base
compensation will be $192,000 in 2004 and which is reviewable
for subsequent years of the term of the agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our other executive officers were paid relatively
nominal amounts of base compensation in 2003, reflecting the
development stage of our Company. Because the company is in the
development stage, the Compensation Committee also did not award
a bonus to any of our executive officers for 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Compliance with Code
Section&nbsp;162(m).</FONT></I><FONT size="2">
Section&nbsp;162(m) of the Code disallows a tax deduction to
publicly-held companies for compensation paid to certain of
their executive officers, to the extent that compensation
exceeds $1&nbsp;million per covered officer in any fiscal year.
The limitation applies only to compensation which is not
considered to be performance based. Non-performance based
compensation paid to the Company&#146;s executive officers for
the 2003 fiscal year did not exceed the $1&nbsp;million limit
per officer, and the Compensation Committee does not anticipate
that the non-performance based compensation to be paid to the
Company&#146;s executive officers for the 2003 fiscal year will
exceed that limit. Because it is unlikely that the cash
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<DIV align="left">
<FONT size="2">compensation payable to any of the Company&#146;s
executive officers in the foreseeable future will approach the
$1&nbsp;million limit, the Compensation Committee has decided at
this time not to take any action to limit or restructure the
elements of cash compensation payable to the Company&#146;s
executive officers. The Compensation Committee will reconsider
this decision should the individual cash non-performance based
compensation of any executive officer ever approach the
$1&nbsp;million level.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board did not modify any action or
recommendation made by the Compensation Committee with respect
to executive compensation for the 2003 fiscal year. It is the
opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total
remuneration program to properly align the Company&#146;s
performance and the interests of the Company&#146;s stockholders
through the use of competitive and equitable executive
compensation in a balanced and reasonable manner, for both the
short and long term.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Respectfully submitted by:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Joseph Helleis
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Hon. J. Joseph Brown
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">John F. Price
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Bruce H. McKinnon
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">24
</FONT>

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<DIV align="left">

</DIV>

<!-- link1 "AUDIT COMMITTEE REPORT" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">AUDIT COMMITTEE REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following report of the Audit Committee
does not constitute soliciting material and should not be deemed
filed or incorporated by reference into any of our other filings
under the Securities Act or the Exchange Act, except to the
extent that we specifically incorporate this report by reference
therein, and shall not be deemed to be soliciting material or
otherwise deemed filed under either such Act.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee is currently composed of four
directors, two of whom are independent. The duties and
responsibilities of a member of the Audit Committee are in
addition to his duties as a member of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee operates under a written
charter . A copy of the Audit Committee Charter is attached as
Appendix&nbsp;A to this proxy statement. The Board and the Audit
Committee believe that the Audit Committee Charter complies with
the current standards set forth in SEC regulations. There may be
further action by the SEC during the current year on several
matters that affect all audit committees. The Board and the
Audit Committee continue to follow closely further developments
by the SEC in the area of the functions of audit committees and
will make additional changes to the Audit Committee Charter and
the policies of the Audit Committee as required or advisable as
a result of these new rules and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee&#146;s primary duties and
responsibilities are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">engage the company&#146;s independent auditor;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">monitor the independent auditor&#146;s
    independence, qualifications and performance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pre-approve all audit and non-audit services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">monitor the integrity of the company&#146;s
    financial reporting process and internal controls system;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide an open avenue of communication among the
    independent auditor, financial and senior management of the
    company and the Board;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">monitor the company&#146;s compliance with legal
    and regulatory requirements.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management is responsible for the company&#146;s
internal controls and the financial reporting process. The
company&#146;s independent auditor is responsible for performing
an independent audit of the company&#146;s consolidated
financial statements in accordance with generally accepted
auditing standards and issuing a report thereon. The Audit
Committee&#146;s responsibility is to monitor and oversee these
processes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The company is planning to form an internal
management group, reporting to the Chief Executive Officer and
the Audit Committee, that is charged with guiding the Company in
meeting the various requirements of Section&nbsp;404 of the
Sarbanes-Oxley Act of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee has begun to implement
procedures to ensure that during the course of each fiscal year
it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under its charter. The
Audit Committee did not meet during 2003, but met in early 2004
with respect to the financial statements and financial condition
of the Company for fiscal years 2002 and 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In overseeing the preparation of the
Company&#146;s financial statements, the Audit Committee met
with both management and the Company&#146;s outside auditors to
review and discuss all financial statements prior to their
issuance and to discuss significant accounting issues.
Management advised the Audit Committee that all financial
statements were prepared in accordance with accounting
principles generally accepted in the United States of America,
and the Audit Committee discussed the statements with both
management and the outside auditors. The Audit Committee&#146;s
review included discussion with the outside auditors of matters
required to be discussed pursuant to Statements on Auditing
Standards No.&nbsp;61 and 90 (Communication with Audit
Committees).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to the company&#146;s outside
auditors, the Audit Committee, among other things, discussed
with Weinberg&nbsp;&#38; Company, P.A. matters relating to its
independence, including the written disclosures made to the
Audit Committee as required by the Independence Standards Board
Standard No.&nbsp;1 (Independence
</FONT>

<P align="center"><FONT size="2">25
</FONT>

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<DIV align="left">
<FONT size="2">Discussions with Audit Committees). The Audit
Committee also reviewed and approved the audit and non-audit
fees of that firm.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the basis of these reviews and discussions,
the Audit Committee recommended to the Board that the Board
approve the inclusion of the Company&#146;s audited financial
statements in the 10-KSB for filing with the SEC.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Respectfully submitted by:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Eugene E. Eichler
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Bruce H. McKinnon
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Joseph Helleis
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">John F. Price
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

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<!-- link1 "STOCKHOLDER PROPOSALS" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">STOCKHOLDER PROPOSALS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time stockholders present proposals
that may be proper subjects for inclusion in a proxy statement
and for consideration at an annual meeting. Under the rules of
the SEC, to be included in the proxy statement for our 2005
annual meeting of stockholders, proposals must be received by us
no later than January&nbsp;10, 2005.
</FONT>

<!-- link1 "ANNUAL REPORT ON FORM 10-K" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="center">
<B><FONT size="2">ANNUAL REPORT ON FORM 10-K</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We filed our Annual Report on Form&nbsp;10-KSB
with the SEC on March&nbsp;15, 2004. A copy of the 10-KSB has
been mailed to all stockholders along with this proxy statement.
Stockholders may obtain additional copies of the 10-KSB and the
exhibits thereto, without charge, by writing to the Corporate
Secretary at our principal executive offices at 5125 Lankershim
Boulevard, North Hollywood, CA 91601.
</FONT>

<!-- link1 "OTHER MATTERS" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="center">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management does not know of any matters to be
presented at the 2004 Annual Meeting other than those set forth
herein and in the Notice accompanying this proxy statement. If a
stockholder vote is necessary to transact any other business at
the 2004 Annual Meeting, the proxyholders intend to vote their
proxies in accordance with their best judgment related to such
business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is important that your shares be represented
at the 2004 Annual Meeting, regardless of the number of shares
that you hold. <B>YOU ARE, THEREFORE, URGED TO EXECUTE PROMPTLY
AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE THAT HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE.</B> Stockholders who are present
at the 2004 Annual Meeting may revoke their proxies and vote in
person or, if they prefer, may abstain from voting in person and
allow their proxies to be voted.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="v98378dv9837800.gif" alt="(-s- Edward L. Masry)"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">EDWARD L. MASRY
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chairman of the Board and Chief Executive
    Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">May&nbsp;3, 2004
</FONT>

<DIV align="left">
<FONT size="2">North Hollywood, California
</FONT>
</DIV>

<P align="center"><FONT size="2">27
</FONT>

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<P align="center">
<B><FONT size="2">SAVE THE WORLD AIR, INC.</FONT></B>

<P align="center">
<B><FONT size="2">Shareholders Meeting May&nbsp;24th, 2004 at
10:00&nbsp;am</FONT></B>

<P align="center">
<B><FONT size="2">Hilton Hotel Los Angeles/Universal
City</FONT></B>

<DIV align="center">
<B><FONT size="2">555 Universal Hollywood Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Universal City, CA 91608</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Phone: (818) 506-2500</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Directions from Los Angeles International
Airport (LAX):</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.&nbsp;Merge onto I-405 N.</FONT></B>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13.8
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.&nbsp;Merge onto US-101 S toward LOS
ANGELES.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7.2
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.&nbsp;Take the exit toward
LANKERSHIM/UNIVERSAL CITY.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.1
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.&nbsp;Turn RIGHT onto CAHUENGA
BLVD.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.2
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.&nbsp;Turn RIGHT onto LANKERSHIM
BLVD.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.1
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.&nbsp;Turn RIGHT onto UNIVERSAL HOLLYWOOD
DR.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.2
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.&nbsp;End at 555 Universal Hollywood
Drive.</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Directions from Los
Angeles/Downtown:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.&nbsp;Merge onto CA-110 N toward
PASADENA.</FONT></B>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.9
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.&nbsp;Merge onto US-101 N toward
HOLLYWOOD.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8.8
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.&nbsp;Take the LANKERSHIM BLVD exit toward
UNIVERSAL CITY</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.2
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.&nbsp;Take RIGHT onto LANKERSHIM
BLVD.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.1
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.&nbsp;Turn RIGHT onto UNIVERSAL HOLLYWOOD
DR.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.2
mi)</FONT></B>
</DIV>

<DIV align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.&nbsp;End at 555 Universal Hollywood
Drive.</FONT></B>
</DIV>

<P align="center"><FONT size="2">28
</FONT>

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<DIV align="right">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Appendix&nbsp;A</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CHARTER FOR THE AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS</FONT></B>

