Exhibit 10.1

 

*** indicates material has been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A complete copy of
this agreement has been filed with the Securities and Exchange Commission.

 

MEMORANDUM OF AGREEMENT

 

THIS MEMORANDUM OF AGREEMENT (“MOA”) is entered into and effective as of the
15th day of August, 2005 (the “Effective Date”) between:

 

  1) Linc Energy, Ltd ABN 60 076 157 045., a corporation organized in the state
of Queensland, Commonwealth of Australia with offices at AMP Plaza, Level 7, 10
Eagle Street, Brisbane, Queensland, Australia (“Linc Energy”) and

 

  2) Syntroleum International Corporation, a corporation organized in the State
of Delaware, United States of America with offices at 4322 South 49th West
Avenue, Tulsa, Oklahoma 74107 (Syntroleum International and Syntroleum
Corporation, its parent company, hereinafter referred to jointly as
“Syntroleum”);

 

herein collectively referred to as the “Parties” and individually as a “Party”.

 

WHEREAS, Syntroleum has developed proprietary technology encompassing the
conversion of carbonaceous substances into a mixture of hydrocarbons comprising
one or more of the processes of syngas production, Fischer-Tropsch catalytic
reactions to produce a product stream, and upgrading the Fischer-Tropsch
hydrocarbon product stream into finished synthetic hydrocarbon products, as well
as the internal processes and catalysts required for the reactions, which forms
the core for the Syntroleum® Process that produces liquid transportation fuels,
lubricants and other specialty chemicals (the “Syntroleum Technology”).

 

WHEREAS, Syntroleum has made significant expenditures over the last twenty years
critical to the success of developing commercial gas-to-liquids (“GTL”) plants
utilizing Syntroleum Technology, including the engineering and construction of
pilot plant facilities for the Autothermal Reformer (ATR) and the multi-stage
advanced Fischer-Tropsch reactor unit (FTR), product refining unit (RPU/
Synfining®) and the 100 barrel per day Catoosa Demonstration Facility (CDF)
which contains all three technology components (ATR, FTR and Synfining®), to
demonstrate and support the design basis for the Syntroleum Technology, which
cumulative research and development, project development and administrative
expenses are estimated to exceed $200 million.

 

WHEREAS, Syntroleum is pursuing further development and demonstration of its FTR
and Synfining® technology integrated with third party coal gasification
technology or integrated with underground coal gasification (“UCG”) processes
and syngas clean-up technology to convert coal into liquid transportation fuels,
lubricants and other specialty chemicals, and commonly known as coal-to-liquids
(“CTL”).

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

WHEREAS, Syntroleum has or is developing relationships within the international
financial community, including Ex-Im banks of the United States, Australia,
China and Japan and other governmental agencies in these countries that have
expressed interest in supporting Syntroleum CTL plants.

 

WHEREAS, Linc Energy has acquired exploration license rights to major coal
deposits in Queensland, Australia with a potential of 3.9 billion tons in place
that are expected to be suitable for UCG development.

 

WHEREAS, Linc Energy has operated a commercial scale UCG facility in Queensland,
Australia producing a nitrogen-diluted mixture of hydrogen and carbon monoxide
gases (“Syngas”) at a ratio of approximately 2:1 hydrogen to carbon (the “Linc
Energy Technology”) and furthermore intends to build a 30 MW independent power
plant with a GE Frame 5 gas turbine that uses this Linc Energy Technology
(hereinafter the “Chinchilla Phase One Project”).

 

WHEREAS, Linc Energy believes that the UCG facility at Queensland could be
expanded to produce additional UCG Syngas that may be suitable as feedstock for
a 17,000 barrel per day UGC-CTL plant using Syntroleum Fischer-Tropsch and
Synfining® technologies (hereinafter the “Chinchilla Phase Two Project”).

 

WHEREAS, Syntroleum and Linc Energy wish to work together to develop and
demonstrate UCG-CTL technology based upon integrating Linc Energy UCG
technology, Syntroleum FTR and Synfining® technology and appropriate third party
Syngas clean-up technology for use at the Chinchilla Phase Two Project as well
as other UCG-CTL projects.

