Option Agreement dated as of October 15, 2003



 Exhibit 4.9 
  

OPTION AGREEMENT 
  
 THIS OPTION AGREEMENT (the “Agreement”), dated as of October 15, 2003, is made and entered into by and among Syntroleum Corporation, a Delaware
corporation (the “Company”), and Mr. Ziad Ghandour (the “Holder”), principal of TI Capital Management (the “Consultant”). This Agreement is being executed in connection with the letter agreement dated October 3, 2003
between the Company and the Consultant, as amended (the “Letter Agreement”). 
  
 The Company agrees to grant to the Holder options, as hereinafter described (the “Options”), to purchase up to 600,000 shares (the “Shares”) of the Company’s Common Stock, par value $.01 per
share (the “Common Stock”). 
  
 In consideration of the
foregoing and for the purpose of defining the terms and provisions of the Options and the respective rights and obligations thereunder, the Company and the Holder, for value received, hereby agree as follows: 
  
 Section 1.    Transferability and Form of Options.

  
 1.1    Registration. The Options
shall be numbered and shall be registered on the books of the Company when issued. 
  
 1.2    Limitations on Transfer. The Options and the Shares shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Agreement. The Holder will cause
any proposed purchaser, assignee, transferee or pledgee of the Options or the Shares, except for transferees in dispositions of Shares that are pursuant to an effective registration statement under the Securities Act of 1933, as amended (the
“Act”), or dispositions of Shares pursuant to Rule 144 under the Act, to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. The Options may be divided or combined, upon
request to the Company by the Holder, into a certificate or certificates representing the right to purchase the same aggregate number of Shares. Unless the context indicates otherwise, the term “Holder” shall include any transferee or
transferees of the Shares that are required to be bound by the terms hereof, and the term “Options” shall include any and all options outstanding pursuant to this Agreement, including those evidenced by a certificate or certificates issued
upon division, exchange or substitution pursuant to this Agreement. The Holder by his receipt of an Option certificate, agrees to be bound by and comply with the terms of this Agreement. The Holder represents and agrees that the Options have been
acquired only for investment, for the Holder’s own account, and without any present intention to sell, or with a view to distribution of, the Options. 
  
 1.3    Form of Options. The text of the Options and of the form of election to purchase Shares shall be substantially as set
forth in Exhibit A attached hereto. The number of Shares issuable upon exercise of the 

  

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Options is subject to adjustment upon the occurrence of certain events, all as hereinafter provided. The Options shall be executed on behalf of the Company
by its Chief Executive Officer, President or by a Vice President, attested to by its Secretary or an Assistant Secretary. An Option bearing the signature of an individual who was at any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior to the delivery of such Option or did not hold such office on the date of this Agreement. 
  
 The Options shall be dated as of the date of signature thereof by the Company either upon initial issuance or upon division,
exchange or substitution. 
  
 1.4    Legend
on Options. Each Option certificate shall bear the following legend: 
  

	 	(a)	“THE OPTIONS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND ANY
PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE OR (III) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES. COPIES OF THE OPTION AGREEMENT AND THE LETTER AGREEMENT COVERING THE GRANT OF THESE OPTIONS AND VARIOUS
REQUIREMENTS, INCLUDING WITHOUT LIMITATION PROVISIONS RESTRICTING THEIR TRANSFER, MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY.”; and 

  

	 	(b)	any legend required by applicable state securities law. 

  
 Any certificate issued at any time in exchange or substitution for any certificate bearing such legends (except, in the case of the Shares, a new
certificate issued upon completion of a public distribution pursuant to a registration statement under the Act or upon completion of a sale under Rule 144 under the Act of the securities represented thereby) shall also bear the above legend or
similar legend unless, in the opinion of the Company’s counsel, the securities represented thereby need no longer be subject to such restrictions. The Holder consents to the Company making a notation on its records and giving instructions to
any registrar or transfer agent of the Options and the Common Stock in order to implement the restrictions on transfer established in this Agreement. 
  

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 Section 2.    Exchange of Option Certificate. Any Option certificate may be
exchanged for another certificate or certificates entitling the Holder to purchase a like aggregate number of Shares as the certificate or certificates surrendered then entitled the Holder to purchase. If the Holder desires to exchange an Option
certificate, he shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, the certificate evidencing the Options to be so exchanged. Thereupon, the Company shall execute and deliver to the person entitled
thereto a new Option certificate as so requested. 
  
