Securities Purchase Agreement


    Exhibit
      4.4

    
       

       

      SECURITIES
        PURCHASE AGREEMENT

       

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        dated as of March 29, 2006, by and between SulphCo, Inc., a Nevada, U.S.A.
        corporation (the “Company”),
        and
        the purchasers identified on the signature pages hereto or a counterpart
        thereof
        (each, a “Purchaser”
and
        collectively, the “Purchasers”).
        

       

      WHEREAS,
        subject to the terms and conditions set forth in this Agreement and pursuant
        to
        Section 4(2) of the U.S. Securities Act of 1933, as amended (the “Securities
        Act”),
        the
        Company desires to issue and sell to each Purchaser, and each Purchaser,
        severally and not jointly, desires to purchase from the Company, certain
        securities of the Company as more fully described in this
        Agreement.

       

      NOW,
        THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
        and for other good and valuable consideration the receipt and adequacy of
        which
        are hereby acknowledged, the Company and each of the Purchasers severally
        (and
        not jointly) agree as follows:

       

      ARTICLE
        I

      DEFINITIONS

       

      1.1
         Definitions.
        In
        addition to the terms defined elsewhere in this Agreement, the following
        terms
        have the meanings indicated:

       

      “Affiliate”
        means
        any Person that, directly or indirectly through one or more intermediaries,
        controls or is controlled by or is under common control with a Person, as
        such
        terms are used in and construed under Rule 144 under the Securities Act.
        With
        respect to a Purchaser, any investment fund or managed account that is managed
        on a discretionary basis by the same investment manager as such Purchaser
        will
        be deemed to be an Affiliate of such Purchaser.

       

      “Business
        Day”
means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        The City of New York are authorized or required by law to remain
        closed.

       

      “Closing”
        means
        the closing of the purchase and sale of the Shares and Warrants pursuant
        to
        Section 2.1.

       

      “Closing
        Date”
        means
        the date of the Closing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Closing
        Price”
        means,
        for any date, the price determined by the first of the following clauses
        that
        applies: (a) if the Common Stock is then listed or quoted on an Eligible
        Market
        or any other national securities exchange, the closing price per share of
        the
        Common Stock for such date (or the nearest preceding date) on the primary
        Eligible Market or exchange on which the Common Stock is then listed or quoted;
        (b) if prices for the Common Stock are then quoted on the OTC Bulletin
        Board, the closing bid price per share of the Common Stock for such date
        (or the
        nearest preceding date) so quoted; (c) if prices for the Common Stock are
        then reported in the “Pink Sheets” published by the National Quotation Bureau
        Incorporated (or a similar organization or agency succeeding to its functions
        of
        reporting prices), the most recent closing bid price per share of the Common
        Stock so reported; or (d) in all other cases, the fair market value of a
        share of Common Stock as determined by an independent appraiser selected
        in good
        faith by Purchasers holding a majority of the Securities.

       

      “Commission”
        means
        the U.S. Securities and Exchange Commission.

       

      “Common
        Stock”
        means
        the common stock of the Company, par value $0.001 per share.

       

      “Effective
        Date”
        means
        the date that the Registration Statement is first declared effective by the
        Commission.

       

      “Eligible
        Market”
        means
        any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ
        National Market, the NASDAQ SmallCap Market or OTC Bulletin Board.

       

      “Exchange
        Act”
        means
        the Securities Exchange Act of 1934, as amended.

       

      “Filing
        Date”
        means
        the 30th
        day
        following the Closing Date.

       

      “Lien”
means
        any lien, charge, claim, security interest, encumbrance, right of first refusal
        or other restriction.

       

      “Losses”
        means
        any and all losses, claims, damages, liabilities, settlement costs and expenses,
        including, without limitation, costs of preparation and reasonable attorneys’
fees.

       

      “Options”
means
        any rights, warrants or options to subscribe for or purchase Common Stock
        or
        Convertible Securities (including all Warrants that can be issued under the
        Transaction Documents).

       

      “Person”
        means
        any individual or corporation, partnership, trust, incorporated or
        unincorporated association, joint venture, limited liability company, joint
        stock company, government (or an agency or subdivision thereof) or any court
        or
        other federal, state, local or other governmental authority or other entity
        of
        any kind.

       

      “Per
        Unit Purchase Price”
means
        $6.805.

       

      “Post-Effective
        Amendment”
means
        a
        post-effective amendment to the Registration Statement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Post-Effective
        Amendment Filing Deadline”
means
        the 10th Trading Day after the Registration Statement ceases to be effective
        pursuant to applicable securities laws due to the passage of time or the
        occurrence of an event requiring the Company to file a Post-Effective
        Amendment.

       

      “Proceeding”
        means an
        action, claim, suit, investigation or proceeding (including, without limitation,
        an investigation or partial proceeding, such as a deposition), whether commenced
        or threatened.

       

      “Prospectus”
        means
        the prospectus included in the Registration Statement (including, without
        limitation, a prospectus that includes any information previously omitted
        from a
        prospectus filed as part of an effective registration statement in reliance
        upon
        Rule 430A promulgated under the Securities Act), as amended or supplemented
        by
        any prospectus supplement, with respect to the terms of the offering of any
        portion of the Registrable Securities covered by the Registration Statement,
        and
        all other amendments and supplements to the Prospectus including post effective
        amendments, and all material incorporated by reference or deemed to be
        incorporated by reference in such Prospectus.

       

      “Purchaser
        Counsel”
        has the
        meaning set forth in Section
        6.2(a).

       

      “Registrable
        Securities”
        means
        any Common Stock (including Underlying Shares) issued or issuable pursuant
        to
        the Transaction Documents, together with any securities issued or issuable
        upon
        any stock split, dividend or other distribution, recapitalization or similar
        event with respect to the foregoing.

       

      “Registration
        Statement”
        means
        each registration statement required to be filed under Article VI, including
        (in
        each case) the Prospectus, amendments and supplements to such registration
        statement or Prospectus, including pre- and post-effective amendments, all
        exhibits thereto, and all material incorporated by reference or deemed to
        be
        incorporated by reference in such registration statement.

       

      “Required
        Effectiveness Date”
        means
        with respect to the initial Registration Statement required to be filed
        hereunder, the 90th
        day
        following the Closing Date.

       

      “Rule
        144,” “Rule
        415,”
        and
“Rule
        424”
        means
        Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission
        pursuant to the Securities Act, as such Rules may be amended from time to
        time,
        or any similar rule or regulation hereafter adopted by the Commission having
        substantially the same effect as such Rule.

       

      “Securities”
        means
        the Shares, the Warrants and the Underlying Shares.

       

      “Shares”
        means an
        aggregate of up to 4,000,000 shares of Common Stock, which are being issued
        and
        sold to the Purchasers at the Closing.

       

      “Subsidiary”
        means
        any Person in which the Company, directly or indirectly, owns capital stock or
        holds an equity or similar interest.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Trading
        Day”
        means
        (a) any day on which the Common Stock is listed or quoted and traded on its
        primary Trading Market, or (b) if the Common Stock is not then listed or
        quoted
        and traded on any Eligible Market, then a day on which trading occurs on
        the OTC
        Bulletin Board (or any successor thereto), or (c) if trading ceases to occur
        on
        the OTC Bulletin Board (or any successor thereto), any Business
        Day.

       

      “Trading
        Market”
        means
        the American Stock Exchange, the OTC Bulletin Board or any other Eligible
        Market, or any national securities exchange, market or trading or quotation
        facility on which the Common Stock is then listed or quoted.

       

      “Transaction
        Documents”
        means
        this Agreement, the Warrants and any other documents or agreements executed
        in
        connection with the transactions contemplated hereunder.

       

      “Underlying
        Shares”
        means
        the shares of Common Stock issuable upon exercise of the Warrants.

       

      “Unit”
means
        one Share and a Warrant to acquire one share of Common Stock.

       

      “Warrants”
means
        the Common Stock purchase warrants issued and sold under this Agreement in
        the
        form of Exhibit
        A.


       

      ARTICLE
        II

      PURCHASE
        AND SALE

       

      2.1
         Subject
        to the terms and conditions set forth in this Agreement, at the Closing the
        Company shall issue and sell to each Purchaser, and each Purchaser shall,
        severally and not jointly, purchase from the Company, the number of Units
        indicated below such Purchaser’s name on the signature page of this Agreement at
        the Per Unit Purchase Price. The Closing shall take place immediately following
        the execution hereof, or at such other time as the parties may agree.