 

WHEREAS, Syntroleum and Linc Energy wish to share the relevant expenses of the
technology development and demonstration with Syntroleum contributing its
expected funding from third parties and Linc Energy contributing cash including
funds from expected public offerings.

 

WHEREAS, Syntroleum and Linc Energy desire to work together to develop the
Chinchilla Phase One Project and Chinchilla Phase Two Project with potential
expansion of these projects to produce power from additional UCG Syngas
production and tail gas and heat recovery from the Chinchilla Phase Two Project
and further expand the UCG-CTL plant in the future to 34,000 barrels per day
(hereinafter the “Chinchilla Phase Three Project”).

 

WHEREAS, Linc Energy desires to immediately raise A$***-A$*** million in equity
capital from private investors (“Cornerstone Investors”) as well as raise
additional capital in an initial public offering (“IPO”) for Linc Energy common
stock on the Australian stock market for the Chinchilla Phase Project and
eventually other UCG-CTL projects in Queensland and other locations.

 

2

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

WHEREAS, Syntroleum and Linc Energy wish to work together to develop other
UCG-CTL projects in Queensland and other locations similar to the Chinchilla
Project with public equity funding from the Australian stock market and other
third party sources.

 

NOW, THEREFORE, in consideration of the foregoing and of the covenants and
promises contained in this MOA, Syntroleum and Linc Energy agree as follows:

 

1. Agreements. The Parties shall negotiate in good faith the definitive
agreements for the technology demonstration, commercial project development,
construction and operation of a CTL plant based upon in-situ gasification of
coal utilizing Linc Energy Technology, Syntroleum Technology and other third
party technology (“Definitive Agreements”). Such agreements shall define the
contributions, obligations, and participation of each individual Party and may
include, but not be limited to a Technology Development Agreement (“TDA”), Site
License Agreement (“SLA”), Project Development Participation Agreement (“PDPA”)
and Equity Purchase Agreement (“EPA”). The Parties agree that the Definitive
Agreements will contain terms and conditions generally found in similar
agreements in the international petroleum refining industry.

 

2. Current Costs and Expenses. Except as provided in this MOA, each Party shall
bear its own costs and expenses of negotiating, entering into and performing its
obligations under this MOA until such time as the Definitive Agreements are
executed.

 

3. Technology Demonstration, Phase 1a. Syntroleum intends to initiate a first
phase program to demonstrate certain aspects of the Syntroleum Technology under
conditions expected in a commercial CTL project (“Demonstration 1 Program”). The
general scope of work for the Demonstration 1 Program is expected to be as
follows:

 

  a. Laboratory testing of FT catalyst at the University of Kentucky and
Syntroleum Tulsa laboratories.

 

  b. Other testing as required and identified by Syntroleum.

 

It is expected that total expenditure will be US$*** to execute this work or
related or expanded work utilizing third party contractors and Syntroleum staff.
The expenses for this work and any additional scope of work, including extended
testing runs as may be determined to be necessary by Syntroleum, will be paid by
Syntroleum. Linc Energy’s participation in the Demonstration 1a Program shall be
either (1) paying Syntroleum an amount equal to half of the total expenses as
incurred by Syntroleum up to a maximum of US$***; or (2) providing Syntroleum
with a detailed report, including raw data, in a form acceptable to Syntroleum
on a similar CTL technology demonstration program, such demonstration program
being equivalent in cost and scope to the Demonstration 1a Program and being
funded independently by Linc Energy or as the Parties may otherwise agree.
Expenditures for such demonstration programs shall be reported to the Parties in
terms of Generally Accepted

 

3

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

Accounting Principles (“GAAP”). Under the terms of a Definitive Agreement
containing appropriate intellectual property protection procedures, Linc Energy
employees will work along side Syntroleum employees to gain knowledge and
experience in CTL operations. If Linc Energy chooses to participate in the
Demonstration 1a Program, Syntroleum will provide a summary report to Linc
Energy on the results of that testing program.

