Exhibit
10.63




EMPLOYMENT
AGREEMENT




This EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of January 9, 2009, by and between SulphCo, Inc., a Nevada
corporation (along with its successors and assigns, the “Company”), and
Florian J. Schattenmann (“Executive”).




WHEREAS, the Company desires to employ
Executive, and Executive desires to be employed by the Company, on the terms and
conditions hereinafter set forth.




NOW, THEREFORE, in consideration of the
mutual promises contained herein and other good and valuable consideration, the
Company and Executive agree as follows:




1.           Employment.




(a)           Term.  Subject
to the terms hereof, Executive’s employment hereunder shall commence as of
January 9, 2009(the “Effective Date”) and
continue until the first anniversary of the Effective Date, with automatic one
(1) year extensions thereafter, unless otherwise terminated pursuant to Section
3 of the Agreement (such period, the “Employment
Period”).




(b)           Position, Place of
Performance and Duties.  Executive will serve as the Company’s
Vice President and Chief Technology Officer, and Executive shall report directly
to the Company’s Chief Executive Officer (“CEO”) and the
Company’s Board of Directors (the “Board”) and any
committees thereof.  Executive will have the responsibilities, duties
and authority commensurate with the position of Chief Technology Officer, and
Executive will perform such other services of an executive nature as may be
prescribed from time to time by the CEO and the Board.  Executive will
generally perform his services hereunder at the Company’s principal offices in
Houston, TX, or such other place as may be agreed to by Executive and the
Company and the Board.  During the Employment Period, Executive will
be available to travel for business at such times and to such places as may be
reasonably necessary in connection with the performance of his duties hereunder,
including, but not limited to, anywhere in the United States, the Middle East
and Europe.  Executive shall devote his full business time and efforts
to the performance of his duties hereunder.  For the duration of the
Employment Period, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior written approval of the Board, which approval
will not be unreasonably withheld; provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any civic,
educational or charitable organization, subject to Executive’s obligations under
this Agreement and any agreement contemplated under Section 5 of this
Agreement.




2.           Compensation.




(a)           Base
Salary.  During the Employment Period, the Company will pay
Executive a base salary at the annual rate of $225,000, which amount will be
reviewed annually and subject to adjustment at the good faith discretion of the
Board (or the Compensation Committee of the Board (the “Compensation
Committee”)), including without limitation, discretionary cost of living
adjustments (as adjusted from time to time, the “Base
Salary”).  The Base Salary will be payable in substantially
equal installments in accordance with the Company’s payroll practices as in
effect from time to time.










(b)           Annual
Bonus.  During the Employment Period, based on Executive’s
performance relative to targets set by the Board and/or the Compensation
Committee in its sole discretion, and subject to the overall performance of the
Company, Executive will be eligible to receive annual bonuses, with a target
bonus of up to 50% of Base Salary, in accordance with the terms and conditions
established by the Board and/or the Compensation Committee from time to
time.




(c)           Equity
Compensation.  The Executive may be entitled to annual option
grants as part of the annual review process at the discretion of the Board and
the Compensation Committee.




(d)           Vacation.  During
the Employment Period, Executive will be entitled to (i) four weeks paid
vacation in each calendar year (to be taken at such times and in such number of
days as Executive and the Company shall mutually agree), (ii) paid sick days as
needed due to illness or other incapacity, and (iii) paid Company holidays, all
in accordance with the Company’s policies for its senior executives as in effect
from time to time.  Any accrued unused vacation may be carried over
from one year to the following year, provided that no more than four weeks
vacation may be carried over at any time.




(e)           Benefits.  During
the Employment Period, Executive (and his eligible dependents) will be entitled
to participate in the same manner as the Company’s other senior executives in
any employee benefit plans which the Company provides or may establish for the
benefit of its senior executives generally; provided that the Company reserves
the right to cancel or change any of its employee benefit plans and programs at
any time.




(f)           Reimbursement of
Expenses.  During the Employment Period, the Company will
reimburse Executive for all out-of-pocket business expenses that are incurred by
him in furtherance of the Company’s business in accordance with the Company’s
policies with respect thereto as in effect from time to time.  Without
limiting the generality of the foregoing, the Company shall pay or reimburse
Executive for charges relating to the use of his cellular phone and reasonable
business travel expenses.




3.           Termination.
Executive’s employment hereunder will terminate upon the first to occur of the
following:




(a)           Executive’s
death;




(b)           by
the Company in the event of Executive’s Disability (as defined
below);




(c)           by
the Company for Cause (as defined below);




(d)           by
the Company without Cause; or




(e)           by
Executive, with or without Good Reason (as defined below).








