sulphco_s3-ex0413.htm


    EXHIBIT
      4.13

     

    ALLONGE
      TO PROMISSORY NOTE

    


    This
      Allonge to Promissory Note (“Allonge”) is dated as of this 27th day of April,
      2007. Reference is hereby made to that certain Promissory Note dated December
      31, 2004, delivered by SulphCo, Inc., as Maker (“Maker”) to Rudolf Gunnerman, as
      lender, as assigned in part to ______________ (“Holder”), pursuant to that
      certain Assignment of Promissory Note, dated April 24, 2007 (“Assignment”), and
      as amended and restated by that certain Promissory Note, dated April 24, 2007,
      delivered by Maker to Holder (“Note”).

     

    WHEREAS,
      Maker has requested that Holder extend the Maturity Date of the Note for one
      year, and Holder has agreed to such extension subject to the other terms set
      forth herein.

     

    Except
      as
      expressly amended by the terms of this Allonge, the terms of the Note remain
      in
      full force and effect. All capitalized terms used and not defined herein are
      used as defined in the Note. As the context requires, all references herein
      to
“Note” refer to the Note as amended by this Allonge.

     

    The
      following terms of the Note are hereby amended by this Allonge:

     

    I.    Maturity
      Date and Additional Interest Payment Date.
      The
      Maturity Date shall mean December 31, 2008, and in the fourth paragraph of
      the
      Note, in the second line, the words “and December 31, 2006” shall be deleted and
      replaced with “December 31, 2006 and December 31, 2007” so as to add an interest
      payment due on December 31, 2007

     

    II.   The
      following is
      hereby added in its entirety:

    


    “Conversion.
      

     

    1.    
Conversion
      Privileges.
      Subject
      to Section II. B.3. below, the Conversion Privileges set forth in paragraph
      2
      below shall remain in full force and effect immediately from the date hereof
      and
      until the Note is paid in full regardless of the occurrence of an Event of
      Default. The Note shall be payable in full on the Maturity Date, unless
      previously converted into Common Stock in accordance with paragraph 2. below;
      provided, that if an Event of Default has occurred, the Holder may extend the
      Maturity Date up to an amount of time equal to the pendency of the Event of
      Default. Such extension must be on notice in writing.

     

    2.    
Conversion
      Rights.
      The
      Holder shall have the right to convert the principal due under this Note into
      shares (“Shares”) of the Maker's Common Stock, $.001 par value per share
      (“Common Stock”) as set forth below.

     

    2.1.   Conversion
      into the Maker's Common Stock.

     

    (a)    Subject
      to Section II. 3. below, the Holder shall have the right from and after the
      date
      of the issuance of this Note and then at any time until this Note is fully
      paid,
      to convert any outstanding and unpaid principal portion of this Note, at the
      election of the Holder (the date of giving of such notice of conversion being
      a
      "Conversion Date") into fully paid and nonassessable shares of Common Stock
      as
      such stock exists on the date of issuance of this Note, or any shares of capital
      stock of Maker into which such Common Stock shall hereafter be changed or
      reclassified, at the conversion price as defined in paragraph 2.1(b) hereof
      (the
      "Conversion Price"), determined as provided herein. Upon delivery to the Maker
      of a completed Notice of Conversion, a form of which is annexed hereto, Maker
      shall issue and deliver to the Holder within three (3) business days after
      the
      Conversion Date (such third day being the “Delivery Date”) that number of shares
      of Common Stock for the portion of the Note converted in accordance with the
      foregoing. At the election of the Holder, the Maker will deliver accrued but
      unpaid interest on the Note, if any, through the Conversion Date directly to
      the
      Holder on or before the Delivery Date. The number of shares of Common Stock
      to
      be issued upon each conversion of this Note shall be determined by dividing
      that
      portion of the principal of the Note to be converted by the Conversion
      Price.

     

    
      
        
        

      

      
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    (b)    Subject
      to adjustment as provided in paragraph 2.1(c) hereof, the Conversion Price
      per
      share shall be $3.80, subject to adjustment as described herein.

