**Ex. 10.78****RETIREMENT AGREEMENT**THIS RETIREMENT AGREEMENT (the “Agreement”) made and entered into effective November 15, 2007,by and between Syntroleum Corporation (the “Company”) and John B. Holmes, Jr. (the “Executive”).W I T N E S S E T H:WHEREAS, the Executive and the Company are parties to that certain Employment Agreement datedas of August 31, 2002 (the “Employment Agreement”), and that certain Indemnification Agreementdated October 1, 2002 (the “Indemnification Agreement”); andWHEREAS, the parties mutually desire to arrange for Executive’s retirement from the Companyunder certain terms; andWHEREAS, in consideration of the mutual promises contained herein, the parties hereto arewilling to enter into this Agreement upon the terms and conditions herein set forth.NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein,the mutual benefits to be gained by the performance thereof and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties heretoagree as follows:1. Retirement and Resignation from Officer Positions. Effective as of the close ofbusiness on December 28, 2007 (the “Retirement Date”), the Executive will retire as an employee ofthe Company. As of November 19, 2007, the Executive agrees to resign any and all director officer,or other positions he holds with the Company or any of its affiliates and/or subsidiaries, and theExecutive hereby agrees to sign and deliver the letter included herein Attachment B,evidencing his resignation as an officer. The Executive shall remain as an employee until theRetirement Date and subject to the terms of the Employment Agreement. However, the Company andExecutive agree that from the execution of the Agreement until the Retirement Date, the Executiveshall be available, at times to be mutually agreed, if called upon by the Company, to provideassistance that the Company may request.2. Consideration and Waiver and Release. The Executive shall have until 45 calendardays after the date this Agreement was furnished to him to consider whether to sign and return thisAgreement to the Company by first class mail or by hand delivery. In consideration for theExecutive’s execution of and compliance with this Agreement, including but not limited to theexecution of the Waiver and Release attached hereto as Attachment A, the Company shallprovide the consideration set forth below in this Section 2. Unless as otherwise provided in theAgreement, this consideration is provided subject to the binding execution by the Executive(without revocation) of the Waiver and Release. The Company’s obligation to make any furtherpayments or provide any benefits otherwise due under Section 2 shall cease only in the event theExecutive is in material breach of the terms of this Agreement or the Waiver and Release and failsto cure such breach in a reasonable period of time, and no payment shall be made or otherbenefit described hereunder provided until the expiration of the seven-day revocation periodas provided for in the Waiver and Release (the “Effective Waiver Date”).
 
 

 
A. Retirement Payments. Assuming the Waiver and Release has become binding(without revocation), the Company agrees to pay the Executive a lump sum payment of$576,202.19 (less applicable taxes) on December 28, 2007.B. Health Plan Coverage Continuation. The Executive and his qualifyingdependents will be eligible for continuation coverage for medical and dental+vision benefitsunder the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), subject to theExecutive’s payment of the full premiums and the Company’s ability to amend or terminate itsbenefit plans at any time. From the Retirement Date until the date one (1) year followingthe Retirement Date, the Company shall bear the payment of that portion of the full premiumwhich is over and above the Executive’s continued payment of the employee portion of thethen-applicable premium under the Company’s medical and dental+vision plans, as such portionand premiums are in effect from time to time. If, following the Retirement Date, theExecutive becomes eligible for medical or dental+vision benefits from another employer, theCompany’s obligation to provide such benefits coverage shall immediately cease only withregard to that coverage provided by the other employer.C. Stock Options. The Executive shall be treated as having terminatedemployment due to “retirement” for purposes of any stock options awarded to the Executiveunder any incentive plan of the Company which remain unexercised as of the Executive’sRetirement Date. All of Executive’s stock options and restricted stock shall be immediatelyvested upon the Retirement Date, except for those restricted stock grants granted pursuantto the Restricted Stock Agreement dated as of March 16, 2007. In addition, the Nominatingand Compensation Committee (the “Committee”) has agreed to extend the exercisability of alloptions until the end of the original term of the option.D. Bonuses. The Executive will not be eligible to receive any annual bonus forthe 2007 calendar year.E. D&O Insurance. Subject to the Company’s own decision with regard to amountsand insurance providers, the Company will maintain D&O or other insurance coverage andextend same to the Executive, similar to the Company’s then-current executive group, for aperiod of three (3) years from the Effective Waiver Date.3. Other Benefits. The Executive’s benefits under the Syntroleum 401(k) Plan and anyother plan or arrangement of the Company shall be determined and paid in accordance with the termsof such plans. Except as expressly provided herein or in the terms of such plans, all benefitsprovided to the Executive shall cease as of the Retirement Date.
 