<DIV align="center">
<B><FONT size="2">OF SAVE THE WORLD AIR, INC.</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Purpose:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Audit Committee of the Board
of Directors of Save the World Air, Inc. (the
&#147;Company&#148;) shall be to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Oversee the accounting and financial reporting
    processes of the Company and audits of the financial statements
    of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assist the Board in oversight and monitoring of
    (i)&nbsp;the integrity of the Company&#146;s financial
    statements; (ii)&nbsp;the Company&#146;s compliance with legal
    and regulatory requirements; (iii)&nbsp;the independent
    auditor&#146;s qualifications, independence and performance; and
    (iv)&nbsp;the Company&#146;s internal accounting and financial
    controls;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Prepare the report that the rules of the
    Securities and Exchange Commission (the &#147;SEC&#148;) require
    be included in the Company&#146;s annual proxy statement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Provide the Company&#146;s Board with the results
    of its monitoring and recommendations derived therefrom;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Provide to the Board such additional information
    and materials as it may deem necessary to make the Board aware
    of significant financial matters that require the attention of
    the Board.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">In addition, the Audit Committee will undertake
those specific duties and responsibilities listed below and such
other duties as the Board of Directors may from time to time
prescribe.
</FONT>

<P align="left">
<B><FONT size="2">Membership:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee members will be appointed by,
and will serve at the discretion of, the Board of Directors. The
Audit Committee will consist of at least three members of the
Board of Directors. Members of the Audit Committee must meet the
following criteria (as well as any additional criteria required
by the SEC):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each member will be able to read and understand
    fundamental financial statements;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least one member will be a financial expert,
    as defined in the rules of the SEC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Authority and Responsibilities:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to any other responsibilities which
may be assigned from time to time by the Board of Directors, the
responsibilities of the Audit Committee shall include:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Independent Auditors</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Appointing, compensating and overseeing the work
    of the independent auditors (including resolving disagreements
    between management and the independent auditors regarding
    financial reporting) for the purpose of preparing or issuing an
    audit report or related work;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pre-approving audit and non-audit services
    provided to the Company by the independent auditors (or
    subsequently approving non-audit services in those circumstances
    where a subsequent approval is necessary and permissible); in
    this regard, the Audit Committee shall have the sole authority
    to approve the hiring and firing of the independent auditors,
    all audit engagement fees and terms and all non-audit
    engagements, as may be permissible, with the independent
    auditors;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-1
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing and providing guidance with respect to
    the external audit and the Company&#146;s relationship with its
    independent auditors by (i)&nbsp;reviewing the independent
    auditors&#146; proposed audit scope, approach and independence;
    (ii)&nbsp;obtaining on a periodic basis a statement from the
    independent auditors regarding relationships and services with
    the Company which may impact independence and presenting this
    statement to the Board of Directors, and to the extent there are
    relationships, monitoring and investigating them;
    (iii)&nbsp;reviewing the independent auditors&#146; peer review
    conducted every three years; (iv)&nbsp;discussing with the
    Company&#146;s independent auditors the financial statements and
    audit findings, including any significant adjustments,
    management judgments and accounting estimates, significant new
    accounting policies and disagreements with management and any
    other matters described in SAS No.&nbsp;61, as may be modified
    or supplemented; and (v)&nbsp;reviewing reports submitted to the
    audit committee by the independent auditors in accordance with
    the applicable SEC requirements;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least annually, obtaining and reviewing a
    report by the independent auditor describing (i)&nbsp;the audit
    firm&#146;s internal quality control procedures; (ii)&nbsp;any
    material issues raised by the most recent internal
    quality-control review, or peer review, of the audit firm, or by
    any inquiry or investigation by governmental or professional
    authorities, within the preceding five years, respecting one or
    more independent audits carried out by the audit firm; and
    (iii)&nbsp;any steps taken to deal with any such issues.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Financial Statements, Disclosure and Other
    Risk Management and Compliance Matters</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing and discussing with management and the
    independent auditors the annual audited financial statements and
    quarterly unaudited financial statements, including the
    Company&#146;s disclosures under &#147;Management&#146;s
    Discussion and Analysis of Financial Condition and Results of
    Operations,&#148; prior to filing the Company&#146;s Annual
    Reports on Form&nbsp;10-KSB and Quarterly Reports on
    Form&nbsp;10-QSB, respectively, with the SEC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Directing the Company&#146;s independent auditors
    to review before filing with the SEC the Company&#146;s interim
    financial statements included in Quarterly Reports on
    Form&nbsp;10-QSB, using professional standards and procedures
    for conducting such reviews;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Conducting a post-audit review of the financial
    statements and audit findings, including any significant
    suggestions for improvements provided to management by the
    independent auditors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">[Reviewing before release the unaudited quarterly
    operating results in the Company&#146;s quarterly earnings
    release;]
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Overseeing compliance with the requirements of
    the SEC for disclosure of auditor&#146;s services and audit
    committee members, member qualifications and activities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing on a continuing basis the adequacy of
    the Company&#146;s system of internal controls, including
    meeting periodically with the Company&#146;s management and the
    independent auditors to review the adequacy of such controls and
    to review before release the disclosure regarding such system of
    internal controls required under SEC rules to be contained in
    the Company&#146;s periodic filings and the attestations or
    reports by the independent auditors relating to such disclosure;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Providing a report in the Company&#146;s proxy
    statement in accordance with the rules and regulations of the
    SEC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing the Company&#146;s policies and
    practices with respect to risk assessment and risk management,
    including discussing with management the Company&#146;s major
    financial risk exposures and the steps that have been taken to
    monitor and control such exposures;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Establishing procedures for receiving, retaining
    and treating complaints received by the Company regarding
    accounting, internal accounting controls or auditing matters and
    procedures for the confidential, anonymous submission by
    employees of concerns regarding questionable accounting or
    auditing matters;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-2
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If necessary, instituting special investigations
    with full access to all books, records, facilities and personnel
    of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">As appropriate, obtaining advice and assistance
    from outside legal, accounting or other advisors (without
    seeking Board of Directors approval);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing, approving and monitoring the
    Company&#146;s code of ethics for its senior financial officers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing management&#146;s monitoring of
    compliance with the Company&#146;s standards of business conduct
    and with the Foreign Corrupt Practices Act;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing, in conjunction with counsel, any legal
    matters that could have a significant impact on the
    Company&#146;s financial statements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing the Company&#146;s financial and
    accounting reporting compliance relating to its employee benefit
    plans;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing and approving in advance any proposed
    related party transactions.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Reporting to the Board</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least quarterly, reporting to the Board. This
    report shall include a review of any issues that arise with
    respect to the quality or integrity of the Company&#146;s
    financial statements, the Company&#146;s compliance with legal
    or regulatory requirements, the performance and independence of
    the Company&#146;s independent auditors, the performance of the
    internal audit function and any other matters that the Audit
    Committee deems appropriate or is requested to be included by
    the Board;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least annually, reviewing and assessing the
    adequacy of this charter and recommend any proposed changes to
    the Board for approval; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least annually, evaluating its own performance
    and report to the Board on such evaluation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Limitations Inherent in the Audit
Committee&#146;s Role:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It&#146;s not the duty of the Audit Committee to
plan or conduct audits or to determine that the Company&#146;s
financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This
is the responsibility of management and the independent auditor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is also not the duty of the Audit Committee to
resolve disagreements, if any, between management and the
outside auditors or to assure compliance with laws and
regulations and the Company&#146;s policies generally.
Furthermore, it is the responsibility of the CEO and senior
management to avoid and minimize the Company&#146;s exposure to
risk, and while the Audit Committee is responsible for reviewing
with management the guidelines and policies to govern the
process by which risk assessment and management is undertaken,
the Audit Committee is not the sole body responsible.
</FONT>

<P align="left">
<B><FONT size="2">Meetings:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee will meet at least four times
each year. The Audit Committee may establish its own schedule,
which it will provide to the Board of Directors in advance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee will meet separately with the
Chief Executive Officer and separately with the Chief Financial
Officer of the Company at such times as are appropriate to
review the financial affairs of the Company. The Audit Committee
will meet separately with the independent auditors of the
Company, at such times as it deems appropriate, but not less
than quarterly, to fulfill the responsibilities of the Audit
Committee under this charter.
</FONT>

<P align="left">
<B><FONT size="2">Minutes:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee will maintain written minutes
of its meetings, which minutes will be filed with the minutes of
the meetings of the Board of Directors.
</FONT>

<P align="center"><FONT size="2">A-3
</FONT>

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<P align="left">
<B><FONT size="2">Compensation:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Audit Committee shall receive such
fees, if any, for their service as Audit Committee members as
may be determined by the Board of Directors in its sole
discretion. Such fees may include retainers, per meeting fees
and special fees for service as Chair of the Audit Committee.
Fees may be paid in such form of consideration as is determined
by the Board of Directors, which may include cash, deferred
payment, stock or stock options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Audit Committee may not receive
any compensation from the Company except the fees that they
receive for service as a member of the Board of Directors or any
committee thereof.
</FONT>

<P align="left">
<B><FONT size="2">Delegation of Authority:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee may, from time to time,
delegate its authority to approve non-audit services on a
preliminary basis to one or more designated members of the Audit
Committee, provided that such designees present any such
approval to the full Audit Committee for ratification at the
next scheduled meeting.
</FONT>

<P align="center"><FONT size="2">A-4
</FONT>

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<DIV align="right">
<B><FONT size="2">Appendix&nbsp;B</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CHARTER FOR THE NOMINATING AND CORPORATE
GOVERNANCE</FONT></B>