     

    (c)    The
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion determined pursuant to Section 2.1(a), shall be subject to
      adjustment from time to time upon the happening of certain events while this
      conversion right remains outstanding, as follows:

     

     A.    Merger,
      Sale of Assets, etc. If the Maker at any time shall consolidate with or merge
      into or sell or convey all or substantially all its assets to any other
      corporation, this Note, as to the unpaid principal portion thereof and accrued
      interest thereon, shall thereafter be deemed to evidence the right to purchase
      such number and kind of shares or other securities and property as would have
      been issuable or distributable on account of such consolidation, merger, sale
      or
      conveyance, upon or with respect to the securities subject to the conversion
      or
      purchase right immediately prior to such consolidation, merger, sale or
      conveyance. The foregoing provision shall similarly apply to successive
      transactions of a similar nature by any such successor or purchaser. Without
      limiting the generality of the foregoing, the anti-dilution provisions of this
      Section shall apply to such securities of such successor or purchaser after
      any
      such consolidation, merger, sale or conveyance.

     

     B.    Reclassification,
      etc. If the Maker at any time shall, by reclassification or otherwise, change
      the Common Stock into the same or a different number of securities of any class
      or classes that may be issued or outstanding, this Note, as to the unpaid
      principal portion thereof and accrued interest thereon, shall thereafter be
      deemed to evidence the right to purchase an adjusted number of such securities
      and kind of securities as would have been issuable as the result of such change
      with respect to the Common Stock immediately prior to such reclassification
      or
      other change.

     

     C.    Stock
      Splits, Combinations and Dividends. If the shares of Common Stock are subdivided
      or combined into a greater or smaller number of shares of Common Stock, or
      if a
      dividend is paid on the Common Stock in shares of Common Stock, the Conversion
      Price shall be proportionately reduced in case of subdivision of shares or
      stock
      dividend or proportionately increased in the case of combination of shares,
      in
      each such case by the ratio which the total number of shares of Common Stock
      outstanding immediately after such event bears to the total number of shares
      of
      Common Stock outstanding immediately prior to such event.

     

    (d)    Whenever
      the Conversion Price is adjusted pursuant to paragraph 2.1(c) above, the Maker
      shall promptly mail to the Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

     

    (e)    During
      the period the conversion right exists, Maker will reserve from its authorized
      and unissued Common Stock a sufficient number of shares to provide for the
      issuance of Common Stock issuable upon the full conversion of this Note and
      as
      described herein below. Maker represents that upon issuance, such shares will
      be
      duly and validly issued, fully paid and non-assessable. Maker agrees that its
      issuance of this Note shall constitute full authority to its officers, agents,
      and transfer agents who are charged with the duty of executing and issuing
      stock
      certificates to execute and issue the necessary certificates for shares of
      Common Stock upon the conversion of this Note.

     

    2.2.   Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part as described in Section
      2.1(a) hereof. Upon partial conversion of this Note, a new Note containing
      the
      same date and provisions of this Note shall, at the request of the Holder,
      be
      issued by the Maker to the Holder for the principal balance of this Note and
      interest which shall not have been paid, and in any case, the unconverted amount
      of principal and all unpaid interest shall be duly noted in the books and
      records of Maker.

     

    
      
        
        

      

      
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    2.3.   Maximum
      Conversion.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Note in connection with that number of shares of Common Stock which would be
      in
      excess of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock
      issuable in connection with the unconverted portion of the Note, and (iii)
      the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Holder and
      its affiliates of more than 4.99% of the outstanding shares of Common Stock
      of
      the Maker on such Conversion Date. For the purposes of the provision to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      2.3 will limit any conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of which portion of the Notes are convertible shall be the
      responsibility and obligation of the Holder. The Holder may waive the conversion
      limitation described in this Section 2.3, in whole or in part, upon and
      effective after 61 days prior written notice to the Maker to increase such
      percentage to up to 9.99%. The Holder may allocate which of the equity of the
      Maker deemed beneficially owned by the Holder shall be included in the 4.99%
      amount or up to 9.99% amount as described above.

     

    3.    
Reservation.
      Maker
      will reserve on behalf of all of Holder from its authorized but unissued Common
      Stock a number of common shares equal to 100% of the amount of Common Stock
      necessary to allow each holder of a Note to be able to convert all such
      outstanding principal balance of holder’s Note.

    


    III.    Legend.
      The
      Note bears the following legend: THIS NOTE AND THE COMMON SHARES ISSUABLE UPON
      CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION
      OF
      THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
      OR
      AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SULPHCO, INC. THAT SUCH
      REGISTRATION IS NOT REQUIRED.

     

    IV.   The
      following is
      hereby added in its entirety:

     

    “Registration.

