Unassociated Document


    Exhibit
      4.1

     

    

      AMENDMENT
        NO. 1 TO SECURITIES
        PURCHASE AGREEMENTS AND WARRANTS 

      


       

      This
        AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT AND WARRANTS (this “Amendment”)
        is made and entered into as of March 12, 2007, by and among Sulphco, Inc.,
        a
        Nevada corporation (the “Company”), and the purchasers identified on the
        signature pages hereto (each, a “Purchaser” and, collectively, the
“Purchasers”).

       

      RECITALS

       

      
        	 	
                1.

              	
                The
                  Company and the Purchasers are parties to (i) a Securities Purchase
                  Agreement, dated as of June 1, 2004 (the “June 1st
                  Purchase Agreement”) pursuant to which the Company issued and sold to the
                  Purchasers shares of common stock, par value $0.001 (the “Common Stock”)
                  and certain warrants (the “June 1st
                  Warrants”), (ii) a Securities Purchase Agreement, dated as of June 14,
                  2004 (the “June 14th
                  Purchase Agreement”) pursuant to which the Company issued and sold to the
                  Purchasers shares of Common Stock and certain warrants (the “June 14th
                  Warrants”), and (iii) a Securities Purchase Agreement, dated as of March
                  29, 2006 (the “2006 Purchase Agreement”, and together with the June
                  1st
                  Purchase Agreement and the June 14th
                  Purchase Agreement, the “Purchase Agreements”) pursuant to which the
                  Company issued and sold to the Purchasers shares of Common Stock
                  and
                  certain warrants (the “2006 Warrants”, and together with the June
                  1st
                  Warrants and June 14th
                  Warrants, the “Warrants”). Capitalized terms used and not defined in this
                  Amendment shall have the respective meanings set forth in the Purchase
                  Agreements and Warrants.

              


      

       

      
        	 	
                2.

              	
                The
                  Company and the Purchasers now wish to further modify certain terms
                  of the
                  Warrants. 

              


      

       

      NOW,
        THEREFORE, in consideration of the foregoing Recitals and other good and
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the Company and each Purchaser, severally and not jointly,
        agree
        as follows: 

       

      1.  Exercise
        of Warrants.
        Subject
        to the terms hereof, each Purchaser agrees to exercise the June 1st
        Warrants, June 14th
        Warrants
        and the 2006 Warrants as set forth herein. 

       

      
        	 	
                1.1

              	
                The
                  Exercise Price on the 2006 Warrants shall be reduced from $6.805
                  to $2.68
                  (the “Market Price”).

              


      

       

      
        	 	
                1.2

              	
                The
                  Company and each Purchaser agree that Section 4(a) of the 2006
                  Warrant
                  shall be deleted and replaced in its entirety as
                  follows:

              


      

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      “(a)
         This
        Warrant shall be exercisable by the registered Holder at any time and from
        time
        to time on or after the date hereof to and including the Expiration Date.
        At
        6:30 P.M., New York City time on the Expiration Date, the portion of this
        Warrant not exercised prior thereto shall be and become void and of no value;
        provided that, if the average of the Closing Prices for the five Trading
        Days
        immediately prior to (but not including) the Expiration Date exceeds the
        Exercise Price on the Expiration Date, then this Warrant shall be deemed
        to have
        been exercised in full (to the extent not previously exercised) on a “cashless
        exercise” basis at 6:30 P.M. New York City time on the Expiration Date if a
“cashless exercise” may occur at such time pursuant to Section 10 below.
        Notwithstanding anything to the contrary herein, the Expiration Date shall
        be
        extended for each day following the Effective Date that the Registration
        Statement is not effective.”