<DIV align="center">
<B><FONT size="2">COMMITTEE OF THE BOARD OF DIRECTORS
OF</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">SAVE THE WORLD AIR, INC.</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Purpose:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Nominating and Corporate
Governance Committee of the Board of Directors (the
&#147;Board&#148;) of Save the World Air, Inc. (the
&#147;Company&#148;) shall be to ensure that the Board is
properly constituted to meet its fiduciary obligations to
stockholders and the Company, and that the Company has and
follows appropriate governance standards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To carry out this purpose, the Nominating and
Corporate Governance Committee shall: (i)&nbsp;identify
prospective director nominees and recommend to the Board the
director nominees for the next annual meeting or special meeting
of stockholders at which directors are to be elected, and
recommend individuals to the Board to fill any vacancies or
newly created directorships that may occur between such
meetings; (ii)&nbsp;develop and recommend to the Board the
governance principles applicable to the Company;
(iii)&nbsp;oversee the evaluation of the Board and management
from a corporate governance perspective; (iv)&nbsp;identify and
recommend to the Board directors for membership on Board
committees; (v) oversee and set compensation for the
Company&#146;s directors; and (vi)&nbsp;review the
Company&#146;s reporting in documents filed with the Securities
and Exchange Commission, to the extent related to corporate
governance and other matters set forth in this charter.
</FONT>

<P align="left">
<B><FONT size="2">Membership:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The members of the Nominating and Corporate
Governance Committee will be appointed by the Board, will serve
at the discretion of the Board and may be removed by the Board
at any time. The Nominating and Corporate Governance Committee
shall consist of at least two members. The Board shall designate
the Chairperson of the Nominating and Corporate Governance
Committee.
</FONT>

<P align="left">
<B><FONT size="2">Authority and Responsibilities:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to any other responsibilities which
may be assigned from time to time by the Board, the Nominating
and Corporate Governance Committee is authorized to undertake,
and has responsibility for, the following matters.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Board and Board Committee
    Nominees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
shall conduct searches for qualified individuals for membership
on the Company&#146;s Board. As vacancies or newly created
positions occur, the Nominating and Corporate Governance
Committee shall recommend individuals for membership on the
Company&#146;s Board of Directors and directors for appointment
to the committees of the Board. In making its recommendations,
the Nominating and Corporate Governance Committee must:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">establish criteria for Board and committee
    membership;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review candidates&#146; qualifications for
    membership on the Board or a committee of the Board and any
    potential conflicts with the Company&#146;s interests;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">assess the contributions of current directors in
    connection with their nomination to the Board or committee;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-1
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">periodically review the composition of the Board
    and its committees to determine whether it may be appropriate to
    add individuals with different backgrounds or skills from those
    already on the Board or any such committee;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consider rotation of committee members and
    committee chairpersons.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Evaluating the Board, its Committees and
    Management</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At least annually, the Nominating and Corporate
Governance Committee shall (i)&nbsp;review and assess the
performance of the Board and its committees, and senior
management of the Company; and (ii)&nbsp;report such
assessments, including any recommendations for proposed changes,
to the Board.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Director Compensation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At least annually, the Nominating and Corporate
Governance Committee shall review and approve compensation
(including stock option grants and other equity-based
compensation) for the Company&#146;s directors. In so reviewing
and approving director compensation, the Committee shall:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identify corporate goals and objectives relevant
    to director compensation (including efforts by the Company to
    retain such directors and the cost to the Company of the
    particular directors&#146; compensation or of all executive
    compensation as a whole);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">evaluate the performance of the Board in light of
    such goals and objectives and set director compensation based on
    such evaluation and such other factors as the Nominating and
    Corporate Governance Committee deems appropriate and in the best
    interests of the Company;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">determine any long-term incentive component of
    director compensation based on such factors as the Nominating
    and Corporate Governance Committee deems appropriate and in the
    best interests of the Company.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Corporate Governance Matters</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Nominating and Corporate Governance Committee
    shall develop and recommend to the Board the Corporate
    Governance Guidelines and Code of Business Conduct and Ethics
    for the Company. At least annually, the Nominating and Corporate
    Governance Committee shall review and reassess the adequacy of
    such Corporate Governance Guidelines and Code of Business
    Conduct and Ethics and recommend any proposed changes to the
    Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Nominating and Corporate Governance Committee
    shall oversee compliance with the Company&#146;s Corporate
    Governance Guidelines and Code of Conduct and Ethics and report
    on such compliance to the Board. The Nominating and Corporate
    Governance Committee shall also review and approve any waivers
    of the Company&#146;s Corporate Governance Guidelines or
    Company&#146;s directors, executive officers and senior
    financial officers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Nominating and Corporate Governance Committee
    shall identify potential conflicts of interest involving
    directors and shall determine whether such director or directors
    may vote on any such issue.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least annually, the Nominating and Corporate
    Governance Committee shall review the number, size and
    responsibilities of the Board and its committees and recommend
    any actions in this regard to the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At least annually, the Nominating and Corporate
    Governance Committee shall, in consultation with the
    Company&#146;s Chief Executive Officer, prepare a report on
    management succession planning for the Board. Such report should
    include policies for Chief Executive Officer selection and
    succession in the event of the incapacitation, retirement or
    removal of the Chief Executive Officer, and evaluations of, and
    development plans for, any potential successors to the Chief
    Executive Officer.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-2
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Disclosure</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
shall review the Company&#146;s reporting in documents filed
with the Securities and Exchange Commission, to the extent
specifically related to corporate governance and the other
matters set forth in this charter.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Reporting to the Board</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
shall report to the Board at least annually. This report shall
include a review of any recommendations or issues that arise
with respect to Board or committee nominees or membership, Board
or management performance, corporate governance or any other
matters that the Nominating and Corporate Governance Committee
deems appropriate or is requested to be included by the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At least annually, the Nominating and Corporate
Governance Committee shall (i)&nbsp;review and assess the
adequacy of this charter and recommend any proposed changes to
the Board for approval; and (ii)&nbsp;evaluate its own
performance and report to the Board on such evaluation.
</FONT>

<P align="left">
<B><FONT size="2">Procedures:</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Meetings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall meet as often as it
determines is appropriate to carry out its responsibilities
under this charter, but not less frequently than quarterly. The
Chairperson of the Nominating and Corporate Governance
Committee, in consultation with the other Committee members,
shall determine the frequency and length of the Committee
meetings and shall set meeting agendas consistent with this
charter.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Advisors and Consultants</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
is authorized to retain (without further Board approval) special
legal, accounting or other advisors and may request any officer
or employee of the Company or the Company&#146;s outside counsel
or independent auditor to meet with any members of, or advisors
to, the Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee has the sole
authority to retain and terminate any search firm to assist in
identifying director candidates, including sole authority to
approve all such search firm&#146;s fees and other retention
terms.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Delegation of Authority</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
may, to the fullest extent permitted by applicable law or
regulation, form and delegate its authority to subcommittees of
the Committee when it deems appropriate and in the best
interests of the Company.
</FONT>