 Section 3.
Vesting of Options; Exercise of Options. 
  
 (a) Subject to
the terms of this Agreement, the Options shall vest in accordance with the terms of the Letter Agreement (each such date, a “Vesting Date”). Subject to the terms of this Agreement, the Holder shall have the right, at any time and from time
to time on a day that is not a Saturday, Sunday or public holiday in Tulsa, Oklahoma during the period commencing on the relevant Vesting Date, and ending at 5:00 p.m., Tulsa, Oklahoma time, on the second anniversary of the relevant Vesting Date
(each such date, a “Termination Date”), to exercise an Option and to purchase from the Company up to the number of fully paid and nonassessable Shares to which the Holder may at the time be entitled to purchase pursuant to this Agreement,
upon surrender to the Company, at its principal office, of the certificate evidencing the Options to be exercised, together with the purchase form on the reverse thereof duly completed and signed, and upon payment to the Company of the Option Price
(as defined in and determined in accordance with the provisions of this Section 3 and Sections 7 and 8 hereof), for the number of Shares in respect of which such Options are then exercised, but in no event for less than 100 Shares (unless less than
an aggregate of 100 Shares are then purchasable under all outstanding Options held by the Holder). 
  
 (b) Payment by the Holder of the aggregate Option Price due from him shall be made in cash or by immediately available funds, check or any combination
thereof. 
  
 (c) Upon such surrender of the Options and payment of
such Option Price as aforesaid, the Company shall issue and cause to be delivered to or upon the written order of the Holder and in the name of the Holder a certificate or certificates for the number of full Shares so purchased upon the exercise of
his Option, together with cash, as provided in Section 9 hereof, in respect of any fractional Shares otherwise issuable upon such surrender. Such certificate or certificates shall be deemed to have been issued and the Holder shall be deemed to have
become a holder of record of such securities as of the date of surrender of the Options and payment of the Option Price, as aforesaid, notwithstanding that the certificate or certificates representing such securities shall not actually have been
delivered or that the stock transfer books of the Company shall then be closed. The Options shall be exercisable after the relevant Vesting Date, at the election of the Holder, either in full or from time to time in part and, in the event that a
certificate evidencing the Options is exercised in respect of less than all of the Shares specified therein at any time prior to the Termination Date, a new certificate evidencing the remaining portion of the Options held by the Holder will be
issued by the Company. 
  

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 Section 4.    Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Options or the Shares; provided, however, the Company shall not be required to pay any tax which may be payable in respect of any secondary transfer of the Options or the Shares. 

 
 Section 5.    Mutilated or Missing Options. In
case the certificate or certificates evidencing the Options shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the Holder, issue and deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or destroyed, a new Option certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt
of evidence satisfactory to the Company of such loss, theft or destruction of such Option and a bond of indemnity, if requested, also satisfactory in form and amount at the applicant’s cost. Applicants for such substitute Options certificate
shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe. 
  
 Section 6.    Reservation of Shares. There has been reserved, and the Company shall at all times keep reserved so long as the
Options remain outstanding, out of its authorized Common Stock, such number of shares of Common Stock as shall be subject to purchase under the Options. On or before taking any action that would cause an adjustment pursuant to the terms of the
Options resulting in an increase in the number of shares of Common Stock deliverable upon such conversion or exercise above the number thereof previously authorized, reserved and available therefor, the Company shall take all such action so required
for compliance with this Section. 
  
 Section
7.    Option Price. The price per Share at which Shares shall be purchasable upon the exercise of the Options (the “Option Price”) shall initially be $4.50 per share, or actual price on date of purchase,
whichever is lower, subject to adjustment pursuant to Section 8 hereof. 
  