      


      2.2
         Closing
        Deliveries.

       

      (a)
         At
        the
        Closing, the Company shall deliver or cause to be delivered to each Purchaser
        the following:

       

      (i)
         one
        or
        more stock certificates, free and clear of all restrictive and other legends
        (except as expressly provided in Section 4.1(b) hereof), evidencing such
        number
        of Shares equal to the number of Units indicated below such Purchaser's name
        on
        the signature page of this Agreement, registered in the name of such
        Purchaser;

       

      (ii)
         a
        Warrant, registered in the name of such Purchaser, pursuant to which such
        Purchaser shall have the right to acquire such number of Underlying Shares
        equal
        to the number of Units indicated below such Purchaser’s name on the signature
        page of this Agreement; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (iii)
         a
        certificate from a duly authorized officer certifying on behalf of the Company
        that each of the conditions set forth in Section 5.1 has been
        satisfied;

       

      (b)
         At
        the
        Closing, each Purchaser shall deliver or cause to be delivered an amount
        equal
        to the Per Unit Purchase Price multiplied by the number of Units indicated
        below
        such Purchaser’s name on the signature page of this Agreement, in United States
        dollars and in immediately available funds, by wire transfer to an account
        designated in writing to such Purchaser by the Company for such
        purpose.

       

      ARTICLE
        III

      REPRESENTATIONS
        AND WARRANTIES

       

      3.1
         Representations
        and Warranties of the Company.
        The
        Company hereby represents and warrants to each of the Purchasers as
        follows:

       

      (a)
         Organization
        and Qualification.
        The
        Company is an entity duly organized, validly existing and in good standing
        under
        the laws of the jurisdiction of its incorporation, with the requisite power
        and
        authority to own and use its properties and assets and to carry on its business
        as currently conducted. The Company is not in violation of any of the provisions
        of its articles of incorporation, bylaws or other organizational or charter
        documents. The Company is duly qualified to do business and is in good standing
        as a foreign corporation in each jurisdiction in which the nature of the
        business conducted or property owned by it makes such qualification necessary,
        except where the failure to be so qualified or in good standing, as the case
        may
        be, could not, individually or in the aggregate, (i) adversely affect the
        legality, validity or enforceability of any Transaction Document, (ii) have
        or
        result in a material adverse effect on the results of operations, assets,
        prospects, business or condition (financial or otherwise) of the Company,
        or
        (iii) adversely impair the Company's ability to perform fully on a timely
        basis
        its obligations under any of the Transaction Documents (any of (i), (ii)
        or
        (iii), a “Material
        Adverse Effect”).

       

      (b)
         Authorization;
        Enforcement.
        The
        Company has the requisite corporate power and authority to enter into and
        to
        consummate the transactions contemplated by each of the Transaction Documents
        and otherwise to carry out its obligations hereunder and thereunder. The
        execution and delivery of each of the Transaction Documents by the Company
        and
        the consummation by it of the transactions contemplated hereby and thereby
        have
        been duly authorized by all necessary action on the part of the Company and
        no
        further consent or action is required by the Company, its Board of Directors
        or
        its shareholders. Each of the Transaction Documents has been (or upon delivery
        will be) duly executed by the Company and is, or when delivered in accordance
        with the terms hereof, will constitute, the valid and binding obligation
        of the
        Company enforceable against the Company in accordance with its
        terms.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)
         No
        Conflicts.
        The
        execution, delivery and performance of the Transaction Documents by the Company
        and the consummation by the Company of the transactions contemplated hereby
        and
        thereby do not and will not (i) conflict with or violate any provision of
        the
        Company’s articles of incorporation, bylaws or other organizational or charter
        documents, (ii) conflict with, or constitute a default (or an event that
        with
        notice or lapse of time or both would become a default) under, or give to
        others
        any rights of termination, amendment, acceleration or cancellation (with
        or
        without notice, lapse of time or both) of, any agreement, credit facility,
        debt
        or other instrument (evidencing a Company or Subsidiary debt or otherwise)
        or
        other understanding to which the Company is a party or by which any property
        or
        asset of the Company is bound or affected, or (iii) result in a violation
        of any
        law, rule, regulation, order, judgment, injunction, decree or other restriction
        of any court or governmental authority to which the Company is subject
        (including federal and state securities laws and regulations and the rules
        and
        regulations of any self-regulatory organization to which the Company or its
        securities are subject), or by which any property or asset of the Company
        is
        bound or affected.

       

      (d)
         Issuance
        of the Securities.
        The
        Securities (including the Underlying Shares) are duly authorized and, when
        issued and paid for in accordance with the Transaction Documents, will be
        duly
        and validly issued, fully paid and nonassessable, free and clear of all Liens
        and shall not be subject to preemptive rights or similar rights of shareholders.
        The Company has reserved from its duly authorized capital stock the maximum
        number of shares of Common Stock issuable upon exercise of the
        Warrants.

       

      (e)
         Capitalization.
        The
        Company has no outstanding shares of capital stock other than its Common
        Stock.
        All outstanding shares of Common Stock have been duly authorized, validly
        issued, fully paid and nonassessable and have been issued in compliance with
        all
        applicable laws. Except as disclosed in the SEC Reports, there are no
        outstanding options, warrants, script rights to subscribe to, calls or
        commitments of any character whatsoever relating to, or securities, rights
        or
        obligations convertible into or exercisable or exchangeable for, or giving
        any
        Person any right to subscribe for or acquire, any shares of Common Stock,
        or
        contracts, commitments, understandings or arrangements by which the Company
        is
        bound to issue additional shares of Common Stock, or securities or rights
        convertible or exchangeable into shares of Common Stock. The issue and sale
        of
        the Securities (including the Underlying Shares) will not obligate the Company
        to issue shares of Common Stock or other securities to any Person (other
        than
        the Purchasers) and will not result in a right of any holder of Company
        securities to adjust any exercise, conversion, exchange or reset price under
        such securities. 

       

      (f)
         SEC
        Reports; Financial Statements.
        The
        Company has filed all reports required to be filed by it under the Exchange
        Act,
        including pursuant to Section 13(a) or 15(d) thereof, for at least the 12
        months
        preceding the date hereof (or such shorter period as the Company was required
        by
        law to file such material) (the foregoing materials (together with any materials
        filed by the Company under the Exchange Act, whether or not required) being
        collectively referred to herein as the “SEC
        Reports”
        and,
        together with this Agreement and the Schedules to this Agreement, the
“Disclosure
        Materials”)
        on a
        timely basis or has received a valid extension of such time of filing and
        has
        filed any such SEC Reports prior to the expiration of any such extension.
        As of
        their respective dates, the SEC Reports complied in all material respects
        with
        the requirements of the Securities Act and the Exchange Act and the rules
        and
        regulations of the Commission promulgated thereunder, and none of the SEC
        Reports, when filed, contained any untrue statement of a material fact or
        omitted to state a material fact required to be stated therein or necessary
        in
        order to make the statements therein, in the light of the circumstances under
        which they were made, not misleading. The financial statements of the Company
        included in the SEC Reports comply in all material respects with applicable
        accounting requirements and the rules and regulations of the Commission with
        respect thereto as in effect at the time of filing. Such financial statements
        have been prepared in accordance with United States generally accepted
        accounting principles applied on a consistent basis during the periods involved
        (“GAAP”),
        except
        as may be otherwise specified in such financial statements or the notes thereto,
        and fairly present in all material respects the financial position of the
        Company and its consolidated subsidiaries as of and for the dates thereof
        and
        the results of operations and cash flows for the periods then ended, subject,
        in
        the case of unaudited statements, to normal, immaterial, year-end audit
        adjustments. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (g)
         Material
        Changes.
        Since
        the date of the latest audited financial statements included within the SEC
        Reports, except as specifically disclosed in the SEC Reports, there has been
        no
        event, occurrence or development that, individually or in the aggregate,
        has had
        or that is reasonably likely to result in a Material Adverse
        Effect.

       

      (h)
         Absence
        of Litigation.
        Except
        as disclosed in the SEC Reports, there is no action, suit, claim, proceeding,
        inquiry or investigation before or by any court, public board, government
        agency, self-regulatory organization or body pending or, to the knowledge
        of the
        Company, threatened against or affecting the Company that is reasonably likely
        to, individually or in the aggregate, have a Material Adverse Effect.


       

      (i)
         Compliance.
        The
        Company (i) is not in default under or in violation of (and no event has
        occurred that has not been waived that, with notice or lapse of time or both,
        would result in a default by the Company under), nor has the Company received
        notice of a claim that it is in default under or that it is in violation
        of, any
        indenture, loan or credit agreement or any other agreement or instrument
        to
        which it is a party or by which it or any of its properties is bound (whether
        or
        not such default or violation has been waived), (ii) is in violation of any
        order of any court, arbitrator or governmental body, or (iii) is in violation
        of
        any statute, rule or regulation of any governmental authority, including
        without
        limitation all foreign, federal, state and local laws relating to taxes,
        environmental protection, occupational health and safety, product quality
        and
        safety and employment and labor matters, except in each case as could not,
        individually or in the aggregate, have or result in a Material Adverse Effect.
        

