Exhibit 10.1

 

Employment Agreement

CONFIDENTIAL

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into on the 30th
day of July, 2003, by and between Syntroleum Corporation, a Delaware corporation
(the “Company”), and Richard Edmonson, an individual (the “Employee”).

 

WHEREAS, the Company desires to enter into an employment relationship with
Employee and Employee is willing to accept such employment on the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Company and Employee hereby agree as follows.

 

1. Employment and Duties. The Company employs Employee in the capacity of
General Counsel, or in such other position and at such location as the Company
may direct or desire and Employee hereby accepts such employment, on the terms
and conditions hereinafter set forth. Employee agrees to perform such services
and duties (including reasonable travel) and hold such offices at such locations
as may be reasonably assigned to him from time to time by the Company and to
devote substantially his full business time, energies and best efforts to the
performance thereof to the exclusion of all other business activities, except
any activities disclosed to the Company in advance and consented to by the
Company.

 

2. Compensation. As compensation for the services to be rendered by Employee to
the Company pursuant to this Agreement, Employee shall be paid the following
compensation and other benefits.

 

(a) Salary in the amount of $185,000 per year, payable in equal bi-weekly
installments in arrears, or such higher compensation as may be established by
the Company from time to time. Payments of salary shall be made in accordance
with the Company’s usual payroll procedures.

 

(b) Employee shall be eligible to participate, to the extent he may be eligible,
in any group medical and hospitalization, profit sharing, retirement, life
insurance or other employee benefit plans which the Company may from time to
time offer to its employees. All group insurance provided to Employee shall be
in such form and provide such coverage as is provided to other employees of the
Company.

 

(c) All compensation payments to Employee shall be made subject to normal
deductions therefrom, including federal and state social security and
withholding taxes.

 

3. Life Insurance. The Company, in its discretion, may apply for and procure in
its own name and for its own benefit, life insurance on the life of Employee in
any amount or amounts considered advisable by the Company. Employee shall submit
to any medical or other examination and execute and deliver any application or
other instrument in writing, reasonably necessary for the Company to acquire
such insurance.

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4. Expenses. The Company shall reimburse Employee for his actual out-of-pocket
expenses incurred in carrying out his duties hereunder in the conduct of the
Company’s business, which expenses shall be limited to ordinary and necessary
items and which shall be supported by vouchers, receipts or similar
documentation submitted in accordance with the Company’s expense reimburse
policy and as required by law.

 

5. Vacations and Leave. Employee shall be entitled to vacation and leave in
accordance with the Company’s policies in effect from time to time.

 

6. Non-Disclosure of Confidential Information.

 

(a) Employee acknowledges that in and as a result of his employment by the
Company, he will be making use of, acquiring, and/or adding to the Company’s
Trade Secret Information. Except as required in the performance of Employee’s
duties under this Agreement, Employee will not use any Trade Secret Information
of the Company for Employee’s own benefit or purposes or disclose to third
parties, directly or indirectly, any Trade Secret Information of the Company,
either during or after Employee’s employment with the Company.

 

(b) As used in this Agreement, “Trade Secret Information” means information,
including, but not limited to, any formula, pattern, compilation, program,
device, method, technique or process, that: (i) derives independent economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. For purposes of this
Agreement, “Trade Secret Information” includes both information disclosed to
Employee by the Company and information developed by Employee in the course of
his employment with the Company. The types and categories of information which
are considered to be Trade Secret Information include, without limitation: (a)
specifications, descriptions, designs, dimensions, content (including chemical
composition) and tolerances of products, parts and components; (b) plans,
blueprints, design packages construction, part and assembly drawings and
diagrams; (c) design, construction and component costs and cost estimates; (d)
the existence, terms or conditions of any agreements (including license
agreements) between the Company and any third party; (e) computer programs
(whether in the form of source code, object code or any other form, including
software, firmware and programmable array logic), formulas, algorithms, methods,
techniques, processes, designs, specifications, diagrams, flow charts, manuals,
descriptions, instructions, explanations, improvements, and the ideas, systems
and methods of operation contained in such programs; (f) information concerning
or resulting from research and development work performed by the Company; (g)
information concerning the Company’s management, financial condition, financial
operations, purchasing activities, sales activities, marketing activities and
business plans; (h) information acquired or compiled by the Company concerning
actual or potential customers;

 

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and (i) all other types and categories of information (in whatever form) with
respect to which, under all the circumstances, Employee knows or has reason to
know that the Company intends or expects secrecy to be maintained and as to
which the Company has made reasonable efforts to maintain its secrecy.

