AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENTS AND WARRANTS
Exhibit
10.38
AMENDMENT
NO. 1 TO SECURITIES
PURCHASE AGREEMENTS AND WARRANTS
This
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT AND WARRANTS (this “Amendment”)
is made and entered into as of March 9, 2007, by and among Sulphco, Inc., a
Nevada corporation (the “Company”), and the purchasers identified on the
signature pages hereto (each, a “Purchaser” and, collectively, the
“Purchasers”).
RECITALS
| 1. |
The
Company and the Purchasers are parties to (i) a Securities Purchase
Agreement, dated as of June 1, 2004 (the “June 1st
Purchase Agreement”) pursuant to which the Company issued and sold to the
Purchasers shares of common stock, par value $0.001 (the “Common Stock”)
and certain warrants (the “June 1st
Warrants”), (ii) a Securities Purchase Agreement, dated as of June 14,
2004 (the “June 14th
Purchase Agreement”) pursuant to which the Company issued and sold to the
Purchasers shares of Common Stock and certain warrants (the “June 14th
Warrants”), and (iii) a Securities Purchase Agreement, dated as of March
29, 2006 (the “2006 Purchase Agreement”, and together with the June
1st
Purchase Agreement and the June 14th
Purchase Agreement, the “Purchase Agreements”) pursuant to which the
Company issued and sold to the Purchasers shares of Common Stock
and
certain warrants (the “2006 Warrants”, and together with the June
1st
Warrants and June 14th
Warrants, the “Warrants”). Capitalized terms used and not defined in this
Amendment shall have the respective meanings set forth in the Purchase
Agreements and Warrants.
|
| 2. |
The
Company and the Purchasers now wish to further modify certain terms
of the
Warrants.
|
NOW,
THEREFORE, in consideration of the foregoing Recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Purchaser, severally and not jointly, agree
as follows:
| 1. |
Exercise
of Warrants.
Subject to the terms hereof, each Purchaser agrees to exercise the
June
1st
Warrants, June 14th
Warrants and the 2006 Warrants as set forth herein.
|
| 1.1 |
The
Exercise Price on the 2006 Warrants shall be reduced from $6.805
to ____.
(the “Market Price”).1
|
| 1.2 |
Subject
to the terms hereof, each Purchaser agrees to exercise (i) 100% of
the
June 1st
Warrants and June 14th
Warrants issued to such Purchaser and (ii) 50% of the 2006 Warrants
issued
to such Purchaser, in each case as set forth on Schedule
A
hereto on the Business Day following the date of this Agreement (“Closing
Date”). In consideration for such exercise, the Company shall issue to
each Purchaser a warrant in the form of Exhibit
A
attached hereto (the “Additional Warrants”), registered in the name of
such Purchaser, pursuant to which such Purchaser shall have the right
to
acquire the number of shares of Common Stock indicated opposite such
Purchaser’s name on Schedule
A
hereto under the heading “Additional Warrant Shares” at an Exercise Price
equal to the Market Price per
share.
|
| 1.3 |
Each
Purchaser shall have the option within 90 calendar days of the date
hereof
to exercise all or any portion of the remaining 2006 Warrants and
receive
an additional warrant, registered in the name of such Purchaser,
pursuant
to which such Purchaser shall have the right to acquire the number
of
shares of Common Stock that it exercises pursuant to this Section
1.3.
Such additional warrant shall be exercisable at the Market Price
and be in
the same form as the Additional Warrant. For the purposes of this
Amendment, the additional warrant issued under this Section 1.3 shall
be
deemed an “Additional Warrant” and the shares issuable upon exercise of
the additional warrant shall be included in the Additional Registration
Statement filed pursuant to Section 3 below.
|
| 2. |
Closing.
