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This
Agreement is dated as of the 12th
day of
February, 2008 among Rudolf Gunnerman and Doris Gunnerman (“Stockholders”),
those parties listed on the signature pages hereto, as purchasers (“Optionees”),
and Grushko & Mittman, P.C. (the "Escrow Agent"):
WITNESSETH:
WHEREAS,
Optionees and Stockholders have entered into a Stock Option Agreement, of even
date herewith (“Stock Option Agreement”; all capitalized terms used and not
defined herein are used as defined in the Stock Option Agreement) for the option
to purchase by the Optionees up to 2,000,000 shares of Common Stock of Sulphco,
Inc. (“Shares”) for a per share purchase price of $4.50; and
WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and
conditions of this Agreement;
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
INTERPRETATION
1.1.Definitions.
Whenever used in this Agreement, the following terms shall have the following
respective meanings:
§
"Agreement"
means this Agreement and all amendments made hereto by written agreement between
the parties;
§
“Closing
Date” shall mean the date of an Option Closing;
§
"Escrowed
Payment" means a cash payment in the amount equal to the Purchase Price at
the
time of exercise of any Option;
§
“Parties”
shall mean the Stockholders, Optionees, and Escrow Agent;
§
“Release
Letter” shall mean the letter to Escrow Agent authorizing release of a Stock
Certificate;
§
“Stock
Certificate” shall mean one or more stock certificates representing 2,000,000
shares of Sulphco, Inc. Common Stock being issued upon an exercise of the Option
under the Stock Option Agreement;
§
Collectively,
the executed Agreement and Stock Certificate with executed Stock Power are
referred to as “Stockholder Documents”; and
§
Collectively,
the Escrowed Payment and the Optionee executed Agreement are referred to as
"Optionee Documents".
§
The
Stockholder Documents and Optionee Documents are collectively referred to as
“Parties Documents”.
1.2.Entire
Agreement.
This
Agreement along with the Stockholder Documents and Optionee Documents constitute
the entire agreement between the parties hereto pertaining to the Stockholder
Documents and Optionee Documents and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations and other agreements made
by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement, the Stockholder Documents and Optionee
Documents.
1.3.Extended
Meanings.
In this
Agreement words importing the singular number include the plural and vice versa;
words importing the masculine gender include the feminine and neuter genders.
The word "person" includes an individual, corporation, partnership, trustee
or
trust or unincorporated association, executor, administrator or legal
representative.
1.4.Waivers
and Amendments.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended,
and the terms and conditions hereof may be waived, only by a written instrument
signed by all parties, or, in the case of a waiver, by the party waiving
compliance. Except as expressly stated herein, no delay on the part of any
party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power
or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5.Headings.
The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.6.Law
Governing this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to conflicts
of laws
principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought
only
in the state courts of New York or in the federal courts located in the state
of
New York. Both parties and the individuals executing this Agreement agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party (which shall be the party which receives an award most closely
resembling the remedy or action sought) shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it
may
conflict therewith and shall be deemed modified to conform with such statute
or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement.
1.7.Specific
Enforcement, Consent to Jurisdiction.
The
Parties acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity. Subject to Section
1.6 hereof, each of the Parties hereby waives, and agrees not to assert in
any
such suit, action or proceeding, any claim that it is not personally subject
to
the jurisdiction of such court, that the suit, action or proceeding is brought
in an inconvenient forum or that the venue of the suit, action or proceeding
is
improper. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1.Stockholders’
Deliveries.
On the
date of execution of this Agreement, the Stockholders will deliver to the Escrow
Agent all the Stockholder Documents other than the Release Letter. On or before
each Option Closing date, the Stockholders will deliver to the Escrow Agent
the
Release Letter.
2.2.Optionee
Deliveries.
On the
date of execution of this Agreement, the Optionees will deliver to the Escrow
Agent executed copies of this Agreement. Each Optionee agrees that exercise
of
its Allocated Portion of the Option will be in minimum increments of 25,000
shares and agrees to deliver the written notice in paragraph 1(e) of the Stock
Option Agreement as specified therein. On or before the Option Closing date,
Optionee shall deliver to the Escrow Agent the applicable Purchase Price and
Release Letter. The Escrowed Payment will be delivered pursuant to the following
wire transfer instructions:
For
Credit to: Grushko & Mittman, IOLA Trust Account
Account
Number: 45208884
2.3.Intention
to Create Escrow Over Stockholder Documents and Optionee
Documents.