<P align="center"><FONT size="2">B-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="right">
<B><FONT size="2">APPENDIX&nbsp;C</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">SAVE THE WORLD AIR,&nbsp;INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">2004 STOCK OPTION PLAN</FONT></B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SAVE THE WORLD AIR,&nbsp;INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">2004 STOCK OPTION PLAN</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">STATEMENT OF PURPOSE; GENERAL MATTERS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">1.1&nbsp;&nbsp;Purpose
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">1.2&nbsp;&nbsp;Effective Date
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">1.3&nbsp;&nbsp;Plan Not Exclusive
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">1.4&nbsp;&nbsp;Choice of Law
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">STOCK TO BE OPTIONED
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">2.1&nbsp;&nbsp;Maximum Number of Shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">2.2&nbsp;&nbsp;Reservation of Shares of Stock
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">ADMINISTRATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3.1&nbsp;&nbsp;Committee
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">3.1.1&nbsp;&nbsp;Powers
    and Duties
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">3.1.2&nbsp;&nbsp;Voting
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3.2&nbsp;&nbsp;Limitations on Liability
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">3.2.1&nbsp;&nbsp;Release
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">3.2.2&nbsp;&nbsp;Indemnification
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">PARTICIPATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4.1&nbsp;&nbsp;Eligibility
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4.2&nbsp;&nbsp;Selection
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4.3&nbsp;&nbsp;Successive Grants
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4.4&nbsp;&nbsp;Limits on Incentive Stock Options
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">4.4.1&nbsp;&nbsp;Employee
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">4.4.2&nbsp;&nbsp;Ten
    Percent Shareholder
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">TERMS OF GRANT
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.1&nbsp;&nbsp;Stock Option Agreement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.2&nbsp;&nbsp;Date of Grant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.3&nbsp;&nbsp;Exercise Price
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.3.1&nbsp;&nbsp;ISO
    Issued to Ten Percent Shareholder
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.3.2&nbsp;&nbsp;Other
    ISOs
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.3.3&nbsp;&nbsp;Non-Qualified
    Stock Options
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.4&nbsp;&nbsp;Continued Employment
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.5&nbsp;&nbsp;Vesting; Installments
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.5.1&nbsp;&nbsp;Limits
    on Incentive Stock Options
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.5.2&nbsp;&nbsp;No
    Fractional Shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.6&nbsp;&nbsp;No Obligation to Exercise
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.7&nbsp;&nbsp;Transferability
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.7.1&nbsp;&nbsp;In
    General
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.7.2 Non-Qualified
    Stock Options
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.8&nbsp;&nbsp;Time Limitation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.8.1&nbsp;&nbsp;ISO
    Issued to Ten Percent Shareholder
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.8.2&nbsp;&nbsp;Other
    ISOs
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">(i)
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="83%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.9&nbsp;&nbsp;Cessation of Employment
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.9.1&nbsp;&nbsp;In
    General
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.9.2&nbsp;&nbsp;Termination
    for Cause
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.10&nbsp;&nbsp;Death of Participant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.11&nbsp;&nbsp;Notification of Corporate
    Transaction
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.11.1&nbsp;&nbsp;Termination
    of Stock Options
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.11.2&nbsp;&nbsp;Acceleration
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.12&nbsp;&nbsp;Compliance With Securities and
    Tax Laws
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.12.1&nbsp;&nbsp;Representation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.12.2&nbsp;&nbsp;Notice
    of Sale
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">5.12.3&nbsp;&nbsp;Withholding
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">ECONOMIC TERMS OF STOCK OPTION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">6.1&nbsp;&nbsp;Purchase Right
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">6.2&nbsp;&nbsp;Manner of Exercise and Payment
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.2.1&nbsp;&nbsp;Effective
    Date of Exercise
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.2.2&nbsp;&nbsp;Minimum
    Number of Shares Purchased
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.2.3&nbsp;&nbsp;Payment
    of Purchase Price
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">6.3&nbsp;&nbsp;Adjustments Upon Changes in
    Capitalization
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.3.1&nbsp;&nbsp;In
    General
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.3.2&nbsp;&nbsp;Determination
    by Board
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">6.3.3&nbsp;&nbsp;Fractionalization
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">7.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">AMENDMENT AND TERMINATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">7.1&nbsp;&nbsp;In General
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">7.2&nbsp;&nbsp;Termination
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">7.3&nbsp;&nbsp;No Grant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">7.4&nbsp;&nbsp;No Effect on Prior Grants
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <FONT size="2">GLOSSARY OF TERMS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">1.&nbsp;&nbsp;&#147;Board&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">2.&nbsp;&nbsp;&#147;Cause&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3.&nbsp;&nbsp;&#147;Code&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4.&nbsp;&nbsp;&#147;Committee&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">5.&nbsp;&nbsp;&#147;Company&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">6.&nbsp;&nbsp;&#147;Corporate Transaction&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">7.&nbsp;&nbsp;&#147;Disability&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">8.&nbsp;&nbsp;&#147;Effective Date&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">9.&nbsp;&nbsp;&#147;Exchange Act&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">10.&nbsp;&nbsp;&#147;Exercise Price&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">11.&nbsp;&nbsp;&#147;Fair Market Value&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">12.&nbsp;&nbsp;&#147;Incentive Stock Option&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">13.&nbsp;&nbsp;&#147;ISO&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">14.&nbsp;&nbsp;&#147;Non-Qualified Stock
    Option&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">15.&nbsp;&nbsp;&#147;NQSO&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">16.&nbsp;&nbsp;&#147;Parent&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">17.&nbsp;&nbsp;&#147;Participant&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">(ii)
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">18.&nbsp;&nbsp;&#147;Plan&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">19.&nbsp;&nbsp;&#147;Stock&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">20.&nbsp;&nbsp;&#147;Stock Option&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">21.&nbsp;&nbsp;&#147;Stock Option Agreement&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">22.&nbsp;&nbsp;&#147;Subsidiary&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">23.&nbsp;&nbsp;&#147;Ten Percent Shareholder&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">24.&nbsp;&nbsp;&#147;Value of Consideration&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">25.&nbsp;&nbsp;&#147;Will&#148;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">(iii)
</FONT>

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<P align="left">
<B><FONT size="2">ALL CAPITALIZED TERMS USED IN THIS PLAN SHALL
HAVE THE MEANINGS SET FORTH IN THE &#147;GLOSSARY OF TERMS&#148;
ATTACHED AS <I>Appendix &#147;A&#148; </I>WHICH IS HEREBY
INCORPORATED BY THIS REFERENCE</FONT></B>

<P align="center">
<B><FONT size="2">SAVE THE WORLD AIR,&nbsp;INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">2004 STOCK OPTION PLAN</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">1.</FONT></B></TD>
    <TD>
    <B><FONT size="2">STATEMENT OF PURPOSE; GENERAL
    MATTERS</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purpose.</FONT></B><FONT size="2">
The purpose of the Save The World Air,&nbsp;Inc. 2004 Stock
Option Plan (this <B>&#147;Plan&#148;</B>) is to benefit and
strengthen Save The World Air,&nbsp;Inc. (the
<B>&#147;Company&#148;</B>), its shareholders, and its Parents
and Subsidiaries by encouraging stock ownership by selected key
employees, directors, consultants and advisers; assisting the
Company and its Parents and Subsidiaries in attracting and
retaining key personnel; and providing to participating
personnel added incentive for high levels of performance to
expand and improve the earnings of the Company and its Parents
and Subsidiaries. This Plan will provide a means whereby <B>(a)
</B>such employees may purchase shares of the Stock of the
Company pursuant to Incentive Stock Options
<B>(&#147;ISOs&#148;</B>) and <B>(b) </B>such employees or other
persons may purchase shares of Stock pursuant to Non-Qualified
Stock Options <B>(&#147;NQSOs&#148;</B>).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
Date.</FONT></B><FONT size="2"> This Plan shall be effective
from the date that this Plan is approved at a meeting of the
Board of Directors of the Company (the <B>&#147;Board&#148;</B>)
(or, if approval is effected by a unanimous written consent of
the Board, such date as is specified in the consent), subject to
approval hereof within twelve (12)&nbsp;months before or after
such date by shareholders of the Company holding not less than a
majority of the voting power of the Company voting in person or
by proxy at a duly held shareholders&#146; meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan Not
Exclusive.</FONT></B><FONT size="2"> This Plan is not exclusive
and the Company may have other plans, programs and arrangements
for the grant of stock options, the issuance of shares or other
non-cash compensation, or payment of cash bonuses or other
compensation; and this Plan does not require that any
Participant be precluded from participation in such other plans,
programs and arrangements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Choice of
Law.</FONT></B><FONT size="2"> The laws of the State of
California shall govern all questions concerning the
construction, validity and interpretation of this Plan,
regardless of the choice of law provisions of California or any
other jurisdiction and regardless of where the Company or any
Participant may now or hereafter be formed, do business, or
reside.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">2.</FONT></B></TD>
    <TD>
    <B><FONT size="2">STOCK TO BE OPTIONED</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum
Number of Shares.</FONT></B><FONT size="2"> The stock to be
offered under this Plan shall be shares of the Company&#146;s
authorized but unissued Stock, and the aggregate number of
shares of Stock to be delivered upon exercise of all Stock
Options granted under this Plan shall not exceed One Million
Five Hundred Thousand (1,500,000), subject to adjustment as
provided in Section hereof. If any Stock Option shall terminate
or expire for any reason without having vested under Section
hereof and been exercised in full under Section hereof, the
unpurchased shares subject thereto shall again be available for
purposes of the foregoing limitation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reservation
of Shares of Stock.</FONT></B><FONT size="2"> The Company during
the term of this Plan shall at all times reserve and keep
available the number of shares of Stock necessary to satisfy the
requirements of this Plan.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">3.</FONT></B></TD>
    <TD>
    <B><FONT size="2">ADMINISTRATION</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Committee.</FONT></B><FONT size="2">
This Plan shall be administered by a committee consisting of
three (3)&nbsp;or more persons who shall be selected by the
Board from time to time (the <B>&#147;Committee&#148;</B>).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.1.1 Powers and
Duties.</FONT></B><FONT size="2"> Subject to the express
provisions of this Plan or an applicable Stock Option Agreement
and in addition to such other powers as are described in this
Plan, the Committee shall have the authority to <B>(a)
</B>construe and interpret this Plan, and to define the terms
used herein; <B>(b) </B>prescribe, amend, and rescind rules and
regulations relating to administration of this Plan; <B>(c)
</B>determine the duration and purposes of leaves of absence
that may be granted to Participants without constituting a
cessation of their
</FONT>