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4. Restrictive Covenants. As a material inducement to the Company to enter into thisAgreement, Executive agrees that the restrictive covenants set forth in paragraphs 6, 7, 8, 9, 10,11 and 12 of the Employment Agreement, originally agreed to by the Executive in entering into theEmployment Agreement in exchange for the Company’s provision to the Executive ofTrade Secret Information and for other good and valid consideration, remain in full force andeffect; provided, however, that, effective the Retirement Date, subject to the Executive upholdinghis continuing obligations to maintain the Trade Secret Information of the Company as set forth inthe Employment Agreement, the Company agrees to waive the restrictions set forth in paragraphs 9(a)and 9(b). Notwithstanding the forgoing, the Company does not waive the restrictions on theExecutive as set forth in paragraph 9(c) of the Employment Agreement.5. Assistance with Legal Proceedings. The Executive agrees that for a period of threeyears after the Retirement Date, the Executive will furnish such information and proper assistanceas may be reasonably necessary in connection with any litigation or other legal proceedings inwhich the Company or any affiliate or subsidiary is then or may become involved; provided, however,that the parties agree to negotiate a reasonable rate of compensation for any such services.6. Reference; Nondisparagement. The Executive agrees to refrain from any criticismsor disparaging comments about the Company or any affiliates (including any current or formerofficer, director or employee of the Company), and the Executive agrees not to take any action, orassist any person in taking any other action, that is adverse to the interests of the Company orany affiliate or inconsistent with fostering the goodwill of the Company and its affiliates.Likewise, the Company agrees to refrain from any criticisms or disparaging comments about theExecutive, and the Company agrees not to take any action, or assist any person in taking any otheraction, that is adverse to the interests of the Executive or inconsistent with fostering thegoodwill of the Executive. Notwithstanding the forgoing, this paragraph imposes no limitation onthe Executive’s rights as a shareholder of the Company, or on either party’s rights to enforce thisAgreement. Nothing in this Agreement shall apply to or restrict in any way the communication ofinformation by either Party to any state or federal law enforcement agency, or require notice toeither Party thereof in such event, and neither Party will be in breach of the covenant containedabove solely by reason of giving testimony which is compelled by process of law.7. Non-Alienation. The Executive shall not have any right to pledge, hypothecate,anticipate, or in any way create a lien upon any amounts provided under this Agreement, and nopayments or benefits due hereunder shall be assignable in anticipation of payment either byvoluntary or involuntary acts or by operation of law. So long as the Executive lives, no person,other than the parties hereto, shall have any rights under or interest in this Agreement or thesubject matter hereof. Upon the death of the Executive, his executors, administrators, deviseesand heirs, in that order, shall have the right to enforce the provisions hereof.8. Amendment of Agreement. This Agreement may not be modified or amended except by aninstrument in writing signed by the parties hereto.9. Waiver. No term or condition of this Agreement shall be deemed to have beenwaived, nor shall there be an estoppel against the enforcement of any provision of this Agreement,except by written instrument of the party charged with such waiver or estoppel.
 
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10. Notices. All notices or communications hereunder shall be in writing, addressedas follows:To the Company:Syntroleum Corporation4322 South 49th West AvenueTulsa, OK 74107-6100Attention: General CounselFax: (918) 592-7979To the Executive:John B. Holmes, Jr.2153 Inwood DriveHouston, Texas 77019Telephone: (713) 630-1045All such notices shall be conclusively deemed to be received and shall be effective; (i) if sent byhand delivery, upon receipt, (ii) if sent by telecopy or facsimile transmission, upon confirmationof receipt by the sender of such transmission or (iii) if sent by registered or certified mail, onthe fifth day after the day on which such notice is mailed.11. Tax Withholding. The Company shall withhold from any benefits payable under thisAgreement the minimum federal, state, city or other taxes that will be required pursuant to any lawor governmental regulation or ruling. In instances where a taxable event involves options orstock, the taxes will be handled in accordance with the applicable stock option agreement orrestricted stock award agreement.12. Severability. If any provision of this Agreement is held to be invalid, illegalor unenforceable, in whole or part, such invalidity will not affect any otherwise valid provision,and all other valid provisions will remain in full force and effect.13. Counterparts. This Agreement may be executed in two or more counterparts, each ofwhich will be deemed an original, and all of which together will constitute one document.14. Titles. The titles and headings preceding the text of the sections andsubsections of this Agreement have been inserted solely for convenience of reference and do notconstitute a part of this Agreement or affect its meaning, interpretation or effect.
 