The
Parties intend that the Stockholder Documents and Optionee Documents shall
be
held in escrow by the Escrow Agent pursuant to this Agreement for their benefit
as set forth herein.
2.4.Escrow
Agent to Deliver the Stockholder Documents and Optionee
Documents.
The
Escrow Agent shall hold and release the Stockholder Documents and Optionee
Documents only in accordance with the terms and conditions of this
Agreement.
2.5.Authority
to Escrow Agent.
The
Escrow Agent is authorized from time to time to deliver the Stock Certificates
to the transfer agent of Sulphco, Inc., for the purpose of reissuing the Shares
in such denominations as required to be able to deliver Shares in compliance
with this Agreement.
ARTICLE
III
RELEASE
OF ESCROW
3.1.Release
of Escrow.
Subject
to the provisions of Section 4.2, the Escrow Agent shall release the Stockholder
Documents and Optionee Documents as follows:
(a) On
each
Option Closing, the Escrow Agent will simultaneously release the Purchase Price
to Stockholders and the applicable Stock Certificate with Stock Power endorsed
in blank to the Optionee.
(b) All
funds
to be delivered to the Stockholders shall be delivered pursuant to the following
wire instructions:
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Parties, it shall deliver the Stockholder
Documents and Optionee Documents in accordance with the terms of the Joint
Instructions.
(e) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "Court
Order"), the Escrow Agent shall deliver the Stockholder Documents and Optionee
Documents in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order
to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent)
to
the effect that the court issuing the Court Order has competent jurisdiction
and
that the Court Order is final and non-appealable.
3.2.Acknowledgement
of Parties; Disputes.
The
Parties acknowledge that the only terms and conditions upon which the
Stockholder Documents and the Optionee Documents are to be released are set
forth in Sections 3 and 4 of this Agreement. The Parties reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect
to
the release of the Stockholder Documents and Optionee Documents. Any dispute
with respect to the release of the Stockholder Documents and the Optionee
Documents shall be resolved pursuant to Section 4.2 or by agreement between
the
Parties.
ARTICLE
IV
CONCERNING
THE ESCROW AGENT
4.1.Duties
and Responsibilities of the Escrow Agent.
The
Escrow Agent's duties and responsibilities shall be subject to the following
terms and conditions:
(a) The
Parties acknowledge and agree that the Escrow Agent (i) shall not be responsible
for or bound by, and shall not be required to inquire into whether any of the
Parties is entitled to receipt of the Stockholder Documents and Optionee
Documents pursuant to, any other agreement or otherwise; (ii) shall be obligated
only for the performance of such duties as are specifically assumed by the
Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be
protected in acting or refraining from acting upon any written notice,
instruction, instrument, statement, request or document furnished to it
hereunder and believed by the Escrow Agent in good faith to be genuine and
to
have been signed or presented by the proper person or party, without being
required to determine the authenticity or correctness of any fact stated therein
or the propriety or validity or the service thereof; (iv) may assume that any
person believed by the Escrow Agent in good faith to be authorized to give
notice or make any statement or execute any document in connection with the
provisions hereof is so authorized; (v) shall not be under any duty to give
the
property held by Escrow Agent hereunder any greater degree of care than Escrow
Agent gives its own similar property; and (vi) may consult counsel satisfactory
to Escrow Agent, the opinion of such counsel to be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by Escrow Agent hereunder in good faith and in accordance with the opinion
of
such counsel.
(b) The
Parties acknowledge that the Escrow Agent is acting solely as a stakeholder
at
their request and that the Escrow Agent shall not be liable for any action
taken
by Escrow Agent in good faith and believed by Escrow Agent to be authorized
or
within the rights or powers conferred upon Escrow Agent by this Agreement.
The
Stockholders and Optionees, jointly and severally, agree to indemnify and hold
harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents
and representatives for any action taken or omitted to be taken by Escrow Agent
or any of them hereunder, including the fees of outside counsel and other costs
and expenses of defending itself against any claim or liability under this
Agreement, except in the case of gross negligence or willful misconduct on
Escrow Agent's part committed in its capacity as Escrow Agent under this
Agreement. The Escrow Agent shall owe a duty only to the Stockholders and
Optionees under this Agreement and to no other person.