<P align="center"><FONT size="2">Page 1 of 8 Pages
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">employment for purposes of Section hereof; <B>(d)
</B>determine the existence of a Disability for purposes of
Section hereof; <B>(e) </B>determine whether a Participant has
been terminated for Cause for purposes of Section hereof; and
<B>(f) </B>make all other determinations necessary or advisable
for administration of this Plan. Determinations by the Committee
that are consistent with this Section shall be final and
conclusive, unless otherwise determined by the Board in its sole
and absolute discretion.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.1.2 Voting.</FONT></B><FONT size="2"> Any
action of the Committee with respect to administration of this
Plan shall be taken pursuant to a majority vote, or to the
unanimous written consent, of its members. Two (2)&nbsp;members
of the Committee shall constitute a quorum for the transaction
of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitations
on Liability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.2.1 Release.</FONT></B><FONT size="2"> No
member of the Committee shall be liable, responsible or
accountable in damages or otherwise to the Company or its Parent
or Subsidiaries, or any Participant or any of such
Participant&#146;s successors or assigns, for any act or
omission by such member performed or omitted in good faith
pursuant to the authority granted to such member by this Plan;
<I>provided,</I> that such Committee member is not guilty of
fraud, bad faith, or gross negligence. No amendment or repeal of
this Section affects any liability or alleged liability of any
member of the Committee for any acts, omissions, or conduct that
occurred prior to such amendment or repeal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.2.2
Indemnification.</FONT></B><FONT size="2"> To the maximum extent
permitted by law, the Company shall indemnify, defend, and hold
harmless each member of the Committee from any liability, loss,
claim, expense or damage incurred by such member by reason of
any act performed or omitted to be performed by such member in
connection with the Committee, including costs and
attorney&#146;s fees and any amounts expended in the settlement
of any claims of liability, loss or damage; <I>provided,</I>
that nothing in this Section shall relieve the party seeking
indemnity from liability for fraud, bad faith, or gross
negligence. No amendment or repeal of this Section affects any
rights to indemnity for any acts, omissions, or conduct that
occurred prior to such amendment or repeal.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">4.</FONT></B></TD>
    <TD>
    <B><FONT size="2">PARTICIPATION</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</FONT></B><FONT size="2">
All employees, directors, consultants and advisers of the
Company or of any Parent or Subsidiary shall be eligible for
selection to participate in this Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selection.</FONT></B><FONT size="2">
Subject to the express provisions of this Plan, the Board
pursuant to recommendations by the Committee, or the Committee
if expressly authorized by the Board, shall select <B>(a)
</B>those individuals to whom Stock Options shall be granted
from the eligible class described in Section hereof; <B>(b)
</B>the terms and provisions of the respective Stock Option
Agreement (which terms need not be identical with respect to
each Participant or with respect to Stock Options granted to any
one Participant); <B>(c) </B>whether such Stock Options will be
Incentive Stock Options or Non-Qualified Stock Options; <B>(d)
</B>the Exercise Price; <B>(e) </B>the times at which such Stock
Options shall be granted and become vested; and <B>(f) </B>the
number of shares of Stock subject to each Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Successive
Grants.</FONT></B><FONT size="2"> A person who has been granted
a Stock Option may, if such person is otherwise eligible under
Section hereof, be granted additional Stock Options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limits on
Incentive Stock Options.</FONT></B><FONT size="2"> No Incentive
Stock Option may be granted to any person who, at the time the
ISO is granted, does not meet both the following requirements:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.4.1 Employee.</FONT></B><FONT size="2"> Such
person (whether or not a Ten Percent Shareholder) must be an
employee of the Company or a Parent or Subsidiary thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.4.2 Ten Percent
Shareholder.</FONT></B><FONT size="2"> Such person cannot be a
Ten Percent Shareholder; <I>provided,</I> that an ISO may
nonetheless be issued to such person if the Exercise Price
complies with Section hereof and if the term of such ISO
complies with Section hereof.
</FONT>

<P align="center"><FONT size="2">Page 2 of 8 Pages
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">5.</FONT></B></TD>
    <TD>
    <B><FONT size="2">TERMS OF GRANT</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the discretion granted to the
Board or the Committee under this Plan, and in addition to such
terms and conditions as are imposed by Section hereof, any grant
of a Stock Option shall be subject to the following terms and
conditions:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Option
Agreement.</FONT></B><FONT size="2"> Each Stock Option shall be
evidenced by a Stock Option Agreement which shall <B>(a)
</B>specify the number of shares of Stock subject to the Stock
Option; <B>(b) </B>specify whether the Stock Option is an ISO or
NQSO; <B>(c) </B>set forth the Exercise Price; and <B>(d)
</B>contain each of the provisions and agreements specifically
required to be contained therein under the Plan and such other
terms and conditions as are deemed necessary or desirable by the
Board (or the Committee, if authorized) and are not inconsistent
with this Plan. A purported grant of a Stock Option shall be
null and void <I>ab initio </I>and of no effect whatsoever
unless evidenced by a Stock Option Agreement signed by a
duly-authorized officer of the Company and by the applicable
Participant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date of
Grant.</FONT></B><FONT size="2"> The date that a Stock Option is
granted shall be set forth in the applicable Stock Option
Agreement and shall be <B>(a) </B>the day of the meeting of the
Board (or meeting of the Committee, if authorized) in which the
action described in Section hereof is taken (or, if such action
is taken by unanimous written consent by the Board or Committee,
as the case may be, the date that the last member of the Board
or Committee signs such consent), or <B>(b)</B> if later, such
date as is specified in the action by the Board or Committee
described in Section hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise
Price.</FONT></B><FONT size="2"> The Exercise Price for a share
of Stock subject to a Stock Option shall be as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.3.1 ISO Issued to Ten Percent
Shareholder.</FONT></B><FONT size="2"> If an ISO is granted to a
Ten Percent Shareholder, the Exercise Price must be at least one
hundred and ten percent (110%) of the Fair Market Value of the
Stock on the date the ISO is granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.3.2 Other ISOs.</FONT></B><FONT size="2"> If
an ISO is granted to a person other than a Ten Percent
Shareholder, the Exercise Price must be at least one hundred
percent (100%) of the Fair Market Value of the Stock on the date
the ISO is granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.3.3 Non-Qualified Stock
Options.</FONT></B><FONT size="2"> The Exercise Price with
respect to an NQSO shall be as determined by the Board (or the
Committee, if authorized).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continued
Employment.</FONT></B><FONT size="2"> The Board (or the
Committee, if authorized) may, in its discretion, include in any
Stock Option Agreement a condition that the Participant shall
agree to remain in the employ of, and to render such services
to, the Company or any Parent or Subsidiary thereof for such
period as shall be specified in such Agreement; <I>provided,</I>
that no Stock Option Agreement shall <B>(a)</B> impose upon the
Company or any Parent or Subsidiary any obligation to employ the
Participant for any period; <B>(b) </B>interfere in any way with
the right of the Company or any Parent or Subsidiary thereof to
reduce such Participant&#146;s compensation; or <B>(c)
</B>impose terms on the Company or any Parent or Subsidiary
thereof that are more onerous to such employer than those
contained in a written employment agreement between such
employer on the one hand and such Participant on the other hand.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vesting;
Installments.</FONT></B><FONT size="2"> A Stock Option may be
exercised only if and to the extent vested, subject to
acceleration as provided under Section hereof. A Stock Option
may vest immediately or according to such schedule as the Board
(or the Committee, if authorized) may determine, but subject to
the following provisions:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.5.1 Limits on Incentive Stock
Options.</FONT></B><FONT size="2"> With respect to an Incentive
Stock Option, the aggregate Fair Market Value of shares of Stock
(such Fair Market Value to be determined as of the date that
such ISO is granted) with respect to which such ISO is
exercisable for the first time by a Participant during any
calendar year (taking into account incentive stock options as
defined under section&nbsp;422 of the Code granted to such
Participant under any other plan maintained by the Company or a
Parent or Subsidiary) shall at no time exceed One Hundred
Thousand Dollars ($100,000).
</FONT>

<P align="center"><FONT size="2">Page 3 of 8 Pages
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.5.2 No Fractional
Shares.</FONT></B><FONT size="2"> No installment of a Stock
Option shall be exercisable except with respect to a whole
share, and fractional shares shall be disregarded except that
they may be accumulated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Obligation
to Exercise.</FONT></B><FONT size="2"> The granting of a Stock
Option shall not impose an obligation on the Participant to
exercise such Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transferability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.1 In General.</FONT></B><FONT size="2">
Except as provided in Section hereof, all Stock Options shall,
by their terms, be non-transferable by the Participant, either
voluntarily or by operation of law, otherwise than by Will or
the laws of descent and distribution, and shall be exercisable
during the Participant&#146;s lifetime only by the Participant,
regardless of any community property interest therein of the
spouse of the Participant or such spouse&#146;s successors in
interest. If the spouse of the Participant shall have acquired a
community property interest in any such Stock Option, the
Participant or the Participant&#146;s permitted successors in
interest may exercise the Stock Option on behalf of the spouse
of the Participant or such spouse&#146;s successors in interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2 Non-Qualified Stock
Options.</FONT></B><FONT size="2"> The Board (or Committee, if
authorized) may provide in a Stock Option Agreement that a
Non-Qualified Stock Option (but not an Incentive Stock Option)
may be transferred under the following terms and conditions:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2.1 </FONT></B><FONT size="2">A
Participant may transfer an NQSO only to <B>(a) </B>a trust of
which such individual is a grantor, <I>provided </I>that the
named beneficiaries of such trust shall include only such person
and/or members of such person&#146;s Family (and such a trust
shall be unrestricted as to the identity of the trustee or
trustees); <B>(b) </B>a corporation, partnership or limited
liability company; <I>provided,</I> that the owners of equity
interests in the foregoing shall consist solely of one or a
combination of such person, member(s) of such person&#146;s
Family, or one or more trusts described in the foregoing
<B><I>clause&nbsp;(a)</I></B>; or <B>(c) </B>as an outright gift
one or more members of such person&#146;s Family.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2.2 </FONT></B><FONT size="2">The
transferor Participant and the transferee shall execute and
acknowledge such assignments or other instruments as the Board
(or the Committee, if authorized) may reasonably request, in
form and substance reasonably satisfactory to the Board or
Committee, to confirm or memorialize such transfer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2.3 </FONT></B><FONT size="2">The
transferor Participant or transferee shall provide the Board (or
the Committee, if authorized) with the name, address, and
taxpayer identification number of the transferee and such other
information as the Board or Committee shall request to prepare
tax returns and other filings reflecting such transfer as are
required by the Code or otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2.4 </FONT></B><FONT size="2">The
transferor Participant or transferee shall, at such
person&#146;s expense, furnish the Board (or the Committee, if
authorized) with an opinion of counsel in form and substance
satisfactory to the Board or Committee to the effect that such
transfer, and the issuance of shares of Stock to the transferee
upon exercise of the NQSO transferred, will comply with federal
or state securities laws (including, without limitation, any
exemption thereunder pursuant to which the Company has caused
such NQSO or share to be issued).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.7.2.5 </FONT></B><FONT size="2">The
transferee shall have executed and acknowledged the Stock Option
Agreement to which the transferor Participant is a party and
shall have assumed all obligations and liabilities of the
transferor Participant thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time
Limitation.</FONT></B><FONT size="2"> Each Stock Option and all
rights associated therewith shall expire on such date as the
Board (or the Committee, if authorized) may determine, and shall
be subject to earlier termination as provided herein, but
subject to the following provisions:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.8.1 ISO Issued to Ten Percent
Shareholder.</FONT></B><FONT size="2"> If an ISO is granted to a
Ten Percent Shareholder, the ISO shall expire no later than five
(5)&nbsp;years after the date such ISO is granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.8.2 Other ISOs.</FONT></B><FONT size="2"> If
an ISO is granted to a person other than a Ten Percent
Shareholder, the ISO shall expire no later than ten
(10)&nbsp;years after the date such ISO is granted.
</FONT>