     

    4.1.    Registration
      Rights.
      The
      Maker hereby grants the following registration rights to holders of the Notes
      and certain Stock Option Agreements being executed and delivered on or about
      April 26, 2006 and certain shares of stock purchased in connection therewith.
      The
      Maker
      shall file with the Commission a Form S-3 registration statement (the
“Registration
      Statement”)
      (or
      such other form that it is eligible to use) in order to register (i) all shares
      issuable upon Conversion of this Note, (ii) shares issuable upon exercise by
      Holder of the Stock Option Agreement, executed and delivered in connection
      with
      the Assignment, (iii) 125,000 shares of Maker Common Stock purchased by certain
      Note holders on or about April 26, 2007 from Gunnerman (“Stock Purchase”), and
      (iv) 125,000 shares issuable upon exercise by Holder of the Stock Option
      Agreement, executed and delivered in connection with the Stock Purchase for
      resale and distribution under the 1933 Act by June 8, 2007 (the “Filing
      Date”),
      and
      shall use commercially reasonable efforts to cause such Registration Statement
      to be declared effective as soon as possible thereafter . The Maker will
      register not less than a number of shares of common stock in the aforedescribed
      registration statement that is equal to 100% of the Shares described in the
      second sentence of this paragraph 4.1 and as more fully set forth on Schedule
      4.1 hereto (collectively the “Registrable
      Securities”).
      The
      Registrable Securities shall be reserved and set aside exclusively for the
      benefit of each holder listed on Schedule 4.1, pro rata,
      and not
      issued, employed or reserved for anyone other than each such holder listed
      on
      Schedule 4.1. The Registration Statement will immediately be amended or
      additional registration statements will be immediately filed by the Maker as
      necessary to register additional shares of Common Stock to allow the public
      resale of all Common Stock included in and issuable by virtue of the Registrable
      Securities

     

    
      
        
        

      

      
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    4.2.    Registration
      Procedures.
      If and
      whenever the Maker is required by the provisions of Section 4.1 to effect the
      registration of any Registrable Securities under the 1933 Act, the Maker will,
      as expeditiously as possible: 

     

    (a)    subject
      to the timelines provided in this Agreement, prepare and file with the
      Commission a registration statement required by Section 4, with respect to
      such
      securities and use its best efforts to cause such registration statement to
      become and remain effective for the period of the distribution contemplated
      thereby (determined as herein provided but not less than 2 years), promptly
      provide to the holders of the Registrable Securities copies of all filings
      and
      Commission letters of comment and notify Holders (by telecopier and by e-mail
      addresses provided by Holders) and Grushko & Mittman, P.C. (by telecopier
      and by email to Counslers@aol.com)
      on or
      before the first business day thereafter that the Maker receives notice that
      (i)
      the Commission has no comments or no further comments on the Registration
      Statement, and (ii) the registration statement has been declared
      effective;

     

    (b)    prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective until such registration
      statement has been effective for a period of two (2) years, and comply with
      the
      provisions of the 1933 Act with respect to the disposition of all of the
      Registrable Securities covered by such registration statement in accordance
      with
      the Sellers’ intended method of disposition set forth in such registration
      statement for such period; 

     

    (c)    furnish
      to the Sellers, at the Maker’s expense, such number of copies of the
      registration statement and the prospectus included therein (including each
      preliminary prospectus) as such persons reasonably may request in order to
      facilitate the public sale or their disposition of the securities covered by
      such registration statement or make them electronically available;

     

    (d)    use
      its
commercially
      reasonable best efforts to register or qualify the Registrable Securities
      covered by such registration statement under the securities or “blue sky” laws
      of New York and such jurisdictions as the Sellers shall request in writing,
      provided, however, that the Maker shall not for any such purpose be required
      to
      qualify generally to transact business as a foreign corporation in any
      jurisdiction where it is not so qualified or to consent to general service
      of
      process in any such jurisdiction; 

     

    (e)    if
      applicable, list the Registrable Securities covered by such registration
      statement with any securities exchange on which the Common Stock of the Maker
      is
      then listed;

     

    (f)    notify
      the Holders within 24 hours of the Maker’s becoming aware that a prospectus
      relating thereto is required to be delivered under the 1933 Act, of the
      happening of any event of which the Maker has knowledge as a result of which
      the
      prospectus contained in such registration statement, as then in effect, includes
      an untrue statement of a material fact or omits to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading in light of the circumstances then existing or which becomes subject
      to a Commission, state or other governmental order suspending the effectiveness
      of the registration statement covering any of the Registrable
      Securities;