 

4. Technology Demonstration Program, Phase 1b. Syntroleum intends to initiate a
supplemental program to demonstrate the Syntroleum Technology at the bench scale
level. The Parties agree to collectively approach Tennessee Eastman to utilize
coal derived syngas from its facility in Kingsport, Tennessee for this activity
(the “Phase 1b Program”). The expenses for the Phase 1b Program, including any
extended testing runs that may be identified and required by Syntroleum and
Tennessee Eastman, will initially be funded by Syntroleum. As part of Linc
Energy’s public offering which would be supported by Syntroleum (See Paragraph
14 Chinchilla Public Offering) Linc Energy agrees to consider including up to an
amount of US$*** as explicit use of funds to reimburse Syntroleum for the Phase
1b Program or as the Parties may otherwise agree. Alternatively, the Parties
will work together to obtain alternative funding from either internal or
third-party funds to support the Phase 1b Program. The general scope of work for
the Phase 1b Program is expected to include:

 

  a. Laboratory testing of FT catalyst at the Tennessee Eastman’s Kingport
facility at using bench scale Continuous Stirred Tank Reactors (CSTR’s)
supervised by Syntroleum and Tennessee Eastman staff;

 

  b. Utilization of actual coal syngas from the Kingsport facility; and

 

  c. Other testing as required and identified by Syntroleum and Tennessee
Eastman.

 

If Linc Energy participates in the funding of the Phase 1b Program, Syntroleum
will provide a detailed report to Linc Energy on the results of this testing
program, once the program is completed and Syntroleum has received payment from
Linc Energy.

 

5. Technology Demonstration, Phase 2. The Parties agree to jointly evaluate the
need for a second phase program to demonstrate the Syntroleum Technology at the
bench scale level using Syngas produced at the Chinchilla Project facility
(“Demonstration 2 Program”). The general scope of work for the Demonstration 2
Program is expected to be as follows:

 

  a. Building of a Syntroleum designed Fischer-Tropsch CSTR mobile lab;

 

  b. Shipping of lab to Chinchilla Project facility; and

 

  c. Operating lab for a period of at least 90 days of uninterrupted production.

 

4

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

If the Parties jointly determine the need for this Demonstration 2 Program, Linc
Energy agrees to pay Syntroleum ***% of the total costs of the program provided
that Linc Energy’s contribution to costs will be no more than US$***. A detailed
description of the lab and scope of work with appropriate budget breakdown and
each Party’s liability in relation to costs will be set out in a Definitive
Agreement. Amounts contributed by Linc Energy to the Demonstration 2 Program
will be used to fund third party contractors and Syntroleum staff, the
engineering, procurement and construction of the mini mobile laboratory,
transport of the lab unit to Queensland and operation of the lab unit.
Expenditures incurred in relation to the Demonstration 2 Program will be
reported to the Parties using GAAP. Expenses for the remaining portion of the
scope of work, including any extended testing runs as may be identified and
required by Syntroleum (expected to be an additional US$***), will be paid by
Syntroleum.

 

If the Demonstration 2 Program is able to be executed for less than currently
budgeted, then Linc Energy and Syntroleum will share the expenses equally. Under
the terms of a Definitive Agreement containing appropriate intellectual property
protection procedures, Linc Energy employees will work along side Syntroleum
employees to gain knowledge and experience in CTL operations. Syntroleum will
provide a detailed report to Linc Energy on the results of the Demonstration 2
Program.

