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SYNTROLEUM CORPORATION
(a Delaware corporation)
5,916,000 Shares of Common Stock
and
887,400 Common Stock Warrants
UNDERWRITING AGREEMENT
Dated: May 21, 2004
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Table of Contents
Page
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SECTION 1. Representations and Warranties. .................................. 2
(a) Representations and Warranties by the Company ...................... 2
(i) Compliance with Registration Requirements ................. 2
(ii) Incorporated Documents .................................... 3
(iii) Independent Accountants ................................... 3
(iv) Financial Statements ...................................... 3
(v) No Material Adverse Change in Business .................... 4
(vi) Good Standing of the Company .............................. 4
(vii) Good Standing of the Subsidiaries ......................... 4
(viii) Capitalization ............................................ 5
(ix) Authorization of Agreement ................................ 5
(x) Authorization and Description of the Shares ............... 5
(xi) Authorization and Description of the Warrant Agreement .... 5
(xii) Authorization of the Warrant Shares ....................... 5
(xiii) Authorization and Description of the Warrants ............. 6
(xiv) Absence of Defaults and Conflicts ......................... 6
(xv) Absence of Labor Dispute .................................. 6
(xvi) Absence of Proceedings .................................... 7
(xvii) Accuracy of Exhibits ...................................... 7
(xviii) Absence of Further Requirements ........................... 7
(xix) Possession of Intellectual Property ....................... 7
(xx) Possession of Licenses and Permits ........................ 8
(xxi) Title to Property ......................................... 8
(xxii) Investment Company Act .................................... 8
(xxiii) Environmental Laws ........................................ 8
(xxiv) Registration Rights ....................................... 9
(xxv) Stabilizing Transactions; Distribution of Prospectus ...... 9
(xxvi) Statistical and Market Data ............................... 9
(xxvii) Finders' Fee .............................................. 9
(xxviii) Payment of Taxes .......................................... 9
(xxix) Internal Controls ......................................... 10
(xxx) Insurance ................................................. 10
(xxxi) Related Party Transactions ................................ 10
(xxxii) Offering Materials ........................................ 10
(xxxiii) Sales of Securities. ...................................... 11
(b) Officer's Certificates ............................................. 11
SECTION 2. Sale and Delivery to Underwriter; Closing. ....................... 11
(a) Securities ......................................................... 11
(b) Payment ............................................................ 11
SECTION 3. Covenants of the Company ......................................... 11
(a) Compliance with Securities Regulations and Commission Requests ..... 11
(b) Filing of Amendments ............................................... 12
(c) Delivery of Registration Statements ................................ 12
(d) Delivery of Prospectuses ........................................... 12
(e) Continued Compliance with Securities Laws .......................... 12
(f) Blue Sky Qualifications ............................................ 13
(g) Rule 158 ........................................................... 13
(h) Use of Proceeds .................................................... 13
(i) Listing and CUSIP .................................................. 13
(j) Restriction on Sale of Securities .................................. 13
(k) Reporting Requirements ............................................. 14
(l) Warrant Shares. .................................................... 14
SECTION 4. Payment of Expenses .............................................. 14
SECTION 5. Conditions of Underwriter's Obligations .......................... 15
(a) Effectiveness of Registration Statement ............................ 15
(b) Opinion of Counsel for Company ..................................... 15
(c) Opinion of General Counsel of Company .............................. 15
(d) Opinion of Counsel for Underwriter ................................. 15
(e) Officers' Certificate .............................................. 15
(f) Accountant's Comfort Letter ........................................ 16
(g) Bring-Down Comfort Letter .......................................... 16
(h) Approval of Listing ................................................ 16
(i) Lock-up Agreements ................................................. 16
(j) Additional Documents ............................................... 16
SECTION 6. Indemnification. ................................................. 16
(a) Indemnification of Underwriter ..................................... 16
(b) Indemnification of Company, Directors and Officers ................. 17
(c) Actions against Parties; Notification .............................. 17
(d) Settlement without Consent if Failure to Reimburse ................. 18
SECTION 7. Contribution ..................................................... 19
SECTION 8. Representations, Warranties and Agreements to Survive Delivery ... 20
SECTION 9. Termination of Agreement. ........................................ 20
(a) Termination; General ............................................... 20
(b) Liabilities ........................................................ 20
ii
SECTION 10. Notices .......................................................... 21
SECTION 11. Parties .......................................................... 21
SECTION 12. GOVERNING LAW AND TIME ........................................... 21
SECTION 13. Effect of Headings ............................................... 21
iii
SCHEDULES
Schedule A - Pricing Information
Schedule B - List of Persons Subject to Lock-Up Letter
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel
Exhibit B - Form of Opinion of General Counsel of the Company
Exhibit C - Form of Lock-Up Letter
iv
SYNTROLEUM CORPORATION
(a Delaware corporation)
5,916,000 Shares of Common Stock
and
887,400 Common Stock Warrants
UNDERWRITING AGREEMENT
May 21, 2004
JEFFERIES & COMPANY, INC.