     

    (g)    provided
      same would not be in violation of the provision of Regulation FD under the
      1934
      Act, make available for inspection by the Sellers, and any attorney, accountant
      or other agent retained by the Seller or underwriter, all publicly available,
      non-confidential financial and other records, pertinent corporate documents
      and
      properties of the Maker, and cause the Maker's officers, directors and employees
      to supply all publicly available, non-confidential information reasonably
      requested by the seller, attorney, accountant or agent in connection with such
      registration statement; and

     

    (h)    provide
      to the Sellers copies of the Registration Statement and amendments thereto
      five
      business days prior to the filing thereof with the Commission.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.3.    Provision
      of Documents.
      In
      connection with each registration described in this Section 4, each Seller
      will
      furnish to the Maker in writing such information and representation letters
      with
      respect to itself and the proposed distribution by it as reasonably shall be
      necessary in order to assure compliance with federal and applicable state
      securities laws.

     

    4.4.    Non-Registration
      Events.
      The
      Maker and the holders listed on Schedule 4.1 hereto agree that the Sellers
      will
      suffer damages if any registration statement described in Section 4 is not
      filed
      by the Filing Date (the “Non-Registration Event”). If the Non-Registration Event
      occurs, then the Maker shall deliver to the holder of Registrable Securities,
      as
Liquidated
      Damages,
      an
      amount equal to one percent (1%) for each thirty (30) days (or such lesser
      pro-rata amount for any period of less than thirty (30) days) of the Principal
      Amount of the outstanding Notes and purchase price of Shares issued upon
      conversion of the Notes owned of record by such holder which are subject to
      the
      Non-Registration Event. The Maker may pay the Liquidated Damages in cash. The
      maximum amount of Liquidated Damages payable in connection with Non-Registration
      Event may not exceed twelve percent (12%). The Liquidated Damages must be paid
      within ten (10) days after the end of each thirty (30) day period or shorter
      part thereof for which Liquidated Damages are payable. Notwithstanding the
      foregoing, the Maker shall not be liable to the Holder under this Section 4.4
      for any events or delays occurring as a consequence of the acts or omissions
      of
      the Holders contrary to the obligations undertaken by Holders in this Agreement.
      Liquidated Damages will not accrue nor be payable pursuant to this Section
      4.4
      nor will the Non-Registration Event be deemed to have occurred for times during
      which Registrable Securities are transferable by the holder of Registrable
      Securities pursuant to Rule 144(k) under the 1933 Act.

     

    4.5.    Expenses.
      All
      expenses incurred by the Maker in complying with Section 4, including, without
      limitation, all registration and filing fees, printing expenses (if required),
      fees and disbursements of counsel and independent public accountants for the
      Maker, fees and expenses (including reasonable counsel fees) incurred in
      connection with complying with state securities or “blue sky” laws, fees of the
      National Association of Securities Dealers, Inc., transfer taxes, and fees
      of
      transfer agents and registrars, are called “Registration
      Expenses.”
All
      underwriting discounts and selling commissions applicable to the sale of
      Registrable Securities are called "Selling
      Expenses."
      The
      Maker will pay all Registration Expenses in connection with the registration
      statement under Section 4. Selling Expenses in connection with each registration
      statement under Section 4 shall be borne by the Seller and may be apportioned
      among the Sellers in proportion to the number of shares sold by the Seller
      relative to the number of shares sold under such registration statement or
      as
      all Sellers thereunder may agree.

     

    4.6.    Indemnification
      and Contribution.

     