 Section 8.    Adjustment of Number of Shares. The number and kind of securities purchasable upon the exercise of the Options and the Option Price shall be subject to adjustment from time to time upon the happening
of certain events, as follows: 
  
 8.1    Adjustments. The number of Shares purchasable upon the exercise of the Options and the Option Price shall be subject to adjustment as follows: 
  
 (a) In case the Company after October 15, 2003 shall (1) make or pay a dividend or make a distribution in shares of Common
Stock on its Common Stock, (2) subdivide its outstanding shares of Common Stock into a greater number of shares or (3) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the number of Shares purchasable
upon exercise of the Options immediately prior to such action shall be 
  

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 adjusted so that the Holder upon exercise of the Options shall be entitled to receive the number of shares of Common
Stock which he would have owned or would have been entitled to receive immediately following such action had the Options been exercised immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective on the day
immediately after the record date, except as provided in subsection (f) below, in the case of a dividend or distribution and shall become effective on the day immediately after the effective date in the case of a subdivision or combination. Whenever
the number of Shares purchasable upon the exercise of an Option is adjusted as provided in this paragraph (a), the Option Price shall be adjusted by multiplying such Option Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of the Options immediately prior to such adjustment, and of which the denominator shall be the number of Shares so purchasable immediately thereafter. 
  
 (b) In case the Company after the date hereof shall distribute any rights,
warrants or options to all holders of its Common Stock entitling them, for a period expiring within 60 days after the record date for such distribution, to purchase shares of Common Stock or securities convertible into Common Stock at a price per
share less than the Relevant Current Market Price Per Share (as defined below), the Option Price shall be adjusted by multiplying the Option Price in effect immediately prior to such adjustment by a fraction, of which (i) the numerator shall be the
sum of (A) the number of shares of Common Stock outstanding on the record date for the distribution to which this subsection (b) is being applied and (B) the number of shares of Common Stock which the aggregate price of the total number of shares of
Common Stock offered pursuant to the distribution to which this subsection (b) is being applied would purchase at the Relevant Current Market Price Per Share and (ii) the denominator shall be the sum of (A) the number of shares of Common Stock
outstanding on the record date for the distribution to which this subsection (b) is being applied and (B) the number of additional shares of Common Stock offered pursuant to the distribution to which this subsection (b) is being applied. For
purposes of this subsection (b), the “Relevant Current Market Price Per Share” means the then current market price per share of the Common Stock (determined as provided in subsection (d) below) on the record date for the distribution to
which this subsection (b) applies, minus, for any distribution to which subsection (c) applies and for which (x) the record date shall occur on or before the record date for the distribution to which this subsection (b) applies and (y) the
“‘ex’ date” shall occur on or after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this subsection (b) applies, the fair market value (on the record date for the
distribution to which this subsection (b) applies and as reasonably determined in good faith by the Board of Directors of the Company) of the assets of the Company or evidences of indebtedness, cash or securities distributed in respect of each share
of Common Stock in such subsection (c) distribution. The adjustment shall, except as provided in subsection (f) below, become effective on the day immediately after the record date for the determination of shareholders entitled to receive the
rights, warrants or options to which this subsection (b) applies. 
  
 (c) In case the Company after the date hereof shall distribute to all holders of Common Stock any of its assets, evidences of indebtedness, cash or securities (excluding any distributions referred to in subsections (a) or (b) and any
dividend or distribution paid in cash out of earned surplus of the Company) then in each such case the Option Price shall be adjusted so that the same shall equal the price determined by multiplying the Option Price in effect 
  

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 immediately prior to the record date of such distribution by a fraction of which the numerator shall be the then current
market price per share of the Common Stock (determined as provided in subsection (d) below) on the record date mentioned below less the then fair market value (as reasonably determined in good faith by the Board of Directors of the Company) of the
portion of the assets, evidences of indebtedness, cash or securities so distributed applicable to one share of Common Stock, and of which the denominator shall be such current market price per share of the Common Stock. Such adjustment shall, except
as provided in subsection (f) below, become effective on the day immediately after the record date for the determination of stockholders entitled to receive such distribution. 
  