650 Poydras Street; Suite 2215
New Orleans, Louisiana 70130
Ladies and Gentlemen:
Syntroleum Corporation, a Delaware corporation (the "Company"), confirms
its agreement with Jefferies & Company, Inc. (the "Underwriter") with respect to
the issue and sale by the Company and the purchase by the Underwriter, of (i)
5,916,000 shares (the "Shares") of the Company's common stock, par value $0.01
per share (the "Common Stock"), and (ii) 887,400 warrants (collectively, the
"Warrants") to purchase initially 887,400 shares of Common Stock, at an initial
exercise price per share of $7.60. The Warrants are to be issued under a Warrant
Agreement between the Company and American Stock Transfer and Trust Company, as
warrant agent (the "Warrant Agent"), to be dated as of the Closing Date (the
"Warrant Agreement") for the benefit of the holders of the Warrants. The shares
of Common Stock issuable upon exercise of the Warrants are herein referred to as
the "Warrant Shares." The Shares and the Warrant Shares are collectively
referred to herein as the "Securities" and each a "Security."
The Company understands that the Underwriter proposes to make an offering
of the Securities (which will be a public offering) as soon as the Underwriter
deems advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333-62290)
covering the registration of common stock, warrants to purchase shares of common
stock and shares of common stock issuable upon exercise of the Warrants under
the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
The registration statement has been declared effective by the Commission. Such
registration statement (as so amended) is referred to herein as the
"Registration Statement," and the final prospectus and the final prospectus
supplement relating to the offering of the Securities,
in the final forms furnished to the Underwriter by the Company for use in
connection with the offering of the Securities, are collectively referred to
herein as the "Prospectus;" provided, however, that all references to the
"Registration Statement" and the "Prospectus" shall also be deemed to include
all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of
this Agreement. For purposes of this Agreement, all references to the
Registration Statement, Prospectus, or to any amendment or supplement to any of
the foregoing shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" (or other
references of like import) in the Registration Statement or Prospectus shall be
deemed to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration Statement or
Prospectus, as the case may be, prior to the execution of this Agreement; and
all references in this Agreement to amendments or supplements to the
Registration Statement or Prospectus shall be deemed to include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement or Prospectus, as the case may be, after the execution of
this Agreement.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Underwriter as of the date hereof and as of the Closing Time
referred to in Section 2(b) hereof, and agrees with the Underwriter, as follows:
(i) Compliance with Registration Requirements. At the time the
Registration Statement became effective under the 1933 Act, the Company met
the requirements for use of Form S-3 under the 1933 Act. The Registration
Statement became effective under the 1933 Act on June 6, 2001, and no stop
order suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto, if any, became effective and at the
Closing Time, the Registration Statement and any amendments thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. At the date of the Prospectus and at the Closing Time,
neither the Prospectus nor any amendments or supplements thereto included
or will include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in
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reliance upon and in conformity with information furnished to the Company
in writing by the Underwriter expressly for use in the Registration
Statement or Prospectus.
Each prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and the Prospectus delivered to the
Underwriter for use in connection with this offering will, at the time of
such delivery, be substantially identical to any electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
with the other information in the Prospectus, at the date of the Prospectus
and at the Closing Time did not and will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) Independent Accountants. Arthur Andersen LLP ("Andersen"), who
certified certain of the financial statements and supporting schedules
included in the Registration Statement and the Prospectus, were independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations. The Company has obtained the requisite representations
concerning audit quality controls, including representations regarding the
continuity of personnel working on the audit and the availability of
national office consultation, as required by the Commission.
Grant Thornton LLP, which is reporting on certain of the audited
financial statements of the Company included in the Registration Statement
and the Prospectus, are independent public accountants within the meaning
of the 1993 Act and 1933 Act Regulations.
(iv) Financial Statements. The financial statements of the Company
included in the Registration Statement and the Prospectus, together with
the related schedules and notes, as well as those financial statements,
schedules and notes of any other entity included therein, present fairly
the financial position of the Company and its consolidated subsidiaries, or
such other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries, or such other entity, as the case may
be, for the periods specified. Such financial statements have been prepared
in conformity with generally accepted accounting principles in the United
States of America ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement and the Prospectus present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included or incorporated by
reference in the
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Registration Statement and the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements incorporated by reference in the Registration
Statement and the Prospectus.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those arising in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not,
individually or in the aggregate, result in a Material Adverse Effect.
(vii) Good Standing of the Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation, to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Effect. Except as otherwise stated in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each
Subsidiary has been duly authorized and is validly issued, fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. None of the outstanding shares of
capital stock of any Subsidiary was issued in violation of preemptive or
other similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (a) the subsidiaries listed in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 2003
and (b) certain other subsidiaries, none of which constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X.
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(viii) Capitalization. The authorized, issued and outstanding shares
of capital stock of the Company are as set forth in the Registration
Statement and Prospectus (except for subsequent issuances, if any, pursuant
to this Agreement, pursuant to reservations, agreements or employee benefit
plans referred to in the Registration Statement and Prospectus or pursuant
to the exercise of convertible securities or options referred to in the
Registration Statement and Prospectus). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable. None of the
outstanding shares of capital stock of the Company were issued in violation
of preemptive or other similar rights of any securityholder of the Company.