<P align="center"><FONT size="2">Page 4 of 8 Pages
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cessation of
Employment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.9.1 In General.</FONT></B><FONT size="2">
Subject to Sections and hereof, if a Participant ceases to be
employed by the Company or any Subsidiary or Parent thereof,
such Participant may, subject to the time limitations in Section
hereof, exercise such Participant&#146;s Stock Options to the
extent that such Participant was entitled to exercise them on
the date of such cessation <B>(a) </B>within one (1)&nbsp;year
after such cessation if such cessation results from the
Disability of such Participant, or <B>(b) </B>otherwise within
ninety (90)&nbsp;days after such cessation; <I>provided,</I>
that the applicable Stock Option Agreement may allow the Board
(or the Committee, if authorized) to cancel any Stock Option in
the event of a cessation described in <B><I>clause&nbsp;(b)
</I></B>of this Section during such ninety (90)&nbsp;day period
if the Participant engages in employment or activities contrary,
in the reasonable opinion of the Board (or the Committee, if
authorized), to the best interests of the Company or a
Subsidiary or Parent thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.9.2 Termination for
Cause.</FONT></B><FONT size="2"> If a Participant is terminated
as an officer or employee of the Company or any Parent or
Subsidiary thereof for Cause, such Participant&#146;s Stock
Options shall terminate immediately; <I>provided, however,</I>
that the Board (or the Committee, if authorized) may, in its
sole and absolute discretion, within ten (10)&nbsp;days of such
termination, waive the expiration of such Stock Options by
giving written notice of such waiver at such Participant&#146;s
last known address. In the event of such waiver, such
Participant may exercise a Stock Option only to such extent, for
such time, and upon such terms and conditions as if such
Participant had been subject to Section hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Death of
Participant.</FONT></B><FONT size="2"> If a Participant dies
while employed by the Company or any Subsidiary or Parent
thereof, or during the period described in <B><I>clause&nbsp;(a)
</I></B>or <B><I>clause&nbsp;(b) </I></B>of Section hereof as
applicable, then, subject to the time limitations in Section
hereof, such Participant&#146;s Stock Options shall expire
within one (1)&nbsp;year after the date of death; and the
executor or administrator of such Participant&#146;s estate, or
the person or persons to whom such Participant&#146;s rights
under the Stock Options shall have passed by Will or by the
applicable laws of descent and distribution, shall have the
right to exercise such Stock Option to the extent that such
Participant was entitled to exercise such Stock Option on the
date of death.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notification
of Corporate Transaction.</FONT></B><FONT size="2"> The Board
(or the Committee, if authorized) shall notify each Participant
of the pendency of a Corporate Transaction a reasonable time
before such Corporate Transaction is to occur, and each
Participant (or such other person entitled to exercise a Stock
Option under Section hereof) shall have the right, at any time
prior to such Corporate Transaction, to exercise any Stock
Options of such person to the extent that such Stock Options are
otherwise exercisable under the terms of this Plan or applicable
Stock Option Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11.1 Termination of Stock
Options.</FONT></B><FONT size="2"> All Stock Options shall
terminate as of the Effective Date of the Corporate Transaction
unless provision is made in connection with such Corporate
Transaction (which provision shall be solely at the option of
such successor corporation or parent or subsidiary corporation)
for <B>(a) </B>assumption of the Company&#146;s obligations
under any Stock Options theretofore granted, or <B>(b)
</B>substitution for such Stock Options of new options covering
stock of a successor employer corporation or a parent or
subsidiary corporation thereof (with appropriate adjustments as
to the number and kinds of shares subject to the Stock Options).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11.2 Acceleration.</FONT></B><FONT size="2">
Acceleration of Stock Options in contemplation of such Corporate
Transaction shall not be permitted except in the following
circumstances:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11.2.1 </FONT></B><FONT size="2">Upon the
occurrence of a Corporate Transaction in which the assets or
voting securities of the Company are acquired by a person whose
equity securities are registered under section&nbsp;12 of the
Exchange Act, then any Stock Option held by any person who would
be considered an affiliate of the Company under the
&#147;pooling of interests&#148; rules promulgated by the
Financial Accounting Standards Board shall, without any action
by the Board or Committee, become immediately exercisable, and
the Board (or the Committee, if authorized) may determine that
either <B><I>clause&nbsp;(b) </I></B>of Section hereof shall
apply or that the Participants shall, upon the Effective Date of
such Corporate Transaction, be entitled to receive cash for each
Stock Option equal to the difference between the Exercise Price
of such Stock Option and the Value of Consideration attributable
to each share of Stock in connection with such Corporate
Transaction.
</FONT>

<P align="center"><FONT size="2">Page 5 of 8 Pages
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11.2.2 </FONT></B><FONT size="2">Upon the
occurrence of a Corporate Transaction in which the assets or
voting securities of the Company are acquired by a person whose
equity securities are not registered under section&nbsp;12 of
the Exchange Act, including a &#147;Rule&nbsp;13e-3
transaction,&#148; as such term is defined by Rule&nbsp;13e-3
promulgated under the Exchange Act, then all Stock Options
granted hereunder shall, without any action by the Board or
Committee, become immediately exercisable and the Participants
shall, upon the Effective Date of such Corporate Transaction, be
entitled to receive cash for each Stock Option equal to the
difference between the Exercise Price of such Stock Option and
the Value of Consideration attributable to each share of Stock
in connection with such Corporate Transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.11.2.3 </FONT></B><FONT size="2">Under no
circumstances shall any such acceleration cause an otherwise
unvested portion of an ISO to become exercisable in violation of
Section hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compliance
With Securities and Tax Laws.</FONT></B><FONT size="2"> No Stock
Option shall be granted and no shares of Stock shall be issued
under this Plan except in compliance with all applicable federal
and state securities and tax laws and regulations and in
compliance with rules of stock exchanges on which the Stock may
be listed. In furtherance of the foregoing and not in order to
limit the generality of the foregoing in any way:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.12.1
Representation.</FONT></B><FONT size="2"> The Company, as a
condition to the issuance of such shares, may require the person
exercising such Stock Option to represent and warrant at the
time of such exercise that any shares of Stock acquired upon
exercise are being acquired only for investment and without any
present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is
required under any applicable law, regulation or rule of any
governmental agency.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.12.2 Notice of
Sale.</FONT></B><FONT size="2"> Each Stock Option Agreement
shall require the person acquiring shares pursuant to the
exercise of a Stock Option to give the Company notice of any
sale or other disposition of any such shares not less than ten
(10)&nbsp;days after such sale or other disposition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.12.3 Withholding.</FONT></B><FONT size="2">
Each Stock Option Agreement shall contain an acknowledgment by
the Participant that the Company, in order to fulfill its
withholding obligations under any federal, state or local tax
law (including, without limitation, upon the disposition by a
person of shares of Stock acquired pursuant to the exercise of
an ISO within two (2)&nbsp;years of the granting of the ISO or
within one (1)&nbsp;year after exercise of the ISO; upon a
Participant&#146;s exercising an ISO more than three
(3)&nbsp;months after such Participant has ceased to be an
employee of the Company or a Parent or Subsidiary; or upon the
exercise by a person of an NQSO) may <B>(a) </B>withhold such
sums from other compensation due the Participant, <B>(b)
</B>require such Participant to pay to the Company such amounts
as a condition to the delivery of shares pursuant to exercise of
the Stock Option, or <B>(c) </B>sell shares that would otherwise
be delivered to such Participant upon exercise of the Stock
Option in order to raise cash in the necessary amount.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">6.</FONT></B></TD>
    <TD>
    <B><FONT size="2">ECONOMIC TERMS OF STOCK OPTION</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase
Right.</FONT></B><FONT size="2"> Each Stock Option shall entitle
a Participant to receive, upon exercise in the manner described
in Section hereof, up to the number of shares of Stock subject
to such Stock Option subject to adjustment as provided in
Section hereof. From such exercise date, the Participant shall
be entitled to the issuance of a stock certificate evidencing
such Participant&#146;s ownership of such Stock (but subject to
Section hereof). No person entitled to exercise any Stock Option
granted under this Plan shall have any of the rights or
privileges of a shareholder of the Company (including, without
limitation, rights to distributions, voting rights, inspection
rights, dissenter&#146;s rights, rights to bring a derivative
action, or other rights of a shareholder under applicable
corporate law) in respect of any shares of Stock issuable upon
exercise of such Stock Option until and only to the extent such
Stock Options are exercised and certificates representing such
shares shall have been issued and delivered.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Manner of
Exercise and Payment.</FONT></B><FONT size="2"> A Participant
shall exercise a Stock Option, if at all, by giving <B>(a)
</B>written notice of such exercise to the Committee specifying
<B>(i) </B>the number of shares of Stock with respect to which
such Stock Option is being exercised and <B>(ii) </B>if the
Participant owns a combination of ISOs and NQSOs, and/or
successive Stock Options, which Stock Options are being
exercised, together with <B>(b) </B>payment of the full purchase
price for such shares (in the manner provided in Section hereof)
equal to the
</FONT>