 (d) For the purpose of any computation under subsection (b) or (c) above, the current market price per share of Common Stock
on any date shall be deemed to be the average of the Market Value (as defined below) of the Common Stock for the 10 trading days before, and ending not later than, the earlier of the date in question and the date before the “‘ex’
date”, with respect to the issuance or distribution requiring such computation. For purposes of subsection (b) and this subsection (d), the term “‘ex’ date,” when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the Nasdaq Stock Market (“Nasdaq”) (or, if not listed or admitted to trading thereon, then on the principal national securities exchange or automated quotation system on which the
Common Stock is listed or admitted to trading and if not listed or admitted to trading on any national securities exchange or automated quotation system, as determined in good faith by the Company’s Board of Directors) without the right to
receive such issuance or distribution. “Market Value” on any trading day shall mean (i) in the case of a security traded on the over-the-counter market and not on Nasdaq nor on any national securities exchange, the per share last sale
price of the Common Stock on such trading day as reported by Nasdaq or an equivalent generally accepted reporting service; (ii) in the case of a security traded on Nasdaq or on a national securities exchange, the per share last sale price of the
Common Stock on such trading day on Nasdaq or on the principal stock exchange on which it is listed, as the case may be or (iii) if neither clause (i) or (ii) above is applicable, then the fair value thereof as determined in good faith by the
Company’s Board of Directors. For purposes of clause (i) above, if trading in the Common Stock is not reported by Nasdaq, the bid price referred to in said clause shall be the lowest bid price as reported in the “pink sheets”
published by National Quotation Bureau, Incorporated. The closing price referred to in clause (ii) above shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and
asked prices, in either case on Nasdaq or on the national securities exchange on which the Common Stock is then listed. 
  
 (e) In addition to the foregoing adjustments in subsections (a), (b) and (c) above, the Company will be permitted to make such reductions in the Option
Price as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of the shares of Common Stock. 
  
 (f) In any case in which this Section 8 shall require that an adjustment be
made effective on the day immediately following a record date, the Company may elect to defer the effectiveness of such adjustment (but in no event until a date later than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Option exercised after such record date and on and before such adjustment shall have become 
  

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 effective (i) defer paying any cash payment pursuant to Section 9 hereof or issuing to the Holder the number of shares of
Common Stock (or other assets or securities) issuable upon such exercise in excess of the number of shares of Common Stock and other capital stock of the Company issuable thereupon only on the basis of the Option Price prior to such adjustment, and
(ii) not later than five business days after such adjustment shall have become effective, pay to the Holder the appropriate cash payment pursuant to Section 9 hereof and issue to the Holder the additional shares of Common Stock (or other asset or
securities) issuable on such exercise. 
  
 (g) Upon the expiration
of any rights, warrants or options referred to in subsection (b) or (c) above, to the extent the Options shall not have been exercised, the Option Price shall be adjusted to such amount as would have been received by the Holder had the adjustment in
such Option Price made upon the distribution of such rights, warrants or options been made upon the basis of the distribution of only such number of rights, warrants or options as were actually exercised. 
  
 (h) No adjustment in the number of Shares purchasable pursuant to the Options
or in the Option Price shall be required unless such adjustment would require an increase or decrease of at least 1.0% of the number of Shares then purchasable upon exercise of the Options or in the Option Price; provided, however, that any
adjustments which by reason of this subsection 8.1(h) are not required to be made immediately shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 8 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be. 
  
 (i)
Whenever the number of Shares purchasable upon the exercise of the Options or the Option Price is adjusted as herein provided, the Company shall cause to be promptly mailed to the Holder by first class mail, postage prepaid, notice of such
adjustment setting forth the number of Shares purchasable upon the exercise of the Options and the Option Price after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made.

  
 (j) Except as provided in this Section 8 or in Section 11,
during the term of the Options or upon the exercise of the Options, no adjustment shall be made (i) in respect of any dividends or distributions or (ii) in respect of the consummation of any business combination or other extraordinary transaction.

  
 (k) Irrespective of any adjustments in the number of
securities issuable upon exercise of Options or in the Option Price, Option certificates theretofore or thereafter issued may continue to express the same number of securities and Option Price as are stated in the Option certificates initially
issuable pursuant to this Agreement. However, the Company may, at any time in its sole discretion (which shall be conclusive), make any change in the form of Option certificate that it may deem appropriate and that does not affect the substance
thereof; and any Option certificate thereafter issued, whether upon registration of, or in exchange or substitution for, an outstanding Option certificate, may be in the form so changed. 
  

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 8.2    Par Value of Shares of Common Stock. Before taking any action which
would cause an adjustment effectively reducing the portion of the Option Price allocable to each Share below the then par value per share of the Common Stock issuable upon exercise of the Options, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Common Stock upon exercise of the Options. 
  
 8.3    Independent Public Accountants. The Company may retain a firm of independent public
accountants of recognized national standing (which may be any such firm regularly employed by the Company) to make any computation required under this Section 8, and a certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 8. 
  