       

      
        	 	
                1.3

              	
                Subject
                  to the terms hereof, each Purchaser agrees to exercise (i) 100%
                  of the
                  June 1st
                  Warrants and June 14th
                  Warrants issued to such Purchaser and (ii) 50% of the 2006 Warrants
                  issued
                  to such Purchaser, in each case as set forth on Schedule
                  A
                  hereto on the Business Day following the date of this Agreement
                  (“Closing
                  Date”). In consideration for such exercise, the Company shall issue
                  to
                  each Purchaser a warrant in the form of Exhibit
                  A
                  attached hereto (the “Additional Warrants”), registered in the name of
                  such Purchaser, pursuant to which such Purchaser shall have the
                  right to
                  acquire the number of shares of Common Stock indicated opposite
                  such
                  Purchaser’s name on Schedule
                  A
                  hereto under the heading “Additional Warrant Shares” at an Exercise Price
                  equal to the Market Price per
                  share.

              


      

       

      
        	 	
                1.4

              	
                Each
                  Purchaser shall have the option within 90 calendar days following
                  the date
                  the Additional Registration Statement is declared effective by
                  the
                  Commission to exercise all or any portion of the remaining 2006
                  Warrants
                  and receive an additional warrant, registered in the name of such
                  Purchaser, pursuant to which such Purchaser shall have the right
                  to
                  acquire the number of shares of Common Stock that it exercises
                  pursuant to
                  this Section 1.3. Such additional warrant shall be exercisable
                  at the
                  Market Price and be in the same form as the Additional Warrant.
                  For the
                  purposes of this Amendment, the additional warrant issued under
                  this
                  Section 1.4 shall be deemed an “Additional Warrant” and the shares
                  issuable upon exercise of the additional warrant shall be included
                  in the
                  Additional Registration Statement filed pursuant to Section 3 below.
                  

              


      

       

      2.  Closing.
        Subject
        to the terms hereof, each Purchaser and the Company agrees that the closing
        of
        the issuance of the Additional Warrants (the “Closing”) shall occur on the
        Closing Date. 

       

      
        	 	
                2.1.

              	
                On
                  the Closing Date, the Company shall (i) issue to each Purchaser
                  a warrant
                  in the form of Exhibit
                  A
                  hereto, registered in the name of such Purchaser pursuant to which
                  such
                  Purchaser shall have the right to acquire the number of shares
                  of Common
                  Stock indicated opposite such Purchaser’s name on
                  Schedule A
                  hereto under the heading “Additional Warrant Shares”, and (ii) issue to
                  each Purchaser a certificate representing the number of Warrant
                  Shares
                  exercised under the Warrants.

              


      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      
        	 	
                2.2.

              	
                On
                  the Closing Date, each Purchaser shall deliver to the Company the
                  Exercise
                  Notice required under the Warrants and the Exercise Price in immediately
                  available funds.

              


      

       

      3.  Registration.
        

       

      
        	 	
                3.1

              	
                The
                  Company will use commercially reasonable efforts to prepare and
                  file a
                  registration statement (the “Additional Registration Statement”) to cover
                  all shares of Common Stock issuable under the Additional Warrants
                  (the
                  “Additional Registrable Securities”) as soon as possible, but in no event
                  later than 90 days after the Closing Date (the “Filing Date”). The Company
                  will use its commercially reasonable efforts to cause the Additional
                  Registration Statement to be declared effective as soon as
                  possible.

              


      

       

      
        	 	
                3.2

              	
                The
                  Company shall use commercially reasonable efforts to prepare and
                  file a
                  post-effective amendment to the registration statement (the “Registration
                  Statement”) covering the June 1st
                  Warrants and the June 14th
                  Warrants as soon as possible, but in no event later than April
                  6, 2007
                  (the “Post Effective Amendment Filing Date”). The Company will use its
                  commercially reasonable efforts to cause such Registration Statement
                  to be
                  declared effective as soon as
                  possible.

              


      

       

      
        	 	
                3.3

              	
                The
                  Company hereby agrees to amend and restate the Company’s Form 10-Q for the
                  periods ending March 31, 2006, June 30, 2006 and September 30,
                  2006 within
                  15 days of the Closing Date (the “Restatement Filing
                  Date”).