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15. Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, UNITED STATES OF AMERICA, WITHOUT REGARD TOCONFLICT OF LAW PROVISIONS THEREOF. Subject to Section 15(a) below, the Company and the Executiveexpressly and irrevocably consent and submit to the nonexclusive jurisdiction of any state orfederal court sitting in Tulsa County, Oklahoma and agree that, to the fullest extent allowed bylaw, 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 theExecutive each irrevocably waive, to the fullest extent allowed by law, any objection either ofthem may have to the laying of venue of any such suit, action or proceeding brought in any state orfederal court sitting in Tulsa County, Oklahoma based upon a claim that such court is inconvenientor otherwise an objectionable forum. Any process in any action, suit or proceeding arising out ofor relating to this Agreement may, among other methods, be served upon the Company or the Executiveby delivering it or mailing it to their respective addresses set forth herein. Any such deliveryor mail service shall be deemed to have the same force and effect as personal service in the Stateof Oklahoma.(a) Any dispute arising out of or in connection with this Agreement, including any questionregarding its existence, validity or termination, shall be addressed exclusively in the followingpriority order:(1) Negotiation. The Employee and the Company shall arrange a meeting, at a mutuallyconvenient time by phone or in person, to discuss the issues of each Party and negotiate for aresolution of the dispute. The period of negotiation shall extend no longer than thirty (30)calendar days from the first meeting of the negotiators.(2) Mediation. If the Parties have failed to resolve the dispute by negotiation, theParties shall submit to mediation prior to seeking resolution by binding arbitration. The Partieswill cooperate with one another in selecting a mediator from the American Arbitration Associationpanel of neutrals, which shall be requested to promptly schedule the mediation proceedings. Theparties covenant that they will participate in the mediation in good faith, and that they will eachbear their own costs. All offers, promises, conduct and statements, whether oral or written, madein the course of the mediation by any of the parties, their agents, employees, experts andattorneys, and by the mediator, are expected to be treated as confidential, privileged andinadmissible for any purpose, including impeachment, in any arbitration or other proceedinginvolving the parties, provided that evidence that is otherwise admissible or discoverable shallnot be rendered inadmissible or non-discoverable as a result of its use in the mediation. If thedispute is not resolved within thirty (30) calendar days from the date of the submission of thedispute to mediation (or such later date as the parties may mutually agree in writing), theadministration of the arbitration shall proceed forthwith. The mediation may continue, if theparties so agree, after the appointment of the arbitrators. Unless otherwise agreed by theparties, the mediator shall be disqualified from serving as arbitrator in the case. The pendencyof a mediation shall not preclude a party from seeking provisional remedies, such as a temporary orpermanent injunction or restraining order to prevent a continuing harm to a Party, in aid of thearbitration from a court of appropriate jurisdiction, and the parties agree not to defend againstany application for provisional relief on the ground that a mediation is pending.
 
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(3) Arbitration. Within five (5) business days of the conclusion of the Parties’mediation, any dispute, claim or controversy arising out of or relating to this Agreement or thebreach, termination, enforcement, interpretation or validity thereof, including the determinationof the scope or applicability of this Agreement to arbitrate, shall be determined by bindingarbitration in Tulsa, Oklahoma, before three (3) arbitrators. The arbitration shall beadministered by the American Arbitration Association pursuant to its Commercial Rules forArbitration. The arbitrators’ award may be enforced in Tulsa County District Court, the UnitedStates District Court for the Northern District of Oklahoma or in any other court havingjurisdiction over the parties. This clause shall not preclude the Parties from seeking provisionalremedies in aid of arbitration, such as a temporary or permanent injunction or restraining order toprevent a continuing harm to a Party, from a court of appropriate jurisdiction. The Partiescovenant that they will participate in the arbitration in good faith, and that they will each beartheir own costs. The provisions of this clause may be enforced by any court of competentjurisdiction, and the Party seeking enforcement shall be entitled to an award of all costs, feesand expenses, including attorneys’ fees, to be paid by the Party against whom enforcement isordered.(4) The Parties agree that the dispute resolution priority set forth herein is a material termof this agreement and that the damages for failure to comply with the dispute resolution priorityare and would be difficult to measure. Consequently, the Parties agree that in the event a Partyelects to ignore the dispute resolution priority order requirements set forth in this Section15(a), the Party making the election shall be obligated for all (internal and external) costs, feesand expenses, including attorneys’ fees, of the other Party, regardless of how the dispute isultimately decided. In other words, any Party electing to forego the dispute resolution priorityin Section 15(a) also elects to pay the fees, costs and expenses of the other Party even if theelecting Party ultimately prevails. The dispute resolution priority order requirement specified inthis Section 15(a) may be amended, modified, or waived only upon the agreement, in writing, of theParties.16. Remedies. In the event of any material breach by either party of any of theprovisions of this Agreement and in the event such material breach is not cured by the breachingparty within forty-five (45) days after notice from the non-breaching party, the non-breachingparty, in addition to any other rights, remedies or damages available at law or in equity, shall beentitled (a) to injunctive relief enjoining and restraining any such material breach by thebreaching party; and, in addition to any other award of damages to which may be entitled, (b) torecover from the breaching party all costs and expenses, including reasonable attorney’s fees,incurred by the non-breaching party, its successors or assigns as a consequence of any such breach.17. Entire Agreement. This Agreement, together with Attachments A and B, constitutethe entire agreement of the parties with respect to the subject matter hereof, and expresslysupersedes the Employment Agreement, except as expressly provided herein.18. 409A Compliance. The parties acknowledge that all payments and benefits providedunder this Agreement and the Consulting Agreement are intended to meet the requirements andrestrictions of the nonqualified deferred compensation rules contained in Section 409A of theInternal Revenue Code of 1986, as amended (to the extent applicable thereto).
 
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IN WITNESS WHEREOF, the parties have executed this Agreement in multiple counterparts, all ofwhich shall constitute one agreement, effective as of the date and year first above written.         SYNTROLEUM CORPORATION           By: /s/ Edward G. Roth       Edward G. Roth      President & Chief Operating Officer           EXECUTIVE    /s/ John B. Holmes, Jr.         John B. Holmes, Jr.  
 
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Attachment A**SYNTROLEUM CORPORATION**