Unassociated Document


    EXHIBIT 4.1


    AMENDMENT
      NO. 1 TO SECURITIES
      PURCHASE AGREEMENTS AND WARRANTS 

    


     

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

     

    RECITALS

     

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

          


     

    	2.
                	
            The
              Company and the Purchasers now wish to further modify certain terms
              of the
              Warrants. 

          


     

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

     

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

          


     

    	1.1   
                	
            The
              Exercise Price on the 2006 Warrants shall be reduced from $6.805 to
              $2.68
              (the “Market Price”).

          


     

    	1.2   
                	
            The
              Company and each Purchaser agree that Section 4(a) of the 2006 Warrant
              shall be deleted and replaced in its entirety as
              follows:

          


     

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

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    	1.3    
              	
            Subject
              to the terms hereof, each Purchaser agrees to exercise (i) 100% of
              the
              June 1st
              Warrants and June 14th
              Warrants issued to such Purchaser and (ii) 50% of the 2006 Warrants
              issued
              to such Purchaser, in each case as set forth on Schedule
              A
              hereto on the Business Day following the date of this Agreement (“Closing
              Date”). In consideration for such exercise, the Company shall issue to
              each Purchaser a warrant in the form of Exhibit
              A
              attached hereto (the “Additional Warrants”), registered in the name of
              such Purchaser, pursuant to which such Purchaser shall have the right
              to
              acquire the number of shares of Common Stock indicated opposite such
              Purchaser’s name on Schedule
              A
              hereto under the heading “Additional Warrant Shares” at an Exercise Price
              equal to the Market Price per share.

          


     

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

          


     

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

          


     

    	2.1    
              	
            On
              the Closing Date, the Company shall (i) issue to each Purchaser a warrant
              in the form of Exhibit
              A
              hereto, registered in the name of such Purchaser pursuant to which
              such
              Purchaser shall have the right to acquire the number of shares of Common
              Stock indicated opposite such Purchaser’s name on
              Schedule A
              hereto under the heading “Additional Warrant Shares”, and (ii) issue to
              each Purchaser a certificate representing the number of Warrant Shares
              exercised under the Warrants.

          


     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    	2.2    
              	
            On
              the Closing Date, each Purchaser shall deliver to the Company the Exercise
              Notice required under the Warrants and the Exercise Price in immediately
              available funds.

          


     

    	3.            
            	
            Registration.
              

          


     

    	3.1      
             	
            The
              Company will use commercially reasonable efforts to prepare and file
              a
              registration statement (the “Additional Registration Statement”) to cover
              all shares of Common Stock issuable under the Additional Warrants (the
              “Additional Registrable Securities”) as soon as possible, but in no event
              later than 90 days after the Closing Date (the “Filing Date”). The Company
              will use its commercially reasonable efforts to cause the Additional
              Registration Statement to be declared effective as soon as
              possible.

          


     

    	3.2     
              	
            The
              Company shall use commercially reasonable efforts to prepare and file
              a
              post-effective amendment to the registration statement (the “Registration
              Statement”) covering the June 1st
              Warrants and the June 14th
              Warrants as soon as possible, but in no event later than April 6, 2007
              (the “Post Effective Amendment Filing Date”). The Company will use its
              commercially reasonable efforts to cause such Registration Statement
              to be
              declared effective as soon as possible.

          


     

    	3.3     
              	
            The
              Company hereby agrees to amend and restate the Company’s Form 10-Q for the
              periods ending March 31, 2006, June 30, 2006 and September 30, 2006
              within
              15 days of the Closing Date (the “Restatement Filing
              Date”).

          


     

    	3.4     
              	
            In
              the event the Company does not file the Additional Registration Statement
              by the Filing Date or the post effective amendment to the Registration
              Statement by the Post Effective Amendment Filing Date (each, an “Event”),
              each Purchaser shall be entitled to receive on the date of such Event
              (the
              “Event Date”) an amount in cash, as partial liquidated damages and not as
              a penalty, equal to 1% of the aggregate Exercise Price paid by such
              Purchaser pursuant to Section 2.2 of this Amendment; and on each monthly
              anniversary of the Event Date thereof (if the applicable Event has
              not
              been cured), the Company shall pay to each Purchaser an amount in cash,
              as
              partial liquidated damages and not as a penalty, equal to 1% of the
              aggregate purchase price paid by such Purchaser pursuant to the Section
              2.2 of this Amendment (the “Liquidated Damages”). The Liquidated Damages
              shall not exceed 12% of the aggregate Exercise Price paid by each
              respective Purchaser pursuant to Section 2.2 of this Amendment.
              

          


     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

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

          


     

    	5.            
            	
            Representations
              and Warranties.

          


     

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

          


     

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

          


     

    	6.            
            	
            Miscellaneous.