Except as described in the Registration Statement and Prospectus, the
Company does not have outstanding any rights, options, warrants or other
similar agreements or arrangements which entitle Persons to acquire capital
stock or other securities of the Company.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) Authorization and Description of the Shares. The Shares have
been duly authorized by the Company for issuance and sale to the
Underwriter pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the consideration
set forth herein, will be validly issued, fully paid and non-assessable;
the Common Stock conforms, in all material respects, to all statements
relating thereto contained in the Prospectus and such description conforms,
in all material respects, to the rights set forth in the instruments
defining the same; no holder of the Shares will be subject to personal
liability by reason of being such a holder; and the issuance of the Shares
is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) Authorization and Description of the Warrant Agreement. The
Warrant Agreement has been duly and validly authorized by the Company and,
when duly executed and delivered by the Company (assuming due execution and
delivery thereof by the Warrant Agent), will constitute a valid and legally
binding agreement of the Company, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors' rights generally
and to general principles of equity and public policy (regardless of
whether such enforceability is considered in a proceeding in equity or at
law); the Warrant Agreement conforms, in all material respects, to all
statements relating thereto contained in the Prospectus and such
description conforms, in all material respects, to the rights set forth in
the instruments defining the same.
(xii) Authorization of the Warrant Shares. The Warrant Shares have
been duly and validly authorized for issuance by the Company and, when
issued upon exercise of the Warrants in accordance with the terms and
conditions contained in the Warrant Agreement, will be validly issued,
fully paid and non-assessable and will not be subject to any preemptive or
similar rights. The Warrant Shares have been duly reserved for issuance in
accordance with the terms of the Warrants and the Warrant Agreement.
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(xiii) Authorization and Description of the Warrants. The Warrants
have been duly authorized by the Company and, when duly executed by the
Company and countersigned by the Warrant Agent in accordance with the
provisions of the Warrant Agreement and when delivered to and paid for by
the Underwriter in accordance with the terms of this Agreement, will have
been duly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company, entitled to the benefits of the
Warrant Agreement and enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors' rights generally
and to general principles of equity and public policy (regardless of
whether such enforceability is considered in a proceeding in equity or at
law); the Warrants conform, in all material respects, to all statements
relating thereto contained in the Prospectus and such description conforms,
in all material respects, to the rights set forth in the instruments
defining the same.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or bylaws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments"), which violation of default would, individually or in the
aggregate, have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement and the Prospectus
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in "Use of Proceeds"
section of the Prospectus) and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or defaults
or liens, charges or encumbrances as would not, individually or in the
aggregate, have a Material Adverse Effect), nor will such action result in
any violation of (A) the provisions of the charter or bylaws of the Company
or any of its subsidiaries or (B) any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition that gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xv) Absence of Labor Dispute. (a) No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is
6
threatened or imminent, and (b) the Company is not aware of any existing
threatened or imminent labor disturbance by the employees of any of its or
any of its subsidiaries' principal suppliers, manufacturers, customers or
contractors, that, in case of either (a) or (b), may reasonably be expected
to result in a Material Adverse Effect.
(xvi) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any of its
subsidiaries, that is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which could reasonably be
expected to result in a Material Adverse Effect, or that might reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder.
The aggregate of all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
respective properties or assets is the subject that are not described in
the Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xvii) Accuracy of Exhibits. There are no contracts or documents that
are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as
exhibits thereto that have not been so described and filed as required.
(xviii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under the 1933 Act, the 1933 Act Regulations or state
securities laws.
(xix) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, in all material respects, and the Sub Quality Gas
Monetization Project contemplated in the Prospectus, and neither the
Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or circumstances
that could reasonably be expected to render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein.
7
(xx) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to so possess would not, individually or in the aggregate, have a
Material Adverse Effect; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
result in a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses that, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries have good
and defensible title to all real property and good title to all personal
property described in the Prospectus as being owned by them and good and
defensible title to a leasehold estate in the real and personal property
described in the Prospectus as being leased by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (A) are described
in the Prospectus, or (B) do not, singularly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries.
(xxii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxiii) Environmental Laws. Except as described in the Registration
Statement and the Prospectus and except as would not individually or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
8
with their requirements, (C) there are no pending or, to the Company's
knowledge, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) there are no events
or circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxiv) Registration Rights. No holder of any securities of the
Company has any rights, not effectively satisfied or waived, to require the
Company to register the sale of any securities under the 1933 Act in
connection with the filing of the Registration Statement or the
consummation of the transactions contemplated therein or pursuant to this
Agreement.
(xxv) Stabilizing Transactions; Distribution of Prospectus. The
Company has not taken and will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Securities, and the
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the
Securities other than the Prospectus or other materials permitted under the
1933 Act.
(xxvi) Statistical and Market Data. The statistical and
market-related data included or incorporated by reference in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate or represent
the Company's good faith estimates that are made on the basis of data
derived from such sources.
(xxvii) Finders' Fee. The Company knows of no outstanding claims for
services, in the nature of a finder's fee or origination fee or other
similar claim, with respect to the transactions contemplated hereby, other
than the underwriting fees and compensation to be paid to the Underwriter
in accordance with this Agreement.