Subject to the terms hereof, each Purchaser and the Company agrees
that
the closing of the issuance of the Additional Warrants (the “Closing”)
shall occur on the Closing Date.
|
| 2.1. |
On
the Closing Date, the Company shall (i) issue to each Purchaser a
warrant
in the form of Exhibit
A
hereto, registered in the name of such Purchaser pursuant to which
such
Purchaser shall have the right to acquire the number of shares of
Common
Stock indicated opposite such Purchaser’s name on
Schedule A
hereto under the heading “Additional Warrant Shares”, and (ii) issue to
each Purchaser a certificate representing the number of Warrant Shares
exercised under the Warrants.
|
1
Closing
Price on the Trading Day immediately preceding the Closing
Date.
2
| 2.2. |
On
the Closing Date, each Purchaser shall deliver to the Company the
Exercise
Notice required under the Warrants and the Exercise Price in immediately
available funds.
|
| 3. |
Registration.
|
| 3.1 |
The
Company will use commercially reasonable efforts to prepare and file
a
registration statement (the “Additional Registration Statement”) to cover
all shares of Common Stock issuable under the Additional Warrants
(the
“Additional Registrable Securities”) as soon as possible, but in no event
later than 90 days after the Closing Date (the “Filing Date”).
|
| 3.2 |
The
Company shall use commercially reasonable efforts to prepare and
file a
post-effective amendment to the registration statement (the “Registration
Statement”) covering the June 1st
Warrants and the June 14th
Warrants as soon as possible, but in no event later than 5 business
days
after the Company files the Form 10-K for the period ended December
31,
2006 (the “Post Effective Amendment Filing
Date”).
|
| 3.3 |
The
Company hereby agrees to amend and restate the Company’s Form 10-Q for the
periods ending March 31, 2006, June 30, 2006 and September 30, 2006
within
15 days of the Closing Date (the “Restatement Filing
Date”).
|
| 3.4 |
In
the event the Company does not file the Additional Registration Statement
by the Filing Date or the post effective amendment to the Registration
Statement by the Post Effective Amendment Filing Date (each, an “Event”),
each Purchaser shall be entitled to receive on the date of such Event
(the
“Event Date”) an amount in cash, as partial liquidated damages and not as
a penalty, equal to 1% of the aggregate Exercise Price paid by such
Purchaser pursuant to Section 2.2 of this Amendment; and on each
monthly
anniversary of the Event Date thereof (if the applicable Event has
not
been cured), the Company shall pay to each Purchaser an amount in
cash, as
partial liquidated damages and not as a penalty, equal to 1% of the
aggregate purchase price paid by such Purchaser pursuant to the Section
2.2 of this Amendment (the “Liquidated Damages”). The Liquidated Damages
shall not exceed 12% of the aggregate Exercise Price paid by each
respective Purchaser pursuant to Section 2.2 of this Amendment.
|
| 4. |
Continued
Validity of Transaction Documents under the Purchase Agreement; Waiver
of
Prior Defaults.
The parties hereto agree that the Purchase Agreements and the other
transaction documents (the “Transaction Documents”) entered into in
connection therewith (as amended by this Amendment), remain in full
force
and effect, modified to the extent and only to the extent necessary
to
give effect to this Amendment and the transactions herein contemplated.
The parties agree that any default or event of default that has occurred,
prior to the effective date hereof, under any of the Transaction
Documents
is waived by each of the
Purchasers.
|
3
| 5. |
Representations
and Warranties.
|
| 5.1. |
The
Company hereby represents and warrants to the Purchasers that each
of the
representations and warranties set forth in Section
3.1
of
the June 14th
Purchase Agreement are true and correct as of the date hereof with
the
exception of Sections 3.1(g), 3.1(h), 3.1(i), 3.1 (s), 3.1(w), 3.1(x),
3.1(y), and 3.1(z) for which the Company makes no representations
and
warranties. Schedule
B,
attached hereto, describes the status of current litigation of
▇▇▇▇
▇▇▇▇▇▇ v. Sulphco, Inc. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
|
| 5.2. |
Each
Purchaser hereby, as to itself only and for no other Purchaser, represents
and warrants to the Company that each of the representations and
warrants
set forth in Section
3.2
of
the June 14th
Purchase Agreement are true and correct as of the date
hereof.
|
| 6. |
Miscellaneous.
|
| 6.1. |
Fees
and Expenses.