          


     

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

          


     

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

          


     

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

          


     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

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

          


     

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

          


     

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

          


     

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

          


     

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

          


     

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

          


     

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

          


     

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

          


     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

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

          


     

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

          


     

    (Signature
      Pages Follow)

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    


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

     

    
      	 	
              SULPHCO,
                INC.

               

            
	 	
              By:
                /s/
                Loren
                Kalmen                                                                   

              Name:
                Loren Kalmen

              Title:
                CFO

            


    

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASERS FOLLOWS]

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

    Name
      of
      Investing Entity:
      ________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      __________________________________

    Name
      of
      Authorized Signatory:
      ____________________________________________________

    Title
      of
      Authorized Signatory:
      _____________________________________________________

    Email
      Address of Authorized
      Entity:_________________________________________________

    


    
      
         

      

      
        8

        
          

        

      

      
         

      

    


    Schedule
      A

     

    
      	 	 	
              June
                1st

            	 	
              June
                14th

            	 	
              2006

            	 	
              Additional

            	 	
              Aggregate

            	 
	
              Purchaser

            	 	
              Warrant
                Shares

            	 	
              Warrant
                Shares

            	 	
              Warrants

            	 	
              Warrant
                Shares

            	 	
              Exercise
                Amount

            	 
	 	 	 	 	 	 	 	 	 	 	 	 
	
              Nancy
                Abbe Trust

            	 	 	
              58,335

            	 	 	
              36,960

            	 	 	 	 	 	
              95,295

            	 	 	
              123,376.88

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Merav
                Abbe Irrevocable Trust

            	 	 	
              116,667

            	 	 	
              73,920

            	 	 	 	 	 	
              190,587

            	 	 	
              246,750.38

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Coleman
                Abbe

            	 	 	
              29,168

            	 	 	
              18,480

            	 	 	 	 	 	
              47,648

            	 	 	
              61,689.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Bruce
                Bernstein

            	 	 	
              43,750

            	 	 	
              27,720

            	 	 	 	 	 	
              71,470

            	 	 	
              92,531.25

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Romana
                Ltd

            	 	 	
              116,667

            	 	 	
              73,920

            	 	 	 	 	 	
              190,587

            	 	 	
              246,750.38

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Ellis
                International Ltd Inc.

            	 	 	
              262,500

            	 	 	
              170,520

            	 	 	
              150,000

            	 	 	
              583,020

            	 	 	
              963,750.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Scot
                J. Cohen

            	 	 	
              350,000

            	 	 	
              332,640

            	 	 	 	 	 	
              682,640

            	 	 	
              913,500.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Cranshire
                Capital LP

            	 	 	
              175,000

            	 	 	 	 	 	 	 	 	
              175,000

            	 	 	
              196,875.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Michael
                Gantcher

            	 	 	 	 	 	
              21,000

            	 	 	 	 	 	
              21,000

            	 	 	
              32,812.50

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Joshua
                Silverman

            	 	 	 	 	 	
              21,000

            	 	 	 	 	 	
              21,000

            	 	 	
              32,812.50

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Brian
                Daly

            	 	 	
              14,581

            	 	 	
              9,240

            	 	 	 	 	 	
              23,821

            	 	 	
              30,841.13

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Northfield
                Advisors Inc.

            	 	 	
              0

            	 	 	
              0

            	 	 	
              250,000

            	 	 	
              250,000

            	 	 	
              670,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Iroquois
                Master Fund, Ltd.

            	 	 	
              0

            	 	 	
              0

            	 	 	
              350,000

            	 	 	
              350,000

            	 	 	
              938,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Eli
                Levitin

            	 	 	
              0

            	 	 	
              0

            	 	 	
              10,000

            	 	 	
              10,000

            	 	 	
              26,800.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Morris
                Wolfson

            	 	 	
              0

            	 	 	
              0

            	 	 	
              25,000

            	 	 	
              25,000

            	 	 	
              67,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Aaron
                Wolfson

            	 	 	
              0

            	 	 	
              0

            	 	 	
              50,000

            	 	 	
              50,000

            	 	 	
              134,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Abraham
                Wolfson

            	 	 	
              0

            	 	 	
              0

            	 	 	
              15,000

            	 	 	
              15,000

            	 	 	
              40,200.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              South
                Ferry #2

            	 	 	
              0

            	 	 	
              0

            	 	 	
              100,000

            	 	 	
              100,000

            	 	 	
              268,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Ari
                Dani Corp.

            	 	 	
              0

            	 	 	
              0

            	 	 	
              50,000

            	 	 	
              50,000

            	 	 	
              134,000.00

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

            	 
	
              Blizzard
                Capital Ltd.