       

      (j)
         Title
        to Assets.
        The
        Company has good and marketable title in fee simple to all real property
        owned
        by it that is material to the business of the Company and good and marketable
        title in all personal property owned by it that is material to the business
        of
        the Company, in each case free and clear of all Liens, except for Liens as
        do
        not materially affect the value of such property and do not materially interfere
        with the use made and proposed to be made of such property by the Company.
        Any
        real property and facilities held under lease by the Company is held by it
        under
        valid, subsisting and enforceable leases of which the Company is in compliance
        except such non-compliance as would not have a Material Adverse
        Effect.

       

      (k)
         Listing
        and Maintenance Requirements.
        The
        Company has not, in the two years preceding the date hereof, received notice
        (written or oral) from any Trading Market on which the Common Stock is or
        has
        been listed or quoted to the effect that the Company is not in compliance
        with
        the listing or maintenance requirements of such Trading Market. The Company
        is,
        and has no reason to believe that it will not in the foreseeable future continue
        to be, in compliance with all such listing and maintenance requirements.
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (l)
         Acknowledgment
        Regarding Purchasers' Purchase of Securities.
        The
        Company acknowledges and agrees that each of the Purchasers is acting solely
        in
        the capacity of an arm's length purchaser with respect to this Agreement
        and the
        transactions contemplated hereby. The Company further acknowledges that no
        Purchaser is acting as a financial advisor or fiduciary of the Company (or
        in
        any similar capacity) with respect to this Agreement and the transactions
        contemplated hereby and any advice given by any Purchaser or any of their
        respective representatives or agents in connection with this Agreement and
        the
        transactions contemplated hereby is merely incidental to the Purchasers'
        purchase of the Securities. The Company further represents to each Purchaser
        that the Company's decision to enter into this Agreement has been based solely
        on the independent evaluation of the transactions contemplated hereby by
        the
        Company and its representatives.

       

      (m)
         Patents
        and Trademarks.
        The
        Company has valid title to all patents, patent applications, trademarks,
        trademark applications, service marks, trade names, copyrights, licenses
        and
        other similar rights that are necessary or material for use in connection
        with
        its business as described in the SEC Reports and which the failure to so
        have
        could have a Material Adverse Effect (collectively, the "Intellectual
        Property Rights").
        To
        the knowledge of the Company, all such Intellectual Property Rights are
        enforceable and there is no existing infringement by another Person of any
        of
        the Intellectual Property Rights.

       

      (n)
         Insurance.
        The
        Company is insured by insurers of recognized financial responsibility against
        such losses and risks and in such amounts as are prudent and customary in
        the
        businesses in which the Company is engaged. 

       

      (o)
         Regulatory
        Permits.
        The
        Company possesses all certificates, authorizations and permits issued by
        the
        appropriate federal, state, local or foreign regulatory authorities necessary
        to
        conduct their respective businesses as described in the SEC Reports, except
        where the failure to possess such permits could not, individually or in the
        aggregate, have or result in a Material Adverse Effect (“Material
        Permits”).

       

      (p)
         Solvency.
        Based
        on the financial condition of the Company as of the Closing Date, (i) the
        Company’s fair saleable value of its assets exceeds the amount that will be
        required to be paid on or in respect of the Company’s existing debts and other
        liabilities (including known contingent liabilities) as they mature; (ii)
        the
        Company’s assets do not constitute unreasonably small capital to carry on its
        business for the current fiscal year as now conducted and as proposed to
        be
        conducted including its capital needs taking into account the particular
        capital
        requirements of the business conducted by the Company, and projected capital
        requirements and capital availability thereof; and (iii) the current cash
        flow
        of the Company, together with the proceeds the Company would receive, were
        it to
        liquidate all of its assets, after taking into account all anticipated uses
        of
        the cash, would be sufficient to pay all amounts on or in respect of its
        debt
        when such amounts are required to be paid. The Company does not intend to
        incur
        debts beyond its ability to pay such debts as they mature (taking into account
        the timing and amounts of cash to be payable on or in respect of its
        debt).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (q)
         Going
        Concern.
        The
        Company has no knowledge (upon receipt of the proceeds of this transaction)
        that
        the Company’s independent public accountants will issue an audit letter
        containing a “going concern” opinion or other qualification in connection with
        the Company’s annual report on Form 10-KSB pursuant to Section 13 or 15(d) under
        the Exchange Act for the fiscal year ended December 31, 2005.

       

      (r)
         Internal
        Accounting Controls.
        The
        Company maintains a system of internal accounting controls sufficient to
        provide
        reasonable assurance that (i) transactions are executed in accordance with
        management’s general or specific authorizations, (ii) transactions are recorded
        as necessary to permit preparation of financial statements in conformity
        with
        generally accepted accounting principles and to maintain asset accountability,
        (iii) access to assets is permitted only in accordance with management’s general
        or specific authorization, and (iv) the recorded accountability for assets
        is
        compared with the existing assets at reasonable intervals and appropriate
        action
        is taken with respect to any differences.

       

      (s)
         Sarbanes-Oxley
        Act.
        The
        Company is in compliance with applicable requirements of the Sarbanes-Oxley
        Act
        of 2002 and applicable rules and regulations promulgated by the Commission
        thereunder in effect as of the date of this Agreement, except where such
        noncompliance could not be reasonably expected to have, individually or in
        the aggregate, a Material Adverse Effect.

       

      3.2
         Representations
        and Warranties of the Purchasers.
        Each
        Purchaser hereby, as to itself only and for no other Purchaser, represents
        and
        warrants to the Company as follows:

       

      (a)
         Organization;
        Authority.
        Such
        Purchaser is an entity duly organized, validly existing and in good standing
        under the laws of the jurisdiction of its organization with the requisite
        corporate or partnership power and authority to enter into and to consummate
        the
        transactions contemplated by the Transaction Documents and otherwise to carry
        out its obligations thereunder. The purchase by such Purchaser of the Shares
        hereunder has been duly authorized by all necessary action on the part of
        such
        Purchaser. This Agreement has been duly executed and delivered by such Purchaser
        and constitutes the valid and binding obligation of such Purchaser, enforceable
        against it in accordance with its terms.

       

      (b)
         Investment
        Intent.
        Such
        Purchaser is acquiring the Securities for investment purposes only and not
        with
        a view to or for distributing or reselling such Securities or any part thereof,
        without prejudice, however, to such Purchaser's right, subject to the provisions
        of this Agreement, at all times to sell or otherwise dispose of all or any
        part
        of such Securities pursuant to an effective registration statement under
        the
        Securities Act or under an exemption from such registration and in compliance
        with applicable federal and state securities laws. Nothing contained herein
        shall be deemed a representation or warranty by such Purchaser to hold
        Securities for any period of time. 

       

      (c)
         Purchaser
        Status.
        At the
        time such Purchaser was offered the Shares and the Warrants, it was, and
        at the
        date hereof it is, an “accredited investor” as defined in Rule 501(a) under the
        Securities Act. If such Purchaser was formed specifically for the purpose
        of
        investing in the Shares and the Warrants, each of its beneficial owners is
        an
“accredited investor” as defined in Rule 501(a) of the Securities
        Act.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d)
         Experience
        of such Purchaser.
        Such
        Purchaser, either alone or together with its representatives, has such
        knowledge, sophistication and experience in business and financial matters
        so as
        to be capable of evaluating the merits and risks of the prospective investment
        in the Securities, and has so evaluated the merits and risks of such investment.
        Such Purchaser is able to bear the economic risk of an investment in the
        Securities and, at the present time, is able to afford a complete loss of
        such
        investment.

       

      (e)
         Access
        to Information.
        Such
        Purchaser has had the opportunity to ask questions or, and receive answers
        from,
        representatives of the Company concerning the Company and the terms and
        conditions of this transaction, as well as obtain any information requested
        by
        such Purchaser. Such Purchaser's decision to enter into the transactions
        contemplated hereby is based on such Purchaser's own evaluation of the risks
        and
        merits of an investment in Company. Such Purchaser acknowledges that such
        Purchaser’s investment in the Securities involves a high degree of
        risk.