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“Cause” means: (i)
Executive’s conviction of, or plea of nolo contendere to, a felony,
or a crime involving dishonesty, disloyalty or moral turpitude;(ii) Executive’s willful
disloyalty or deliberate dishonesty; (iii) the commission by Executive of an act
of fraud or embezzlement against the Company; (iv) Executive’s failure to use
his good faith efforts to perform in all material respects such duties as are
contemplated by this Agreement, or to follow any lawful direction of the CEO,
the Board or any committee thereof; (v) Executive’s gross negligence in the
performance of his duties hereunder; or (vi) a material breach by Executive of
any provision of this Agreement or of any Company policy, which breach is not
cured within thirty (30) days after delivery by the Company to Executive of
written notice of such breach, provided that, if such breach is not capable of
being cured within such 30-day period, Executive will have a reasonable
additional period to cure such breach.  No act or omission on
Executive’s part will be considered “willful” unless done, or admitted to be
done, by Executive in bad faith or without his reasonable belief that such act
or omission was in the best interests of the Company. Any determination of
“Cause” shall be made in good faith by a majority vote of the
Board.




“Disability” means
Executive’s mental, physical or other disability, the condition of which renders
him incapable of performing his obligations under this Agreement for a period of
90 consecutive days or an aggregate of 120 days (whether or not consecutive) in
any 12-month period.  Any determination of “Disability” shall be made
in good faith by a majority vote of the Board.




“Good Reason” means,
without Executive’s consent: (i) a failure by the Company to comply with any
material provision of this Agreement which is not cured within thirty (30) days
after Executive has given written notice of such noncompliance to the Company,
provided that, if such failure is not capable of being cured within such 30-day
period, the Company will have a reasonable additional period to cure such
failure; (ii) a material adverse change by the Company in Executive’s
responsibilities, duties or authority as the Chief Technology Officer of the
Company, which causes Executive’s position with the Company to have less
responsibility or authority than Executive’s position immediately prior to such
change, provided that any such change is not in connection with the termination
of Executive’s employment with the Company; or (iii) at Executive’s election, a
Change in Control of the Company if, following such Change in Control, Executive
is no longer the Chief Technology Officer of the Company (or the surviving or
successor company, as applicable), provided that Executive’s election under this
subsection (iii) may only be exercised within the thirty (30) day period
following the first six (6) month anniversary following the Change in
Control.




“Change in Control”
means: (i) any person, entity or affiliated group becoming the beneficial owner
of more than 50% of the outstanding equity securities of the Company or
otherwise becoming the beneficial owner of outstanding equity securities of the
Company having more than 50% of the voting power of the Company; (ii) a
consolidation or merger (in one transaction or a series of related transactions)
of the Company pursuant to which the holders of the Company’s equity securities
immediately prior to such transaction or series of related transactions would
not be the holders immediately after such transaction or series of related
transactions of at least 50% of the voting power of the entity surviving such
transaction or series of related transactions; or (iii) the sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company.




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4.           Termination Procedures;
Effect of Termination.




(a)           Notice of
Termination. Any termination of Executive’s employment by the Company or
Executive (other than termination on account of Executive’s death) shall be
communicated by written notice (a “Notice of
Termination”) to the other party hereto in accordance with Section 7(a)
below, which notice shall indicate the specific termination provision in Section
3 of this Agreement relied upon and, if the termination is by the Company for
Cause or by Executive for Good Reason, the specific reasons
therefor.




(b)           Date of
Termination.  As used herein, “Date of Termination”
shall mean: (i) if Executive’s employment is terminated as a result of
Executive’s death, the date of Executive’s death; (ii) if Executive’s employment
is terminated by reason of Executive’s Disability, on the date Notice of
Termination is given or such later date specified in the Notice of Termination
as the effective date of termination; (iii) if Executive’s employment is
terminated by the Company for Cause, on the date Notice of Termination is given
or such later date specified in the Notice of Termination as the effective date
of termination; (iv) if Executive’s employment is terminated by the Company
without Cause, such date which is specified in the Notice of Termination as the
effective date of termination; and (v) if Executive’s employment is terminated
by Executive, with or without Good Reason, such date which is specified in the
Notice of Termination as the effective date of termination, which date shall be
at least thirty (30) days following the date the Notice of Termination is
given.




(c)           Compensation Upon
Termination.