 

(c) In the event that Employee is requested or required by applicable law or by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process to disclose any of the Company’s Trade Secret
Information, Employee shall provide the Company with prompt written notice of
such request or requirement prior to making the requested disclosure, and shall
cooperate with the Company so that the Company may seek to protect the
proprietary nature of such Trade Secret Information through available
procedures, including a protective order or other appropriate remedy.

 

(d) The Company may also advise Employee from time to time as to restrictions
upon the use or disclosure of specified information which has been licensed or
otherwise disclosed to the Company by third parties pursuant to license or
confidential disclosure agreements which contain restrictions upon the use or
disclosure of such information. Employee agrees to abide by the restrictions
upon use and/or disclosure contained in such agreements.

 

(e) Employee has not and will not use or disclose to the Company any
confidential or proprietary information belonging to others without the written
consent of the person to whom such information is confidential, and Employee
represents that his employment with the Company will not require the use of such
information or the violation of any confidential relationship with any third
party.

 

7. Other Property of the Company. All documents, encoded media, and other
tangible items provided to Employee by the Company or prepared, generated or
created by Employee or others in connection with any business activity of the
Company are the property of the Company. Upon termination of Employee’s
employment with the Company, Employee will promptly deliver to the Company all
such documents, media and other items in his possession, including all complete
or partial copies, recordings, abstracts, notes or reproductions of any kind
made from or about such documents, media, items or information contained
therein. Employee will neither have nor claim any right, title or interest in
any trademark, service mark or trade name owned or used by the Company.

 

8. Inventions and Works of Authorship.

 

(a) Employee agrees to assign and hereby irrevocably assigns to the Company all
of Employee’s right, title and interest in and to any and all Inventions and
Works of Authorship made, generated or conceived by Employee during the period
of his employment with the Company, and Employee agrees to and shall promptly
disclose all such Inventions and Works of Authorship to the Company in writing.
As used herein, “Invention” means any

 

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discovery, improvement, innovation, idea, formula, or shop right (whether or not
patentable, whether or not put into writing and whether or not put into
practice) made, generated or conceived by Employee (whether alone or with
others) while employed by the Company. For purposes of this Agreement, any
discovery, improvement, innovation, idea, formula, or shop right (whether or not
patentable, whether or not put into writing and whether or not put into
practice) relating directly or indirectly to the business of the Company or to
the Company’s actual or demonstrably anticipated business, research or
development with respect to which Employee files a patent application within two
years after termination of employment with the Company shall be presumed to be
an Invention. As used herein, “Work of Authorship” means any original work of
authorship within the purview of the copyright laws of the United States of
America, and both the Company and Employee intend and agree that all Works of
Authorship created by Employee in the course of his employment with the Company
will be and shall constitute works made for hire within the meaning and purview
of such copyright laws.

 

(b) Employee will execute and assign any and all applications, assignments, and
other documents and will render all assistance which may be reasonably necessary
for the Company to obtain patent, copyright, or any other form of intellectual
property protection with respect to all Inventions and Works of Authorship in
all countries and will cooperate with Syntroleum as reasonably necessary to
enforce any such intellectual property protection. The Company will pay Employee
$200 for each patent issued to the Company upon which Employee’s name appears as
an inventor.

 

(c) The provisions of this Paragraph 8 do not apply to an invention for which no
equipment, supplies, facility or Trade Secret Information of the Company was
used and which was developed entirely on Employee’s own time, and which does not
relate (i) directly or indirectly to the business, research or development of
the Company, or (ii) to the Company’s actual or demonstrably anticipated
business, research or development. A reasonable determination of the
applicability of this Paragraph 8(a) to an Employee’s invention shall be made by
Syntroleum after the Employee submits notification in writing of the invention.
Said notice shall include adequate detail for Syntroleum to evaluate the
invention.