      


      


      ARTICLE
        IV

      OTHER
        AGREEMENTS OF THE PARTIES

       

      4.1
         Transfer
        Restrictions.

       

      (a)
         Securities
        may only be disposed of pursuant to an effective registration statement under
        the Securities Act or pursuant to an available exemption from the registration
        requirements of the Securities Act, and in compliance with any applicable
        state
        securities laws. In connection with any transfer of Securities other than
        pursuant to an effective registration statement or to the Company or pursuant
        to
        Rule 144(k), except as otherwise set forth herein, the Company may require
        the
        transferor to provide to the Company an opinion of counsel selected by the
        transferor, the form and substance of which opinion shall be reasonably
        satisfactory to the Company, to the effect that such transfer does not require
        registration under the Securities Act. Notwithstanding the foregoing, the
        Company hereby consents to and agrees to register on the books of the Company
        and with its transfer agent, without any such legal opinion, any transfer
        of
        Securities by a Purchaser to an Affiliate of such Purchaser, provided that
        the
        transferee certifies to the Company that it is an “accredited investor” as
        defined in Rule 501(a) under the Securities Act.

       

      (b)
         The
        Purchasers agree to the imprinting, so long as is required by this Section
        4.1(b),
        of the
        following legend on any certificate evidencing Securities: 

       

      NEITHER
        THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
        HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
        SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
        REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
        ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
        EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
        AN
        AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
        SECURITIES LAWS OR BLUE SKY LAWS. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)
         Certificates
        evidencing Securities shall not be required to contain such legend or any
        other
        legend (i) while a Registration Statement covering the resale of such Securities
        is effective under the Securities Act, or (ii) following any sale of such
        Securities pursuant to Rule 144, or (iii) if such Securities are eligible
        for
        sale under Rule 144(k), or (iv) if such legend is not required under applicable
        requirements of the Securities Act (including judicial interpretations and
        pronouncements issued by the Staff of the Commission). Following the Effective
        Date or at such earlier time as a legend is no longer required for certain
        Securities, the Company will no later than three Trading Days following the
        delivery by a Purchaser to the Company or the Company’s transfer agent of a
        legended certificate representing such Securities, deliver or cause to be
        delivered to such Purchaser a certificate representing such Securities that
        is
        free from all restrictive and other legends. The Company may not make any
        notation on its records or give instructions to any transfer agent of the
        Company that enlarge the restrictions on transfer set forth in this
        Section.

       

      4.2
         Furnishing
        of Information.
        As long
        as any Purchaser owns Securities, the Company covenants to timely file (or
        obtain extensions in respect thereof and file within the applicable grace
        period) all reports required to be filed by the Company after the date hereof
        pursuant to the Exchange Act. Upon the request of any Purchaser, the Company
        shall deliver to such Purchaser a written certification of a duly authorized
        officer as to whether it has complied with the preceding sentence. As long
        as
        any Purchaser owns Securities, if the Company is not required to file reports
        pursuant to such laws, it will prepare and furnish to the Purchasers and
        make
        publicly available in accordance with paragraph (c) of Rule 144 such information
        as is required for the Purchasers to sell the Securities under Rule 144.
        The
        Company further covenants that it will take such further action as any holder
        of
        Securities may reasonably request to satisfy the provisions of Rule 144
        applicable to the issuer of securities relating to transactions for the sale
        of
        securities pursuant to Rule 144.

       

      4.3
         Reservation
        and Listing of Securities.
        The
        Company shall maintain a reserve from its duly authorized shares of Common
        Stock
        for issuance pursuant to the Transaction Documents in such amount as may
        be
        required to fulfill its obligations in full under the Transaction Documents.
        In
        the event that at any time the then authorized shares of Common Stock are
        insufficient for the Company to satisfy its obligations in full under the
        Transaction Documents, the Company shall promptly take such actions as may
        be
        required to increase the number of authorized shares. The Company shall in
        the
        time and manner required by its Trading Market, prepare and file with such
        Trading Market an additional shares listing application covering the number
        of
        shares of Common Stock issuable under the Transaction Documents and shall
        take
        all steps necessary to cause such shares of Common Stock to be approved for
        listing on its Trading Market as soon as possible. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.4
         Reimbursement.
        If any
        Purchaser or any of its Affiliates or any officer, director, partner,
        controlling Person, employee or agent of a Purchaser or any of its Affiliates
        (a
“Related
        Person”)
        becomes involved in any capacity in any Proceeding brought by or against
        any
        Person in connection with or as a result of the transactions contemplated
        by the
        Transaction Documents, the Company will indemnify and hold harmless such
        Purchaser or Related Person for its reasonable legal and other expenses
        (including the costs of any investigation, preparation and travel) and for
        any
        Losses incurred in connection therewith, as such expenses or Losses are
        incurred, excluding only Losses that result directly from such Purchaser’s or
        Related Person’s gross negligence or willful misconduct. In addition, the
        Company shall indemnify and hold harmless each Purchaser and Related Person
        from
        and against any and all Losses, as incurred, arising out of or relating to
        any
        breach by the Company of any of the representations, warranties or covenants
        made by the Company in this Agreement or any other Transaction Document,
        or any
        allegation by a third party that, if true, would constitute such a breach.
        The
        conduct of any Proceedings for which indemnification is available under this
        paragraph shall be governed by Section 6.4(c) below. The indemnification
        obligations of the Company under this paragraph shall be in addition to any
        liability that the Company may otherwise have and shall be binding upon and
        inure to the benefit of any successors, assigns, heirs and personal
        representatives of the Purchasers and any such Related Persons. The Company
        also
        agrees that neither the Purchasers nor any Related Persons shall have any
        liability to the Company or any Person asserting claims on behalf of or in
        right
        of the Company in connection with or as a result of the transactions
        contemplated by the Transaction Documents, except to the extent that any
        Losses
        incurred by the Company result from the gross negligence or willful misconduct
        of the applicable Purchaser or Related Person in connection with such
        transactions.
        If
        the
        Company breaches its obligations under any Transaction Document, then, in
        addition to any other liabilities the Company may have under any Transaction
        Document or applicable law, the Company shall pay or reimburse the Purchasers
        on
        demand for all costs of collection and enforcement (including reasonable
        attorneys fees and expenses). Without limiting the generality of the foregoing,
        the Company specifically agrees to reimburse the Purchasers on demand for
        all
        costs of enforcing the indemnification obligations in this
        paragraph.

       

      


      ARTICLE
        V

      CONDITIONS

      


      5.1
         Conditions
        Precedent to the Obligations of the Purchasers.
        The
        obligation of each Purchaser to acquire Securities at the Closing is subject
        to
        the satisfaction or waiver by such Purchaser, at or before the Closing, of
        each
        of the following conditions:

       

      (a)
         Representations
        and Warranties.
        The
        representations and warranties of the Company contained herein shall be true
        and
        correct in all material respects as of the date when made and as of the Closing
        as though made on and as of such date; and

       

      (b)
         Performance.
        The
        Company and each other Purchaser shall have performed, satisfied and complied
        in
        all material respects with all covenants, agreements and conditions required
        by
        the Transaction Documents to be performed, satisfied or complied with by
        it at
        or prior to the Closing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)
         No
        Injunction.
        No
        statute, rule, regulation, executive order, decree, ruling or injunction
        shall
        have been enacted, entered, promulgated or endorsed by any court or governmental
        authority of competent jurisdiction that prohibits the consummation of any
        of
        the transactions contemplated by the Transaction Documents;

       

      (d)
         Adverse
        Changes.
        Since
        the date of execution of this Agreement, no event or series of events shall
        have
        occurred that reasonably would be expected to have or result in a Material
        Adverse Effect; 

       

      (e)
         No
        Suspensions of Trading in Common Stock; Listing.
        Trading
        in the Common Stock shall not have been suspended by the Commission or any
        Trading Market at any time since the date of execution of this Agreement,
        and
        the Common Stock shall have been at all times since such date listed for
        trading
        on an Eligible Market;

       

      (f) Consents
        and Approvals. All
        consents and approvals of any corporate body and any third party, including
        the
        American Stock Exchange, shall have been obtained.

      


      5.2
         Conditions
        Precedent to the Obligations of the Company.
        The
        obligation of the Company to sell Securities at the Closing is subject to
        the
        satisfaction or waiver by the Company, at or before the Closing, of each
        of the
        following conditions:

       

      (a)
         Representations
        and Warranties.
        The
        representations and warranties of the Purchasers contained herein shall be
        true
        and correct in all material respects as of the date when made and as of the
        Closing Date as though made on and as of such date; and

       

      (b)
         Performance.
        The
        Purchasers shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by the Transaction
        Documents to be performed, satisfied or complied with by the Purchasers at
        or
        prior to the Closing.

