Unassociated Document


    Exhibit
      10.2

     

    

      EMPLOYMENT
        AGREEMENT

      


       

      This
        EMPLOYMENT AGREEMENT (this “Agreement”)
        is
        entered into as of May 17, 2007, by and between SulphCo, Inc., a Nevada
        corporation (along with its successors and assigns, the “Company”),
        and
        Stanley W. Farmer (“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 June
        11, 2007 (the
        “Effective
        Date”)
        and
        continue until the first anniversary of the Effective Date, with automatic
        one
        (1) year extensions thereafter, unless otherwise terminated by Executive
        or by
        the Company 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 Financial
        Officer, and Executive shall report directly to the Company’s Chief Executive
        Officer (“CEO”),
        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 Vice President and Chief Financial
        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 offices in Houston,
        TX, or such other place as may be agreed to by Executive and the Board. During
        the Employment Period, the Company shall pay for all reasonable travel expenses
        associated with Executive’s commute between Texas and Nevada for the purpose of
        performing services hereunder. 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 $250,000, 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.
        On the
        Effective Date, Executive will be granted a stock option to purchase one
        hundred
        fifty thousand (150,000) shares of the Company's common stock at an exercise
        price equal to the fair market value of the Company’s common stock on the date
        of grant (the “Option”).
        The
        Option will vest over a three-year period, with 1/3
        of
        the shares subject to the Option vesting on each of the first three
        anniversaries following the date of grant.
        The
        Option will be subject to the terms, definitions and provisions of the SulphCo,
        Inc. 2006 Stock Option Plan, and the accompanying stock option agreement
        under
        which it is granted. In addition, Executive may further 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) five 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 five 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.

       

      (g) Signing
        Bonus.
        Within
        ten (10) days following the Effective Date, the Company shall pay to Executive
        a
        one-time signing bonus of $75,000.

       

      (h) Incentive
        Compensation.
        During
        the Employment Period, Executive will be entitled to participate in the same
        manner as the Company’s other senior executives in any executive incentive
        compensation 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 such plans and programs at any time.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      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). 

       

      For
        purposes of this Agreement, the following terms shall have the following
        meanings:

       

      “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 to Executive
        by
        the Company 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 Vice President and Chief Financial
        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 Vice President and Chief Financial
        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. 

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “Change
        in Control”
means:
        (i) the acquisition by 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 entitled to vote 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.
        In all respects, the definition of “Change in Control” shall be interpreted to
        comply with Section 409A of the Internal Revenue Code of 1986, as amended
        (the
“Code”),
        and
        any successor statute, regulation and guidance thereto.

       

      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.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      (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, their 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
        earlier 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) twelve (12) months after
        the
        Date of Termination.

       

      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 Code Section 409A, 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 the 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 similar to the Company’s standard form of agreement used for its
        senior executives, 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.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      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 at the address of such
        party
        set forth above, (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:

       

      
        	
              	If
                to the Company:	
                SulphCo,
                  Inc.

              


      

      850
        Spice
        Islands Drive

      Sparks,
        Nevada 89431

      Attention:
        Chief Executive Officer

       

      
        	
              	If
                to Executive:	
                Stanley
                  W. Farmer

              


      

      13418
        North Bend Landing

      Cypress,
        Texas 77429

       

      (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. The
        Company and Executive agree that they will negotiate in good faith and jointly
        execute an amendment to modify this Agreement to the extent necessary to
        comply
        with the requirements of Code Section 409A, or any successor statute, regulation
        and guidance thereto, provided, however, no such amendment will increase
        the
        financial obligations of the Company to Executive.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (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.

       

      (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 with competent subject matter
        jurisdiction. 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.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      (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) Deductions
        and Withdrawals.
        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 or under any Company-sponsored employee benefit plan in which
        Executive participates.

       

      (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 and 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.

       

      (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.

       

      [Remainder
        of page left intentionally blank. Signature page(s) to follow.]

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

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

       

       

      SULPHCO,
        INC.

      


      By:__________________________

      


      Name:________________________

      


      Title:_________________________

      


      


      EXECUTIVE

       

      


      _____________________________

      Stanley
        W. Farmer  

       

      


      9