 

9. Limited Covenants Against Competition; Non-Solicitation.

 

(a) Employee acknowledges that the services he is to render to the Company are
of a special and unusual character with a unique value to the Company, the loss
of which cannot adequately be compensated by damages in an action at law. In
view of the unique value to the Company of the services of Employee and because
of the confidential Trade Secret Information to be obtained by or disclosed to
Employee, as set forth above, and as a material inducement to the Company to
enter into this Agreement and to pay to Employee the compensation stated in
Paragraph 2, Employee covenants and agrees that during the period of Employee’s
employment within the Company and for a period of two years following

 

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termination of Employee’s employment with the Company for any reason,
voluntarily or involuntarily, Employee will not directly or indirectly: (i)
start or participate or assist (as a proprietor, partner, shareholder, lender,
investor, director, employee, consultant, independent contractor or otherwise)
in starting any Competing Business; (ii) assist (as a proprietor, partner,
shareholder (except as a holder of 1% or less of the outstanding voting
securities or income interest), lender, investor (except as a holder of 1% or
less of the outstanding voting securities or income interest), director,
employee, consultant, independent contractor or otherwise) any existing
Competing Business in the design, development or manufacture of any Competing
Product; (iii) sell or assist in the sale of any Competing Product to any person
or organization with whom Employee had any contact while employed with the
Company; (iv) directly or indirectly solicit for employment or employ any of the
Company’s employees; or (v) become employed by a former employee of the Company.
Because Syntroleum actively pursues opportunities throughout the world and is
engaged in a world-wide oriented business the Employee acknowledges the
reasonableness of having no geographic limitation hereunder.

 

(b) Employee further acknowledges that, while employed by the Company, he will
have contact with and become aware of the Company’s customers and licensees and
their respective representatives, including their names and addresses, specific
needs and requirements, as well as leads and references to prospective customers
and licensees. Employee further acknowledges that loss of such customers or
licensees would cause the Company great and irreparable harm. Employee agrees
that for a period of two years following termination of Employee’s employment
with the Company for any reason, voluntarily or involuntarily, Employee will not
directly or indirectly solicit, contact, call upon, communicate with or attempt
to communicate with any customer or licensee, former customer or licensee, or
prospective customer or licensee of the Company for the purpose of selling,
installing, implementing, or modifying any Competing Product. This restriction
shall apply only to any customer or licensee, former customer or licensee, or
prospective customer or licensee of the Company with whom Employee had contact
during the last two years of Employee’s employment with the Company.

 

(c) The Employee agrees that for as long as he is employed by the Company and
for a period of two years after termination of Employee’s employment with the
Company for any reason, voluntarily or involuntarily, Employee will not solicit,
recruit, hire or attempt to solicit, recruit or hire, directly or by assisting
others, any other employee of the Company.

 

(d) As used in this Agreement, (i) “Competing Business” means any person, entity
or organization other than the Company which is engaged in or is about to become
engaged in the design, manufacture or sale of a Competing Product, (ii)
“Competing Product” means any product (including, without limitation, any
chemical formula or process) which is or may be marketed in competition with any
product marketed or under development by the Company at any time, and (iii)
“contact” means interaction between Employee and a customer or licensee, former
customer or licensee, or prospective customer or licensee of the

 

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Company, which takes place to further any business relationship; or performing
services for the customer or licensee, former customer or licensee, or
prospective customer or licensee on behalf of the Company.

 

10. Reasonableness of Restrictions.

 

(a) Employee expressly acknowledges that he has carefully read and considered
the provisions of Paragraphs 6, 7, 8 and 9, and, having done so, agrees that the
restrictions set forth in these Paragraphs, including, but not limited to, the
time periods and geographic areas of restriction are fair and reasonable and are
reasonably required for the protection of the interests of the Company and its
officers, directors, shareholders and other employees.