              


      

       

      
        	 	
                3.4

              	
                In
                  the event the Company does not file the Additional Registration
                  Statement
                  by the Filing Date or the post effective amendment to the Registration
                  Statement by the Post Effective Amendment Filing Date (each, an “Event”),
                  each Purchaser shall be entitled to receive on the date of such
                  Event (the
                  “Event Date”) an amount in cash, as partial liquidated damages and not as
                  a penalty, equal to 1% of the aggregate Exercise Price paid by
                  such
                  Purchaser pursuant to Section 2.2 of this Amendment; and on each
                  monthly
                  anniversary of the Event Date thereof (if the applicable Event
                  has not
                  been cured), the Company shall pay to each Purchaser an amount
                  in cash, as
                  partial liquidated damages and not as a penalty, equal to 1% of
                  the
                  aggregate purchase price paid by such Purchaser pursuant to the
                  Section
                  2.2 of this Amendment (the “Liquidated Damages”). The Liquidated Damages
                  shall not exceed 12% of the aggregate Exercise Price paid by each
                  respective Purchaser pursuant to Section 2.2 of this Amendment.
                  

              


      

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      4.  Continued
        Validity of Transaction Documents under the Purchase Agreement; Waiver of
        Prior
        Defaults.
        The
        parties hereto agree that the Purchase Agreements and the other transaction
        documents (the “Transaction Documents”) entered into in connection therewith (as
        amended by this Amendment), remain in full force and effect, modified to
        the
        extent and only to the extent necessary to give effect to this Amendment
        and the
        transactions herein contemplated. 

       

      5. Representations
        and Warranties.

       

      
        	
              	5.1.	
                The
                  Company hereby represents and warrants to the Purchasers that each
                  of the
                  representations and warranties set forth in Section
                  3.1
                  of
                  the June 14th
                  Purchase Agreement are true and correct as of the date hereof with
                  the
                  exception of Sections 3.1(g), 3.1(h), 3.1(i), 3.1 (s), 3.1(w),
                  3.1(x),
                  3.1(y), and 3.1(z) for which the Company makes no representations
                  and
                  warranties. Schedule
                  B,
                  attached hereto, describes the status of current litigation of
                  Mark
                  Neuhas v. Sulphco, Inc. and Rudolph W. Gunnerman.

              


      

       

      
        	
              	5.2.	
                Each
                  Purchaser hereby, as to itself only and for no other Purchaser,
                  represents
                  and warrants to the Company that each of the representations and
                  warrants
                  set forth in Section
                  3.2
                  of
                  the June 14th
                  Purchase Agreement are true and correct as of the date
                  hereof.

              


      

       

      6. Miscellaneous.

       

      
        	
              	6.1.	
                Fees
                  and Expenses.
                  The Company has agreed to reimburse Iroquois Master Fund, Ltd.
                  (“Iroquois”) $20,000 for its legal fees and expenses in connection with
                  this Amendment. Accordingly, the amount Iroquois must pay to the
                  Company
                  upon exercise of the Warrants under Section 1 shall be reduced
                  by $20,000.
                  Except for the foregoing, each party hereto will bear the fees
                  and
                  expenses of its own counsel and advisors in connection with the
                  negotiation and entering into of this Amendment. The Company shall
                  pay all
                  transfer agent fees, stamp taxes and other taxes and duties levied
                  in
                  connection with the issuance of any
                  Securities.

              


      

       

      
        	
              	6.2.	
                Entire
                  Agreement.
                  This Amendment and the Transaction Documents, together with the
                  exhibits
                  and schedules thereto, contain the entire understanding of the
                  parties
                  with respect to the subject matter hereof and supersede all prior
                  agreements and understandings, oral or written, with respect to
                  such
                  matters, which the parties acknowledge have been merged into such
                  documents, exhibits and schedules.

              


      

       

      
        	
              	6.3.	
                Equal
                  Treatment of Purchasers.
                  No consideration shall be offered or paid to any person to amend
                  or
                  consent to a waiver or modification of any provision of any of
                  the
                  Transaction Documents unless the same consideration is also offered
                  to all
                  of the parties to the Transaction
                  Documents.

              


      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      
        	
              	6.4.	
                Public
                  Announcement.
                  On or before March 14, 2007, the Company shall file a Current Report
                  on
                  Form 8-K with the Commission (the “8-K
                  Filing”)
                  describing the terms of the transactions contemplated by the Transaction
                  Documents and including as exhibits to such Current Report on Form
                  8-K
                  this Amendment and Warrants, in the form required by the Exchange
                  Act.