    (a)    In
      the
      event of a registration of any Registrable Securities under the 1933 Act
      pursuant to Section 4, the Maker will, to the extent permitted by law, indemnify
      and hold harmless the Seller, each officer of the Seller, each director of
      the
      Seller, each underwriter of such Registrable Securities thereunder and each
      other person, if any, who controls such Seller or underwriter within the meaning
      of the 1933 Act, against any losses, claims, damages or liabilities, joint
      or
      several, to which the Seller, or such underwriter or controlling person may
      become subject under the 1933 Act or otherwise, insofar as such losses, claims,
      damages or liabilities (or actions in respect thereof) arise out of or are
      based
      upon any untrue statement or alleged untrue statement of any material fact
      contained in any registration statement under which such Registrable Securities
      was registered under the 1933 Act pursuant to Section 4, any preliminary
      prospectus or final prospectus contained therein, or any amendment or supplement
      thereof, or arise out of or are based upon the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading in light of the circumstances when made,
      and will subject to the provisions of Section 4.6(c) reimburse the Seller,
      each
      such underwriter and each such controlling person for any legal or other
      expenses reasonably incurred by them in connection with investigating or
      defending any such loss, claim, damage, liability or action; provided, however,
      that the Maker shall not be liable to the Seller to the extent that any such
      damages arise out of or are based upon an untrue statement or omission made
      in
      any preliminary prospectus if (i) the Seller failed to send or deliver a copy
      of
      the final prospectus delivered by the Maker to the Seller with or prior to
      the
      delivery of written confirmation of the sale by the Seller to the person
      asserting the claim from which such damages arise, (ii) the final prospectus
      would have corrected such untrue statement or alleged untrue statement or such
      omission or alleged omission, or (iii) to the extent that any such loss, claim,
      damage or liability arises out of or is based upon an untrue statement or
      alleged untrue statement or omission or alleged omission so made in conformity
      with information furnished by any such Seller, or any such controlling person
      in
      writing specifically for use in such registration statement or prospectus.
      

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b)    In
      the
      event of a registration of any of the Registrable Securities under the 1933
      Act
      pursuant to Section 4, each Seller severally, but not jointly, will, to the
      extent permitted by law, indemnify and hold harmless the Maker, and each person,
      if any, who controls the Maker within the meaning of the 1933 Act, each officer
      of the Maker who signs the registration statement, each director of the Maker,
      each underwriter and each person who controls any underwriter within the meaning
      of the 1933 Act, against all losses, claims, damages or liabilities, joint
      or
      several, to which the Maker or such officer, director, underwriter or
      controlling person may become subject under the 1933 Act or otherwise, insofar
      as such losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact contained in the registration statement under which such
      Registrable Securities were registered under the 1933 Act pursuant to Section
      4,
      any preliminary prospectus or final prospectus contained therein, or any
      amendment or supplement thereof, or arise out of or are based upon the omission
      or alleged omission to state therein a material fact required to be stated
      therein or necessary to make the statements therein not misleading, and will
      reimburse the Maker and each such officer, director, underwriter and controlling
      person for any legal or other expenses reasonably incurred by them in connection
      with investigating or defending any such loss, claim, damage, liability or
      action, provided, however, that the Seller will be liable hereunder in any
      such
      case if and only to the extent that any such loss, claim, damage or liability
      arises out of or is based upon an untrue statement or alleged untrue statement
      or omission or alleged omission made in reliance upon and in conformity with
      information pertaining to such Seller, as such, furnished in writing to the
      Maker by such Seller specifically for use in such registration statement or
      prospectus, and provided, further, however, that the liability of the Seller
      hereunder shall be limited to the net proceeds actually received by the Seller
      from the sale of Registrable Securities covered by such registration
      statement.

     

    (c)    Promptly
      after receipt by an indemnified party hereunder of notice of the commencement
      of
      any action, such indemnified party shall, if a claim in respect thereof is
      to be
      made against the indemnifying party hereunder, notify the indemnifying party
      in
      writing thereof, but the omission so to notify the indemnifying party shall
      not
      relieve it from any liability which it may have to such indemnified party other
      than under this Section 4.6(c) and shall only relieve it from any liability
      which it may have to such indemnified party under this Section 4.6(c), except
      and only if and to the extent the indemnifying party is prejudiced by such
      omission. In case any such action shall be brought against any indemnified
      party
      and it shall notify the indemnifying party of the commencement thereof, the
      indemnifying party shall be entitled to participate in and, to the extent it
      shall wish, to assume and undertake the defense thereof with counsel
      satisfactory to such indemnified party, and, after notice from the indemnifying
      party to such indemnified party of its election so to assume and undertake
      the
      defense thereof, the indemnifying party shall not be liable to such indemnified
      party under this Section 4.6(c) for any legal expenses subsequently incurred
      by
      such indemnified party in connection with the defense thereof other than
      reasonable costs of investigation and of liaison with counsel so selected,
      provided, however, that, if the defendants in any such action include both
      the
      indemnified party and the indemnifying party and the indemnified party shall
      have reasonably concluded that there may be reasonable defenses available to
      it
      which are different from or additional to those available to the indemnifying
      party or if the interests of the indemnified party reasonably may be deemed
      to
      conflict with the interests of the indemnifying party, the indemnified parties,
      as a group, shall have the right to select one separate counsel and to assume
      such legal defenses and otherwise to participate in the defense of such action,
      with the reasonable expenses and fees of such separate counsel and other
      expenses related to such participation to be reimbursed by the indemnifying
      party as incurred.

