Syntroleum — Management Stock
Option Agreement
CONFIDENTIAL
This stock
option Agreement (the “Agreement”) is effective as of
the Grant Date set forth in the attached Notice. The Agreement is
by and between Syntroleum Corporation, a Delaware corporation
(“Syntroleum”), and the Grantee listed in the Notice.
The Agreement evidences the grant by Syntroleum of the Option to
Grantee to purchase the number of shares of Syntroleum common
stock, par value $0.01 per share Common Stock indicated in the
Notice. The grant is made pursuant to action of the Board of
Directors and Grantee’s acceptance of the Option in
accordance with the provisions of the Plan. Syntroleum and Grantee
agree as follows.
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1.1.
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“Change in Control”
shall be deemed to occur if any person or group within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934 shall become the beneficial owner of 25% or more of the
shares of Syntroleum Common Stock then outstanding. A Change of
Control shall not have occurred if the beneficial owner is
Syntroleum, a subsidiary of Syntroleum or an employee benefit plan
of Syntroleum.
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1.2.
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“Common Stock” means
the shares of Syntroleum common stock, par value $0.01 per
share.
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1.3.
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“Committee” means the
Nominating and Compensation Committee of Syntroleum’s Board
of Directors.
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1.4.
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“Employee in Good
Standing” means a Syntroleum employee who is not in violation
of any of the following terms and conditions of his employment
agreement and/or general company policy;
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1.4.1.
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has not threatened and has no
pending legal or quasi-legal proceeding against Syntroleum
including but not limited to negotiations (related to employment),
mediations, arbitration or litigation;
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1.4.2.
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is current in all monies owed
Syntroleum;
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1.4.3.
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has been in the continuous
employment of Syntroleum from the Grant Date; 1.4.4. is not on
performance or disciplinary probation,
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1.4.5.
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is not under felony
indictment;
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1.4.6.
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has not resigned. Authorized leaves
of absence from Syntroleum shall not constitute a
resignation/termination of employment for purposes of this
Agreement. For purposes of this Agreement, an authorized leave of
absence shall be an absence while Grantee is on military leave,
sick leave, or other bona fide leave of absence so long as
Grantee’s right to employment with Syntroleum is guaranteed
by statute or contract and is mandatory in nature.
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1.5.
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“Exercise Price” means
the price set out in line 5 of Exhibit A of this
Agreement
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Syntroleum — Management Stock
Option Agreement
CONFIDENTIAL
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1.6.1.
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the assignment to the Grantee of
any duties that are materially inconsistent with the
Grantee’s position or any other assignment that results in a
material diminution of the Grantee’s position, authority or
responsibilities (excluding performance or disciplinary action)
that are not generally imposed on Syntroleum employees as a whole.
Good Reason does not include any isolated or inadvertent action not
taken in bad faith and remedied by Syntroleum in the normal course
of business after receipt of written notification.
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1.6.2.
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the assignment of the Grantee to an
office outside the Tulsa metropolitan area unless the assignment is
necessary in order to complete a Syntroleum project, is not
intended to be permanent, does not last for more than twelve
(12) months and for which Syntroleum compensates the Grantee
as per common industry practices (if any).
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1.7.
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“Grant Date” means the
date set out in line 3 of Exhibit A of this
Agreement.
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1.8.
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“Grantee” means the
person set out in line 1 of Exhibit A of this
Agreement.
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1.9.
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“Incentive Stock
Option(s)” or “Option(s)” means the grant by
Syntroleum to Grantee of the right to purchase shares of Common
Stock pursuant to the terms of this Agreement and the Plan. The
shares subject to the Option are intended to be Incentive Stock
Option (ISO) shares as described in Section 422(b) of the Internal
Revenue Code of 1986, as amended.
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1.10.
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“Notice” means
Exhibit A attached to this Agreement.
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1.11.
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“Performance Test” has
the definition set out in Exhibit A of the Site License
Agreement attached to the Biofining Master License Agreement
between Syntroleum Corporation and Dynamic Fuels dated
June 22, 2007.
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1.12.
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“Plan” means the
Syntroleum Corporation 2005 Stock Incentive Plan as
amended
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1.13.
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“Plant” means the
Dynamic Fuels bio-refinery located in Geismar,
Louisiana.
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2.