 

(b) In the event that, notwithstanding the foregoing, any of the provisions of
Paragraphs 6, 7, 8 and 9 shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
therein. In the event that any provision of Paragraphs 6, 7, 8 and 9 relating to
the time period and/or the areas of restriction and/or related aspects shall be
declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems reasonable and enforceable, the time period
and/or areas of restriction and/or related aspects deemed reasonable and
enforceable by the court shall become and thereafter be the maximum restriction
in such regard, and the restriction shall remain enforceable to the fullest
extent deemed reasonable by such court.

 

11. Requests for Clarification. In the event Employee is uncertain as to the
meaning of any provision of this Agreement or its application to any particular
information, item or activity, Employee will inquire in writing to the Company,
specifying any areas of uncertainty. The Company will respond in writing within
a reasonable time and will endeavor to clarify any areas of uncertainty,
including such things as whether it considers particular information to be its
Trade Secret Information or whether it considers any particular activity or
employment to be in violation of this Agreement.

 

12. Remedies. In the event of a breach or threatened breach of any of the
covenants in Paragraphs 6, 7, 8 and 9, the Company shall have the right to seek
monetary damages and equitable relief, including specific performance by means
of an injunction against Employee or against Employee’s partners, agents,
representatives, servants, employers, employees, family members and/or any and
all persons acting directly or indirectly by or with him, to prevent or restrain
any such breach.

 

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13. Term and Termination.

 

(a) The term of this Agreement shall be for an initial term of 12 months from
the effective date hereof, unless sooner terminated as provided herein, and
shall thereafter be automatically renewed for successive terms of 12 months each
unless sooner terminated as provided herein.

 

(b) Employment of Employee under this Agreement may be terminated:

 

(i) by the Company upon the death of Employee.

 

(ii) by the Company if Employee becomes disabled. For the purposes of this
Agreement, Employee will be deemed disabled if he (i) has been declared legally
incompetent by a final court decree (the date of such decree being deemed to be
the date on which the disability occurred), or (ii) receives disability
insurance benefits from any disability income insurance policy maintained by the
Company for a period of three consecutive months, or (iii) has been found to be
disabled pursuant to a disability determination. A “disability determination”
means a finding that Employee, because of a medically determinable disease,
injury, or other mental or physical disability, is unable to perform
substantially all of his regular duties to the Company and that such disability
is determined or reasonably expected to last at least six months. The disability
determination shall be based upon the written opinion of the physician regularly
attending Employee whose disability is in question. If the Company disagrees
with the opinion of this physician (the “First Physician”), it may engage, at
its own expense, another physician of its choice (the “Second Physician”) to
examine Employee. If the First and Second Physicians agree in writing that
Employee is or is not disabled, their written opinion shall, except as otherwise
set forth in this subsection, be conclusive on the issue of disability. If the
First and Second Physicians disagree on the disability of Employee, they shall
choose a third consulting physician (whose expense shall be borne by the
Company), and the written opinion of a majority of these three physicians shall,
except as otherwise provided in this subsection, be conclusive as to Employee’s
disability. The date of any written opinion conclusively finding Employee to be
disabled is the date on which the disability will be deemed to have occurred. If
there is a conclusive finding that Employee is not totally disabled, the Company
shall have the right to request additional disability determinations provided it
agrees to pay all the expenses of the disability determinations and does not
request an additional disability determination more frequently than once every
three months. In connection with any disability determination, Employee hereby
consents to any required medical examination, and agrees to furnish any medical
information requested by any examining physician and to waive any applicable
physician-patient privilege that may arise because of such examination. All
physicians except the First Physician must be board-certified in the specialty
most closely related to the nature of the disability alleged to exist.

 

 

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(iii) by the Company when Employee reaches mandatory retirement age under any
retirement policy applicable to all executive officers adopted by the Company.

 

(iv) by mutual agreement of Employee and the Company.

 

(v) by the Company upon the dissolution and liquidation of the Company (other
than as part of a reorganization, merger, consolidation or sale of all or
substantially all of the assets of the Company whereby the business of the
Company is continued).