(i)           At
any time that Executive’s employment is terminated, the Company will pay the
Accrued Obligations (as defined below) to Executive (or to his estate or legal
representative, if applicable) on or promptly following the Date of
Termination.  For purposes of this Agreement, “Accrued Obligations”
means (A) the portion of Executive’s Base Salary as has accrued up through the
Date of Termination which the Executive has not yet been paid, (B) an amount
equal to any unpaid bonus which has already been earned and awarded by the Board
and/or the Compensation Committee through the Date of Termination, (C) an amount
equal to the value of Executive’s accrued unused vacation days, and (D) the
amount of expenses incurred by Executive on behalf of the Company prior to the
Date of Termination and not yet reimbursed as of such date.




(ii)           In
addition to the Accrued Obligations, if Executive’s employment is terminated by
the Company without Cause or by Executive for Good Reason (and other than due to
Executive’s death or Disability), then in exchange for Executive’s execution and
delivery to the Company of a full general release (which Executive does not
later revoke in accordance with its terms), in a form acceptable to the Company,
releasing all claims, known or unknown, that Executive may have against the
Company, and any subsidiary or related entity, and their respective officers,
directors, employees and agents, the Company will (A) within thirty (30) days
following the Date of Termination, pay to Executive (or his estate or legal
representative if applicable) a lump-sum severance payment equal to one year of
his then current Base Salary, and (B) upon proper election of continuation
coverage under Title X of the Consolidated Budget Reconciliation Act of 1985, as
amended (“COBRA”) under the
Company’s group health plans, continue to pay the group medical and dental COBRA
premiums for Executive and Executive’s eligible dependents until the earliest of
(x) the date Executive first becomes eligible for coverage under a subsequent
employer’s applicable group health plan(s), (y) the date such coverage
terminates under applicable law, or (z) eighteen (18) months after the Date of
Termination.




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Notwithstanding any other provision
with respect to the timing of payments under this Section 4(c), if, at the time
of Executive’s termination, Executive is deemed to be a “specified
employee”  (within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), and any
successor statute, regulation and guidance thereto) of the Company, then only to
the extent necessary to comply with the requirements of Code Section 409A, any
payments to which Executive may become entitled under Section 4(c) which
are subject to Code Section 409A (and not otherwise exempt from its application)
will be withheld until the first business day of the seventh month following the
Date of Termination, at which time Executive shall be paid an
aggregate amount of any withheld payments otherwise due under Section 4(c), as
applicable.




(d)           Other
Provisions.  The effect of termination on any stock options or
restricted stock granted or issued to Executive shall be governed by the terms
and provisions of any applicable option agreement, restricted stock agreement
and/or equity incentive plan.  The amount of any benefit due to
Executive after the date of such termination pursuant to this Agreement will not
be reduced or offset by any payment or benefit that Executive may receive from
any other source.




5.           Restrictive
Covenants.  On the Effective Date, Executive will enter into a
confidentiality, non-competition, non-solicitation, assignment of inventions and
non-disparagement agreement, substantially in the form of the Company’s standard
agreement used for such purposes, and the non-competition and non-solicitation
covenants shall last for two years following the Date of
Termination.




6.           Indemnification.  The
Company shall, to the fullest extent permitted by law and by its Articles of
Incorporation and Bylaws, indemnify Executive and hold him harmless for any acts
or decisions made by him in good faith while performing his duties to the
Company, and the Company shall at all times during Executive’s employment with
the Company, maintain directors’ and officers’ liability insurance, at and upon
commercially reasonable terms and limits.




7.           General.




(a)           Notices.  All
notices, requests, consents and other communications hereunder will be in
writing, will be addressed to the receiving party’s address set forth below or
to such other address as a party may designate by notice hereunder, and will be
either (i) delivered by hand, (ii) sent by overnight courier, or
(iii) sent by registered or certified mail, return receipt requested,
postage prepaid.  All notices, requests, consents and other
communications hereunder will be deemed to have been given either (A) if by
hand, at the time of the delivery thereof to the receiving party, (B) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (C) if sent by registered or
certified mail, on the third business day following the day such mailing is
made.  All notices, requests, consents and other communications
hereunder will be sent as follows:




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If
      to the Company:
                  SulphCo,
      Inc.4333
      W. Sam Houston Pkwy N., Suite 190Houston,
      TX 77043Attention:  Chief
      Executive OfficerIf
      to Executive:
                  Florian
      J. Schattenmann22331
      Maybrook Park CircleKaty,
      TX 77450




(b)           Entire
Agreement.  This Agreement (together with any other agreements
referenced herein) embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written agreements and understandings relating to the subject
matter hereof.  No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement will affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.