(xxviii) Payment of Taxes. All United States federal income tax
returns of the Company and its Subsidiaries required by law to be filed
have been filed. All taxes shown by such filed tax returns or otherwise
assessed, that are due and payable, have been paid, except assessments
against which appeals have been or will be promptly taken and as to which
adequate reserves have been provided. The United States federal income tax
returns of the Company through the fiscal year ended December 31, 2002 have
been settled and no assessment in connection therewith has been made
against the Company. The Company and its subsidiaries have filed all other
tax returns that are required to have been filed by them pursuant to
applicable foreign, state, local or other law except insofar as the failure
to file such returns would not result in a Material Adverse Effect, and
have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company and its subsidiaries, except for such
taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves on
the books of the Company in respect of any income and corporation tax
9
liability for any years not finally determined are adequate to meet any
assessments or reassessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
result in a Material Adverse Effect.
(xxix) Internal Controls. The principal executive officer and
principal financial officer of the Company have made all certifications
required by the Sarbanes-Oxley Act or any related rules and regulations
promulgated by the SEC, and the statements contained in any such
certification are complete and correct. The Company maintains "disclosure
controls and procedures" (as defined in Rule 13a-14(c) under the 1934 Act),
and such controls and procedures are designed (i) to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and
forms and (ii) to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate
to allow timely decisions regarding required disclosure. The Company does
not have any material weaknesses in internal controls, and there has been
no fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls.
The Company and its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorization, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company is otherwise in compliance in all material
respects with all applicable effective provisions of the Sarbanes-Oxley Act
and the rules and regulations promulgated by the Commission (and intends to
comply with all applicable provisions that are not yet effective upon
effectiveness).
(xxx) Insurance. The Company and its Subsidiaries carry or are
entitled to the benefits of insurance, with financially sound and reputable
insurers, in such amounts and covering such risks as is generally
maintained by companies of established repute engaged in the same or
similar business, and all such insurance is in full force and effect.
(xxxi) Related Party Transactions. No relationship, direct or
indirect, exists between or among any of the Company or any affiliate of
the Company, on the one hand, and any director, officer, stockholder,
customer or supplier of any of them, on the other hand, which is required
by the 1933 Act or by the 1933 Act Regulations to be described in the
Registration Statement or the Prospectus which is not so described or is
not described as required.
(xxxii) Offering Materials. The Company has not distributed and,
prior to the later to occur of (A) the Closing Time and (B) completion of
the distribution of the Securities, will not distribute any offering
material in connection with the offering and
10
sale of the Securities other than the Registration Statement, the
Prospectus, or other materials, if any, permitted by the 1933 Act and
approved by the Underwriter.
(xxxiii) Sales of Securities. The Company has not made any offering of
or consummated any sale of common stock or other securities (including
securities convertible into common stock) which would be integrated with or
otherwise adversely impact the offering and sale of the Shares and Warrant.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Underwriter or to counsel
for the Underwriter in connection with the offering of the Securities shall be
deemed a representation and warranty by the Company to the Underwriter as to the
matters covered thereby on the date of such certificate.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriter and the Underwriter agrees to purchase from
the Company, at the price set forth in Schedule A, 5,916,000 shares of Common
Stock and 887,400 Warrants.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Vinson & Elkins
L.L.P., 1001 Fannin Street, Suite 2300, Houston, Texas 77002, or at such other
place as shall be agreed upon by the Underwriter and the Company, at 9:00 A.M.
(Houston, Texas time) on the third business day after the date hereof, or such
other time not later than ten business days after such date as shall be agreed
upon by the Underwriter and the Company (such time and date of payment and
delivery being herein called "Closing Time").
The Shares and Warrants shall each initially be evidenced by global form
certificates registered in the name of Cede & Co. as nominee of DTC. Such global
certificates shall be deposited at the Closing Time, by or on behalf of the
Company, with DTC or its designated custodian, against payment by or on behalf
of the Underwriter of the purchase price therefor, by wire transfer (same day
funds) to such account or accounts as the Company shall specify at least 48
hours prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with the
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b) will notify the Underwriter immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
11
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Underwriter notice of
its intention to file or prepare any amendment to the Registration Statement or
any amendment, supplement or revision to the Prospectus, whether pursuant to the
1933 Act, the 1934 Act or otherwise, will furnish the Underwriter with copies of
any such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to which the
Underwriter or counsel for the Underwriter shall object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Underwriter and counsel for the Underwriter, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriter, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the Registration Statement and each
amendment thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company will furnish to the Underwriter,
without charge, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriter will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, based on advice of counsel for the Underwriter or for the
Company, to amend the Registration Statement in order that the Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or to amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, based on the advice of
such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the
12
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriter such number of copies of such amendment or supplement
as the Underwriter may reasonably request. The Company agrees to comply with the
terms of Section 4.03 of the Warrant Agreement, including keeping the
Registration Statement effective, current and in full compliance with the
requirements of applicable securities laws throughout the term of the Warrants.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriter, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Underwriter may designate and to maintain such
qualifications in effect for a period of not less than one year from the date of
this Agreement; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one year
from the date of this Agreement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the "Use of Proceeds"
section of the Prospectus.