       

      (c) Consents
        and Approvals. All
        consents and approvals of any corporate body and any third party, including
        the
        American Stock Exchange, shall have been obtained.

      


      ARTICLE
        VI

      REGISTRATION
        RIGHTS

       

      6.1
         Shelf
        Registration

       

      (a)
         As
        promptly as possible, and in any event on or prior to the Filing Date, the
        Company shall prepare and file with the Commission a “Shelf” Registration
        Statement covering the resale of all Registrable Securities for an offering
        to
        be made on a continuous basis pursuant to Rule 415. The Registration Statement
        shall be on Form S-3 (except if the Company is not then eligible to register
        for
        resale the Registrable Securities on Form S-3, in which case such registration
        shall be on Form S-1 or another appropriate form in accordance herewith as
        the
        Purchasers may consent).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)
         The
        Company shall use its best efforts to cause the Registration Statement to
        be
        declared effective by the Commission as promptly as possible after the filing
        thereof, but in any event prior to the Required Effectiveness Date, and shall
        use its best efforts to keep the Registration Statement continuously effective
        under the Securities Act until the fifth anniversary of the Effective Date
        or
        such earlier date when all Registrable Securities covered by such Registration
        Statement have been sold publicly or are freely tradeable under U.S. securities
        laws (the “Effectiveness
        Period”).

       

      (c)
         The
        Company shall notify each Purchaser in writing promptly (and in any event
        within
        one Trading Day) after receiving notification from the Commission that the
        Registration Statement has been declared effective. 

       

      (d)
         As
        promptly as possible, and in any event no later than the Post-Effective
        Amendment Filing Deadline, the Company shall prepare and file with the
        Commission a Post-Effective Amendment. The Company shall use its best efforts
        to
        cause the Post-Effective Amendment to be declared effective by the Commission
        as
        promptly as possible after the filing thereof, but in any event prior to
        the
        fifteenth Trading Day after the Post-Effective Amendment Filing Deadline.
        The
        Company shall notify each Purchaser in writing promptly (and in any event
        within
        one business day) after receiving notification from the Commission that the
        Post-Effective Amendment has been declared effective.

       

      (e)
         If:
        (i)
        any Registration Statement is not declared effective by the Commission by
        the
        Required Effectiveness Date or (ii) a Post-Effective Amendment is not declared
        effective on or prior to the fifteenth Trading Day after the Post-Effective
        Amendment Filing Deadline; the date on which any such Event occurs being
        referred to as “Event
        Date”),
        then
        on each monthly anniversary of each such Event Date thereof (if the applicable
        Event shall not have been cured by such date) until the applicable Event
        is
        cured, the Company shall pay to each Purchaser an amount in cash, as partial
        liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase
        price paid by such Purchaser pursuant to the Purchase Agreement. Such payments
        shall be in partial compensation to the Purchasers and shall not constitute
        the
        Purchaser’s exclusive remedy for such events. Notwithstanding the foregoing, no
        amounts shall be payable to a Purchaser under clause (i) or (ii) above if
        the
        Registrable Securities may be sold by such Purchaser without restrictions
        under
        applicable U.S. securities laws. If the Company fails to pay any liquidated
        damages pursuant to this Section in full within seven days after the date
        payable, the Company will pay interest thereon at a rate of 18% per annum
        (or
        such lesser maximum amount that is permitted to be paid by applicable law)
        to
        the Purchaser, accruing daily from the date such liquidated damages are due
        until such amounts, plus all such interest thereon, are paid in
        cash.

       

      (f)
         Notwithstanding
        the provisions of Section 6.1(e), the Company may, during the period a
        registration statement is required to remain effective hereunder, suspend
        the
        use of the prospectus for a period not to exceed sixty (60) days (whether
        or not
        consecutive) in any 12-month period if the Board of Directors of the Company
        determines in good faith that because of valid business reasons, including
        pending mergers or other business combination transactions, the planned
        acquisition or divestiture of assets, pending material corporate developments
        and similar events, it is in the best interests of the Company to suspend
        such
        use, and prior to or contemporaneously with suspending such use the Company
        provides the Purchasers of Registrable Securities with written notice of
        such
        suspension (which notice need not specify the nature of the event giving
        rise to
        such suspension), and the Purchaser shall suspend the use of the prospectus
        until its receipt of written notice. At the end of any such suspension period
        the Company shall immediately provide the Purchasers with written notice
        of the
        termination of such suspension.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      6.2
         Registration
        Procedures.
        In
        connection with the Company's registration obligations hereunder, the Company
        shall:

       

      (a)
         Not
        less
        than three Trading Days prior to the filing of a Registration Statement or
        any
        related Prospectus or any amendment or supplement thereto (including any
        document that would be incorporated or deemed to be incorporated therein
        by
        reference), the Company shall (i) furnish to each Purchaser and any counsel
        designated by any Purchaser (each, a “Purchaser
        Counsel”),
        copies of all such documents proposed to be filed, which documents (other
        than
        those incorporated or deemed to be incorporated by reference) will be subject
        to
        the review of such Purchaser’s and Purchaser Counsel (it being understood that
        such review must be completed within three Business Days of receipt of such
        documents), and (ii) cause its officers and directors, counsel and independent
        certified public accountants to respond to such inquiries as shall be necessary,
        in the reasonable opinion of respective counsel, to conduct a reasonable
        investigation within the meaning of the Securities Act. 

       

      (b)
         (i)
        Prepare and file with the Commission such amendments, including post-effective
        amendments, to each Registration Statement and the Prospectus used in connection
        therewith as may be necessary to keep the Registration Statement continuously
        effective as to the applicable Registrable Securities for the Effectiveness
        Period and prepare and file with the Commission such additional Registration
        Statements in order to register for resale under the Securities Act all of
        the
        Registrable Securities; (ii) cause the related Prospectus to be amended or
        supplemented by any required Prospectus supplement, and as so supplemented
        or
        amended to be filed pursuant to Rule 424; (iii) respond as promptly as
        reasonably possible, and in any event within ten days, to any comments received
        from the Commission with respect to the Registration Statement or any amendment
        thereto and as promptly as reasonably possible provide the Purchasers true
        and
        complete copies of all correspondence from and to the Commission relating
        to the
        Registration Statement; and (iv) comply in all material respects with the
        provisions of the Securities Act and the Exchange Act with respect to the
        disposition of all Registrable Securities covered by the Registration Statement
        during the applicable period in accordance with the intended methods of
        disposition by the Purchasers thereof set forth in the Registration Statement
        as
        so amended or in such Prospectus as so supplemented

       

      (c)
         Notify
        the Purchasers of Registrable Securities to be sold and Purchaser Counsel
        as
        promptly as reasonably possible, and (if requested by any such Person) confirm
        such notice in writing no later than one Trading Day thereafter, of any of
        the
        following events: (i) the Commission notifies the Company whether there will
        be
        a “review” of any Registration Statement; (ii) the Commission comments in
        writing on any Registration Statement (in which case the Company shall deliver
        to each Purchaser a copy of such comments and of all written responses thereto);
        (iii) any Registration Statement or any post-effective amendment is declared
        effective; (iv) the Commission or any other Federal or state governmental
        authority requests any amendment or supplement to any Registration Statement
        or
        Prospectus or requests additional information related thereto; (v) the
        Commission issues any stop order suspending the effectiveness of any
        Registration Statement or initiates any Proceedings for that purpose; (vi)
        the
        Company receives notice of any suspension of the qualification or exemption
        from
        qualification of any Registrable Securities for sale in any jurisdiction,
        or the
        initiation or threat of any Proceeding for such purpose; or (vii) the financial
        statements included in any Registration Statement become ineligible for
        inclusion therein or any statement made in any Registration Statement or
        Prospectus or any document incorporated or deemed to be incorporated therein
        by
        reference is untrue in any material respect or any revision to a Registration
        Statement, Prospectus or other document is required so that it will not contain
        any untrue statement of a material fact or omit to state any material fact
        required to be stated therein or necessary to make the statements therein,
        in
        the light of the circumstances under which they were made, not
        misleading.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d)
         Use
        its
        best efforts to avoid the issuance of or, if issued, obtain the withdrawal
        of
        (i) any order suspending the effectiveness of any Registration Statement,
        or
        (ii) any suspension of the qualification (or exemption from qualification)
        of
        any of the Registrable Securities for sale in any jurisdiction, as soon as
        possible.

       

      (e)
         Furnish
        to each Purchaser and Purchaser Counsel, without charge, at least one conformed
        copy of each Registration Statement and each amendment thereto, including
        financial statements and schedules, all documents incorporated or deemed
        to be
        incorporated therein by reference, and all exhibits to the extent requested
        by
        such Person (including those previously furnished or incorporated by reference)
        promptly after the filing of such documents with the Commission.