 

6. Technology Demonstration, Phase 3. The Parties agree to jointly evaluate the
need for a third phase program to demonstrate the Syntroleum Technology at the
pilot plant scale of nominally two barrels per day (“Demonstration 3 Program”).
Linc Energy agrees to earmark up to AUD$*** from its upcoming equity raising to
cover the cost of constructing and operating this pilot plant for a period of
one year. In return for Linc Energy funding the budgeted and reasonable
construction and operating expense of this pilot plant, Syntroleum will
contribute the use of its detailed engineering designs that were used for the
Tulsa pilot plant at no cost to Linc Energy, the ownership of such designs
remaining with Syntroleum and the protection of the intellectual property being
strictly enforced under the terms of a Technology Development Agreement. For
this program, the Parties agree to prepare a detailed description of the scope
of work with appropriate budget breakdown of costs of this work that is expected
to utilize third party contractors and Syntroleum staff, and also include
engineering, procurement and construction of the pilot plant with all such
expenditures being reported to the Parties using GAAP. Under a Definitive
Agreement, Syntroleum will work with Linc Energy to provide training to Linc
Energy employees who will jointly operate any such pilot plant in preparation
for Linc Energy’s future operation of a commercial CTL plant.

 

7. Credits Against License Fees. In consideration for early contribution by Linc
Energy of up to US$*** funding for the Demonstration 1a Program, Demonstration
Phase 1b Program, Demonstration 2 and Demonstration 3 Program, Syntroleum will
provide Linc Energy up to a US$*** credit against the payment required for a
Site License to use the Syntroleum Technology for the Chinchilla Phase Two
Project. Such credit will be applied to license fees due to Syntroleum at the

 

5

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

start of construction of the plant, but no later than *** years from the
completion of Demonstration 2 or 3 Program, unless an extension is agreed in
writing by Syntroleum following receipt of request from Linc Energy containing
reasonable justification. The Parties agree to negotiate for additional credits
that would be provided in return for any further technology demonstration as the
Parties may agree.

 

8. Site Reservation Fee. At the time of execution of the Site License agreement
for the Chinchilla Phase Two Project, Syntroleum will grant Linc Energy rights
to use the Syntroleum Technology in developing a single UCG-CTL project to
produce transportation fuels, with unlimited capacity expansion at the
designated site at the same volume-based fee structure included in the Site
License. By execution of this MOA Syntroleum grants Linc Energy a period until
December 31, 2005 to execute a Site License for the Chinchilla Phase Two
Project. If a Site License is not executed within such specified period, this
MOA shall terminate. The Site License Agreement is intended to include terms to
maintain the exclusive site reservation for Chinchilla Phase Two Project for up
to two years provided that (1) Linc Energy is funding ongoing technology
demonstration programs or (2) paying a minimum fee of US$*** per year (“Site
Reservation Fee”) for up to a total of *** years extension.

 

9. Syntroleum CTL Site License. The Site License fee shall be calculated as
discussed in subclause “a” below, and payable, as discussed in subclause “b”
below, in installments as the Chinchilla Phase Two Project progresses through
first production. The

 

  a. The Site License fee is calculated as follows for the first plant:

 

    ***

 

For Example: ***

 

  b. Progress payments shall be made to Syntroleum in accordance with the
following schedule:

 

    ***

 

10. ExxonMobil Sub-License Agreement. An ancillary technology sub license from
ExxonMobil that provides certain enhancements to the Syntroleum Technology will
be included with the Syntroleum Site License.

 

  a. The additional license fee to be paid by Linc Energy to ExxonMobil is based
upon diesel production (approximately 75% of total capacity) and will be as
follows:

 

    ***

 

For Example: ***

 

    ***

 

    ***

 

6

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

  b. Payments are made quarterly to ExxonMobil after start-up of the CTL plant
and any capacity expansion will incur additional fees at the same per barrel
rate.

 

11. Fees for Technical Services. Under a separate Technical Services Agreement,
Syntroleum will provide engineering and other project related services on a time
and material basis. This includes any support required for preparation of
detailed feasibility studies, process design packages and front end engineering
design. Syntroleum will utilize both its own staff and the Syntroleum
pre-qualified engineering contractors (the “Tier 1 Engineering Contractors”) in
such scope of work. Third-party contracts will be billed at cost plus 10%. The
current Syntroleum staff hourly billing rate for these technical services, which
may change from time to time due to market conditions, are as follows:

 

a.      Project Manager

   US$ 240

b.      Sr. Engineer/Scientist

   US$ 200

c.      Engineer/Scientist

   US$ 140

d.      Technical/Draftsman

   US$ 120

e.      Administrative Assistant

   US$ 35

 

12. Catalyst Purchase Agreement. Under a separate Catalyst Purchase Agreement,
Syntroleum will supply its proprietary FT catalyst, utilizing a pre-qualified
catalyst manufacturer operating under the direction of Syntroleum.