(i) Listing and CUSIP. The Company will use its best efforts to effect the
listing of the Shares and the Warrant Shares on the Nasdaq National Market. The
Company will provide a CUSIP number for the Warrants.
(j) Restriction on Sale of Securities. During a period commencing on the
date of the Prospectus and ending on the 90th day after the date of the
Prospectus (the "Lock-Up Period"), the Company will not, without the prior
written consent of the Underwriter, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder, (B) any shares of Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Prospectus, (C) any shares of Common Stock issued or options to purchase Common
Stock
13
granted pursuant to existing employee benefit plans of the Company referred to
in the Prospectus, (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or (E) any shares of Common Stock or options or
warrants to purchase Common Stock issued by the Company in connection with the
Company's GTL barge project to potential strategic partners or consultants
involved in the GTL barge project provided that the proceeds of any such sale
shall be dedicated for use in the GTL barge project and all such persons agree
to be bound by the restrictions on sale set forth herein.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Warrant Shares. The Company, for so long as any Warrants remain
outstanding, shall keep reserved and authorized for issuance by the Company such
number of shares of Common Stock as may be issuable upon exercise of the
Warrants in accordance with and pursuant to the terms of the Warrant Agreement.
SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Prospectus and of each amendment
thereto, (ii) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriter, including any stock or other transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriter, (iii) the fees and disbursements of the Company's
counsel, accountants and other advisors, (iv) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriter in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (v) any filings
with the National Association of Securities Dealers, if any, as may be required
in connection with the offering and sale of the Securities, (vi) the printing
and delivery to the Underwriter of copies of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriter of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities and
(ix) the fees and expenses incurred in connection with the listing of and
obtaining CUSIP numbers for the Securities in accordance with the provisions of
Section 3(i) hereof. In addition, whether or not the transactions contemplated
under this Agreement are consummated, or this Agreement expires or is
terminated, the Company shall pay to, or on behalf of, the Underwriter, promptly
as billed, all reasonable fees, disbursements and out-of-pocket expenses
incurred by the Underwriter in connection with its services rendered (including,
without limitation, the reasonable fees and disbursements of counsel for the
Underwriter, travel and lodging expenses, word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenditures). The
Underwriter acknowledges that pursuant to the terms of its engagement letter
with the Company, the Underwriter agrees not to incur any single item of expense
that is likely to exceed $5,000 without the Company's prior consent, which
consent will not be unreasonably withheld. The Company, in this regard,
acknowledges that the Company has consented to the Underwriter engaging counsel
to assist in the offering of the Shares and the Warrants.
14
SECTION 5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Company contained in Section 1 hereof or in certificates of
any officer of the Company or any subsidiary of the Company delivered pursuant
to the provisions hereof, to the performance by the Company of its covenants and
other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement
has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the Underwriter.
(b) Opinion of Counsel for Company. At Closing Time, the Underwriter shall
have received the favorable opinion, dated as of Closing Time, of Baker Botts
LLP, counsel for the Company, in form and substance satisfactory to counsel for
the Underwriter to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriter may reasonably request.
(c) Opinion of General Counsel of Company. At Closing Time, the
Underwriter shall have received the favorable opinion, dated as of Closing Time,
of Richard Edmonson, General Counsel of the Company, in form and substance
satisfactory to counsel for the Underwriter, to the effect set forth in Exhibit
B hereto and to such further effect as counsel to the Underwriter may reasonably
request.
(d) Opinion of Counsel for Underwriter. At Closing Time, the Underwriter
shall have received the favorable opinion, dated as of Closing Time, of Vinson &
Elkins L.L.P., counsel for the Underwriter, with respect to the matters set
forth in clauses (ii) (solely as to preemptive or other similar rights arising
by operation of law or under the charter or bylaws of the Company), (iii)
through (vi), inclusive, (xii) (solely as to the information in the Prospectus
in the "Description of Capital Stock" section of the Prospectus), and the first
paragraph following clause (xvii) of Exhibit A hereto. In giving such opinion
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Underwriter. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriter shall have
received a certificate of the Chief Executive Officer, President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and
15
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or, to such
officer's knowledge, are contemplated by the Commission.
(f) Accountant's Comfort Letter. Prior to the Closing Time, the
Underwriter shall have received from Grant Thornton LLP a letter dated such
date, in form and substance satisfactory to the Underwriter, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(g) Bring-Down Comfort Letter. At Closing Time, the Underwriter shall have
received from Grant Thornton LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (f) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(h) Approval of Listing. At Closing Time, the Shares and the Warrant
Shares shall have been approved for listing on the Nasdaq National Market,
subject only to official notice of issuance.
(i) Lock-up Agreements. At the date of this Agreement, the Underwriter
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule B hereto.
(j) Additional Documents. At Closing Time, Vinson & Elkins L.L.P. shall
have been furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained. All proceedings taken by the Company in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Underwriter and counsel for the Underwriter.
SECTION 6. Indemnification.