     

    (d)    In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the 1933 Act in any case in which either (i) a Seller, or any controlling
      person of a Seller, makes a claim for indemnification pursuant to this Section
      4.6 but it is judicially determined (by the entry of a final judgment or decree
      by a court of competent jurisdiction and the expiration of time to appeal or
      the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 4.6 provides
      for indemnification in such case, or (ii) contribution under the 1933 Act may
      be
      required on the part of the Seller or controlling person of the Seller in
      circumstances for which indemnification is not provided under this Section
      4.6;
      then, and in each such case, the Maker and the Seller will contribute to the
      aggregate losses, claims, 

     

    
      
        
        

      

      
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      damages
        or liabilities to which they may be subject (after contribution from others)
        in
        such proportion so that the Seller is responsible only for the portion
        represented by the percentage that the public offering price of its securities
        offered by the registration statement bears to the public offering price
        of all
        securities offered by such registration statement, provided, however, that,
        in
        any such case, (y) the Seller will not be required to contribute any amount
        in
        excess of the public offering price of all such securities sold by it pursuant
        to such registration statement; and (z) no person or entity guilty of fraudulent
        misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will
        be
        entitled to contribution from any person or entity who was not guilty of
        such
        fraudulent misrepresentation.

       

      4.7.    Delivery
        of Unlegended Shares.

       

      (a)    Within
        FIVE (5) business days (such third business day being the “Unlegended
        Shares Delivery Date”)
        after
        the business day on which the Maker has received (i) a notice that shares
        of
        stock issued upon a conversion of the Note or any other Common Stock deemed
        Registrable Securities have been sold pursuant to the Registration Statement
        or
        Rule 144 under the 1933 Act, (ii) a representation that the prospectus delivery
        requirements, or the requirements of Rule 144, as applicable and if required,
        have been satisfied, (iii) the original share certificates representing the
        shares of Common Stock that have been sold, and (iv) in the case of sales
        under
        Rule 144, customary representation letters of the Holder and/or Holder’s broker
        regarding compliance with the requirements of Rule 144, the Maker at its
        expense, (y) shall deliver, and shall cause legal counsel selected by the
        Maker
        to deliver to its transfer agent (with copies to Holder) an appropriate
        instruction and opinion of such counsel, directing the delivery of shares
        of
        Common Stock without any legends including the legend set forth in Section
        4(i)
        above,
        reissuable pursuant to any effective and current Registration Statement
        described in Section 4 of this Agreement or pursuant to Rule 144 under the
        1933
        Act (the “Unlegended
        Shares”);
        and
        (z) cause the transmission of the certificates representing the Unlegended
        Shares together with a legended certificate representing the balance of the
        submitted Shares certificate, if any, to the Holder at the address specified
        in
        the notice of sale, via express courier, by electronic transfer or otherwise
        on
        or before the Unlegended Shares Delivery Date.

       

      (b)    In
        lieu
        of delivering physical certificates representing the Unlegended Shares, if
        the
        Maker’s transfer agent is participating in the Depository Trust Company
        (“DTC”)
        Fast
        Automated Securities Transfer program, upon request of a Holder, so long
        as the
        certificates therefor do not bear a legend and the Holder is not obligated
        to
        return such certificate for the placement of a legend thereon, the Maker
        shall
        cause its transfer agent to electronically transmit the Unlegended Shares
        by
        crediting the account of Holder’s prime Broker with DTC through its Deposit
        Withdrawal Agent Commission system. Such delivery must be made on or before
        the
        Unlegended Shares Delivery Date.