              


      

       

      
        	
              	6.5.	
                Notices.
                  Any and all notices or other communications or deliveries required
                  or
                  permitted to be provided hereunder shall be in writing and shall
                  be deemed
                  given and effective as specified in the Purchase Agreement. The
                  address
                  for such notices and communications shall be as set forth on the
                  signature
                  pages attached to the Purchase
                  Agreement.

              


      

       

      
        	
              	6.6.	
                Amendments;
                  Waivers.
                  No provision of this Amendment may be waived or amended except
                  in a
                  written instrument signed, in the case of an amendment, by the
                  Company and
                  each Purchaser or, in the case of a waiver, by the party against
                  whom
                  enforcement of any such waiver is sought. No waiver of any default
                  with
                  respect to any provision, condition or requirement of this Amendment
                  shall
                  be deemed to be a continuing waiver in the future or a waiver of
                  any
                  subsequent default or a waiver of any other provision, condition
                  or
                  requirement hereof, nor shall any delay or omission of either party
                  to
                  exercise any right hereunder in any manner impair the exercise
                  of any such
                  right.

              


      

       

      
        	
              	6.7.	
                Amendment
                  Controls.
                  If any topic is addressed both in the Purchase Agreement (or any
                  document
                  related thereto) and in this Amendment, this Amendment shall
                  control.

              


      

       

      
        	
              	6.8.	
                Construction.
                  The headings herein are for convenience only, do not constitute
                  a part of
                  this Amendment and shall not be deemed to limit or affect any of
                  the
                  provisions hereof. The language used in this Amendment will be
                  deemed to
                  be the language chosen by the parties to express their mutual intent,
                  and
                  no rules of strict construction will be applied against any
                  party.

              


      

       

      
        	
              	6.9.	
                Governing
                  Law.
                  All questions concerning the construction, validity, enforcement
                  and
                  interpretation of this Amendment shall be governed by and construed
                  and
                  enforced in accordance with the internal laws of the State of New
                  York,
                  without regard to the principles of conflicts of law thereof. The
                  parties
                  agree that Section
                  7.9
                  of
                  the June 14th
                  Purchase Agreement shall apply to this Amendment as if set forth
                  in its
                  entirety herein.

              


      

       

      
        	
              	6.10.	
                Survival.
                  The representations and warranties contained herein shall survive
                  the
                  delivery, exercise and/or conversion of the securities, as applicable
                  for
                  the applicable statute of
                  limitations.

              


      

       

      
        	
              	6.11.	
                Execution.
                  This Amendment may be executed in two or more counterparts, all
                  of which
                  when taken together shall be considered one and the same document
                  and
                  shall become effective when counterparts have been signed by each
                  party
                  and delivered to the other party, it being understood that both
                  parties
                  need not sign the same counterpart.


              


      

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      
        	
              	6.12.	
                Severability.
                  If any provision of this Amendment is held to be invalid or unenforceable
                  in any respect, the validity and enforceability of the remaining
                  terms and
                  provisions of this Amendment shall not in any way be affected or
                  impaired
                  thereby and the parties will attempt to agree upon a valid and
                  enforceable
                  provision that is a reasonable substitute therefor, and upon so
                  agreeing,
                  shall incorporate such substitute provision in this
                  Amendment.

              


      

       

      
        	
