SULPHCO, INC. STOCK OPTION AGREEMENT
Exhibit
10.2
SULPHCO,
INC.
This
Stock Option Agreement (the "Agreement") is made and entered into as of May
23,
2006 (hereinafter referred to as the "Effective Date"), by and between SULPHCO,
INC., a Nevada corporation (the "Company"), and XXXXXX
X. XXXXXXXXX ("Optionee"),
with reference to the following facts:
A. The
Company has duly adopted the 2006 Stock Option Plan (hereinafter referred to
as
the "Plan"), subject to stockholder approval, which authorizes the Option
Committee (the "Committee") to grant stock options, and which Plan is intended
to encourage ownership of stock of the Company by officers, directors,
consultants, advisors and other key management employees and to provide
additional incentive for them to promote the success of the
Company.
B.
The
Committee has determined that Optionee is entitled to participate in the Plan,
and has taken appropriate action to authorize the granting of a stock option
to
Optionee for the number of shares, at the price per share and on the terms
set
forth in this Agreement, subject to stockholder approval of the
Plan.
C.
Optionee
desires to participate in the Plan and to receive an option on the terms and
conditions set forth in this Agreement.
NOW,
THEREFORE, the parties agree as follows:
1.
Grant of Option.
The
Company hereby grants to Optionee the right and option (hereinafter referred
to
as the "Option") to purchase all or any part of an aggregate of One
Million (1,000,000)
shares
(the "Option Shares") of common stock, $.001 par value, of the Company (the
"Common Stock") at the times and on the terms and conditions set forth in this
Agreement. The Option shall be a “non-statutory stock option” under the Internal
Revenue Code of 1986.
2.
Exercise Price. The
purchase price (the "Exercise Price") of each Option Share shall be $9.03
per
share of the Company’s Common Stock.
3.
Option
Period.
3.1 The
Option shall be exercisable on and after the first to occur of a “Change in
Control” or a “Vesting Event” (as such quoted terms are defined in paragraph 3
this Agreement) and shall expire, and all rights to purchase the Option Shares
shall terminate, at the close of business on the day immediately preceding
the
third anniversary of the Effective Date, unless terminated earlier as provided
in this Agreement. The Option shall not be exercisable until the time at which
all legal requirements in connection with the Plan have been fully complied
with, including
stockholder approval of the Plan. If Optionee is subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), the Option shall not be exercisable until at least six months
and one day from the Effective Date.
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3.2 For
purposes of this Agreement, “Vesting Event” shall mean the reporting by the
Company of $50,000,000 or more of gross revenues in a fiscal year.
3.3 (a)
A
Change
in Control shall be deemed to have occurred if (i) a Takeover Transaction
(as defined in paragraph (2) of this Section 3.10) occurs; or
(ii) any election of directors of the Company takes place (whether by the
directors then in office or by the stockholders at a meeting or by written
consent) and a majority of the directors in office following such election
are
individuals who were not nominated by a vote of two-thirds of the members of
the
Board of Directors, or, if the Company had a nominating committee at such time,
its nominating committee, immediately preceding such election; or (iii) the
Company effectuates a complete liquidation or a sale or disposition of all
or
substantially all of its assets.
(b)
A
“Takeover Transaction” shall mean (i) a merger or consolidation of the
Company with, or an acquisition of the Company or all or substantially all
of
its assets by, any other corporation or entity, other than a merger,
consolidation or acquisition in which the individuals who were members of the
Board of Directors of the Company immediately prior to such transaction continue
to constitute a majority of the Board of Directors or other governing body
of
the surviving corporation or entity (or, in the case of an acquisition involving
a holding company, constitute a majority of the Board of Directors or other
governing body of the holding company) for a period of not less than twelve
(12) months following the closing of such transaction, or (ii) one or
more occurrences or events as a result of which any “person” (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”)), becomes the “beneficial owner” (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
thirty percent (30%) or more of the combined voting power of the Company’s then
outstanding securities.
4.