 

(vi) by the Company for just cause at any time upon written notice. For purposes
of this Agreement, “just cause” shall mean any one or more of the following: (A)
Employee’s material breach of his obligations, duties and responsibilities under
any term or provision of this Agreement, which breach remains uncured for a
period of five days after written notice by the Company to Employee; (B)
Employee’s failure to adhere to the reasonable standards of performance
prescribed by the Company; (C) Employee’s act of insubordination to the
Company’s Board of Directors; (D) Employee’s gross negligence or willful
misconduct in the performance of his duties under this Agreement; (E) Employee’s
dishonesty, fraud, misappropriation or embezzlement in the course of, related to
or connected with the business of the Company; (F) Employee’s conviction of a
felony; or (G) Employee’s failure (after written notice to Employee of such
failure and Employee not correcting such failure within five days of such
notice) to devote his time, attention and best efforts to the business of the
Company as provided in this Agreement.

 

(vii) by either the Company or Employee upon 60 days written notice.

 

(c) Any termination of Employee’s employment, either by the Company or Employee,
shall be communicated by a written notice of termination to the other party.

 

(d) If Employee’s employment is terminated pursuant to the terms of this
Agreement for any reason, Employee shall be entitled to all arrearages of salary
and expenses up to and including the date of termination but shall not be
entitled to further compensation. Provided, that if, at any time after the first
12 months from the date of this Agreement, Employee’s employment is terminated
by the Company for any reason other than Employee’s death, disability or
retirement, the Company’s dissolution or just cause as provided in Paragraphs
13(b)(i), (ii), (iii), (v) or (vi), respectively, Employee shall be entitled to
and the Company shall pay Employee all arrearages of salary and expenses up to
and including the date of termination and, in addition, Employee’s monthly base
salary for an additional period of 24 months.

 

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(e) Upon expiration of the term of this Agreement or upon earlier termination of
this Agreement, Employee shall deliver all Trade Secret Information of the
Company to an authorized representative of the Company, and the non-disclosure
provisions of Paragraph 6 shall survive such expiration or termination and shall
remain in full force and effect for a period of 15 years from such expiration or
termination.

 

14. Change of Control.

 

(a) In the event of a Change of Control of the Company and (i) during the
one-year period immediately following any Change of Control, the Company
terminates Employee’s employment for any reason other than Employee’s death,
disability, retirement or just cause as provided in Paragraphs 13(b)(i), (ii),
(iii) and (vi), respectively, (ii) the Employee terminates his employment for
Good Reason, or (iii) during the Window Period the Company or Employee
terminates Employee’s employment for any reason, then the Company or its
successor shall pay Employee his full base salary in effect at the time of the
notice of termination through the date of termination, and in lieu of any
further salary payments for periods subsequent to the date of termination, the
Company or its successor shall pay Employee as severance pay an amount equal to
two times Employee’s full base salary in effect on the date of termination
payable in 24 equal monthly installments beginning on the first day of the first
calendar month following the date of Employee’s termination and continuing on
the first day of each month thereafter until paid.

 

(b) Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Employee’s employment with the Company is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Employee that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement, the “Change of
Control” shall be deemed to have occurred on the date immediately prior to the
date of such termination of employment.

 

(c) as used in this Agreement, the terms set forth below shall have the
following respective meanings:

 

(i) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
Agreement Effective Date.

 

(ii) “Agreement Effective Date” shall mean July 30, 2003.

 

(iii) “Associate” shall mean, with reference to any Person, (a) any corporation,
firm, partnership, association, unincorporated organization or other entity
(other than the Company or a subsidiary of the Company) of which such Person is
an officer or

 

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general partner (or officer or general partner of a general partner) or is,
directly or indirectly, the Beneficial Owner of 10% or more of any class of
equity securities, (b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity and (c) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person.