       

      (f)
         Promptly
        deliver to each Purchaser and Purchaser Counsel, without charge, as many
        copies
        of the Prospectus or Prospectuses (including each form of prospectus) and
        each
        amendment or supplement thereto as such Persons may reasonably request. The
        Company hereby consents to the use of such Prospectus and each amendment
        or
        supplement thereto by each of the selling Purchasers in connection with the
        offering and sale of the Registrable Securities covered by such Prospectus
        and
        any amendment or supplement thereto.

       

      (g)
         
        (i) In
        the time and manner required by each Trading Market, prepare and file with
        such
        Trading Market an additional shares listing application covering all of the
        Registrable Securities; (ii) take all steps necessary to cause such Registrable
        Securities to be approved for listing on each Trading Market as soon as possible
        thereafter; (iii) provide to the Purchasers evidence of such listing; and
        (iv)
        maintain the listing of such Registrable Securities on each such Trading
        Market
        or another Eligible Market.

       

      (h)
         Prior
        to
        any public offering of Registrable Securities, use its best efforts to register
        or qualify or cooperate with the selling Purchasers and each applicable
        Purchaser Counsel in connection with the registration or qualification (or
        exemption from such registration or qualification) of such Registrable
        Securities for offer and sale under the securities or Blue Sky laws of such
        jurisdictions within the United States as any Purchaser requests in writing,
        to
        keep each such registration or qualification (or exemption therefrom) effective
        during the Effectiveness Period and to do any and all other acts or things
        necessary or advisable to enable the disposition in such jurisdictions of
        the
        Registrable Securities covered by a Registration Statement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (i)
         Cooperate
        with the Purchasers to facilitate the timely preparation and delivery of
        certificates representing Registrable Securities to be delivered to a transferee
        pursuant to a Registration Statement, which certificates shall be free, to
        the
        extent permitted by this Agreement, of all restrictive legends, and to enable
        such Registrable Securities to be in such denominations and registered in
        such
        names as any such Purchasers may request.

       

      (j)
         Upon
        the
        occurrence of any event described in Section 6.2(c)(vii), as promptly as
        reasonably possible, prepare a supplement or amendment, including a
        post-effective amendment, to the Registration Statement or a supplement to
        the
        related Prospectus or any document incorporated or deemed to be incorporated
        therein by reference, and file any other required document so that, as
        thereafter delivered, neither the Registration Statement nor such Prospectus
        will contain an untrue statement of a material fact or omit to state a material
        fact required to be stated therein or necessary to make the statements therein,
        in the light of the circumstances under which they were made, not
        misleading.

       

      (k)
         Cooperate
        with any due diligence investigation undertaken by the Purchasers in connection
        with the sale of Registrable Securities, including, without limitation, by
        making available any documents and information; provided that the Company
        will
        not deliver or make available to any Purchaser material, nonpublic information
        unless such Purchaser specifically requests in advance to receive material,
        nonpublic information in writing.

       

      (l)
         If
        Holders of a majority of the Registrable Securities being offered pursuant
        to a
        Registration Statement select underwriters for the offering, the Company
        shall
        enter into and perform its obligations under an underwriting agreement, in
        usual
        and customary form, including, without limitation, by providing customary
        legal
        opinions, comfort letters and indemnification and contribution
        obligations.

       

      (m)
         Comply
        with all applicable rules and regulations of the Commission.

       

      In
        connection with the registration of the Registrable Securities, it shall
        be a
        condition precedent to the obligations of the Company to complete the
        registration pursuant to this Agreement with respect to the Registrable
        Securities of a particular Purchaser (or to make any payments or other damages
        to such Purchaser pursuant to Section 6.1) that such Purchaser shall furnish
        to
        the Company such information regarding itself and the Registrable Securities
        held by it as shall reasonably be required to effect the registration of
        such
        Registrable Securities within five Trading Days of the Company's written
        request.

      


      6.3
         Registration
        Expenses.
        The
        Company shall pay (or reimburse the Purchasers for) all fees and expenses
        incident to the performance of or compliance with this Agreement by the Company,
        including without limitation (a) all registration and filing fees and expenses,
        including without limitation those related to filings with the Commission,
        any
        Trading Market and in connection with applicable state securities or Blue
        Sky
        laws, (b) printing expenses (including without limitation expenses of printing
        certificates for Registrable Securities and of printing prospectuses requested
        by the Purchasers), (c) messenger, telephone and delivery expenses, (d) fees
        and
        disbursements of counsel for the Company, (e) fees and expenses of all other
        Persons retained by the Company in connection with the consummation of the
        transactions contemplated by this Agreement, and (f) all listing fees to
        be paid
        by the Company to the Trading Market. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.4
         Indemnification

       

      (a)
         Indemnification
        by the Company.
        The
        Company shall, notwithstanding any termination of this Agreement, indemnify
        and
        hold harmless each Purchaser, the officers, directors, partners, members,
        agents, brokers (including brokers who offer and sell Registrable Securities
        as
        principal as a result of a pledge or any failure to perform under a margin
        call
        of Common Stock), investment advisors and employees of each of them, each
        Person
        who controls any such Purchaser (within the meaning of Section 15 of the
        Securities Act or Section 20 of the Exchange Act) and the officers, directors,
        partners, members, agents and employees of each such controlling Person,
        to the
        fullest extent permitted by applicable law, from and against any and all
        Losses,
        as incurred, arising out of or relating to any untrue or alleged untrue
        statement of a material fact contained in the Registration Statement, any
        Prospectus or any form of prospectus or in any amendment or supplement thereto
        or in any preliminary prospectus, or arising out of or relating to any omission
        or alleged omission of a material fact required to be stated therein or
        necessary to make the statements therein (in the case of any Prospectus or
        form
        of prospectus or supplement thereto, in the light of the circumstances under
        which they were made) not misleading, except to the extent, but only to the
        extent, that (i) such untrue statements, alleged untrue statements, omissions
        or
        alleged omissions are based solely upon information regarding such Purchaser
        furnished in writing to the Company by such Purchaser expressly for use therein,
        or to the extent that such information relates to such Purchaser or such
        Purchaser's proposed method of distribution of Registrable Securities and
        was
        reviewed and expressly approved in writing by such Purchaser expressly for
        use
        in the Registration Statement, such Prospectus or such form of Prospectus
        or in
        any amendment or supplement thereto or (ii) in the case of an occurrence
        of an
        event of the type specified in Section 6.2(c)(v)-(vii), the use by such
        Purchaser of an outdated or defective Prospectus after the Company has notified
        such Purchaser in writing that the Prospectus is outdated or defective and
        prior
        to the receipt by such Purchaser of the Advice contemplated in Section 6.5.
        The
        Company shall notify the Purchasers promptly of the institution, threat or
        assertion of any Proceeding of which the Company is aware in connection with
        the
        transactions contemplated by this Agreement.

       

      (b)
         Indemnification
        by Purchasers.
        Each
        Purchaser shall, severally and not jointly, indemnify and hold harmless the
        Company, its directors, officers, agents and employees, each Person who controls
        the Company (within the meaning of Section 15 of the Securities Act and Section
        20 of the Exchange Act), and the directors, officers, agents or employees
        of
        such controlling Persons, to the fullest extent permitted by applicable law,
        from and against all Losses (as determined by a court of competent jurisdiction
        in a final judgment not subject to appeal or review) arising solely out of
        any
        untrue statement of a material fact contained in the Registration Statement,
        any
        Prospectus, or any form of prospectus, or in any amendment or supplement
        thereto, or arising solely out of any omission of a material fact required
        to be
        stated therein or necessary to make the statements therein (in the case of
        any
        Prospectus or form of prospectus or supplement thereto, in the light of the
        circumstances under which they were made) not misleading to the extent, but
        only
        to the extent, that such untrue statement or omission is contained in any
        information so furnished in writing by such Purchaser to the Company
        specifically for inclusion in such Registration Statement or such Prospectus
        or
        to the extent that (i) such untrue statements or omissions are based solely
        upon
        information regarding such Purchaser furnished in writing to the Company
        by such
        Purchaser expressly for use therein, or to the extent that such information
        relates to such Purchaser or such Purchaser's proposed method of distribution
        of
        Registrable Securities and was reviewed and expressly approved in writing
        by
        such Purchaser expressly for use in the Registration Statement, such Prospectus
        or such form of Prospectus or in any amendment or supplement thereto or (ii)
        in
        the case of an occurrence of an event of the type specified in Section
        6.2(c)(v)-(vii),
        the use
        by such Purchaser of an outdated or defective Prospectus after the Company
        has
        notified such Purchaser in writing that the Prospectus is outdated or defective
        and prior to the receipt by such Purchaser of the Advice contemplated in
        Section
        6.5.
        In no
        event shall the liability of any selling Purchaser hereunder be greater in
        amount than the dollar amount of the net proceeds received by such Purchaser
        upon the sale of the Registrable Securities giving rise to such indemnification
        obligation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)
         Conduct
        of Indemnification Proceedings.
        If any
        Proceeding shall be brought or asserted against any Person entitled to indemnity
        hereunder (an “Indemnified
        Party”),
        such
        Indemnified Party shall promptly notify the Person from whom indemnity is
        sought
        (the “Indemnifying
        Party”)
        in
        writing, and the Indemnifying Party shall assume the defense thereof, including
        the employment of counsel reasonably satisfactory to the Indemnified Party
        and
        the payment of all fees and expenses incurred in connection with defense
        thereof; provided, that the failure of any Indemnified Party to give such
        notice
        shall not relieve the Indemnifying Party of its obligations or liabilities
        pursuant to this Agreement, except (and only) to the extent that it shall
        be
        finally determined by a court of competent jurisdiction (which determination
        is
        not subject to appeal or further review) that such failure shall have
        proximately and materially adversely prejudiced the Indemnifying
        Party.