(a) Indemnification of Underwriter. The Company agrees to indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in the
Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a
16
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided, that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) from and against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. The Underwriter
agrees to indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give written notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
or (b) above, the indemnifying party shall assume the defense of such action,
including the employment of counsel and payment of reasonable expenses. The
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such
17
counsel shall be at the expense of the indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to take charge of the defense of such action within a
reasonable time after notice of the institution of such action, (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to the indemnifying party or (iv) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest (in which case of such conflicts the indemnifying
party shall not have the right to direct counsel to the indemnified party or
parties as to such matters) in any of which events such fees and expenses shall
be borne by the indemnifying party and paid as incurred; provided that the
indemnifying party shall only be responsible for the fees and expenses of one
counsel for the indemnified party or parties hereunder with respect to any claim
for indemnity. Anything in this paragraph to the contrary notwithstanding, the
indemnifying party shall not be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
18
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriter on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriter on the
other hand in connection with the statements or omissions that resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriter, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the underwriting discount received by the Underwriter, in each
case as set forth on the cover of the Prospectus bear to the aggregate public
offering price of the Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the Underwriter, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
19
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Underwriter may terminate this Agreement, by
notice to the Company, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred since the time of execution of this Agreement any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the Nasdaq National Market,
or if trading generally on the American Stock Exchange, the New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, (iv) if a banking moratorium has been
declared by either Federal, New York or Texas authorities or (v) any of the
conditions specified in Section 5 above shall not have been fulfilled when and
as required to be fulfilled.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
20
SECTION 10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the Underwriter at 650 Poydras Street; Suite
2215, New Orleans, Louisiana 70130, Attention: Stephen A. Landry; and notices to
the Company shall be directed to it at 4322 South 49th West Avenue, Tulsa,
Oklahoma 74107, Attention: Chief Executive Officer.
SECTION 11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriter and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriter
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriter and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 13. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
21
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter and the Company in accordance with its terms.
Very truly yours,
Syntroleum Corporation
By: /s/ John B. Holmes, Jr.
--------------------------------
John B. Holmes, Jr.,
President and
Chief Operating Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
Jefferies & Company, Inc.
By: /s/ Michael A. Bauer
-------------------------
Michael A. Bauer,
Managing Director
SCHEDULE A
SYNTROLEUM CORPORATION
5,916,000 Shares of Common Stock
and
887,400 Common Stock Warrants
1. The public offering price per unit of Shares and Warrants shall be
$5.60 for an aggregate purchase price of $33,129,600.
2. The aggregate purchase price for the Shares and Warrants to be paid by
the Underwriter shall be $31,316,824, being an amount equal to the public
offering price set forth above less $1,812,776.
Schedule A-1
SCHEDULE B
Lock-Up Letter Signatories
Kenneth L. Agee, Chairman of the Board and Chief Executive Officer
John B. "Jack" Holmes, Jr., Director, President and Chief Operating Officer
Jeffrey M. Bigger, Senior Vice President and Chief Technology Officer
Kenneth R. Roberts, Senior Vice President of Licensing and Business Development
Larry J. Weick, Senior Vice President and Chief Financial Officer
Carla S. Covey, Vice President of Finance and Controller
Richard L. Edmonson, Vice President, General Counsel and Corporate Secretary
Ronald E. Stinebaugh, Vice President of Corporate Finance and Acquisitions
Frank M. Bumstead, Director
Robert B. Rosene, Jr., Director
P. Anthony Jacobs, Director
James R. Seward, Director
Alvin R. Albe, Jr., Director
Robert A. Day, Director
J. Edward Sheridan, Director
Ziad Ghandour, Director
Schedule B-1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Shares have been duly authorized and, when issued and delivered
in accordance with the terms of the Agreement against payment therefor as set
forth in the Agreement, will be validly issued, fully paid and non-assessable.
The issuance of the Shares and the Warrants is not subject to the preemptive or
other similar rights of any securityholder of the Company pursuant to the
Delaware General Corporation Law, the Amended and Restated Certificate of
Incorporation, as amended, and By-Laws of the Company.
(iii) The Warrants have been duly authorized by the Company and, when duly
executed by the Company and countersigned by the Warrant Agent in accordance
with the provisions of the Warrant Agreement and when delivered to and paid for
by the Underwriter in accordance with the terms of the Agreement, will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the Warrant
Agreement and enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally and to general principles
of equity and public policy (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) The Warrant Shares have been duly authorized for issuance by the
Company and, when issued upon exercise of the Warrants in accordance with the
terms and conditions contained in the Warrant Agreement, will be, validly
issued, fully paid and non-assessable. The Warrant Shares have been duly
reserved for issuance in accordance with the terms of the Warrants and the
Warrant Agreement.
(v) The Agreement has been duly authorized, executed and delivered by
the Company.
(vi) The Warrant Agreement has been duly authorized by the Company and,
when duly executed and delivered by the Company (assuming due execution and
delivery thereof by the Warrant Agent), will constitute a valid and legally
binding agreement of the Company, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally and to general principles
of equity and public policy (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Exhibit A-1
(vii) Any required filings of the Prospectus pursuant to Rule 424(b) have
been made in the manner and within the time period required by Rule 424(b).