Option Exercise.
4.1
The
Option shall be exercised by delivering this Agreement for endorsement to the
Company, at its principal office, attention of the Corporate Secretary, together
with a Notice and Agreement of Exercise (in the form attached hereto or
specified from time to time by the Committee) indicating the number of Option
Shares Optionee wishes to purchase and full payment of the Exercise Price of
such shares. In no event shall the Company be required to issue or transfer
fractional shares.
4.2 Payment
for Option Shares may be made in cash, by cashier’s or certified
check.
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5.
Employment of Optionee.
5.1.
Except as otherwise provided in paragraph 6 of this Agreement, Optionee may
not
exercise the Option unless, at the time of exercise, Optionee is employed by
the
Company or a parent or a subsidiary thereof and has been in the employ of the
Company or a parent or a subsidiary thereof continuously since the Effective
Date. For purposes of this paragraph, the period of continuous employment with
the Company shall be deemed to include (without extending the term of the
Option) any period during which Optionee is on leave of absence with the consent
of the Company, provided that such leave of absence shall not exceed three
months and Optionee returns to the employ of the Company at the expiration
of
such leave of absence. If Optionee fails to return to the employ of the Company
at the expiration of such leave of absence, Optionee’s employment with the
Company shall be deemed terminated as of the date such leave of absence
commenced.
The
continuous employment of Optionee with the Company shall also be deemed to
include any period during which Optionee is a member of the military, provided
that Optionee returns to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date Optionee first becomes
entitled to discharge. If Optionee does not return to the employ of the Company
within 90 days from the date Optionee first becomes entitled to discharge (or
such longer period as may be prescribed by law), Optionee’s employment with the
Company shall be deemed to have terminated as of the date Optionee’s military
service ended.
5.2 Nothing
contained herein shall be construed to impose upon the Company or subsidiary
thereof any obligation to employ Optionee for any period or to supersede or
in
any way alter, increase or diminish the respective rights and obligations of
the
Company or any parent or subsidiary thereof and Optionee under any employment
contract now or hereafter existing between them.
6.
Termination of Employment.
6.1.
If
the
employment of Optionee with the Company shall terminate because of
Retirement,
Disability (as such terms are defined in the Plan) or death, unless otherwise
provided
by
the
Committee (with the consent of Optionee) or otherwise expressly provided herein,
(a) the Option, to the extent then presently exercisable, shall remain in full
force and effect and may be exercised pursuant to the provisions hereof,
including expiration at the end of the fixed term hereof, and (b) the Option,
to
the extent not then presently exercisable, shall terminate as of the date of
such termination of employment and shall not be exercisable
thereafter.
6.2 If
the
employment of Optionee with the Company shall terminate for any reason other
than the reasons set forth in paragraph 6.1 hereof, unless otherwise provided
by
the Committee, (a) the Option, to the extent then presently exercisable, shall
remain exercisable only for
a
period of ninety (90) days after the date of such termination of employment
and
may be exercised during such period pursuant to the provisions hereof, including
expiration at the end of the fixed term hereof, and (b) the Option, to the
extent not then presently exercisable, shall terminate as of the date of such
termination of employment and shall not be exercisable thereafter.
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7.
Securities Laws Requirements.
7.1 The
Option shall not be exercisable unless and until any applicable registration
or
qualification requirements of federal and state securities laws, and all other
requirements of law or any regulatory bodies having jurisdiction over such
exercise or issuance and delivery, have been fully complied with. The Company
will use reasonable efforts to maintain the effectiveness of a Registration
Statement under the Securities Act of 1933 (the “Securities Act”) for the
issuance of the Option and the Option Shares but there may be times when no
such
Registration Statement will be currently effective. Exercise of the Option
may
be temporarily suspended without liability to the Company during times when
no
such Registration Statement is currently effective, or during times when, in
the
reasonable opinion of the Committee, such suspension is necessary to preclude
violation of any requirements of applicable law or regulatory bodies having
jurisdiction over the Company. If the Option would expire for any reason except
the end of its term during such a suspension, then if exercise of the Option
is
duly tendered before its expiration, the Option shall be exercisable and
exercised (unless the attempted exercise is withdrawn) as of the first day
after
the end of such suspension. The Company shall have no obligation to file any
Registration Statement covering resales of the Option Shares.