The Company has agreed to reimburse Iroquois Master Fund, Ltd.
(“Iroquois”) $15,000 for its legal fees and expenses in connection with
this Amendment. Accordingly, the amount Iroquois must pay to the
Company
upon exercise of the Warrants under Section 1 shall be reduced by
$15,000.
Except for the foregoing, each party hereto will bear the fees and
expenses of its own counsel and advisors in connection with the
negotiation and entering into of this Amendment. The Company shall
pay all
transfer agent fees, stamp taxes and other taxes and duties levied
in
connection with the issuance of any
Securities.
|
| 6.2. |
Entire
Agreement.
This Amendment and the Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
|
| 6.3. |
Equal
Treatment of Purchasers.
No consideration shall be offered or paid to any person to amend
or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered
to all
of the parties to the Transaction
Documents.
|
| 6.4. |
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 as specified in the Purchase Agreement. The address
for such notices and communications shall be as set forth on the
signature
pages attached to the Purchase
Agreement.
|
4
| 6.5. |
Amendments;
Waivers.
No provision of this Amendment may be waived or amended except in
a
written instrument signed, in the case of an amendment, by the Company
and
each Purchaser or, in the case of a waiver, by the party against
whom
enforcement of any such waiver is sought. No waiver of any default
with
respect to any provision, condition or requirement of this Amendment
shall
be deemed to be a continuing waiver in the future or a waiver of
any
subsequent default or a waiver of any other provision, condition
or
requirement hereof, nor shall any delay or omission of either party
to
exercise any right hereunder in any manner impair the exercise of
any such
right.
|
| 6.6. |
Amendment
Controls.
If any topic is addressed both in the Purchase Agreement (or any
document
related thereto) and in this Amendment, this Amendment shall
control.
|
| 6.7. |
Construction.
The headings herein are for convenience only, do not constitute a
part of
this Amendment and shall not be deemed to limit or affect any of
the
provisions hereof. The language used in this Amendment will be deemed
to
be the language chosen by the parties to express their mutual intent,
and
no rules of strict construction will be applied against any
party.
|
| 6.8. |
Governing
Law.
All questions concerning the construction, validity, enforcement
and
interpretation of this Amendment shall be governed by and construed
and
enforced in accordance with the internal laws of the State of New
York,
without regard to the principles of conflicts of law thereof. The
parties
agree that Section
7.9
of
the June 14th
Purchase Agreement shall apply to this Amendment as if set forth
in its
entirety herein.
|
| 6.9. |
Survival.
The representations and warranties contained herein shall survive
the
delivery, exercise and/or conversion of the securities, as applicable
for
the applicable statute of
limitations.
|
| 6.10. |
Execution.
This Amendment may be executed in two or more counterparts, all of
which
when taken together shall be considered one and the same document
and
shall become effective when counterparts have been signed by each
party
and delivered to the other party, it being understood that both parties
need not sign the same counterpart.
|
| 6.11. |
Severability.
If any provision of this Amendment is held to be invalid or unenforceable
in any respect, the validity and enforceability of the remaining
terms and
provisions of this Amendment shall not in any way be affected or
impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this
Amendment.
|
| 6.12. |
Independent
Nature of Purchasers’ Obligations and Rights.
The obligations of each Purchaser hereunder are several and not joint
with
the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of
any other
Purchaser. Nothing contained herein, and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchasers as
a
partnership, an association, a joint venture or any other kind of
entity,
or create a presumption that the Purchasers are in any way acting
in
concert or as a group with respect to such obligations or the transactions
contemplated hereby. Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the
rights
arising out of this Amendment and it shall not be necessary for any
other
Purchaser to be joined as an additional party in any proceeding for
such
purpose. The Purchasers have not relied upon the same legal counsel
in
their review and negotiation of this Amendment. The Company has elected
to
provide all Purchasers with the same terms and form of Amendment
for the
convenience of the Company and not because it was required or requested
to
do so by the Purchasers. Each Purchaser represents that it has been
represented by its own separate legal counsel in its review and
negotiations of this Amendment and each party represents and confirms
that
Malhotra & Associates LLP represents only Iroquois in connection with
this Amendment.
|
(Signature
Pages Follow)
5
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the date first
indicated above.
|
SULPHCO,
INC.