 

  a. The price of the catalyst to Linc Energy and payable to Syntroleum shall be
based on actual Cost plus a Syntroleum Mark-up, wherein:

 

  i. Cost shall be the ***, and

 

  ii. Mark-up shall be the ***.

 

  b. Linc Energy may propose one or more Australian catalyst manufacturers as
candidates (each a “Candidate”) for certification to help assure competitiveness
of the catalyst bids. Syntroleum will use commercially reasonable efforts in
working with each Candidate to achieve certification as a Syntroleum-approved
catalyst manufacturer.

 

13. Equity Participation in Chinchilla Project. Linc Energy will grant
Syntroleum a right of first offer option to invest in at least ***%, and up to
maximum of ***%, of the equity of the Chinchilla Phase One Project and
Chinchilla Phase Two Project, such total percentages above ***% being a) subject
to Linc Energy’s discretion to hold greater than ***% equity itself and b)
limited by the total options that may be exercised by third parties up to the
time of the equity investment option

 

7

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

decision by Syntroleum. At such time that Linc Energy elects to offer any equity
interest in the Chinchilla Phase One Project or Chinchilla Phase Two Project,
Linc Energy shall give written notice to Syntroleum which notice shall include
all the terms reasonably necessary for a party to make a decision on whether to
invest in the CTL project. Syntroleum shall have thirty (30) days after receipt
of that notice and all the necessary terms to elect to acquire such equity
interest. Such terms shall be on the same terms as offered to other third party
investors. In the event that Syntroleum declines to acquire such equity
interest, and Linc Energy subsequently changes the terms which it is offering to
third party investors, then Linc Energy will re-offer the equity interest to
Syntroleum on the new terms. This same right of first offer option will apply to
any subsequent expansions of the plant covered by the Site License, such
decision being required by Syntroleum prior to the start of the PDP for the
plant expansion. The provisions of this Paragraph 13 do not provide Syntroleum
any rights to purchase the equity of Linc Energy.

 

14. Chinchilla Public Offering. If Linc Energy participates in the Demonstration
1a Program, and/or Phase 1(b) Program and/or Demonstration 2 Program, Syntroleum
agrees to support Linc Energy in its initial and secondary public offerings for
the Chinchilla Phase One Project and Chinchilla Phase Two Project by
accompanying Linc Energy on the “road show” to market the offering to private
and public investors in the Australian market to answer questions about the
Syntroleum Technology. Linc Energy agrees to set a minimum amount of capital to
be raised in the initial public offering equal to the amount they believe will
be needed to get the Chinchilla Phase One Project to first revenue and a minimum
of AUD$*** for development of Chinchilla Phase Two Program that would include
the use of funds to perform technology demonstration programs, a Detailed
Feasibility Study (that includes a +/- 25% cost estimate) and thereafter execute
a Syntroleum Site License, if the results of the study show acceptable economic
returns.

 

15. Subsequent Projects. Syntroleum Corporation will commit to issue additional
site licenses to Linc Energy to use the Syntroleum Technology for multiple UCG-
CTL projects, excluding China (other than as may be granted for China under
conditions of Paragraph 17), with a primary focus on Queensland, Australia
locations, under the same general terms of the Site License and Equity
Participation Agreement for the Chinchilla Project. Under Equity Participation
Agreements for subsequent projects, Linc Energy will grant Syntroleum a right of
first offer to invest in at least ***% up to a maximum of ***% of the equity for
these projects, such total percentages above ***% being a) subject to Linc
Energy’s discretion to hold greater than ***% equity itself and b) limited by
the total options that may be exercised by third parties up to the time of the
equity investment option decision by Syntroleum. The Syntroleum Site License fee
for subsequent projects, including future expansion of the first site licensed
plant will be calculated in the same manner as Paragraph 9b above, except that
***. There will be no limit on the number of expansions to existing plants under
the single-project site license. Issuance of subsequent new site licenses (and
exclusive site reservation)

