Exhibit 10.27
SEPARATION AGREEMENT
AND MUTUAL RELEASE
This Separation
Agreement and Mutual Release ("Agreement") is made and shall be
effective as of December 28, 2004, by and between SulphCo, Inc., a
Nevada corporation (the "Company"), and Kirk S. Schumacher
("Employee").
RECITALS
1. Employee
is currently employed by the Company as President and Secretary
pursuant to a certain Executive Employment Agreement (the
“Employment Agreement”) dated February 17, 2003.
2. The
Company and Employee have mutually agreed to terminate the
employment relationship, including the rights and obligations of
the Parties under the Employment Agreement, and to release each
other from any claims arising from, or related to the employment
relationship, all on the terms and conditions set forth in this
Agreement.
AGREEMENT
NOW THEREFORE, in
consideration of the mutual promises made herein, the Company and
Employee (collectively referred to as the "Parties") hereby agree
as follows:
1.
Resignation . Employee hereby resigns from his position as
the Company’s President and Secretary effective December 28,
2004.
2.
Severance Payment . The Company agrees to pay Employee the
lump sum payment of One Hundred Sixty-Five Thousand Dollars
($165,000)(the “Severance Amount”), the receipt of
which is hereby acknowledged by Employee. Employee hereby directs
the payment of such amount to the Company as payment in full of the
exercise price of the 300,000 Company Stock Options described in
Paragraph 3 below, the receipt of which is hereby acknowledged by
the Company. In consideration of payment of the Severance Amount
Employee hereby waives and relinquishes all rights to any severance
payments under the Employment Agreement.
3.
Exercise of Certain Employee Stock Options; Termination of
Certain Employee Stock Options . The Company acknowledges that
that on December 27, 2004, the Employee exercised his option to
acquire 300,000 shares (the “Option”) of the
Company’s common stock granted under the Employment
Agreement. The Company hereby accepts the exercise of the Option.
The Company hereby acknowledges receipt of the full exercise price
of $0.55 per share, which is being paid by Employee in the manner
provided in Paragraph 2 of this Agreement from the net proceeds of
the Severance Amount paid to Employee under Paragraph 2. The
Company agrees to promptly cause the issuance of the 300,000 option
shares, provided that Employee shall pay within three days of the
December 27, 2004 exercise date any applicable withholding taxes
incurred as a result of the exercise of the Option. The Option
Shares shall be issued by the Company to Employee without
restrictive legend to Employee’s account at RBC Dain
Rauscher. Employee acknowledges that the shares are
“restricted shares” within the meaning of the
Securities Act of 1933, as they have not been registered under the
Securities Act, and shall only be sold in accordance with the
Undertaking of Optionee between the Company and Employee dated July
12, 2004, which Undertaking shall survive the execution and
delivery of this Agreement. The Company acknowledges and agrees
that the resale of the Option Shares by Employee is covered by an
effective Registration Statement on Form S-8 filed with the SEC,
and the Company shall maintain the effectiveness of such
registration statement until Employee has sold all of the Option
Shares or, in the opinion of counsel to the Company, the Option
Shares may be sold by Employee without registration pursuant to the
provisions of Rule 144 under the Securities Act.
Employee hereby
relinquishes all rights to the remaining 500,000 Stock Options (the
“Relinquished Options”) granted to Employee under the
Employment Agreement. Employee acknowledges that the Relinquished
Options have substantial value and may in the future have
substantial value, either as a result of facts and circumstances
existing as of this date, as a result of future events, or
otherwise. Some of such facts, circumstances or events are or may
be unknown to Employee. With this knowledge Employee is releasing
all rights to the Relinquished Options and assuming the economic
risks associated with such release.
4.
Benefits . Employee shall have the right to convert his
health insurance benefits to individual coverage pursuant to
COBRA.
5.
Confidential Information . Employee agrees to maintain the
confidentiality of all confidential and proprietary information of
the Company. Employee shall return all Company property and
confidential and proprietary information in his possession to the
Chairman of the Company by December 31, 2004.
6.
Payment of Salary . Employee will be paid his regular salary
through December 29, 2004, and waives any accrued vacation.
7.
Release of Claims . Employee and the Company each agree that
the foregoing consideration represents settlement in full of all
outstanding obligations owed to Employee by the Company. Employee
and the Company, on behalf of themselves, and their respective
heirs, family members, executors, officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns,
hereby fully and forever release each other and their respective
heirs, family members, executors, officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns,
from, and agree not to sue concerning, any claim, duty, obligation
or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that any of
them may possess arising from any omissions, acts or facts that
have occurred up until and including December 28, 2004, including,
without limitation:
2
(a) any
and all claims relating to or arising from the Employment Agreement
or Employee’s employment relationship with the Company and
the termination of that relationship;
(b) any
and all claims relating to, or arising from, Employee’s right
to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claim