(c) The
Stockholders and Optionees, jointly and severally agree to reimburse the Escrow
Agent for outside counsel fees, to the extent authorized hereunder and incurred
in connection with the performance of its duties and responsibilities
hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Parties. Prior to the effective
date of the resignation as specified in such notice, the Stockholders and
Optionees will issue to the Escrow Agent a Joint Instruction authorizing
delivery of the Stockholder Documents and Optionee Documents to a substitute
Escrow Agent selected by the Optionees and Stockholders. If no successor Escrow
Agent is named by the Optionees and Stockholders, the Escrow Agent may apply
to
a court of competent jurisdiction in the State of New York for appointment
of a
successor Escrow Agent, and to deposit the Stockholder Documents and Optionee
Documents with the clerk of any such court.
(e) The
Escrow Agent does not have and will not have any interest in the Stockholder
Documents and Optionee Documents, but is serving only as escrow agent, having
only possession thereof. The Escrow Agent shall not be liable for any loss
resulting from the making or retention of any investment in accordance with
this
Escrow Agreement.
(f) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(g) The
Escrow Agent shall be permitted to act as counsel for the Optionees in any
dispute as to the disposition of the Stockholder Documents and Optionee
Documents, in any other dispute between the Parties, whether or not the Escrow
Agent is then holding the Stockholder Documents and Optionee Documents and
continues to act as the Escrow Agent hereunder.
(h) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent
or the termination of this Agreement.
4.2.Dispute
Resolution: Judgments.
Resolution of disputes arising under this Agreement shall be subject to the
following terms and conditions:
(a) If
any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Stockholder Documents and Optionee Documents, or if the
Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone,
to
(i) refrain from taking any action other than to continue to hold the
Stockholder Documents and Optionee Documents pending receipt of a Joint
Instruction from Stockholders and the Optionees, or (ii) deposit the Stockholder
Documents and Optionee Documents with any court of competent jurisdiction in
the
State of New York, in which event the Escrow Agent shall give written notice
thereof to the Stockholders and Optionees and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement. The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to the Stockholder Documents and Optionee Documents.
The Escrow Agent shall have the right to retain counsel if it becomes involved
in any disagreement, dispute or litigation on account of this Agreement or
otherwise determines that it is necessary to consult counsel.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow
Agent shall not be liable to the Parties or to any other person, firm,
corporation or entity by reason of such compliance.
ARTICLE
V
GENERAL
MATTERS
5.1.Termination.
This
escrow shall terminate upon the release of all of the Stockholder Documents
and
Optionee Documents or at any time upon the agreement in writing of the
Stockholders and Optionees.
5.2.Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
or
to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3.Interest.
The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith. In the event the Escrowed Payment
is deposited in an interest bearing account, the Stockholders and Optionees
shall be entitled to receive its prorata
portion
of any accrued interest thereon, but only if the Escrow Agent receives from
such
party the party’s United States taxpayer identification number and other
requested information and forms.
5.4.Assignment;
Binding Agreement.
Neither
this Agreement nor any right or obligation hereunder shall be assignable by
any
party without the prior written consent of the other parties hereto. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
5.5.Invalidity.
In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall
be
enforceable to the fullest extent permitted by law.
5.6.Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
5.7.Agreement.
Each of
the undersigned states that he has read the foregoing Stock Option Funds Escrow
Agreement and understands and agrees to it.
RUDOLF
GUNNERMAN
“Stockholder”
_____________________________________
DORIS
GUNNERMAN
“Stockholder”
_____________________________________
ESCROW
AGENT:
_____________________________________
GRUSHKO
& MITTMAN, P.C.
[OPTIONEE
SIGNATURE PAGES TO STOCK OPTION ESCROW]
IN
WITNESS WHEREOF the undersigned have executed this Stock Option Funds Escrow
Agreement as of the first date above written.
Name
of
Optionee: Iroquois
Master Fund Ltd.
Signature
of Authorized Signatory of Optionee:
_______________________________________
Name
of
Authorized Signatory:
____________________________________________________
Title
of
Authorized Signatory:
_____________________________________________________