(viii) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than (i) financial statements and schedules (including the notes thereto and the
auditors' reports thereon) included or incorporated by reference therein, (ii)
the other financial information included or incorporated by reference therein
and (iii) the exhibits thereto (as to which we have not been asked to comment)
appear on their face to comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(ix) The Company's Annual Report on Form 10-K/A for the year ended
December 31, 2003 (other than (i) financial statements and schedules (including
the notes thereto and the auditors' reports thereon) included or incorporated by
reference therein, (ii) the other financial information included or incorporated
by reference therein and (iii) the exhibits thereto (as to which we have not
been asked to comment) when they were filed with the Commission, appear on their
face to comply as to form in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder.
(x) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and bylaws of the Company and with the
requirements of the Nasdaq National Market.
(xi) The statements in the Registration Statement and the Prospectus
under the captions "Description of Capital Stock" and "Description of Warrants,"
and in the Registration Statement under Item 15, insofar as they are
descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate summaries in all material
respects.
(xii) No consent, approval, authorization or waiver of, or notice to or
filing with, or other action by, any governmental authority is required by any
statutory law or regulation or ruling known to us as a condition to the
execution and delivery by the Company of the Agreement, or the performance by
the Company of its obligations under the Agreement, except such as have been
obtained under the 1933 Act and the 1934 Act (and except such as may be required
under state securities or blue sky laws governing the purchase and distribution
of the Shares and the Warrants by the Underwriter, as to which we express no
opinion).
(xiii) Neither the offer, sale or delivery of the Shares and the Warrants
by the Company, the execution, delivery or performance of the Agreement by the
Company (including the use of the proceeds from the sale of the Shares and the
Warrants as described in the Prospectus under the caption "Use of Proceeds") nor
compliance by the Company with its obligations under the Agreement will result
in any violation of (a) the provisions of the charter or bylaws of the Company
or (b) any applicable law, statute, rule or regulation known to us (assuming
compliance with all applicable state and securities and blue sky laws.
Exhibit A-2
(xiv) The Company is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the 1940 Act.
(xv) To our knowledge, no holder of any securities of the Company has any
rights that have not been waived to require the Company to register the sale of
any securities pursuant to the Registration Statement in connection with the
consummation of the offering and sale of the Shares and the Warrants, or the
exercise of the Warrants and issuance of the Warrant Shares upon such exercise.
To our knowledge, the offer and sale of the Shares and the Warrants, the
exercise of the Warrants and resulting issuance of Warrant Shares upon such
exercise will not trigger any antidilution adjustments contained in any
agreements or instruments heretofore entered into by the Company.
(xvi) The Registration Statement has been declared effective under the
1933 Act and, to our knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.
(xvii) The documents incorporated by reference in the Prospectus (other
than (i) financial statements and schedules (including the notes thereto and the
auditors' reports thereon) included or incorporated by reference therein, (ii)
the other financial information included or incorporated by reference therein
and (iii) the exhibits thereto (as to which we have not been asked to comment)
when they were filed with the Commission, appear on their face to comply as to
form in all material respects with the requirements of the 1933 Act or the 1934
Act, as applicable, and the rules and regulations of the Commission thereunder.
We have participated in conferences with officers and other representatives
of the Company and counsel for and representatives of the Underwriter at which
the contents of the Registration Statement and the Prospectus and related
matters were discussed. Although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, we advise you that,
on the basis of the foregoing (relying as to materiality to a large extent upon
officers and other representatives of the Company and representatives of the
Underwriter), no facts have come to our attention which lead us to believe that
at its effective date the Registration Statement (other than (i) financial
statements and schedules (including the notes thereto and the auditors' reports
thereon) included or incorporated by reference therein and (ii) the other
financial information included or incorporated by reference therein, as to which
we have not been asked to comment), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of the date
of the Prospectus, the Prospectus (other than (i) financial statements and
schedules (including the notes thereto and the auditors' reports thereon)
included or incorporated by reference therein and (ii) the other financial
information included or incorporated by reference therein, as to which we have
not been asked to comment) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Exhibit A-3
In connection with our opinion expressed above in paragraph (xvi), we have
relied upon the oral notification by a member of the staff of the Commission as
to the effectiveness of the Registration Statement under the 1933 Act.
In the foregoing opinions, phrases such as "to our knowledge," "known to
us" and those with equivalent wording refer to the conscious awareness of
information by the lawyers of this firm who have prepared this opinion, signed
this opinion or been actively involved in assisting and advising the Company in
connection with the preparation of the Registration Statement and the Prospectus
and the execution and delivery of the Underwriting Agreement.
The opinions expressed in this letter are limited exclusively to the laws
of the State of Texas, the contract laws of the State of New York, the General
Corporation Law of the State of Delaware and applicable federal laws of the
United States of America. This opinion is being furnished to you solely for your
use in connection with the transactions consummated on the date hereof pursuant
to the Agreement and may not be relied upon by any other person or for any other
purpose. This opinion speaks as of the date hereof, and we disclaim any
obligation to update this opinion.
Exhibit A-4
Exhibit B
FORM OF OPINION OF GENERAL COUNSEL
OF THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(c)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own or lease its
properties and to conduct its business as described in the Prospectus and to
execute and deliver, and perform its obligations under, the Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect.