7.2. Upon
each
exercise of the Option, Optionee shall represent, warrant and agree, by the
Notice and Agreement of Exercise delivered to the Company, that (a) no Option
Shares will be sold or otherwise distributed in violation of the Securities
Act
or any other applicable federal or state securities laws, (b) if Optionee is
subject to the reporting requirements under Section 16(a) of the Exchange Act,
Optionee will furnish to the Company a copy of each Form 4 or Form 5 filed
by
Optionee and will timely file all reports required under federal securities
laws, and (c) Optionee will report all sales of Option Shares to the Company in
writing on the form prescribed from time to time by the Company. All Option
Share certificates may be imprinted with legend
conditions
reflecting federal and state securities law restrictions and conditions and
the
Company may comply therewith and issue “stop transfer” instructions to its
transfer agents and registrars without liability.
8.
Transferability of Option.
The
Option may not be transferred by Optionee without the prior written consent
of
the Committee unless such transfer is pursuant to a Will of Optionee or the
laws
governing the distribution of Optionee’s property upon his or her death. The
Option may be exercised, during the lifetime of Optionee, only by Optionee
and
Optionee’s permitted transferees. Notwithstanding the foregoing, the Option
shall not be assignable by operation of law and shall not be subject to
attachment, execution, garnishment, sequestration, the law of bankruptcy
or any other legal or equitable process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition contrary to the provisions of this
Agreement, and the levy of any execution, attachment or similar process
thereupon, shall be null and void and without effect.
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9.
Changes in Capitalization.
9.1 The
number and class of shares subject to the Option, the Exercise Price (but not
the total price), and the minimum number of shares as to which the Option may
be
exercised at any one time, shall be proportionately adjusted in the event of
any
increase or decrease in the number of the issued shares of Common Stock which
results from a split-up or consolidation of shares, payment of a stock dividend
or stock dividends exceeding a total of two and one-half percent (2.5%) for
which the record dates occur in any one fiscal year, a recapitalization (other
than the conversion of convertible securities according to their terms), a
combination of shares or other like capital adjustment, so that upon exercise
of
the Option, Optionee shall receive the number and class of shares Optionee
would
have received had Optionee been the holder of the number of shares of Common
Stock for which the Option is being exercised upon the date of such change
or
increase or decrease in the number of issued shares of the Company.
9.2
Upon
a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or in which the Company survives as a wholly-owned subsidiary of another
corporation, or upon a sale of all or substantially all of the property of
the
Company to another corporation, or any dividend or distribution to stockholders
of more than 10% of the Company's assets, adequate adjustment or other
provisions shall be made by the Company or other party to such transaction
so
that there shall remain and/or be substituted for the Option Shares provided
for
herein, the shares, securities or assets which would have been issuable or
payable in respect of or in exchange for the Option Shares then remaining under
the Option, as if Optionee had been the owner of such shares as of the
applicable date. Any securities so substituted shall be subject to similar
successive adjustments.
10.
Relationship. The
Option shall not be deemed to be salary or other compensation to Optionee for
purposes of any pension, thrift, profit sharing, stock purchase or other
employee benefit
plan now maintained or hereafter adopted by the Company.
11.
Privileges of Ownership.
Optionee shall not have any of the rights of a stockholder with respect to
the
shares covered by the Option except to the extent that share certificates have
actually been issued and registered in Optionee's name on the books of the
Company or its registrar upon the due exercise of the Option. The Company shall
be allowed a reasonable time following notice of exercise in which to accomplish
the issuance and registration.
12.
Reference to Plan.