              	6.13.	
                Independent
                  Nature of Purchasers’ Obligations and Rights.
                  The obligations of each Purchaser hereunder are several and not
                  joint with
                  the obligations of any other Purchaser, and no Purchaser shall
                  be
                  responsible in any way for the performance of the obligations of
                  any other
                  Purchaser. Nothing contained herein, and no action taken by any
                  Purchaser
                  pursuant hereto, shall be deemed to constitute the Purchasers as
                  a
                  partnership, an association, a joint venture or any other kind
                  of entity,
                  or create a presumption that the Purchasers are in any way acting
                  in
                  concert or as a group with respect to such obligations or the transactions
                  contemplated hereby. Each Purchaser shall be entitled to independently
                  protect and enforce its rights, including, without limitation,
                  the rights
                  arising out of this Amendment and it shall not be necessary for
                  any other
                  Purchaser to be joined as an additional party in any proceeding
                  for such
                  purpose. The Purchasers have not relied upon the same legal counsel
                  in
                  their review and negotiation of this Amendment. The Company has
                  elected to
                  provide all Purchasers with the same terms and form of Amendment for the
                  convenience of the Company and not because it was required or requested
                  to
                  do so by the Purchasers. Each Purchaser represents that it has
                  been
                  represented by its own separate legal counsel in its review and
                  negotiations of this Amendment and each party represents and confirms
                  that
                  Malhotra & Associates LLP represents only Iroquois in connection with
                  this Amendment.

              


      

       

      (Signature
        Pages Follow)

       


      
        
           

           

        

        
          6

          
            

          

        

        
           

        

      


      IN
        WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
        executed by their respective authorized signatories as of the date first
        indicated above.

       

      
        	 	
                SULPHCO,
                  INC.

                 

              
	 	
                By:
                  /s/
                  Loren Kalmen 
                  
                  

                

                Name:
                  Loren Kalmen

                Title:
                  CFO

              


      

      


      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
        PAGE FOR PURCHASERS FOLLOWS]

       


      
        
           

           

        

        
          7

          
            

          

        

        
           

        

      


      


      IN
        WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed
        by their respective authorized signatories as of the date first indicated
        above.

       

      Name
        of
        Investing Entity:
        ________________________________________________________

      Signature
        of Authorized Signatory of Investing Entity:
        __________________________________

      Name
        of
        Authorized Signatory:
        ____________________________________________________

      Title
        of
        Authorized Signatory:
        _____________________________________________________

      Email
        Address of Authorized
        Entity:________________________________________________

      



      
        
           

           

        

        
          8

          
            

          

        

        
           

        

      


      Schedule
        A

       

      
        	 	
                June
                  1st

              	
                June
                  14th

              	
                2006

              	
                Additional
                  

              	
                Aggregate
                  

              
	
                Purchaser

              	
                Warrant
                  Shares

              	
                Warrant
                  Shares

              	
                Warrants

              	
                Warrant
                  Shares

              	
                Exercise
                  Amount

              
	 	 	 	 	 	 
	
                Nancy
                  Abbe Trust

              	
                58,335

              	
                36,960

              	 	
                95,295

              	
                123,376.88

              
	 	 	 	 	 	
                 

              
	
                Merav
                  Abbe Irrevocable Trust

              	
                116,667

              	
                73,920

              	 	
                190,587

              	
                246,750.38

              
	 	 	 	 	 	
                 

              
	
                Coleman
                  Abbe

              	
                29,168

              	
                18,480

              	 	
                47,648

              	
                61,689.00

              
	 	 	 	 	 	
                 

              
	
                Bruce
                  Bernstein

              	
                43,750

              	
                27,720

              	 	
                71,470

              	
                92,531.25

              
	 	 	 	 	 	
                 

              
	
                Romana
                  Ltd

              	
                116,667

              	
                73,920

              	 	
                190,587

              	
                246,750.38

              
	 	 	 	 	 	
                 

              
	
                Ellis
                  International Ltd Inc.

              	
                262,500

              	
                170,520

              	
                150,000

              	
                583,020

              	
                963,750.00

              
	 	 	 	 	 	
                 

              
	
                Scot
                  J. Cohen

              	
                350,000

              	
                332,640

              	 	
                682,640

              	
                913,500.00

              
	 	 	 	 	 	
                 

              
	
                Cranshire
                  Capital LP

              	
                175,000

              	 	 	
                175,000

              	
                196,875.00

              
	 	 	 	 	 	
                 

              
	
                Michael
                  Gantcher

              	 	
                21,000

              	 	
                21,000

              	
                32,812.50

              
	 	 	 	 	 	
                 

              
	
                Joshua
                  Silverman

              	 	
                21,000

              	 	
                21,000

              	
                32,812.50

              
	 	 	 	 	 	
                 

              
	
                Brian
                  Daly

              	
                14,581

              	
                9,240

              	 	
                23,821

              	
                30,841.13

              
	 	 	 	 	 	
                 

              
	
                Northfield
                  Advisors Inc.