By:
__________________________________________
Name:
Title:
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASERS FOLLOWS]
6
IN
WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed
by their respective authorized signatories as of the date first indicated
above.
Name
of
Investing Entity:
____________________________________________________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
______________________________________________________________________________________________
Name
of
Authorized Signatory:
________________________________________________________________________________________________________________
Title
of
Authorized Signatory:
_________________________________________________________________________________________________________________
Email
Address of Authorized
Entity:_____________________________________________________________________________________________________________
7
Schedule
A
|
June
1st
|
June
14th
|
2006
|
Additional
|
||||||||||
|
Purchaser
|
Warrant
Shares
|
Warrant
Shares
|
Warrants
|
Warrant
Shares
|
|||||||||
|
▇▇▇▇▇
▇▇▇▇ Trust
|
58,335
|
36,960
|
95,295
|
||||||||||
|
▇▇▇▇▇
▇▇▇▇ Irrevocable Trust
|
116,667
|
73,920
|
190,587
|
||||||||||
|
▇▇▇▇▇▇▇
▇▇▇▇
|
29,168
|
18,480
|
47,648
|
||||||||||
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
43,750
|
27,720
|
71,470
|
||||||||||
|
Romana
Ltd
|
116,667
|
73,920
|
190,587
|
||||||||||
|
▇▇▇▇▇
International Ltd Inc.
|
262,500
|
170,520
|
150,000
|
583,020
|
|||||||||
|
▇▇▇▇▇▇
▇ ▇▇▇▇▇
|
15,556
|
9,856
|
25,412
|
||||||||||
|
▇▇▇▇
▇. ▇▇▇▇▇
|
350,000
|
332,640
|
682,640
|
||||||||||
|
Cranshire
Capital LP
|
175,000
|
175,000
|
|||||||||||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
21,000
|
21,000
|
|||||||||||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
21,000
|
21,000
|
|||||||||||
|
▇▇▇▇▇
▇▇▇▇
|
14,581
|
9,240
|
23,821
|
||||||||||
|
Northfield
Advisors Inc.
|
250,000
|
250,000
|
|||||||||||
|
Iroquois
Master Fund, Ltd.
|
350,000
|
350,000
|
|||||||||||
|
▇▇▇
▇▇▇▇▇▇▇
|
10,000
|
10,000
|
|||||||||||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
25,000
|
25,000
|
|||||||||||
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
50,000
|
50,000
|
|||||||||||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
15,000
|
15,000
|
|||||||||||
|
South
Ferry #2
|
100,000
|
100,000
|
|||||||||||
|
▇▇▇▇▇
Corp.
|
50,000
|
50,000
|
|||||||||||
|
Blizzard
Capital Ltd.
|
1,000,000
|
1,000,000
|
|||||||||||
|
Total
|
1,182,224
|
795,256
|
2,000,000
|
3,977,480
|
|||||||||
8
Schedule
B
In
the
case of ▇▇▇▇
▇▇▇▇▇▇ v. SulphCo, Inc. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
in the
Second Judicial District Court, in and for the County of Washoe, Case No. CV06
02502, Dept. No. 1, ▇▇▇▇ ▇▇▇▇▇▇▇ has sued the Company relating to a purported
Non-qualified Stock Option Agreement, dated on or about March of 2002. ▇▇.
▇▇▇▇▇▇▇ claims in that lawsuit that he was entitled to purchase three million
shares of the Company at $0.01 per share pursuant to the purported Non-qualified
Stock Option Agreement. In the lawsuit, ▇▇. ▇▇▇▇▇▇▇ is seeking either to require
the Company to issue the shares pursuant to the alleged agreement, or, in the
alternative, damages as a result of the Company’s refusal to issue shares
pursuant to the alleged agreement. The Company is proceeding with a vigorous
defense of the lawsuit. Trial in this case is scheduled for September 24,
2007.
9