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Vesting : The Option shall vest as indicated
in the Notice except as otherwise provided herein.
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Syntroleum — Management Stock
Option Agreement
CONFIDENTIAL
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3.
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Exercise Period
: The vested portion of
the Option may be exercised from time to time with respect to any
number of shares on any regular business day at Syntroleum’s
offices until the earliest to occur of the following dates subject
to a ten thousand (10,000) share minimum or balance of ownership
whichever is less.
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3.1.
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30 month period after the
first running of the Plant Performance Test if the Grantee is an
Employee in Good Standing;
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3.2.
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30 month period after the
first running of the Plant Performance Test if the Grantee’s
employment is terminated without cause or the Grantee resigns for
Good Reason, or
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3.3.
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30 month period after the
first running of the Plant Performance Test if Grantee’s
termination of employment with Syntroleum is by reason of death or
disability or retirement, or
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3.4.
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10 business days following the date
of Grantee’s termination of employment for any other reason,
or
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3.5.
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the tenth anniversary of the Grant
Date. [This language is required in order for the Option to qualify
as an ISO.]
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4.1.
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The Option may be exercised only by
Grantee or, in the event or Grantee’s death, by the person to
whom the Option was transferred by delivering or mailing written
notice of the exercise to the Secretary of Syntroleum in the form
shown in Exhibit B. The written notice shall be signed by each
person entitled to exercise the Option and shall specify the
address and Social Security number of each such person. If any
person other than Grantee purports to be entitled to exercise all
or any portion of the Option, the written notice shall be
accompanied by proof, satisfactory to Syntroleum, of that
entitlement. All legal expenses incurred by Syntroleum in
exercising the Option will be to the Grantee’s
account.
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4.2.
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The written notice of exercise will
be effective and the Option shall be deemed exercised to the extent
specified in the notice on the date one day after the written
notice is received by the Secretary of Syntroleum at its offices
during regular business hours and is accompanied by full payment of
the exercise price for the shares as to which the Option is
exercised in certified funds.
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4.3.
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In the event of a Change in
Control, the Option will be canceled, and Syntroleum will issue to
the Grantee Common Stock equal in number to the gross number of
shares that would have been acquired upon the exercise of the
remaining unexercised portion of the Option. Grantee is responsible
for its tax obligations.
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3
Syntroleum — Management Stock
Option Agreement
CONFIDENTIAL
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5.
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Transfer of Shares; Tax
Withholding .
As soon as practicable after receipt of an effective written notice
of exercise and full payment of the exercise price as provided in
Section 4.0, or upon the occurrence of a Change in Control,
the Secretary of Syntroleum shall cause ownership of the
appropriate number of shares of Syntroleum Common Stock to be
issued to the person exercising the Option or the person entitled
to receive shares by reason of the Change in Control by delivering
to such person a certificate for such number of shares registered
in the name of such person. Each such certificate shall bear a
legend describing, to the extent applicable, the restrictions
imposed by applicable state and federal securities laws.
Notwithstanding the foregoing, if Syntroleum requires payment of
any tax required by law to be withheld with respect to a Notice or
a Change in Control, the Secretary shall not transfer ownership of
shares until the required payment is made. Syntroleum reserves the
right to withhold cash from salary or other cash payments made to
the Grantee or to retain shares of Common Stock that would
otherwise be transferred pursuant to the exercise of an Option or
the Change in Control in order to satisfy the tax withholding
obligations of Syntroleum resulting from the exercise of an Option
or the Change in Control.
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6.1.
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The rights under this Agreement may
not be transferred except by will or the laws of descent and
distribution.
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6.2.
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The rights under this Agreement may
be exercised during his lifetime only by Grantee. The terms of the
Option shall be binding upon the executors, administrators, heirs,
and successors of Grantee.
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6.3.
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The Option may not be exercised,
and the exercise period shall be extended day for day, if the
Committee determines that the issuance of shares of
Syntroleum’s Common Stock upon such exercise of the Option
would constitute a violation of any applicable federal or state
securities or other law or regulation or restrict
Syntroleum’s ability to use its net operating loss for tax
purposes; provided however, that the exercise period shall in no
event be extended beyond the tenth anniversary of the Grant Date.
In addition, the net operating loss restriction on the
Grantee’s ability to exercise will not apply in the event of
a Change in Control. Grantee shall have no
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