              	
                0

              	
                0

              	
                250,000

              	
                250,000

              	
                670,000.00

              
	 	 	 	 	 	
                 

              
	
                Iroquois
                  Master Fund, Ltd.

              	
                0

              	
                0

              	
                350,000

              	
                350,000

              	
                938,000.00

              
	 	 	 	 	 	
                 

              
	
                Eli
                  Levitin

              	
                0

              	
                0

              	
                10,000

              	
                10,000

              	
                26,800.00

              
	 	 	 	 	 	
                 

              
	
                Morris
                  Wolfson

              	
                0

              	
                0

              	
                25,000

              	
                25,000

              	
                67,000.00

              
	 	 	 	 	 	
                 

              
	
                Aaron
                  Wolfson

              	
                0

              	
                0

              	
                50,000

              	
                50,000

              	
                134,000.00

              
	 	 	 	 	 	
                 

              
	
                Abraham
                  Wolfson

              	
                0

              	
                0

              	
                15,000

              	
                15,000

              	
                40,200.00

              
	 	 	 	 	 	
                 

              
	
                South
                  Ferry #2

              	
                0

              	
                0

              	
                100,000

              	
                100,000

              	
                268,000.00

              
	 	 	 	 	 	
                 

              
	
                Ari
                  Dani Corp.

              	
                0

              	
                0

              	
                50,000

              	
                50,000

              	
                134,000.00

              
	 	 	 	 	 	
                 

              
	
                Blizzard
                  Capital Ltd.

              	
                0

              	
                0

              	
                1,000,000

              	
                1,000,000

              	
                2,680,000.00

              
	 	
                 

              	
                 

              	
                 

              	
                 

              	 
	 	 	 	 	 	 
	
                Total

              	
                1,166,668

              	
                785,400

              	
                2,000,000

              	
                3,952,068

              	
                7,899,689.00

              


      

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
 

      Schedule
        B

      


       

      
        	
                1.

              	
                On
                  January 5, 2004, a lawsuit was filed by the Company in the Second
                  Judicial
                  District Court of the State of Nevada, in and for the County of
                  Washoe,
                  Case No. CV04 00013, Dept. No. 9, against Alexander H. Walker,
                  Jr., the
                  Company’s former general counsel and director, and Nevada Agency &
                  Trust Company, the Company’s former transfer agent. The lawsuit alleges
                  breaches of fiduciary duty, contract violations, conversion, and
                  other
                  related claims, in connection with the sale of shares of the Company’s
                  common stock to Coldwater Capital, LLC and Mark Neuhaus in 2001.
                  The
                  Company claims it did not receive approximately $737,000 of the
                  purchase
                  price for the shares sold. The Defendants have answered the Complaint,
                  generally denying the allegations and raising affirmative defenses,
                  and
                  cross-complaining against Coldwater Capital, LLC and Mark Neuhaus
                  for the
                  payment of the funds owed to the Company. The Company subsequently
                  obtained a pre-judgment writ of attachment requiring Mr. Walker
                  to deposit
                  the proceeds of the sale of the Company stock he owned with the
                  court,
                  pending trial. Discovery has been completed and trial in this matter
                  is
                  presently scheduled for April 23,
                  2007.

              


      

       

      
        	
                2.