       

      An
        Indemnified Party shall have the right to employ separate counsel in any
        such
        Proceeding and to participate in the defense thereof, but the fees and expenses
        of such counsel shall be at the expense of such Indemnified Party or Parties
        unless: (i) the Indemnifying Party has agreed in writing to pay such fees
        and
        expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
        the defense of such Proceeding and to employ counsel reasonably satisfactory
        to
        such Indemnified Party in any such Proceeding; or (iii) the named parties
        to any
        such Proceeding (including any impleaded parties) include both such Indemnified
        Party and the Indemnifying Party, and such Indemnified Party shall have been
        advised by counsel that a conflict of interest is likely to exist if the
        same
        counsel were to represent such Indemnified Party and the Indemnifying Party
        (in
        which case, if such Indemnified Party notifies the Indemnifying Party in
        writing
        that it elects to employ separate counsel at the expense of the Indemnifying
        Party, the Indemnifying Party shall not have the right to assume the defense
        thereof and such counsel shall be at the expense of the Indemnifying Party).
        The
        Indemnifying Party shall not be liable for any settlement of any such Proceeding
        effected without its written consent, which consent shall not be unreasonably
        withheld. No Indemnifying Party shall, without the prior written consent
        of the
        Indemnified Party, effect any settlement of any pending Proceeding in respect
        of
        which any Indemnified Party is a party, unless such settlement includes an
        unconditional release of such Indemnified Party from all liability on claims
        that are the subject matter of such Proceeding.

       

      All
        fees
        and expenses of the Indemnified Party (including reasonable fees and expenses
        to
        the extent incurred in connection with investigating or preparing to defend
        such
        Proceeding in a manner not inconsistent with this Section) shall be paid
        to the
        Indemnified Party, as incurred, within ten Trading Days of written notice
        thereof to the Indemnifying Party (regardless of whether it is ultimately
        determined that an Indemnified Party is not entitled to indemnification
        hereunder; provided, that the Indemnifying Party may require such Indemnified
        Party to undertake to reimburse all such fees and expenses to the extent
        it is
        finally judicially determined that such Indemnified Party is not entitled
        to
        indemnification hereunder). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d)
         Contribution.
        If a
        claim for indemnification under Section
        6.4(a)
        or
(b)
        is
        unavailable to an Indemnified Party (by reason of public policy or otherwise),
        then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
        shall contribute to the amount paid or payable by such Indemnified Party
        as a
        result of such Losses, in such proportion as is appropriate to reflect the
        relative fault of the Indemnifying Party and Indemnified Party in connection
        with the actions, statements or omissions that resulted in such Losses as
        well
        as any other relevant equitable considerations. The relative fault of such
        Indemnifying Party and Indemnified Party shall be determined by reference
        to,
        among other things, whether any action in question, including any untrue
        or
        alleged untrue statement of a material fact or omission or alleged omission
        of a
        material fact, has been taken or made by, or relates to information supplied
        by,
        such Indemnifying Party or Indemnified Party, and the parties' relative intent,
        knowledge, access to information and opportunity to correct or prevent such
        action, statement or omission. The amount paid or payable by a party as a
        result
        of any Losses shall be deemed to include, subject to the limitations set
        forth
        in Section
        6.4(c),
        any
        reasonable attorneys' or other reasonable fees or expenses incurred by such
        party in connection with any Proceeding to the extent such party would have
        been
        indemnified for such fees or expenses if the indemnification provided for
        in
        this Section was available to such party in accordance with its
        terms.

       

      The
        parties hereto agree that it would not be just and equitable if contribution
        pursuant to this Section
        6.4(d)
        were
        determined by pro rata allocation or by any other method of allocation that
        does
        not take into account the equitable considerations referred to in the
        immediately preceding paragraph. Notwithstanding the provisions of this Section
        6.4(d), no Purchaser shall be required to contribute, in the aggregate, any
        amount in excess of the amount by which the proceeds actually received by
        such
        Purchaser from the sale of the Registrable Securities subject to the Proceeding
        exceeds the amount of any damages that such Purchaser has otherwise been
        required to pay by reason of such untrue or alleged untrue statement or omission
        or alleged omission. No Person guilty of fraudulent misrepresentation (within
        the meaning of Section 11(f) of the Securities Act) shall be entitled to
        contribution from any Person who was not guilty of such fraudulent
        misrepresentation.

       

      The
        indemnity and contribution agreements contained in this Section are in addition
        to any liability that the Indemnifying Parties may have to the Indemnified
        Parties.

       

      6.5
         Dispositions.
        Each
        Purchaser agrees that it will comply with the prospectus delivery requirements
        of the Securities Act as applicable to it in connection with sales of
        Registrable Securities pursuant to the Registration Statement. Each Purchaser
        further agrees that, upon receipt of a notice from the Company of the occurrence
        of any event of the kind described in Sections
        6.2(c)(v),
        (vi)
        or
(vii),
        such
        Purchaser will discontinue disposition of such Registrable Securities under
        the
        Registration Statement until such Purchaser's receipt of the copies of the
        supplemented Prospectus and/or amended Registration Statement contemplated
        by
Section
        6.2(j),
        or
        until it is advised in writing (the “Advice”)
        by the
        Company that the use of the applicable Prospectus may be resumed, and, in
        either
        case, has received copies of any additional or supplemental filings that
        are
        incorporated or deemed to be incorporated by reference in such Prospectus
        or
        Registration Statement. The Company may provide appropriate stop orders to
        enforce the provisions of this paragraph.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.6
         No
        Piggyback on Registrations.
        Neither
        the Company nor any of its security holders (other than the Purchasers in
        such
        capacity pursuant hereto or Rubenstein Public Relations with respect to not
        more
        than 100,000 shares of Common Stock) may include securities of the Company
        in
        the Registration Statement other than the Registrable Securities, and the
        Company shall not after the date hereof enter into any agreement providing
        any
        such right to any of its security holders.

       

      6.7
         Piggy-Back
        Registrations.
        If at
        any time during the Effectiveness Period there is not an effective Registration
        Statement covering all of the Registrable Securities and the Company shall
        determine to prepare and file with the Commission a registration statement
        relating to an offering for its own account or the account of others under
        the
        Securities Act of any of its equity securities, other than on Form S-4 or
        Form
        S-8 (each as promulgated under the Securities Act) or their then equivalents
        relating to equity securities to be issued solely in connection with any
        acquisition of any entity or business or equity securities issuable in
        connection with stock option or other employee benefit plans, then the Company
        shall send to each Purchaser written notice of such determination and if,
        within
        fifteen days after receipt of such notice, any such Purchaser shall so request
        in writing, the Company shall include in such registration statement all
        or any
        part of such Registrable Securities such Purchaser requests to be
        registered.

       

      ARTICLE
        VII

      MISCELLANEOUS

       

      7.1
         Termination.
        This
        Agreement may be terminated by the Company or any Purchaser, by written notice
        to the other parties, if the Closing has not been consummated by the third
        Trading Day following the date of this Agreement; provided that no such
        termination will affect the right of any party to sue for any breach by the
        other party (or parties).

       

      7.2
         Fees
        and Expenses.
        Each
        party shall pay the fees and expenses of its advisers, counsel, accountants
        and
        other experts, if any, and all other expenses incurred by such party incident
        to
        the negotiation, preparation, execution, delivery and performance of this
        Agreement. The Company shall pay all transfer agent fees, stamp taxes and
        other
        taxes and duties levied in connection with the issuance of any Securities
        or the
        execution thereof.