 

8

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

for an additional *** projects (***) will be contingent upon development
activity measured by specified project milestones as follows:

 

***

 

16. Upon successful operation of the first UCG-CTL project in Queensland,
Syntroleum and Linc Energy will negotiate in good faith for changes in the
installment payment schedule in Paragraph 9b, for those projects in which
Syntroleum has at least ***% equity ownership with such possible license fee
schedule changes including but not limited to reduced, upfront payments in
exchange for payments made on actual production after start-up of the plant.

 

17. Licensed Territory. The licensed territory for the Chinchilla Project shall
be Queensland, Australia (the “Licensed Territory”). For the first two site
licenses issued by Syntroleum to Linc Energy (“SLA#1” and “SLA#2” respectively)
in the Licensed Territory, Syntroleum grants Linc Energy exclusive rights to
develop UCG-CTL projects in the Licensed Territory, and Syntroleum shall extend
this right thereafter for a period of 5 years following the successful operation
of each subsequent project in Queensland. Upon successful operation of the first
two UCG-CTL projects in Queensland, Syntroleum and Linc Energy will negotiate in
good faith for restricted joint development of UCG-CTL projects in China to the
extent that then existing agreements do not preclude Syntroleum from providing
Linc Energy rights to SLA’s in China.

 

18. License Rights from Linc Energy. Linc Energy represents and warrants that it
owns or has license rights to UCG technology, proprietary know-how and other
intellectual property currently being utilized or planned to be used in the
Chinchilla Phase Two Project, including, but not limited to, Ergo Exergy
technologies. Other than rights to equity participation in projects described
herein, nothing in this MOA confers any technology licenses to Syntroleum from
Linc Energy or Ergo Exergy regarding underground coal gasification.

 

19. Fiscal Incentives. Linc Energy agrees to work with Syntroleum to obtain from
the Commonwealth of Australia and State of Queensland a package of investment
incentives that may include, but not be limited to, tax holiday, federal fuel
excise tax exemption, exemption from import duties on equipment and materials,
and relaxation of royalties on incremental gas.

 

20. International Financial Support. Syntroleum will endeavor to use its
relationships with the United States Government, Government of the Commonwealth
of Australia, and Ex-Im Banks of Japan and China to gain international financial
support for the Chinchilla Phase Two Project.

 

21. Employee Solicitation and Hiring. Neither party shall, during the term of
this MOA and for 2 years after its expiration or termination, directly solicit
or hire an employee or contract employee (who had direct involvement with the
Chinchilla Project or other UCG-CTL project initiated by Linc Energy provided
hereunder, including Dr. Michael Blinderman or an individual that has a
pre-existing

 

9

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

strategic relationship with Linc Energy or Syntroleum) of the other Party
without such Party’s written consent.

 

22. Foreign Corrupt Practices Act. The Parties represent that they are familiar
with and understand the United States Foreign Corrupt Practices Act of 1977 and
its prohibitions of offers, payments, gifts of money or anything else of value
to any person for the purpose of influencing any act or decision of any
government or government official, and that the Parties, their agents and
representatives have complied and will comply with said Act.

 

23. Confidentiality. The Parties agree that this MOA and information exchanged
between the Parties, both technical and commercial, will remain strictly
confidential, subject to that certain Confidentiality Agreement dated 7 December
2004 (the “Confidentiality Agreement”). Subject to paragraph 24, any required
disclosure will be reviewed and approved in writing by both Parties prior to the
disclosure of such information.