(c)           Modifications and
Amendments.  The terms and provisions of this Agreement may be
modified or amended only by written agreement executed by the parties
hereto.




(d)           Waivers and
Consents.  The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or
provisions.  No such waiver or consent will be deemed to be or will
constitute a waiver or consent with respect to any other terms or provisions of
this Agreement, whether or not similar.  Each such waiver or consent
will be effective only in the specific instance and for the purpose for which it
was given, and will not constitute a continuing waiver or consent.




(e)           Successors and Assigns;
Third Party Beneficiaries.  All statements, representations,
warranties, covenants and agreements in this Agreement will be binding on the
parties hereto and will inure to the benefit of the respective successors,
heirs, executors and permitted assigns of each party hereto.  Any such
successor of the Company will be deemed substituted for the Company under the
terms of this Agreement for all purposes.  For this purpose,
“successor” means any person, firm, corporation or other business entity which
at any time, whether by purchase, merger or otherwise, directly or indirectly
acquires all or substantially all of the assets or business of the
Company.  Executive may not assign any of Executive’s rights to
compensation or other benefits under this Agreement, except by will or the laws
of descent and distribution.  Any other attempted assignment,
transfer, conveyance or other disposition of Executive’s right to compensation
or other benefits will be null and void.  Nothing in this Agreement
will be construed to create any rights or obligations except among the parties
hereto, and (except for Executive’s estate or other legal representative) no
person or entity will be regarded as a third-party beneficiary of this
Agreement.




(f)           Governing
Law.  This Agreement and the rights and obligations of the
parties hereunder will be construed in accordance with and governed by the law
of the State of Texas, without giving effect to the conflict of law principles
thereof.





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(g)           Jurisdiction,
Venue.  Any legal action or proceeding with respect to this
Agreement will be brought in the Federal or state courts of Harris County,
Texas.  By execution and delivery of this Agreement, each of the
parties hereto accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid
courts.




(h)           Severability.  The
parties intend this Agreement to be enforced as written.  However, if
any court of competent jurisdiction determines any provision, or any portion
thereof, of this Agreement to be unenforceable or invalid, then such provision
shall be deemed limited to the extent that such court deems it valid or
enforceable and the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.




(i)           Headings and
Captions.  The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and will in
no way modify or affect the meaning or construction of any of the terms or
provisions hereof.




(j)           No Waiver of Rights, Powers
and Remedies.  No failure or delay by a party hereto in
exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, will operate as a waiver of any such right,
power or remedy of the party.  No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, will preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder.  The
election of any remedy by a party hereto will not constitute a waiver of the
right of such party to pursue other available remedies.  No notice to
or demand on a party not expressly required under this Agreement will entitle
the party receiving such notice or demand to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the party giving such notice or demand to any other or further action in any
circumstances without such notice or demand.




(k)           Expenses.  Each
party shall bear its own fees and expenses incurred in connection with the
preparation, negotiation, execution and delivery of this
Agreement.  The prevailing party in any legal proceeding to enforce
this Agreement shall be entitled to legal fees and costs reasonably
incurred.




(l)          
 Withholdings.  The
Company will deduct from each payment to be made to Executive under this
Agreement such amounts, if any, required to be deducted or withheld under
applicable law.




(m)          Tax
Consequences.  Executive hereby acknowledges and agrees that
the Company makes no representations or warranties regarding the tax treatment
or tax consequences of any compensation, benefits or other payments under the
Agreement, including, without limitation, by operation of Code Section 409A, or
any successor statute, regulation or guidance thereto.




(n)          
Counterparts.  This
Agreement may be executed in two or more counterparts, and by different parties
hereto on separate counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.  This Agreement may be delivered by facsimile, and
facsimile signatures shall be treated as original signatures for all applicable
purposes.




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(o)           Opportunity to
Review.  Executive hereby acknowledges that Executive has had
adequate opportunity to review these terms and conditions and to reflect upon
and consider the terms and conditions of this Agreement, and that Executive has
had the opportunity to consult with counsel of Executive’s own choosing
regarding such terms. Executive further
acknowledges that Executive fully understands the terms of this Agreement and
has voluntarily executed this Agreement.




IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as
of the date and year first above written.




SULPHCO, INC.By:
                            /s/
      Larry D. RyanName:
                            Larry
      D. RyanTitle:
                            Chief
      Executive OfficerEXECUTIVE/s/
      Florian J. SchattenmannFlorian
      J.
Schattenmann




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