              	
                In
                  Clean
                  Fuels Technology v. Rudolf W. Gunnerman, Peter Gunnerman, RWG,
                  Inc. and
                  SulphCo, Inc.,
                  the Company, Rudolf Gunnerman, Peter Gunnerman, and RWG, Inc.,
                  were named
                  as defendants in a legal action commenced in Reno, Nevada. The
                  Plaintiff
                  alleged claims relating to “sulfur removal technology” originally
                  developed by Professor Teh Fu Yen and Dr. Gunnerman with financial
                  assistance provided by Dr. Gunnerman, and subsequently assigned
                  to the
                  Company. On December 18, 2006, following a trial, the jury found
                  in the
                  Company’s favor on both claims asserted against the Company by the
                  Plaintiff. The Plaintiffs have since requested equitable relief,
                  including
                  the imposition of a constructive trust, from the Judge who presided
                  over
                  the trial. The Company views the request for any equitable relief
                  as
                  against the Company as without merit. Oral argument on the request
                  for
                  equitable relief took place on February 22, 2007, and the Company
                  is
                  awaiting a decision. 

              


      

       

      
        	
                3.

              	
                In
                  Talisman
                  Capital Talon Fund, Ltd. v. Rudolf Gunnerman and SulphCo,
                  Inc.,
                  the Company and Rudolf Gunnerman were named as Defendants in a
                  legal
                  action commenced in federal court in Reno, Nevada. The Plaintiff
                  alleged
                  claims relating to the Company’s rights to develop its “sulfur removal
                  technology. The Company regards these claims as without merit.
                  Discovery
                  in this case formally concluded on May 24, 2006. Motions to compel
                  additional discovery and summary judgment motions by both parties
                  are
                  still pending, and no trial date has yet been set.
                  

              


      

       

      
        	
                4.

              	
                In
                  In
                  The Matter of the Arbitration between Stan L. McLelland v. SulphCo,
                  Inc.,
                  Mr. McLelland, who was the Company's president from August 13,
                  2001, until
                  he resigned on September 12, 2001, is seeking to exercise two million
                  (2,000,000) shares of the Company stock options at 50 cents per
                  share. It
                  is the Company’s position that those options had not vested prior to Mr.
                  McLelland's resignation. Mr. McLelland also seeks salary for the
                  six
                  months following his resignation and $20,000 of alleged unpaid
                  commuting
                  expenses, as well as attorneys' fees and costs. Discovery is closed,
                  and
                  the arbitrator recently denied the parties’ cross-motions for summary
                  judgment on the options issue. The arbitration hearing has been
                  set for
                  April 19 and 20, 2007 in Reno,
                  Nevada.

              


      

       

      
        
           

        

        
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                5.

              	
                On
                  October 20, 2006, Mark Neuhaus filed a lawsuit against the Company
                  and
                  Rudolph W. Gunnerman, Mark
                  Neuhaus v. SulphCo, Inc., Rudolph W. Gunnerman,
                  in the Second Judicial District Court, in and for the County of
                  Washoe,
                  Case No. CV06 02502, Dept. No. 1. The lawsuit is based on a purported
                  Non-Qualified Stock Option Agreement and related Consulting Agreement
                  between Mark Neuhaus and the Company dated March of 2002. Mark
                  Neuhaus
                  claims that according to the terms of the Non-Qualified Stock Option
                  Agreement, he was granted an option to purchase three million (3,000,000)
                  shares of the Company’s common stock at the exercise price per share of
                  $0.01. On or about February of 2006, Mark Neuhaus attempted to
                  exercise
                  the option allegedly provided to him under the Non-Qualified Stock
                  Option
                  Agreement. At that time, the Company rejected Mr. Neuhaus’s attempt to
                  exercise the option. Thereafter, Mr. Neuhaus filed this lawsuit
                  seeking to
                  enforce the Non-qualified Stock Option Agreement. In his suit,
                  Mr. Neuhaus
                  includes claims for specific performance, breach of contract, contractual
                  breach of the covenant of good faith and fair dealing, and tortious
                  breach
                  of the covenant of good faith and fair dealing. He requests the
                  Court to
                  compel the Company to issue the shares or alternatively to award
                  him
                  damages equal to the fair market value of the three million (3,000,000)
                  shares of stock when he purported to exercise the options, minus
                  the
                  exercise price. On December 7, 2006, the Company moved to dismiss
                  the
                  lawsuit. On January 4, 2007, the Court issued an Order denying
                  the motion
                  on the ground that there were factual issues to be resolved which
                  prevented dismissal at that time. The Company is now in the process
                  of
                  preparing an Answer to the Complaint. The Company intends to vigorously
                  defend the claims made by Mr. Neuhaus, which it believes are without
                  merit. Trial in this matter is scheduled for September 24,
                  2007.

