THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

SulphCo, Inc. (SUF)

6/5/2006 Proxy Information

Following is a description of transactions involving more than $60,000 since January 1, 2005, between us and our directors, nominees, executive officers, or members of their immediate family.

On July 1, 2004, and July 1, 2005, we entered into Engagement Agreements with RWG, Inc., an affiliate of Dr. Gunnerman, providing for Dr. Gunnerman to render services to us as chairman of the Board and as chief executive officer. Each Engagement Agreement was for a term of one year, and provided for an annual fee to be paid to RWG, Inc. of $480,000. Effective as of November 1, 2004, this amount has been reduced by mutual agreement to $30,000 per month until we receive substantial additional funds. On May 8, 2006, the Company’s Board of Directors approved the reinstatement of Dr. Gunnerman’s consulting fees to $40,000 per month ($480,000 per annum), effective April 1, 2006, in view of the receipt of approximately $27 million of proceeds from a private placement completed on March 29, 2006.

On December 30, 2003, we issued a $500,000 promissory note to Dr. Gunnerman, of which $250,000 was advanced by Dr. Gunnerman on December 30, 2003 and the remaining $250,000 was advanced on March 22, 2004. The note was due on December 30, 2004, and required the payment to Dr. Gunnerman, in lieu of interest, of 500,000 shares of our common stock. On January 5, 2004, we issued 500,000 shares to Dr. Gunnerman valued at $0.37 per share and discounted 20% because of their restricted status, or $148,000, as prepaid interest through December 30, 2004 in lieu of a cash interest payment for the loan of $500,000. In December 2004 Dr. Gunnerman agreed to extend the maturity of the note from December 30, 2004, to December 30, 2005 at an interest rate of 8% per annum. The extension agreement also provides for mandatory prepayments from revenues we receive from the sale of our products or the licensing of our technology or otherwise, and from the amount of unrestricted loan or equity financings we receive. In December 2005 Dr. Gunnerman again agreed to extend the maturity of the note from December 30, 2005, to December 30, 2006 at an interest rate of 8% per annum. The extension agreement also provides for payment on demand of Dr. Gunnerman prior to December 30, 2006. The loan was repaid in full in May 2006.

In April 2004 Dr. Gunnerman furnished a commitment to fund up to an additional $2,000,000 in loans to us, of which $200,000 was advanced to us as of May 2004. In June 2004 the commitment was superseded by the funding under the June 3, 2004 and June 15, 2004 private placements. Accordingly, the $200,000 advanced by Dr. Gunnerman was repaid by us in June 2004.

In December 2004 Dr. Gunnerman advanced $7 million to us as a loan. The loan is evidenced by a promissory note which bears interest at the rate of 0.5% above the “LIBOR” rate, payable annually, and the entire principal amount is due and payable in December 2007. In May 2006 the Company made a voluntary partial principal prepayment of $2 million, reducing the outstanding principal balance to $5 million.

On December 30, 2003, we issued a $500,000 promissory note to Erika Herrmann, the sister-in-law of Dr. Gunnerman, of which $250,000 was advanced by Ms. Herrmann on December 30, 2003, and the remaining $250,000 was advanced on April 28, 2004. The note was due on December 30, 2004, and required the payment to Ms. Herrmann, in lieu of interest, of 500,000 shares of our common stock. On January 5, 2004, we issued 500,000 shares to Ms. Herrmann valued at $0.37 per share and discounted 20% because of their restricted status, or $148,000, as prepaid interest through December 30, 2004, in lieu of a cash interest payment for the loan of $500,000. As of December 10, 2004, $500,000 remained outstanding under this note. In December 2004 Ms. Herrmann agreed to extend the maturity of the note from December 30, 2004, to December 30, 2005 at an interest rate of 8% per annum. The extension agreement also provides for mandatory prepayments from revenues we receive from the sale of our products or the licensing of our technology or otherwise, and from the amount of unrestricted loan or equity financings we receive. The note was paid off in December 2005.

Effective November 1, 2004, we entered into a consulting agreement with Peak One Consulting, Inc., a company owned by Richard L. Masica, a director, under which Peak One has agreed to provide management consulting services to SulphCo from time to time, as requested by SulphCo, until December 31, 2005, subject to earlier termination by either party. The consulting agreement provides for a consulting fee of $1,500 per day or $200 per hour, whichever is less.

In connection with Mr. Masica's appointment to the Board of Directors in November 2004, SulphCo agreed to grant Mr. Masica 25,000 shares of our common stock on January 1, 2005 for services as a director if he is then serving as a director. Mr. Masica was also granted an option on November 30, 2004, to acquire 25,000 shares of our common stock at an exercise price of $2.86 per share in consideration of services to be provided as a director, with the option expiring on November 30, 2007. These issuances of were based upon SulphCo’s determination of the value of the services rendered and to be rendered by Mr. Masica as a director. On December 27, 2004, our Board of Directors amended the terms of Mr. Masica’s compensation as a director to coincide with past compensation practices regarding outside directors and in view of Mr. Masica’s expected contributions to SulphCo. The amended terms provided for Mr. Masica to receive 50,000 shares of our common stock in lieu of the original proposal for 25,000 shares and 25,000 options, effective January 1, 2005. In January 2005 the 50,000 restricted shares of common stock were issued to him at $5.47 per share, for services valued at $273,500.

From January 2005 through May 2005 we maintained a monthly consulting arrangement with Global 6, LLC, a company owned by Peter Gunnerman, which provided for Global 6 to provide management consulting services to SulphCo on a month-to-month basis, for a monthly consulting fee of $10,000. Peter Gunnerman is the son of Rudolf Gunnerman, our Chairman and Chief Executive Officer. The consulting arrangement was terminated immediately prior to Mr. Gunnerman joining the Company as President in June 2005. For information regarding Mr. Gunnerman’s employment agreement entered into in June 2005 see “Employment and Consulting Contracts.”

Kristina Ligon, the daughter of Dr. Rudolf Gunnerman, has been employed by us as Dr. Gunnerman’s executive assistant. She received salaries of $162,500 in 2005 and $139,500 in 2004.

In April 2005, 50,000 restricted shares of common stock were issued to a Director, Robert Van Maasdijk, upon joining our Board of Directors.

In May 2005, 50,000 restricted shares of common stock were issued to a Director, Dr. Raad Alkadiri, upon joining our Board of Directors.

In November 2005, 50,000 restricted shares of common stock were issued to a Director, Dr. Hannes Farnleitner, upon joining the Board of Directors.

In December 2005, 50,000 restricted shares of common stock were issued to a Director, Christoph Henkel, upon joining the Board of Directors.

In January 2006, 50,000 restricted shares of common stock were issued to Michael Applegate upon joining SulphCo as Chief Operating Officer, subject to a vesting period of 90 days.

All share issuances and option exercise prices described in this section were equal to the fair market value of our common stock on the date the share or option issuances, as the case may be, and were approved by our board of directors, except as otherwise specifically noted. All of the transactions described in this section, although involving related parties, are believed to be on terms no more favorable than could have been obtained from an independent third party.

In May 2006 the Option Committee awarded options to Dr. Gunnerman and Mr. Van Maasdijk, subject to approval of the Plan at the 2006 Annual Meeting of Stockholders. For further information regarding these grants see “Summary of Option Grants” elsewhere in this Proxy Statement.