<P align="center"><FONT size="2">Page 6 of 8 Pages
</FONT>

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<DIV align="left">
<FONT size="2">number of shares to be purchased times the
Exercise Price per share. Otherwise, the exercise of a Stock
Option shall be void <I>ab initio </I>and of no force or effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.2.1 Effective Date of
Exercise.</FONT></B><FONT size="2"> The date upon which such
written notice is given and payment of the full purchase price
is received by the Committee shall be the exercise date for such
Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.2.2 Minimum Number of Shares
Purchased.</FONT></B><FONT size="2"> No fewer than five
(5)&nbsp;shares (or, if less, the maximum number of shares
subject to the applicable Stock Option to the extent vested and
unexercised) may be purchased pursuant to the exercise of a
Stock Option. No Stock Option or installment thereof shall be
exercisable except with respect to whole shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.2.3 Payment of Purchase
Price.</FONT></B><FONT size="2"> The purchase price of the
shares upon exercise of a Stock Option shall be paid in full at
the time of exercise through any one or combination of the
foregoing as specified in the applicable Stock Option Agreement:
<B>(a) </B>by wire transfer to a Company account designated by
the Committee; <B>(b) </B>by unendorsed certified or
cashier&#146;s check; <B>(c) </B>if the Committee so authorizes,
by delivery of shares of Stock of the Company already owned by
and in the possession of the Participant (in which case any such
shares of Stock shall be valued at their Fair Market Value as of
the close of the business day immediately preceding the date of
exercise); or <B>(d) </B>if the Stock is then publicly traded
and if the Committee so authorizes, by delivery to a broker of a
copy of the notice of exercise, specifying the number of shares
with respect to which the Stock Option is to be exercised and
instructing the broker to sell the shares issuable upon exercise
of the Stock Option and to deliver to the Company from the sale
proceeds of such shares an amount equal to the purchase price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments
Upon Changes in Capitalization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.3.1 In General.</FONT></B><FONT size="2"> If
the issued and outstanding shares of Stock are increased,
decreased, or changed into or exchanged for a different number
or kind of shares or securities of the Company without receipt
of consideration by the Company through reorganization, merger,
recapitalization, reclassification, stock split, stock dividend,
stock consolidation or other similar transaction, <B>(a)
</B>appropriate and proportionate adjustments shall be made to
the number and kind of shares as to which Stock Options may be
granted under the Plan, and <B>(b)</B> a corresponding
adjustment to the number or kind of shares and the Exercise
Price per share allocated to unexercised Stock Options, or
portions thereof, that have been granted prior to any such
change shall likewise be made; <I>provided,</I> that any such
adjustment to an outstanding but unexercised Stock Option shall
be made without change to the total purchase price applicable to
the unexercised portion of the Stock Option but with a
corresponding adjustment to the price of each share subject to
the Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.3.2 Determination by
Board.</FONT></B><FONT size="2"> Adjustments under Section
hereof shall be made by the Board (or the Committee, if
authorized), whose determination as to what adjustments shall be
made, and the extent thereof, shall be final and conclusive.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.3.3
Fractionalization.</FONT></B><FONT size="2"> Stock Options for
fractional shares shall not be issued or created on account of
any adjustment under Section hereof.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">7.</FONT></B></TD>
    <TD>
    <B><FONT size="2">AMENDMENT AND TERMINATION</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
General.</FONT></B><FONT size="2"> The Board may at any time
suspend, amend, or terminate this Plan; and the Board (or the
Committee, if authorized) may, with the consent of a
Participant, make such modification of the terms and conditions
of such Participant&#146;s Stock Options as the Board or
Committee shall deem advisable; <I>provided </I>that any
amendment or modification to this Plan that would
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.1.1 </FONT></B><FONT size="2">increase the
maximum number of shares that may be purchased pursuant to Stock
Options granted under this Plan, either in the aggregate or by
any one person, other than as provided in Section hereof;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.1.2 </FONT></B><FONT size="2">reduce the
Exercise Price of an Incentive Stock Option;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.1.3 </FONT></B><FONT size="2">increase the
maximum term of an Incentive Stock Option;&nbsp;or
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.1.4 </FONT></B><FONT size="2">permit Stock
Options to be granted to anyone other than a person described in
Section hereof
</FONT>

<P align="center"><FONT size="2">Page 7 of 8 Pages
</FONT>

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<P align="left">
<FONT size="2">shall be deemed adopted as of the date of the
action of the Board effecting such amendment or modification and
shall be effective immediately, unless otherwise provided
therein, subject to approval thereof within twelve (12) months
before or after the effective date by shareholders of the
Company holding not less than a majority of the voting power of
the Company voting in person or by proxy at a duly held
shareholders&#146; meeting; <I>provided, however,</I> that the
Board may amend the Plan <I>in toto </I>without shareholder
approval if the Plan has not yet been approved by the
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination.</FONT></B><FONT size="2">
Unless sooner terminated by the Board pursuant to Section
hereof, this Plan shall terminate on the earlier of <B>(a)
</B>the tenth (10th) anniversary of the effective date of the
Plan set forth in Section hereof or <B>(b) </B>the Effective
Date of a Corporate Transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
Grant.</FONT></B><FONT size="2"> No Stock Option may be granted
during any suspension or after termination of this Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Effect on
Prior Grants.</FONT></B><FONT size="2"> Amendment, suspension,
or termination of this Plan shall not, without the consent of
the holder thereof, alter or impair any rights or obligations
under any Stock Option theretofore granted.
</FONT>

<P align="center"><FONT size="2">Page 8 of 8 Pages
</FONT>

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<P align="center">
<B><FONT size="2">APPENDIX&nbsp;A</FONT></B>

<DIV align="center">
<B><FONT size="2">GLOSSARY OF TERMS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.&nbsp;&#147;Board&#148;
</FONT></B><FONT size="2">is as defined in Section of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.&nbsp;&#147;Cause&#148;
</FONT></B><FONT size="2">with respect to a Participant means
<B>(a) </B>a material breach by such Participant of any
employment agreement between such Participant on the one hand
and the Company or Parent or Subsidiary thereof on the other
hand, together with failure to correct such breach within thirty
(30)&nbsp;days after notice of such breach is given to such
Participant by the employer; <B>(b) </B>gross malfeasance by
such Participant in the performance of such Participant&#146;s
duties on behalf of the Company or a Parent or Subsidiary
thereof; or <B>(c) </B>the conviction of or plea of guilty or
<I>nolo contendere </I>by such Participant with respect to any
misdemeanor or felony arising from or related to the conduct of
the affairs of the Company or a Parent or Subsidiary thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.&nbsp;&#147;Code&#148;
</FONT></B><FONT size="2">means the Internal Revenue Code of
1986, as amended, and all regulations and administrative
pronouncements thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">4.&nbsp;&#147;Committee&#148;
</FONT></B><FONT size="2">is as defined in Section of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">5.&nbsp;&#147;Company&#148;
</FONT></B><FONT size="2">means Save The World Air,&nbsp;Inc., a
Nevada corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.&nbsp;&#147;Corporate Transaction&#148;
</FONT></B><FONT size="2">means any of the following:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.1 </FONT></B><FONT size="2">the dissolution
or liquidation of the Company (in which case the
<B>&#147;Effective Date&#148; </B>of such Corporate Transaction
is the date that the Company&#146;s shareholders shall have duly
approved such dissolution or liquidation under the
Company&#146;s bylaws and the laws of the state of the
Company&#146;s incorporation);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.2 </FONT></B><FONT size="2">unless the
principal purpose of such transaction is to change the state of
the Company&#146;s incorporation, a reorganization, merger or
consolidation of the Company with one or more corporations as a
result of which the Company is not the surviving corporation or
as a result of which it is the surviving corporation and its
outstanding voting securities are converted to or reclassified
as cash, securities of another corporation or other property (in
which case the <B>&#147;Effective Date&#148; </B>of such
Corporate Transaction shall be the closing date of such
reorganization, merger or consolidation);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.3 </FONT></B><FONT size="2">a sale of assets
of the Company or its Subsidiaries having a fair market value
equal to more than fifty percent (50%) of the total fair market
value of the Company&#146;s assets to an entity which is not
controlling, controlled by or under common control with the
Company (in which case the <B>&#147;Effective Date&#148; </B>of
such Corporate Transaction shall be the closing date of such
sale);&nbsp;or
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">6.4 </FONT></B><FONT size="2">the acquisition
of a record or beneficial interest in more than thirty percent
(30%) of the then outstanding voting securities of the Company,
either in a single transaction or a series of transactions, by
an entity or &#147;group&#148; within the meaning of
section&nbsp;13(d) of the Exchange Act that is not an affiliate
of the Company (in which case the <B>&#147;Effective Date&#148;
</B>of such Corporate Transaction shall be the closing date of
such acquisition).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">7.&nbsp;&#147;Disability&#148;
</FONT></B><FONT size="2">of a Participant means an illness,
accident, or other disability or incapacity that renders such
Participant unable to discharge such Participant&#146;s duties
as an officer or employee of the Company or a Parent or
Subsidiary thereof for a continuous period of sixty
(60)&nbsp;days, or for ninety (90)&nbsp;days during any period
of twelve (12)&nbsp;months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">8.&nbsp;&#147;Effective Date&#148;
</FONT></B><FONT size="2">of a Corporate Transaction is as
defined under Section&nbsp;6.1, Section&nbsp;6.2,
Section&nbsp;6.3, or Section&nbsp;6.4 of this Glossary, as
applicable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">9.&nbsp;&#147;Exchange Act&#148;
</FONT></B><FONT size="2">means the federal Securities Exchange
Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">10.&nbsp;&#147;Exercise Price&#148;
</FONT></B><FONT size="2">for a share of Stock subject to a
Stock Option shall be as determined under Section of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">11.&nbsp;&#147;Family&#148;
</FONT></B><FONT size="2">of an individual includes such
individual&#146;s current spouse and lineal descendants
(including those by adoption).
</FONT>