            	 	 	
              0

            	 	 	
              0

            	 	 	
              1,000,000

            	 	 	
              1,000,000

            	 	 	
              2,680,000.00

            	 
	 	 	 	

            	 	 	

            	 	 	

            	 	 	

            	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total

            	 	 	
              1,166,668

            	 	 	
              785,400

            	 	 	
              2,000,000

            	 	 	
              3,952,068

            	 	 	
              7,899,689.00

            	 


    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
Schedule
      B

    


     

    	1.     
              	
            On
              January 5, 2004, a lawsuit was filed by the Company in the Second Judicial
              District Court of the State of Nevada, in and for the County of Washoe,
              Case No. CV04 00013, Dept. No. 9, against Alexander H. Walker, Jr.,
              the
              Company’s former general counsel and director, and Nevada Agency &
              Trust Company, the Company’s former transfer agent. The lawsuit alleges
              breaches of fiduciary duty, contract violations, conversion, and other
              related claims, in connection with the sale of shares of the Company’s
              common stock to Coldwater Capital, LLC and Mark Neuhaus in 2001. The
              Company claims it did not receive approximately $737,000 of the purchase
              price for the shares sold. The Defendants have answered the Complaint,
              generally denying the allegations and raising affirmative defenses,
              and
              cross-complaining against Coldwater Capital, LLC and Mark Neuhaus for
              the
              payment of the funds owed to the Company. The Company subsequently
              obtained a pre-judgment writ of attachment requiring Mr. Walker to
              deposit
              the proceeds of the sale of the Company stock he owned with the court,
              pending trial. Discovery has been completed and trial in this matter
              is
              presently scheduled for April 23, 2007.

          


     

    	2.     
              	
            In
              Clean
              Fuels Technology v. Rudolf W. Gunnerman, Peter Gunnerman, RWG, Inc.
              and
              SulphCo, Inc.,
              the Company, Rudolf Gunnerman, Peter Gunnerman, and RWG, Inc., were
              named
              as defendants in a legal action commenced in Reno, Nevada. The Plaintiff
              alleged claims relating to “sulfur removal technology” originally
              developed by Professor Teh Fu Yen and Dr. Gunnerman with financial
              assistance provided by Dr. Gunnerman, and subsequently assigned to
              the
              Company. On December 18, 2006, following a trial, the jury found in
              the
              Company’s favor on both claims asserted against the Company by the
              Plaintiff. The Plaintiffs have since requested equitable relief, including
              the imposition of a constructive trust, from the Judge who presided
              over
              the trial. The Company views the request for any equitable relief as
              against the Company as without merit. Oral argument on the request
              for
              equitable relief took place on February 22, 2007, and the Company is
              awaiting a decision. 

          


     

    	3.     
              	
            In
              Talisman
              Capital Talon Fund, Ltd. v. Rudolf Gunnerman and SulphCo,
              Inc.,
              the Company and Rudolf Gunnerman were named as Defendants in a legal
              action commenced in federal court in Reno, Nevada. The Plaintiff alleged
              claims relating to the Company’s rights to develop its “sulfur removal
              technology. The Company regards these claims as without merit. Discovery
              in this case formally concluded on May 24, 2006. Motions to compel
              additional discovery and summary judgment motions by both parties are
              still pending, and no trial date has yet been set.
              

          


     

    	4.     
              	
            In
              In
              The Matter of the Arbitration between Stan L. McLelland v. SulphCo,
              Inc.,
              Mr. McLelland, who was the Company's president from August 13, 2001,
              until
              he resigned on September 12, 2001, is seeking to exercise two million
              (2,000,000) shares of the Company stock options at 50 cents per share.
              It
              is the Company’s position that those options had not vested prior to Mr.
              McLelland's resignation. Mr. McLelland also seeks salary for the six
              months following his resignation and $20,000 of alleged unpaid commuting
              expenses, as well as attorneys' fees and costs. Discovery is closed,
              and
              the arbitrator recently denied the parties’ cross-motions for summary
              judgment on the options issue. The arbitration hearing has been set
              for
              April 19 and 20, 2007 in Reno, Nevada.

          


     

    
      
         

      

      
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    	5.     
              	