 

24. Publication. Each Party agrees to refrain from disclosing the terms of this
MOA, except as required by applicable law, regulation, or public securities
exchange, except that the parties may disclose this MOA in connection with their
solicitation of investment funding for an initial public offering or private
placement. Linc Energy recognizes that public announcements regarding the
material terms of this MOA and project description may be necessary upon signing
of this MOA in order for Syntroleum to comply with the rules of the United
States Securities Exchange Commission. Syntroleum recognizes that Linc Energy
may need to make public disclosures of a general nature regarding this MOA and
project description may be necessary for its private placement and initial
public offering. When necessary during negotiations with potential third party
participants in the Projects, the Parties recognize that additional disclosures
may be necessary to encourage participation by those third parties. In such
instance, each Party agrees to consult with the other Party, providing notice of
the content of any press release or other announcement relating to this MOA or
the project at least forty-eight (48) hours prior to the intended release of
such information and that written approval be obtained from the other Party
prior to release of such information.

 

25. Obligations and Commitments. The Parties represent that the signatories of
this MOA have obtained the necessary approvals of their respective Board of
Directors or other decision-making authority to allow the Parties to move
forward on executing the terms of this MOA. Neither Party shall have the
authority to obligate or commit the other Party in any manner whatsoever.
Neither Party shall represent or hold itself out to have authority over the
other, unless agreed to in writing by the other Party. Neither Party shall have
the authority to obligate or commit the other Party in any manner whatsoever.

 

26. Liabilities. Neither party shall be liable to the other for any indirect,
incidental, special, or consequential loss or damage, (including but not limited
to, loss of use, loss of profit or interest, or

 

10

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

business interruption), incurred by the other party, whether based on contract,
negligence or other tort, statute, strict liability, or otherwise arising out of
this MOA.

 

27. Governing Law & Arbitration. This MOA is governed by and shall be construed
in accordance with New South Wales law. Any disputes arising out of or in
connection with this MOA shall be referred to the senior management of the
Parties for resolution. Unless settled by the senior management of the Parties
in accordance with the previous sentence, all disputes arising out of or in
connection with this MOA shall be finally settled under the Rules of Arbitration
of the International Chamber of Commerce by a panel of three arbitrators
appointed in accordance with the said Rules. The seat of any reference to
arbitration shall be Singapore. The substantive and procedural law of reference
to arbitration shall be New South Wales law. Judgment upon any award rendered
pursuant to this Paragraph 24 may be entered and execution had in any court
having jurisdiction or application may be made to such court for a judicial
enforcement and application, as applicable. The prevailing party in any
arbitration or legal action arising out of or related to this MOA shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses incurred in such arbitration or action, including
court costs and legal fees, on a solicitor and his own client basis

 

28. Assignment. This MOA shall not be assigned by either Party without the prior
written consent of the other Party, except that Syntroleum shall be allowed to
assign this MOA to a new entity that is being contemplated by Syntroleum to
focus on its CTL business.

 

29. Successors in Title. This MOA shall be binding on the new owners or
successors in title of the respective parties, should such situation arise.

 

30. Term of Agreement. The initial term of this MOA shall be through
December 31, 2005. This MOA may be otherwise extended upon written agreement of
the Parties as necessary.

 

31. Entire Agreement. This MOA constitutes the entire and only agreement between
these Parties at the time of its execution with respect to the subject matter
hereof except for that certain Confidentiality Agreement. There are no
undertakings or representations of any kind, expressed, implied, oral, written,
statutory or otherwise not expressly set forth herein. No alteration or
modification of the MOA shall be binding unless agreed in writing. Nothing in
this MOA shall be construed as granting either Party a license or any other
right to any Confidential Information (as defined in the Confidentiality
Agreement”) or to any other intellectual property or resource of the other
Party, except as expressly provided in this MOA.

 

32. Miscellaneous. This MOA may be executed in one or more counterparts, each of
which shall be an original and together which will form one and the same
instrument.

 

11

--------------------------------------------------------------------------------

Memorandum of Agreement

  CONFIDENTIAL

 

IN WITNESS WHEREOF, Syntroleum and the Linc Energy have duly executed this MOA
as of the date and year first above written.

 

EXECUTED AS AN AGREEMENT

 

By and For       By and For SYNTROLEUM INTERNATIONAL CORPORATION       LINC
ENERGY LTD             Kenneth R. Roberts       Peter A. Bond Vice President    
  Managing Director

 

12