<P align="center"><FONT size="2">(1)
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">12.&nbsp;&#147;Fair Market Value&#148;
</FONT></B><FONT size="2">of a share of Stock as of any date
shall be determined for purposes of the Plan in accordance with
the following provisions:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">12.1 </FONT></B><FONT size="2">If the Stock is
then listed on a stock exchange, the Fair Market Value shall be
determined by reference to the closing price on the principal
stock exchange on which the Stock is then listed, as reported by
<I>The Wall Street Journal,</I> for the day on which the
determination is made (or, if such day is not a business day,
the immediately preceding business day).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">12.2 </FONT></B><FONT size="2">If the Stock is
then not listed on a stock exchange, the Fair Market Value shall
be determined by reference to the closing price (if a National
Market issue) or the mean between the bid and asked price (if
other over-the-counter issue) of a share as supplied by the
National Association of Securities Dealers through NASDAQ (or
its successor in function), in each case as reported by <I>The
Wall Street Journal,</I> for the day on which the determination
is made (or, if such day is not a business day, the immediately
preceding business day).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">12.3 </FONT></B><FONT size="2">If for any
reason the price referred to in Section or Section of this
Glossary is not available, the Fair Market Value shall be
determined in such other manner as the Board (or the Committee,
if authorized) may deem appropriate to reflect the then Fair
Market Value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">13.&nbsp;&#147;Incentive Stock Option&#148;
</FONT></B><FONT size="2">means a Stock Option that qualifies as
&#147;incentive stock option&#148; under section&nbsp;422 of the
Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">14.&nbsp;&#147;ISO&#148;
</FONT></B><FONT size="2">means an Incentive Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">15.&nbsp;&#147;Non-Qualified Stock
Option&#148; </FONT></B><FONT size="2">means a Stock Option
other than an Incentive Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">16.&nbsp;&#147;NQSO&#148;
</FONT></B><FONT size="2">means a Non-Qualified Stock Option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">17.&nbsp;&#147;Parent&#148;
</FONT></B><FONT size="2">means any current or future
&#147;parent corporation&#148; of the Company as defined in
section&nbsp;424(e) of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">18.&nbsp;&#147;Participant&#148;
</FONT></B><FONT size="2">means a person to whom a Stock Option
is granted under Section of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">19.&nbsp;&#147;Plan&#148;
</FONT></B><FONT size="2">means the Save The World Air Inc. 2004
Stock Option Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">20.&nbsp;&#147;Stock&#148;
</FONT></B><FONT size="2">means the common stock of the Company,
par
value &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">21.&nbsp;&#147;Stock Option&#148;
</FONT></B><FONT size="2">means a right to purchase shares of
Stock described in Section of the Plan and shall refer to, as
the context may require, an Incentive Stock Option, a
Non-Qualified Stock Option, or both.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">22.&nbsp;&#147;Stock Option Agreement&#148;
</FONT></B><FONT size="2">means a written agreement duly
executed by the Company and a Participant under which a Stock
Option is granted to such Participant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">23.&nbsp;&#147;Subsidiary&#148;
</FONT></B><FONT size="2">means any current or future
&#147;subsidiary corporation&#148; of the Company as defined in
section&nbsp;424(f) of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">24.&nbsp;&#147;Ten Percent Shareholder&#148;
</FONT></B><FONT size="2">means any person that owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of a
Parent or Subsidiary thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">25.&nbsp;&#147;Value of Consideration&#148;
</FONT></B><FONT size="2">attributable to a share of Stock in
connection with a Corporate Transaction shall be determined as
follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">25.1 </FONT></B><FONT size="2">if such
consideration consists of cash, by reference to the Fair Market
Value of a share of Stock as of the Effective Date of such
Corporate Transaction;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">25.2 </FONT></B><FONT size="2">if such
consideration consists of traded securities, by reference to the
closing price on the principal stock exchange on which such
shares are then listed, or if such shares are not then listed on
a stock exchange, by reference to the closing price (if a
National Market issue) or the mean between the bid and asked
price (if other over-the-counter issue) of a share as supplied
by the National Association of Securities Dealers through NASDAQ
(or its successor in function), in each case as reported by
<I>The Wall Street</I>
</FONT>

<P align="center"><FONT size="2">(2)
</FONT>

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<DIV align="left">
<I><FONT size="2">Journal,</FONT></I><FONT size="2"> as of the
Effective Date of such Corporate Transaction (or, if such day is
not a business day, the immediately preceding business
day);&nbsp;or
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">25.3 </FONT></B><FONT size="2">if for any
reason no such price is available, in such other manner as the
Board (or the Committee, if authorized) may deem appropriate to
reflect the then fair market value thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">26.&nbsp;&#147;Will&#148;
</FONT></B><FONT size="2">means any instrument (whether or not
styled or titled as a will, and including without limitation any
trust instrument) governing or affecting the transfer of any of
the SARs of a person upon or as a result of such person&#146;s
death.
</FONT>

<P align="center"><FONT size="2">(3)
</FONT>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.</B>



<P align="center" style="font-size: 10pt"><B>2004 ANNUAL MEETING OF STOCKHOLDERS<BR>
May&nbsp;24, 2004</B>


<P align="left" style="font-size: 10pt">This proxy is solicited by the Board of Directors for use at the 2004 Annual
Meeting of Stockholders of Save the World Air, Inc., (the &#147;Company&#148;) to be held
at the Hilton Hotel, 555 Universal Hollywood Drive, Universal City, California,
at 10:00&nbsp;A.M. on May&nbsp;24, 2004.


<P align="left" style="font-size: 10pt">By signing the proxy, you revoke all prior proxies, acknowledge receipt of the
Notice of 2004 Annual Meeting of Stockholders and the Proxy Statement, and
appoint Edward L. Masry, Eugene E. Eichler and Bruce H. McKinnon, and each of
them, with full power of substitution, to vote all your shares of common stock
of Save the World Air, Inc. which you are entitled to vote, on the matters
shown on the reverse side and any other matters which may come before the
Annual Meeting and all adjournments and postponements thereof.


<P align="left" style="font-size: 10pt">Whether or not a choice is specified, this proxy, when properly executed, will
be voted in the discretion of the proxy holders upon such other business as may
properly come before the Annual Meeting or any adjournment or postponement
thereof.


<P align="left" style="font-size: 10pt">The shares of stock you hold in your account will be voted as you specify on
the reverse side.


<P align="left" style="font-size: 10pt"><B>THE COMPANY&#146;S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
DIRECTORS LISTED HEREON AND VOTES FOR EACH OF THE LISTED PROPOSALS. IF NO
CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS
LISTED HEREON AND FOR EACH OF PROPOSALS 2 AND 3.</B>



<P align="center" style="font-size: 10pt"><B>SEE REVERSE FOR VOTING INSTRUCTIONS.</B>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center" style="font-size: 10pt"><FONT face="Webdings">6</FONT> DETACH PROXY CARD HERE <FONT face="Webdings">6</FONT></DIV>


<DIV align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%"></DIV>



<P align="center" style="font-size: 10pt"><B>Please Detach Here</B><BR>
<FONT face="Webdings">6</FONT> <B>You Must Detach This Portion of the Proxy Card </B><FONT face="Webdings">6</FONT><BR>
<B>Before Returning it in the Enclosed Envelope</B>



<P><DIV style="position: relative; float: left; margin-right: 1%; width: 53%">
<P align="left" style="font-size: 10pt"><B>Please mark, sign and date your proxy card and return it today in the
postage-paid envelope provided to: Nevada Agency and Trust, 50 West
Liberty Street, Suite&nbsp;880, Reno, Nevada 89501, Attention: Proxy
Department.</B>


<P align="left" style="font-size: 10pt"><B>1. The Board of Directors recommends a vote FOR Items 1, 2 and 3.</B><br>
ELECTION OF DIRECTORS


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vote <B>FOR</B> all nominees listed
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vote <B>WITHHELD</B> from all nominees</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">01 Edward L. Masry
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02 Eugene E. Eichler
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">03 Bruce H. McKinnon
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04 Robert F. Sylk</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">05 John Brown
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">06 John F. Price
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">07 Joseph Helleis</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>(to withhold authority to vote for any nominee, strike a line through the
nominee&#146;s name above)</B>



<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>RATIFICATION OF APPOINTMENT OF
WEINBERG &#038; CO., P.A. as independent
auditors of Save the World Air, Inc.
for the fiscal year ending December&nbsp;31,
2004</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>FOR</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>AGAINST</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>ABSTAIN</B></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 45%">

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>APPROVAL of the 2004 Stock Option Plan</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>FOR</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>AGAINST</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>ABSTAIN</B></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED AS DIRECTED OR, IF
NO DIRECTION IS GIVEN, WILL BE
VOTED FOR THE ELECTION OF EACH OF
THE DIRECTORS LISTED HEREON, IN
FAVOR OF PROPOSALS 2 AND 3, AND IN
THE DISCRETION OF THE PROXY
HOLDERS ON ALL OTHER MATTERS
PROPERLY BROUGHT BEFORE THE
MEETING.</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR align="center" size="1" noshade width="100%"></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top">Signature</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><HR align="center" size="1" noshade width="100%"></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top">Signature (if joint or common ownership)</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Please sign exactly as your name(s)
appears on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
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    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">For address change: <B>Mark Box</B> and indicate changes below:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>


<!-- End Table Body -->
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