EMPLOYMENT AGREEMENT
Exhibit
10.2
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
Xxxxxxx X. Xxxxxx (“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.
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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.
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“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.
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(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.
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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.
|
000
Xxxxx
Xxxxxxx Xxxxx
Xxxxxx,
Xxxxxx 00000
Attention:
Chief Executive Officer
| If to Executive: |
Xxxxxxx
X. Xxxxxx
|
00000
Xxxxx Xxxx Xxxxxxx
Xxxxxxx,
Xxxxx 00000
(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.
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(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 Xxxxxx 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.
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(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.]
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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
_____________________________
Xxxxxxx
X. Xxxxxx
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