 

(iv) “Beneficial Owner” shall mean, with reference to any securities, any Person
if:

 

(a) such Person or any of such Person’s Affiliates and Associates, directly or
indirectly, is the “beneficial owner” of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on the
Agreement Effective Date) such securities or otherwise has the right to vote or
dispose of such securities, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any
security under this subsection (a) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (i) arises solely from a revocable proxy or consent given in
response to a public (i.e., not including a solicitation exempted by Rule
14a-2(b)(2) of the General Rules and Regulations under the Exchange Act) proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act and (ii)
is not then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);

 

(b) such Person or any of such Person’s Affiliates and Associates, directly or
indirectly, has the right or obligation to acquire such securities (whether such
right or obligation is exercisable or effective immediately or only after the
passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to “beneficially own,” (i) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
or (ii) securities issuable upon exercise of Exempt Rights; or

 

(c) such Person or any of such Person’s Affiliates or Associates (i) has any
agreement, arrangement or understanding (whether or not in writing) with any
other Person (or any Affiliate or Associate thereof) that beneficially owns such
securities for the purpose of acquiring, holding, voting (except as set forth in
the proviso to subsection (a) of this definition) or disposing of such
securities or (ii) is a member of a group (as that term is used in Rule 13d-5(b)
of the General Rules and Regulations under the Exchange Act) that includes any
other Person that beneficially owns such securities;

 

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provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or to
“beneficially own,” any securities acquired through such Person’s participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For purposes hereof, “voting” a security
shall include voting, granting a proxy, consenting or making a request or demand
relating to corporate action (including, without limitation, a demand for a
stockholder list, to call a stockholder meeting or to inspect corporate books
and records) or otherwise giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.

 

The terms “beneficially own” and “beneficially owning” shall have meanings that
are correlative to this definition of the term “Beneficial Owner.”

 

(v) “Change of Control” shall mean any of the following (provided, however, that
without limiting the generality of any other provision hereof, no Change of
Control shall be deemed to have occurred as a result of the consummation of any
of the transactions contemplated by the Agreement and Plan of Merger dated as of
March 30, 1998 by and between SLH Corporation, a Kansas corporation, and the
Company (the “Merger Agreement”)):

 

(a) any Person (other than an Exempt Person) shall become the Beneficial Owner
of 30% or more of the shares of Common Stock then outstanding or 30% or more of
the combined voting power of the Voting Stock of the Company then outstanding;
provided, however, that no Change of Control shall be deemed to occur for
purposes of this subsection (a) if such Person shall become a Beneficial Owner
of 30% or more of the shares of Common Stock or 30% or more of the combined
voting power of the Voting Stock of the Company solely as a result of (i) an
Exempt Transaction or (ii) an acquisition by a Person pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and (iii)
of subsection (c) of this definition are satisfied;

 

(b) individuals who, as of the Agreement Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the Agreement Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board;
provided, further, that there shall be excluded, for this purpose, any such
individual whose initial assumption of office occurs as a result of any actual
or threatened election contest that is subject to the provisions of Rule 14a-11
under the Exchange Act;

 

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(c) approval by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i) more than 80% of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding Voting Stock of such
corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
outstanding Common Stock, (ii) no Person (excluding any Exempt Person or any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 30% or more of the Common Stock then
outstanding or 30% or more of the combined voting power of the Voting Stock of
the Company then outstanding) beneficially owns, directly or indirectly, 30% or
more of the then outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined voting power
of the then outstanding Voting Stock of such corporation and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement or initial action by
the Board providing for such reorganization, merger or consolidation; or

 

(d) approval by the shareholders of the Company of (i) a complete liquidation or
dissolution of the Company unless such liquidation or dissolution is approved as
part of a plan of liquidation and dissolution involving a sale or disposition of
all or substantially all of the assets of the Company to a corporation with
respect to which, following such sale or other disposition, all of the
requirements of clauses (ii)(A), (B) and (C) of this subsection (d) are
satisfied, or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which,
following such sale or other disposition, (A) more than 80% of the then
outstanding shares of common stock of such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such sale
or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the outstanding Common
Stock, (B) no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 30% or more of the Common Stock then outstanding or 30% or more of
the combined voting power of the Voting Stock of the Company then outstanding)

 

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beneficially owns, directly or indirectly, 30% or more of the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding Voting Stock of such corporation and (C) at least a majority of
the members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or initial
action of the Board providing for such sale or other disposition of assets of
the Company.