(iv) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own or lease its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect; all of the issued and outstanding capital stock of
each Subsidiary has been duly authorized and validly issued, and is owned of
record and, to our knowledge, beneficially by the Company, directly or through
subsidiaries, free and clear of any perfected security interest, lien,
encumbrance or adverse claim.
(v) The issuance of the Shares and the Warrants is not subject to the
preemptive or other similar rights of any securityholder of the Company pursuant
to any agreement to which the Company is a party or by which its assets or
properties are bound.
(vi) To my knowledge, there are no statutes or regulations that are
required to be described in the Prospectus that are not described as required.
(vii) To my knowledge, neither the Company nor any subsidiary is in
violation of its charter or bylaws and no default by the Company or any
subsidiary exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(viii) To my knowledge, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the
Exhibit B-1
Registration Statement or any document incorporated by reference therein that
are not described or filed as required, as the case may be.
(ix) Neither the offer, sale or delivery of the Shares and the Warrants
by the Company, the execution, delivery or performance of the Agreement by the
Company (including the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") nor compliance
by the Company with its obligations under the Agreement constitutes or will
constitute, whether with or without the giving of notice or lapse of time or
both, a breach of, or default or Repayment Event (as defined in Section
1(a)(xiv) of the Agreement) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to which the
Company or any subsidiary is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any subsidiary is
subject, that has been filed as an exhibit to the Registration Statement or to
any document incorporated by reference therein (except for such breaches or
defaults or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will any such action result in any violation of (a) the
provisions of the charter or bylaws of the Company or any subsidiary, (b) any
applicable law, statute, rule or regulation (assuming compliance with all
applicable state and securities and blue sky laws) or (c) any judgment, order,
writ or decree of any court, governmental agency or arbitrator that is known to
me to be applicable to the Company or any subsidiary or any of their respective
properties.
(x) To my knowledge, there is not pending or threatened any action, suit
or proceeding to which the Company or any subsidiary is a party before or
brought by any court or governmental agency or body, domestic or foreign, which
would result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the consummation of the transactions
contemplated in the Agreement or the performance by the Company of its
obligations thereunder.
I have participated in conferences with officers and other representatives of
the Company and counsel for and representatives of the Underwriter at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed. Although I am not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, I advise you that,
on the basis of the foregoing no facts have come to my attention which lead me
to believe that at its effective date the Registration Statement (other than (i)
financial statements and schedules (including the notes thereto and the
auditors' reports thereon) included or incorporated by reference therein and
(ii) the other financial information included or incorporated by reference
therein, as to which I have not been asked to comment) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that, as of the date of the Prospectus, the Prospectus (other than (i) financial
statements and schedules (including the notes thereto and the auditors' reports
thereon) included or incorporated by reference therein and (ii) the other
financial information included or incorporated by reference therein, as to which
I have not been asked to comment) contained an untrue statement of a material
fact or omitted to state a material fact
Exhibit B-2
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The opinions expressed in this letter are limited exclusively to the laws of the
State of Texas and the federal laws of the United States of America and the
corporate laws of the State of Delaware. This opinion is being furnished to you
solely for your use in connection with the transactions consummated on the date
hereof pursuant to the Agreement and may not be relied upon by any other person
or for any other purpose. This opinion speaks as of the date hereof, and I
disclaim any obligation to update this opinion.
Exhibit B-3
Exhibit C
------------
Jefferies & Company, Inc.
650 Poydras Street; Suite 2215
New Orleans, Louisiana 70130
Re: Proposed Public Offering by Syntroleum Corporation
Dear Sirs:
The undersigned, an officer and/or director of Syntroleum Corporation, a
Delaware corporation (the "Company"), understands that Jefferies & Company, Inc.
("Jefferies") proposes to enter into an Underwriting Agreement (the
"Underwriting Agreement") with the Company providing for the public offering of
(i) 5,916,000 shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), and (ii) 887,400 warrants to purchase initially 887,400
shares of Common Stock (collectively, the "Securities"). In recognition of the
benefit that such an offering will confer upon the undersigned as an officer
and/or director of the Company, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with Jefferies that, during a period commencing on the date of the
Underwriting Agreement and ending on the 180th day after the date of the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Jefferies, directly or indirectly, (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether any such swap or transaction is to be settled by delivery of Common
Stock or other securities, in cash or otherwise; provided, however, that the
restrictions in clauses (i) and (ii) above shall not apply to (A) any bona fide
gift of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock to a donee; provided that (a) each donee shall
execute and deliver to Jefferies a duplicate form of this Lock-up Agreement and
(b) no filing by any party (donor or donee) under Section 16(a) of the
Securities Exchange Act of 1934, as amended, shall be required or shall be made
voluntarily in connection with such transfer (other than a filing on Form 5 made
after the expiration of the 180-day period referred to above); (B) any transfers
pursuant to bona fide pledges of securities existing on the date of this letter,
(C) intra-family transfers provided the transferee agrees to be bound by these
restrictions and (D) withholding or surrender of securities to satisfy tax
withholding obligations.
Very truly yours,
Signature: _________________________
Print Name: ________________________
Exhibit C-1