            On
              October 20, 2006, Mark Neuhaus filed a lawsuit against the Company
              and
              Rudolph W. Gunnerman, Mark
              Neuhaus v. SulphCo, Inc., Rudolph W. Gunnerman,
              in the Second Judicial District Court, in and for the County of Washoe,
              Case No. CV06 02502, Dept. No. 1. The lawsuit is based on a purported
              Non-Qualified Stock Option Agreement and related Consulting Agreement
              between Mark Neuhaus and the Company dated March of 2002. Mark Neuhaus
              claims that according to the terms of the Non-Qualified Stock Option
              Agreement, he was granted an option to purchase three million (3,000,000)
              shares of the Company’s common stock at the exercise price per share of
              $0.01. On or about February of 2006, Mark Neuhaus attempted to exercise
              the option allegedly provided to him under the Non-Qualified Stock
              Option
              Agreement. At that time, the Company rejected Mr. Neuhaus’s attempt to
              exercise the option. Thereafter, Mr. Neuhaus filed this lawsuit seeking
              to
              enforce the Non-qualified Stock Option Agreement. In his suit, Mr.
              Neuhaus
              includes claims for specific performance, breach of contract, contractual
              breach of the covenant of good faith and fair dealing, and tortious
              breach
              of the covenant of good faith and fair dealing. He requests the Court
              to
              compel the Company to issue the shares or alternatively to award him
              damages equal to the fair market value of the three million (3,000,000)
              shares of stock when he purported to exercise the options, minus the
              exercise price. On December 7, 2006, the Company moved to dismiss the
              lawsuit. On January 4, 2007, the Court issued an Order denying the
              motion
              on the ground that there were factual issues to be resolved which
              prevented dismissal at that time. The Company is now in the process
              of
              preparing an Answer to the Complaint. The Company intends to vigorously
              defend the claims made by Mr. Neuhaus, which it believes are without
              merit. Trial in this matter is scheduled for September 24,
              2007.

          


     

    	6.     
              	
            On
              January 17, 2007, Rudolf W. Gunnerman filed a lawsuit against four
              of the
              Company’s independent directors, Richard L. Masica, Robert Van Maasdijk,
              Edward E. Urquhart, and Lawrence G. Schafran. This case is known as
              Rudolph
              W. Gunnerman v. Robert Van Maasdijk, Richard L. Masica, Larry G. Schafran,
              Edward E. Urquhart,
              and was filed in the Second Judicial District Court of the State of
              Nevada, in and for the County of Washoe, Case No Case No. CV07 00103,
              Dept. No. B6. Gunnerman’s Complaint seeks declaratory and injunctive
              relief with respect to the amendments to the Company’s bylaws made by the
              Company’s Board of Directors on Wednesday, January 17, 2007. Gunnerman
              alleges that the independent directors’ amendment to the Company’s bylaws
              which provides that the Board of Directors shall have exclusive authority
              to amend the bylaws was invalid and the bylaw amendment should be declared
              invalid. The independent directors have counterclaimed for a declaration
              that the amendment was valid and in the Company’s best interest. Discovery
              in this case has not begun and no trial date has been
              set.

          


     

    	7.     
              	
            On
              January 26, 2007, Thomas Hendrickson filed a shareholder derivative
              claim
              against certain current and former officers and directors or the Company
              in the Second Judicial District Court of the State of Nevada, in and
              for
              the County of Washoe. The case is known as Thomas
              Hendrickson, Derivatively on Behalf of SulphCo, Inc. v. Rudolf W.
              Gunnerman, Peter W. Gunnerman, Loren J. Kalmen, Richard L. Masica,
              Robert
              Henri Charles Van Maasdijk, Hannes Farnleitner, Michael T. Heffner,
              Edward
              E. Urquhart, Lawrence G. Schaffran, Alan L. Austin, Jr., Raad Alkadiri
              and
              Christoph Henkel,
              Case No. CV07 00137, Dept. No. B6. The complaint alleges, among other
              things, that the defendants breached their fiduciary duty to the Company
              by failing to act in good faith and diligence in the administration
              of the
              affairs of the Company and in the use and preservation of its property
              and
              assets, including the Company’s credibility and reputation. The Company
              and the Board intend to file a Motion for Dismissal with the Court,
              based
              upon the Plaintiff’s failure to make a demand upon the
              Board.

          


     

    	8.     
              	
            On
              June 26, 2006, the Company filed an action, SulphCo,
              Inc. v. Cullen,
              in the Second Judicial District Court of the State of Nevada, in and
              for
              the County of Washoe, Case No. CV06-01490, against Mark Cullen arising
              out
              of Mr. Cullen’s alleged breach of a secrecy agreement that he had executed
              when employed by GRD, Inc., whose claims have accrued to the Company.
              The
              lawsuit seeks damages, a constructive trust, and an order requiring
              Mr.
              Cullen to assign to the Company certain intellectual property in the
              form
              of patent applications (as well as a now-issued patent) that he filed
              following his departure from the Company. On October 23, 2006, Mr.
              Cullen
              moved to dismiss the Company’s complaint; the motion was denied. On
              February 26, 2007, Mr. Cullen filed an amended answer to the Company’s
              complaint. That Answer included counterclaims for breach of contract,
              unfair competition, interference with contractual relations, and
              interference with prospective economic advantage. The Company views
              Mr.
              Cullen’s counterclaims as without merit. Discovery in this case has not
              yet begun, and no trial date has been set.


          


     

     

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