 

(vi) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(vii) “Exempt Person” shall mean the Company, any subsidiary of the Company, any
employee benefit plan of the Company or any subsidiary of the Company, and any
Person organized, appointed or established by the Company for or pursuant to the
terms of any such plan.

 

(viii) “Exempt Rights” shall mean any rights to purchase shares of Common Stock
or other Voting Stock of the Company if at the time of the issuance thereof such
rights are not separable from such Common Stock or other Voting Stock (i.e., are
not transferable otherwise than in connection with a transfer of the underlying
Common Stock or other Voting Stock) except upon the occurrence of a contingency,
whether such rights exist as of the Agreement Effective Date or are thereafter
issued by the Company as a dividend on shares of Common Stock or other Voting
Securities or otherwise.

 

(ix) “Exempt Transaction” shall mean an increase in the percentage of the
outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of the Company beneficially owned by any
Person solely as a result of a reduction in the number of shares of Common Stock
then outstanding due to the repurchase of Common Stock or Voting Stock by the
Company, unless and until such time as (a) such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or additional Voting Stock representing 1% or
more of the combined voting power of the then outstanding Voting Stock, or (b)
any other Person (or Persons) who is (or collectively are) the Beneficial Owner
of shares of Common Stock constituting 1% or more of the then outstanding shares
of Common Stock or Voting Stock representing 1% or more of the combined voting
power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.

 

(x) “Good Reason” shall mean:

 

(a) the assignment to the Employee of any duties materially inconsistent in any
respect with the Employee’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1 of this Agreement, or any other action by the

 

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Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;

 

(b) any material failure by the Company to comply with any of the provisions of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Employee;

 

(c) the Company’s requiring the Employee to be based at any office outside the
Tulsa metropolitan area;

 

(d) any purported termination by the Company of the Employee’s employment
otherwise than as expressly permitted by this Agreement; or

 

(xi) “Person” shall mean any individual, firm, corporation, partnership,
association, trust, unincorporated organization or other entity.

 

(xii) “Voting Stock” shall mean, with respect to a corporation, all securities
of such corporation of any class or series that are entitled to vote generally
in the election of directors of such corporation (excluding any class or series
that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).

 

(xiii) “Window Period” shall mean the 60-day period immediately following elapse
of one year after any Change of Control.

 

15. Resignation Upon Termination. In the event of termination of this Agreement
other than for death, Employee agrees to resign from all positions held in the
Company, including without limitation any position as a director, officer,
agent, trustee or consultant of the Company or any affiliate of the Company.

 

16. Notice to Subsequent Employers. For a period of two years after termination
of Employee’s employment with the Company for any reason, Employee will inform
any new employer (before accepting employment) of the obligations of Employee
under Paragraphs 6, 7, 8, 9, and 10 of this Agreement.

 

17. Obligations Unconditional. The obligations of the parties under this
Agreement are unconditional and do not depend upon the performance of any
agreements, duties, obligations, or terms outside this Agreement.

 

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18. Waiver. A party’s failure to insist on compliance or enforcement of any
provision of this Agreement shall not affect the validity or enforceability or
constitute a waiver of future enforcement of that provision or of any other
provision of this Agreement by that party or any other party.

 

19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, UNITED STATES OF AMERICA,
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF. The Company and Employee
expressly and irrevocably consent and submit to the nonexclusive jurisdiction of
any state or federal court sitting in Tulsa County, Oklahoma and agree that, to
the fullest extent allowed by law, such Oklahoma state or federal courts shall
have jurisdiction over any action, suit or proceeding arising out of or relating
to this Agreement. The Company and Employee each irrevocably waive, to the
fullest extent allowed by law, any objection either of them may have to the
laying of venue of any such suit, action or proceeding brought in any state or
federal court sitting in Tulsa County, Oklahoma based upon a claim that such
court is inconvenient or otherwise an objectionable forum. Any process in any
action, suit or proceeding arising out of or relating to this Agreement may,
among other methods, be served upon the Company or Employee by delivering it or
mailing it to their respective addresses set forth herein. Any such delivery or
mail service shall be deemed to have the same force and effect as personal
service in the State of Oklahoma.