This
Agreement and the Option are subject to all of the terms and conditions of
the
Plan, which are hereby incorporated by reference. In the event of any
conflict
between this Agreement and the Plan, the provisions of the Plan shall
prevail.
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13.
Notices.
Any
notice to be given under the terms of this Agreement shall be addressed to
the
Company in care of its Corporate Secretary at its principal executive offices
and any notice to be given to Optionee shall be addressed to Optionee at the
address appearing on the employment records of the Company, or at such other
address or addresses as either party may hereafter designate in writing to
the
other. Any such notice shall be deemed duly given when personally delivered
or
enclosed in a properly sealed envelope, addressed as herein required and
deposited, postage prepaid, in a post office or branch post office regularly
maintained by the jurisdiction in which it is deposited.
14.
Withholding Taxes.
The
Company shall have the right at the time of exercise of the Option to make
adequate provision for any federal, state, local or foreign taxes which it
believes are or may be required by law to be withheld with respect to such
exercise ("Tax Liability"), to ensure the payment (through withholding from
Optionee's salary or the Option Shares or otherwise as the Company shall deem
in
its sole and conclusive discretion to be in its best interests) of any such
Tax
Liability.
15.
Number and Gender.
Terms
used herein in any number or gender include other numbers or genders, as the
context may require.
16.
Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
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17.
Governing Law. This
Agreement and performance under it, shall be construed in accordance with and
under the laws of the State of Nevada, U.S.A. Should a court or other body
of
competent jurisdiction determine that any term or provision of this Agreement
is
excessive in scope, such term or provision shall be adjusted rather than voided
and interpreted so as to be enforceable to the fullest extent possible, and
all
other terms and provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
IN
WITNESS WHEREOF, the Company and Optionee have executed this Agreement as of
the
Effective Date.
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"OPTIONEE":
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"COMPANY":
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Xxxxxx
X. Xxxxxxxxx
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SULPHCO,
INC.
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/s/
Xxxxxx X. Xxxxxxxxx
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/s/
Xxxxx X. Xxxxxx
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(Signature)
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By:Xxxxx
X. Xxxxxx
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Its:
Chief Financial Officer
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SULPHCO,
INC.
NOTICE
AND AGREEMENT OF EXERCISE
OF
STOCK OPTION
I
hereby
exercise my SulphCo, Inc. Stock Option dated as of May 23, 2006, as to
__________ shares of SulphCo, Inc. common stock, $.001 par value (the "Option
Shares").
Enclosed
are the documents and payment specified in Paragraph 4 of my Option Agreement.
I
understand that no Option Shares shall be issued and delivered unless and until
any applicable registration requirements of the Securities Act of 1933, as
amended, any listing requirements of any securities exchange on which stock
of
the same class is then listed, and any other requirements of law or any
regulatory bodies having jurisdiction over such issuance and delivery, shall
have been fully complied with. I hereby represent, warrant and agree, to and
with SulphCo, Inc. (the "Company"), that:
a.
The
Option Shares I am purchasing are being acquired for my account, and no other
person (except, if I am married, my spouse) will own any interest
therein.
b.
I
will
not sell or dispose of my Option Shares in violation of the Securities Act
of
1933 or any other applicable Federal or state securities laws. I will obtain
the
Company's advice prior to any disposition of my Option Shares.
c.
I
agree
that the Company may, without liability, place legend conditions upon my Option
Shares and issue "stop transfer" restrictions requiring compliance with
applicable securities laws and the terms of my Option.
d.
If
and so
long as I am subject to reporting requirements under Section 16(a) of the
Securities
Exchange Act of 1934, as amended, I will furnish to the Company a copy of each
Form 4 and Form 5 filed by me and will timely file all reports required under
the Federal securities laws.
e.
I will
report to the Company all sales of Option Shares on the form prescribed from
time to time by the Company.
The
number of Option Shares specified above are to be issued in the following
registration (husband and wife will be shown to be joint tenants unless I state
that the Option Shares will be held as community property or as tenants in
common):
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(Print
your name)
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(Signature)
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