EMPLOYMENT AGREEMENT

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).

“ 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% o