Securities Purchase Agreement


    EXHIBIT
      4.4


    EXECUTION
      COPY

     

    SECURITIES
      PURCHASE AGREEMENT

     

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

     

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

     

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

     

    ARTICLE
      I

    DEFINITIONS

     

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

     

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

     

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

     

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

     

    “Closing
      Date”
      means
      the date of the Closing.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Per
      Unit Purchase Price”
means
      $6.805.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

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


     

    2.2    Closing
      Deliveries.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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


     

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

     

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

     

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


     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

    


    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1    Transfer
      Restrictions.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

    ARTICLE
      V

    CONDITIONS

    


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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    


    ARTICLE
      VI

    REGISTRATION
      RIGHTS

     

    6.1    Shelf
      Registration

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    


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

     

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

    


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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    6.4    Indemnification

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    ARTICLE
      VII

    MISCELLANEOUS

     

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

     

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

     

    7.3    Entire
      Agreement.
      The
      Transaction Documents, together with the Exhibits and Schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules. At or after the Closing, and
      without further consideration, the Company will execute and deliver to the
      Purchasers such further documents as may be reasonably requested in order to
      give practical effect to the intention of the parties under the Transaction
      Documents. Notwithstanding anything to the contrary herein, Securities may
      be
      assigned to any Person in connection with a bona fide margin account or other
      loan or financing arrangement secured by such Company Securities.

     

    
      
        
        

      

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

     

    7.5    Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each of
      the
      Purchasers or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. Notwithstanding the foregoing, a waiver
      or consent to depart from the provisions hereof with respect to a matter that
      relates exclusively to the rights of Purchasers under Article
      VI
      and that
      does not directly or indirectly affect the rights of other Purchasers may be
      given by Purchasers holding at least a majority of the Registrable Securities
      to
      which such waiver or consent relates.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

     

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      PAGES TO FOLLOW]

     

    
      
        
        

      

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

     

    
      	 	
              SULPHCO,
                INC.

               

               

              By:
                /s/ Rudolf W.
                Gunnerman                             

              Name: Rudolf
                W. Gunnerman

              Title: Chief
                Executive Officer

               

              Address
                for Notice:

               

              850
                Spice Islands Drive, 

              Sparks,
                NV 89431

               

              Facsimile
                No.: (775) 829-1351

              Telephone
                No.: (775) 829-1310

              Attn:
                Chief Executive Officer

            


    

    
    

     

     

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    SIGNATURE
      PAGES FOR PURCHASERS FOLLOW]

     

    
      
        
        

      

      
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              ______________________________________

               

              By: ___________________________________

              Name:

              Title: 

               

              Number
                of Units:________________________

               

               

              Address
                for Notice:

               

              ______________________________________

              ______________________________________

              ______________________________________

              ______________________________________

              Facsimile
                No.: ___________________________

              Telephone
                No.: __________________________

              Attn:
                __________________________________

            


    

     

     

    
      
        
        

      

      
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      Exhibits:

    

     

    A Form
      of
      Warrant

    


    
 

     

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