              


      

       

      
        	
                6.

              	
                On
                  January 17, 2007, Rudolf W. Gunnerman filed a lawsuit against four
                  of the
                  Company’s independent directors, Richard L. Masica, Robert Van Maasdijk,
                  Edward E. Urquhart, and Lawrence G. Schafran. This case is known
                  as
                  Rudolph
                  W. Gunnerman v. Robert Van Maasdijk, Richard L. Masica, Larry G.
                  Schafran,
                  Edward E. Urquhart,
                  and was filed in the Second Judicial District Court of the State
                  of
                  Nevada, in and for the County of Washoe, Case No Case No. CV07
                  00103,
                  Dept. No. B6. Gunnerman’s Complaint seeks declaratory and injunctive
                  relief with respect to the amendments to the Company’s bylaws made by the
                  Company’s Board of Directors on Wednesday, January 17, 2007. Gunnerman
                  alleges that the independent directors’ amendment to the Company’s bylaws
                  which provides that the Board of Directors shall have exclusive
                  authority
                  to amend the bylaws was invalid and the bylaw amendment should
                  be declared
                  invalid. The independent directors have counterclaimed for a declaration
                  that the amendment was valid and in the Company’s best interest. Discovery
                  in this case has not begun and no trial date has been
                  set.

              


      

       

      
        
           

        

        
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                7.

              	
                On
                  January 26, 2007, Thomas Hendrickson filed a shareholder derivative
                  claim
                  against certain current and former officers and directors or the
                  Company
                  in the Second Judicial District Court of the State of Nevada, in
                  and for
                  the County of Washoe. The case is known as Thomas
                  Hendrickson, Derivatively on Behalf of SulphCo, Inc. v. Rudolf
                  W.
                  Gunnerman, Peter W. Gunnerman, Loren J. Kalmen, Richard L. Masica,
                  Robert
                  Henri Charles Van Maasdijk, Hannes Farnleitner, Michael T. Heffner,
                  Edward
                  E. Urquhart, Lawrence G. Schaffran, Alan L. Austin, Jr., Raad Alkadiri
                  and
                  Christoph Henkel,
                  Case No. CV07 00137, Dept. No. B6. The complaint alleges, among
                  other
                  things, that the defendants breached their fiduciary duty to the
                  Company
                  by failing to act in good faith and diligence in the administration
                  of the
                  affairs of the Company and in the use and preservation of its property
                  and
                  assets, including the Company’s credibility and reputation. The Company
                  and the Board intend to file a Motion for Dismissal with the Court,
                  based
                  upon the Plaintiff’s failure to make a demand upon the
                  Board.

              


      

       

      
        	
                8.

              	
                On
                  June 26, 2006, the Company filed an action, SulphCo,
                  Inc. v. Cullen,
                  in the Second Judicial District Court of the State of Nevada, in
                  and for
                  the County of Washoe, Case No. CV06-01490, against Mark Cullen
                  arising out
                  of Mr. Cullen’s alleged breach of a secrecy agreement that he had executed
                  when employed by GRD, Inc., whose claims have accrued to the Company.
                  The
                  lawsuit seeks damages, a constructive trust, and an order requiring
                  Mr.
                  Cullen to assign to the Company certain intellectual property in
                  the form
                  of patent applications (as well as a now-issued patent) that he
                  filed
                  following his departure from the Company. On October 23, 2006,
                  Mr. Cullen
                  moved to dismiss the Company’s complaint; the motion was denied. On
                  February 26, 2007, Mr. Cullen filed an amended answer to the Company’s
                  complaint. That Answer included counterclaims for breach of contract,
                  unfair competition, interference with contractual relations, and
                  interference with prospective economic advantage. The Company views
                  Mr.
                  Cullen’s counterclaims as without merit. Discovery in this case has not
                  yet begun, and no trial date has been set.


              


      

       

      


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