 

20. Severability. If for any reason any paragraph, term or provision of this
Agreement is held to be invalid or unenforceable for any reason, such invalidity
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed and enforced as if such provision had not been
included herein and all other valid provisions herein shall remain in full force
and effect. If for any reason the restrictions and covenants contained herein
are held to cover a geographical area or be for a length of time which is
unreasonable or unenforceable, or in any other way are construed to be too broad
or to any extent invalid, then to the extent the same are or would be valid or
enforceable under applicable law, any court of competent jurisdiction shall
construe and interpret or reform this Agreement to provide for a covenant having
the maximum area, time or other provisions (not greater than those contained
herein) as shall be valid and enforceable under such applicable law.

 

21. Jurisdiction. The Company and Employee intend to and hereby confer
jurisdiction to enforce the provisions of this Agreement and any restrictive
covenants contained herein upon the courts of any jurisdiction within the
geographical scope of such covenants. If the courts of any one or more of such
jurisdictions hold the provisions of this Agreement or any of the restrictive
covenants contained herein unenforceable by reason of the breadth of such scope
or otherwise, it is the intention of the Company and Employee that such
determination not bar or in any way affect the Company’s right to the relief
provided herein in the courts of any other jurisdiction within the geographical
scope of such covenants, as to breaches of such covenants, such covenants as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.

 

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22. Notice. Any and all notices required or permitted herein shall be deemed
delivered if delivered personally or if mailed by registered or certified mail
to the Company at its principal place of business and to Employee at the address
hereinafter set forth following Employee’s signature, or at such other address
or addresses as either party may hereafter designate in writing to the other.

 

23. Amendments. This Agreement may be amended at any time by mutual consent of
the parties hereto, with any such amendment to be invalid unless in writing,
signed by the Company and Employee.

 

24. Burden and Benefit. This Agreement, together with any amendments hereto,
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and personal representatives. The
Company may, in its sole discretion, assign this Agreement or its rights
hereunder to any parent, affiliate, shareholder, or successor of the Company, or
to any person or entity which purchases substantially all of the assets of the
Company. Employee may not transfer or assign this Agreement or any of Employee’s
rights or obligations under this Agreement.

 

25. References to Gender and Number Terms. In construing this Agreement,
feminine or number pronouns shall be substituted for those masculine in form and
vice versa, and plural terms shall be substituted for singular and singular for
plural in any place which the context so requires.

 

26. Headings. The various headings in this Agreement are inserted for
convenience only and are not part of the Agreement.

 

27. Entire Agreement. This Agreement contains the entire understanding and
agreement between the parties relating to the subject matter hereof.

 

28. Counterparts. This Agreement may be executed in one or more counterparts,
and all such counterparts shall constitute one and the same instrument.

 

29. Severance Compensation. In the event of termination of Employee’s employment
with the Company under the terms of this Agreement which provide for payment by
the Company to Employee of severance compensation, the amount of such severance
compensation shall in no event be greater than the amount which would be
deductible by the Company under Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), after taking into consideration all payments to
Employee covered by Code Section 280G which Employee receives or is deemed to
receive (i) under this Agreement; (ii) under the Company’s 1993 Stock Option and
Incentive Plan, as amended,

 

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by reason of the acceleration of the right to exercise any options (including
any related stock appreciation rights) granted thereunder or the acceleration of
the vesting of any restricted stock awards granted thereunder; or (iii) under
any new plan or arrangement implemented by the Company after the date of this
Agreement which would otherwise be considered a “parachute payment” under
Section 280G. In the event such payments exceed the amount which would be
deductible by the Company under Code Section 280G, the timing of such payments
shall be extended or otherwise modified such that such payments shall be
deductible by the Company under Code Section 280G and in a manner which, to the
extent possible, provides Employee the full benefit of such payments as
originally agreed to.

 

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
as of the date and year first above written.

 

COMPANY:

SYNTROLEUM CORPORATION

By:

 

 

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    John B. Holmes, Jr. President    

Syntroleum Corporation.

   

1350 South Boulder, Suite 1100

   

Tulsa, Oklahoma 74119

EMPLOYEE:

By:

 

 

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    Richard Edmonson    

Home address:

   

 

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