       

      V.    The
        following
        is hereby added in its entirety:

       

      Negative
        Covenants.
        So long
        as at least $2 million of the principal amount of the Notes is outstanding,
        without the written consent of the holders of a majority of the aggregate
        principal amount of the Notes outstanding as of the date of the request ,
        the
        Maker will not and will not permit any of its subsidiaries to directly or
        indirectly:

       

      (i)    create,
        incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
        arrangement, lien, charge, claim, security interest, security title, mortgage,
        security deed or deed of trust, easement or encumbrance, or preference, priority
        or other security agreement or preferential arrangement of any kind or nature
        whatsoever (including, without limitation, any lease or title retention
        agreement, any financing lease having substantially the same economic effect
        as
        any of the foregoing, and the filing of, or agreement to give, any financing
        statement perfecting a security interest under the Uniform Commercial Code
        or
        comparable law of any jurisdiction) which is senior to the obligations owed
        to
        the Holders under the Note and Allonge (each, a “Lien”) upon any of its
        property, whether now owned or hereafter acquired, except for: (i) (a) Liens
        imposed by law for taxes that are not yet due or are being contested in good
        faith and for which adequate reserves have been established in accordance
        with
        generally accepted accounting principles; (b) carriers’, warehousemen’s,
        mechanics’, material men’s, repairmen’s and other like Liens imposed by law,
        arising in the ordinary course of business and securing obligations that
        are

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

         

        not
          overdue by more than 30 days or that are being contested in good faith
          and by
          appropriate proceedings; (c) pledges and deposits made in the ordinary
          course of
          business in compliance with workers’ compensation, unemployment insurance and
          other social security laws or regulations; (d) deposits to secure the
          performance of bids, trade contracts, leases, statutory obligations, surety
          and
          appeal bonds, performance bonds and other obligations of a like nature,
          in each
          case in the ordinary course of business; (e) Liens created with respect
          to the
          financing of the purchase of property or lease of equipment in the ordinary
          course of the Maker’s business up to the amount of the purchase price of such
          property; and (f) easements, zoning restrictions, rights-of-way and similar
          encumbrances on real property imposed by law or arising in the ordinary
          course
          of business that do not secure any monetary obligations and do not materially
          detract from the value of the affected property (each of (a) through (f),
          a
“Permitted Lien”) and (ii) indebtedness for borrowed money which is not senior
          or pari passu in right of payment to the payment of the Notes or distribution
          of
          the Maker’s assets, and for which an appropriate subordination agreement has
          been executed and delivered which is acceptable to the Holder in its sole
          discretion;

         

        (ii)    amend
          its
          certificate of incorporation, by-laws or its charter documents so as to
          adversely affect any rights of the Holder;

         

        (iii)   repay,
          repurchase or offer to repay, repurchase or otherwise acquire or make any
          dividend or distribution in respect of any of its Common Stock, preferred
          stock,
          or other equity securities

         

        (iv)    prepay
          or
          redeem any financing related debt or past due obligations outstanding as
          of the
          Closing Date, unless such financing otherwise provides for prepayment or
          redemption by its terms;

         

        or

         

        (v)    the
          Maker
          agrees to provide Holder not
          less
          than ten days notice prior to becoming
          obligated to or effectuating a Permitted Lien.” 

      

    

    


    For
      avoidance of doubt, the Maker may create, incur, assume or suffer to exist
      any
      Lien that is junior or pari passu to the Notes.

     

    VI.    The
      following
      are hereby added as “Events of Default” under the Note:

     

    1.    Breach
      of Material Covenant.
      The
      Maker breaches any material covenant or other term or condition of this Note
      (unless any such covenant, etc. contains a shorter notice or cure period) in
      any
      material respect and such breach, if subject to cure, continues for a period
      of
      ten (10) business days after written notice to the Maker from the
      Holder.

     

    2.    Delisting
      of
      the Maker’s Common Stock from any principal market on which it is listed (i.e.:
      Over the Counter Bulletin Board or American Stock Exchange, etc. (“Principal
      Market”); failure to comply with the requirements for continued listing on a
      Principal Market for a period of fifteen consecutive trading days; or
      notification from a Principal Market that the Maker is not in compliance with
      the conditions for such continued listing on such Principal Market.

     

    3.    Stop
      Trade.
      An SEC
      or judicial stop trade order or Principal Market trading suspension with respect
      to Maker’s Common Stock that lasts for fifteen or more consecutive trading
      days.4
      Failure
      to Deliver Common Stock or Replacement Note.
      Maker's
      failure to timely deliver Common Stock to the Holder pursuant to and in the
      form
      required by this Note and, if requested by Holder, a replacement
      Note.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    4.    Cross
      Default.
      A
      default by the Maker of a material term, covenant, warranty or undertaking
      of
      any agreement executed in connection with the Assignment or the Stock Purchase
      agreement to which the Maker and Holder are parties, or the occurrence of a
      material event of default under such agreements which is not cured after any
      required notice and/or cure period.