       

      7.3
         Entire
        Agreement.
        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. At or after the Closing, and
        without further consideration, the Company will execute and deliver to the
        Purchasers such further documents as may be reasonably requested in order
        to
        give practical effect to the intention of the parties under the Transaction
        Documents. Notwithstanding anything to the contrary herein, Securities may
        be
        assigned to any Person in connection with a bona fide margin account or other
        loan or financing arrangement secured by such Company Securities.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.4
         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
        on the earliest of (a) the date of transmission, if such notice or communication
        is delivered via facsimile at the facsimile number specified in this Section
        prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading
        Day after the date of transmission, if such notice or communication is delivered
        via facsimile at the facsimile number specified in this Section on a day
        that is
        not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
        Day, (c) the Trading Day following the date of deposit with a nationally
        recognized overnight courier service, or (d) upon actual receipt by the party
        to
        whom such notice is required to be given. The addresses and facsimile numbers
        for such notices and communications are those set forth on the signature
        pages
        hereof, or such other address or facsimile number as may be designated in
        writing hereafter, in the same manner, by any such Person.

       

      7.5
         Amendments;
        Waivers.
        No
        provision of this Agreement may be waived or amended except in a written
        instrument signed, in the case of an amendment, by the Company and each of
        the
        Purchasers 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 Agreement 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. Notwithstanding the foregoing, a waiver
        or consent to depart from the provisions hereof with respect to a matter
        that
        relates exclusively to the rights of Purchasers under Article
        VI
        and that
        does not directly or indirectly affect the rights of other Purchasers may
        be
        given by Purchasers holding at least a majority of the Registrable Securities
        to
        which such waiver or consent relates.

       

      7.6
         Construction.
        The
        headings herein are for convenience only, do not constitute a part of this
        Agreement and shall not be deemed to limit or affect any of the provisions
        hereof. The language used in this Agreement will be deemed to be the language
        chosen by the parties to express their mutual intent, and no rules of strict
        construction will be applied against any party.

       

      7.7
         Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their successors and permitted assigns. The Company may not assign this
        Agreement or any rights or obligations hereunder without the prior written
        consent of the Purchasers. Any Purchaser may assign its rights under this
        Agreement to any Person to whom such Purchaser assigns or transfers any
        Securities, provided such transferee agrees in writing to be bound, with
        respect
        to the transferred Securities, by the provisions hereof that apply to the
        “Purchasers.” Notwithstanding anything to the contrary herein, Securities may be
        assigned to any Person in connection with a bona fide margin account or other
        loan or financing arrangement secured by such Securities.

       

      7.8
         No
        Third-Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        successors and permitted assigns and is not for the benefit of, nor may any
        provision hereof be enforced by, any other Person, except that each Related
        Person is an intended third party beneficiary of Section 4.4 and each
        Indemnified Party is an intended third party beneficiary of Section 6.4 and
        (in
        each case) may enforce the provisions of such Sections directly against the
        parties with obligations thereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.9
         Governing
        Law; Venue.
        ALL
        QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
        OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
        WITH THE LAWS OF ENGLAND. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT
        TO THE EXCLUSIVE JURISDICTION OF THE COMPETANT COURTS SITTING IN
        ENGLAND.

       

      7.10
         Survival.
        The
        representations, warranties, agreements and covenants contained herein shall
        survive the Closing and the delivery and/or exercise of the Securities, as
        applicable. 

       

      7.11
         Execution.
        This
        Agreement may be executed in two or more counterparts, all of which when
        taken
        together shall be considered one and the same agreement and shall become
        effective when counterparts have been signed by each party and delivered
        to the
        other party, it being understood that both parties need not sign the same
        counterpart. In the event that any signature is delivered by facsimile
        transmission, such signature shall create a valid and binding obligation
        of the
        party executing (or on whose behalf such signature is executed) with the
        same
        force and effect as if such facsimile signature page were an original
        thereof.

       

      7.12
         Severability.
        If any
        provision of this Agreement is held to be invalid or unenforceable in any
        respect, the validity and enforceability of the remaining terms and provisions
        of this Agreement 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 Agreement.

       

      7.13
         Replacement
        of Securities.
        If any
        certificate or instrument evidencing any Securities is mutilated, lost, stolen
        or destroyed, the Company shall issue or cause to be issued in exchange and
        substitution for and upon cancellation thereof, or in lieu of and substitution
        therefor, a new certificate or instrument, but only upon receipt of evidence
        reasonably satisfactory to the Company of such loss, theft or destruction
        and
        customary and reasonable indemnity, if requested. The applicants for a new
        certificate or instrument under such circumstances shall also pay any reasonable
        third-party costs associated with the issuance of such replacement
        Securities.

       

      7.14
         Remedies.
        In
        addition to being entitled to exercise all rights provided herein or granted
        by
        law, including recovery of damages, each of the Purchasers and the Company
        will
        be entitled to specific performance under the Transaction Documents. The
        parties
        agree that monetary damages may not be adequate compensation for any loss
        incurred by reason of any breach of obligations described in the foregoing
        sentence and hereby agrees to waive in any action for specific performance
        of
        any such obligation the defense that a remedy at law would be
        adequate.

       

      7.15
         Adjustments
        in Share Numbers and Prices.
        In the
        event of any stock split, subdivision, dividend or distribution payable in
        shares of Common Stock (or other securities or rights convertible into, or
        entitling the holder thereof to receive directly or indirectly shares of
        Common
        Stock), combination or other similar recapitalization or event occurring
        after
        the date hereof, each reference in any Transaction Document to a number of
        shares or a price per share shall be amended to appropriately account for
        such
        event.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.16
         Independent
        Nature of Purchasers' Obligations and Rights.
        The
        obligations of each Purchaser under any Transaction Document 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 under any Transaction Document. The decision of each Purchaser
        to
        purchase Securities pursuant to this Agreement has been made by such Purchaser
        independently of any other Purchaser and independently of any information,
        materials, statements or opinions as to the business, affairs, operations,
        assets, properties, liabilities, results of operations, condition (financial
        or
        otherwise) or prospects of the Company or of the Subsidiary which may have
        been
        made or given by any other Purchaser or by any agent or employee of any other
        Purchaser, and no Purchaser or any of its agents or employees shall have
        any
        liability to any other Purchaser (or any other person) relating to or arising
        from any such information, materials, statements or opinions. Nothing contained
        herein or in any Transaction Document, and no action taken by any Purchaser
        pursuant thereto, 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 by the
        Transaction Document. The Company hereby confirms that it understands and
        agrees
        that the Purchasers are not acting as a “group” as that term is used in Section
        13(d) of the Exchange Act. Each Purchaser acknowledges that no other Purchaser
        has acted as agent for such Purchaser in connection with making its investment
        hereunder and that no other Purchaser will be acting as agent of such Purchaser
        in connection with monitoring its investment hereunder. Each Purchaser shall
        be
        entitled to independently protect and enforce its rights, including without
        limitation the rights arising out of this Agreement or out of the other
        Transaction Documents, and it shall not be necessary for any other Purchaser
        to
        be joined as an additional party in any proceeding for such purpose. Each
        Purchaser represents that it has been represented by its own separate legal
        counsel in its review and negotiations of this Agreement and the Transaction
        Documents.

       

      7.17
         Announcements. The
        Company undertakes not to make any public announcements about the subject
        matter
        hereof without the prior written consent of each of the Purchasers, except
        as
        required by any laws, regulations or the rules of any Trading Market, in
        which
        case the Purchasers would be informed in advance about the timing and content
        of
        the announcement.

       

      


      


      


      


      


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

       

                              SULPHCO,
        INC.

       

                              By:
        ____________________________

                              Name: Rudolf
        W.
        Gunnerman

                              Title: Chief
        Executive Officer

       

                              Address
        for
        Notice:

       

                              850
        Spice Islands
        Drive, 

       

                              Sparks,
        NV
        89431

       

                              Facsimile
        No.: (775)
        829-1351

                              Telephone
        No.: (775)
        829-1310

                              Attn:
        Chief Executive
        Officer

       

      


       

      


      


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                              ______________________________________

       

                              By: __________________________

                              Name: 

                              Title: 

       

                              Number
        of
        Units:   ___________________

       

      


      


                              Address
        for
        Notice:

      


                              ______________________________________

                              ______________________________________

                              ______________________________________

                              ______________________________________

                              Facsimile
        No.:
        __________________________

                              Telephone
        No.:
        _________________________

                              Attn:
        __________________________________