    


    VII.   The
      governing law
      for the Note shall be the State of New York and the Note shall be deemed to
      be
      executed and delivered in the State of New York. The following governing law
      provision shall apply:

    


    “This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      New York. Any action brought by either party against the other concerning the
      transactions contemplated by this Agreement shall be brought only in the state
      courts of New York or in the federal courts located in the state of New York.
      Both parties and the individual signing this Agreement on behalf of the Maker
      agree to submit to the jurisdiction of such courts. The prevailing party shall
      be entitled to recover from the other party its reasonable attorney's fees
      and
      costs. This
      Note shall be deemed an unconditional obligation of Maker for the payment of
      money and, without limitation to any other remedies of Holder, may be enforced
      against Maker by summary proceeding pursuant to New York Civil Procedure Law
      and
      rules Section 3213 or any similar rule or statute in the jurisdiction where
      enforcement is sought.”

    


    Miscellaneous.
      This
      Allonge must be delivered by original signature for Maker, but the Holder may
      execute and deliver by facsimile copy.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Allonge as of the date
      first written above.

    


    SULPHCO,
      INC.

    


    


    


    By:______________________________

    Name:

    Title:

    


    [NAME
      OF
      HOLDER]

    


    


    


    By:______________________________

    Name:

    Title:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Registered Holder in order to convert the Note)

    


    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by SulphCo Inc. on April __, 2007 into
      Shares of Common Stock of SulphCo Inc. (the "Maker") according to the conditions
      set forth in such Note, as of the date written below.

    


     

    Date
      of
      Conversion:____________________________________________________________________

    


    


    Conversion
      Price:______________________________________________________________________

    


    


    Shares
      To
      Be
      Delivered:_________________________________________________________________

    


    


    Signature:____________________________________________________________________________

    


    


    Print
      Name:___________________________________________________________________________

    


    


    Address:_____________________________________________________________________________

    


    ____________________________________________________________________________________

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

      Schedule
        4.1 to Allonge to Promissory Note, dated April 27, 2007

    

    


    
      	
              Name

            	 	
              Note

              Conversion
                Shares

            	 	
              Option
                Shares

              from
                Note

              Assignment

              Option

            	 	
              Stock

              Purchase

              Shares

            	 	
              Option
                Shares

              from
                Stock

              Purchase

              Option

            	 	
              Total

            	 
	 	 	 	 	 	 	
               

            	 	
               

            	 	 	 
	
              Ellis
                Capital LLC

            	 	 	
              305,281

            	 	 	
              348,020

            	 	 	 	 	 	 	 	 	
              653,301

            	 
	
              Mayflower
                Oak LLC

            	 	 	
              348,939

            	 	 	
              397,790

            	 	 	
              62,500

            	 	 	
              62,500

            	 	 	
              871,729

            	 
	
              Iroquois
                Master Fund Ltd.

            	 	 	
              218,087

            	 	 	
              248,619

            	 	 	
              62,500

            	 	 	
              62,500

            	 	 	
              591,705

            	 
	
              Scott
                Cohen

            	 	 	
              114,819

            	 	 	
              130,893

            	 	 	 	 	 	 	 	 	
              245,712

            	 
	
              Scott
                Jason Cohen Foundatation Inc.

            	 	 	
              23,263

            	 	 	
              26,519

            	 	 	 	 	 	 	 	 	
              49,782

            	 
	
              Merav
                Abbe Irrevocable Trust

            	 	 	
              138,081

            	 	 	
              157,412

            	 	 	 	 	 	 	 	 	
              295,494

            	 
	
              Ed
                Rosenblum

            	 	 	
              43,617

            	 	 	
              49,724

            	 	 	 	 	 	 	 	 	
              93,341

            	 
	
              Devidas
                Budrani 

            	 	 	
              94,464

            	 	 	
              107,689

            	 	 	 	 	 	 	 	 	
              202,153

            	 
	
              Joshua
                Silverman

            	 	 	
              14,620

            	 	 	
              16,667

            	 	 	 	 	 	 	 	 	
              31,287

            	 
	
              Phil
                Mirabelli

            	 	 	
              14,620

            	 	 	
              16,667

            	 	 	 	 	 	 	 	 	
              31,287

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              TOTALS

            	 	 	
              1,315,791

            	 	 	
              1,500,000

            	 	 	
              125,000

            	 	 	
              125,000

            	 	 	
              3,065,791

            	 


    

    


     

    12