 8.4    Statement on Option Certificates. Irrespective of any adjustments in the number of securities issuable upon exercise of Options or in the Option Price, Option certificates theretofore or thereafter issued
may continue to express the same number of securities and Option Price as are stated in the Option certificates initially issuable pursuant to this Agreement. However, the Company may, at any time in its sole discretion (which shall be conclusive),
make any change in the form of Option certificate that it may deem appropriate and that does not affect the substance thereof; and any Option certificate thereafter issued, whether upon registration of, or in exchange or substitution for, an
outstanding Option certificate, may be in the form so changed. 
  
 Section 9.    Fractional Interests; Fair Value. The Company shall not be required to issue fractional Shares on the exercise of the Options. If any fraction of a Share would, except for the provisions of this
Section 9, be issuable on the exercise of the Options (or specified portion thereof), the Company shall pay an amount in cash equal to the then Market Value of the Common Stock on the day of such exercise multiplied by such fraction. 
  
 Section 10.    No Right as Stockholder; Notices to the
Holder. Nothing contained in this Agreement or in the Options shall be construed as conferring upon the Holder or his transferees any rights as a stockholder of the Company, including the right to vote, receive dividends, call meetings, consent
or receive notices as a stockholder in respect of any meeting of stockholders for the election of directors of the Company or any other matter or imposing any fiduciary or other duty on the Company, its officers or directors, in favor of the Holder,
all of which rights and duties owed to stockholders are disclaimed and waived by the Holder. If, however, at any time prior to the expiration of the Options and prior to their exercise, any one or more of the following events shall occur:

  
 (a) any action which would require an adjustment pursuant to
Section 8.1; or 
  
 (b) a dissolution, liquidation or winding up
of the Company or a consolidation, merger or similar business combination or sale of its property, assets and business as an entirety or substantially as an entirety shall be proposed; 
  

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 then the Company shall give notice in writing of such event to the Holder, as provided in Section 10 hereof, promptly
prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to any relevant dividend, distribution, subscription rights or other rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to mail or receive such notice or any defect
therein shall not affect the validity of any action taken with respect thereto. 
  
 Section 11.    Continuation of Purchase Rights in Case of Reclassification, Change, Merger, Consolidation or Sale of Assets. If any of the following shall occur, namely: (a) any
reclassification or change of outstanding shares of Common Stock issuable upon exercise of the Options (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or
combination of outstanding shares of Common Stock), (b) any consolidation or merger of the Company with or into any other person, or the merger of any other person with or into the Company (other than a merger which does not result in any
reclassification, change, conversion, exchange or cancellation of outstanding shares of Common Stock) or (c) sale, transfer or conveyance of all or substantially all of the assets of the Company (computed on a consolidated basis), then the Company,
or such successor or purchasing entity, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, sale, transfer or conveyance, execute and deliver to the Holder an agreement providing that the
Holder shall have the right to exercise the Options only into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, sale, transfer or
conveyance by a holder of the number of shares of Common Stock issuable upon exercise of the Options immediately prior to such reclassification, change, consolidation, merger, sale, transfer or conveyance assuming such holder of Common Stock of the
Company (i) is not a person party to such transaction and (ii) failed to exercise its rights of an election, if any, as to the kind or amount of securities, cash and other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance (provided that if the kind or amount of securities, cash, and other property receivable upon such reclassification, change, consolidation, merger, sale, transfer or conveyance is not the same for each share of
Common Stock of the Company held immediately prior to such reclassification, change, consolidation, merger, sale, transfer or conveyance in respect of which such rights of election shall not have been exercised (“non-electing share”), then
for the purpose of this Section 11 the kind and amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, sale, transfer or conveyance by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing shares). Such agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Agreement. If, in the
case of any such consolidation, merger, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of shares of Common Stock includes shares of stock or other securities and property (including
cash) of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale or conveyance, then such agreement shall also be executed by such other corporation and shall contain such additional
provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. The provisions 
  

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 of this Section 11 shall similarly apply to successive consolidations, mergers, sales or conveyances. Notice of the
execution of each such agreement shall be mailed to the Holder by first class mail, postage prepaid. 
  
 Section 12.    Securities Laws; Restrictions on Transfer of Shares; Registration Rights. 
  
 (a) The Holder agrees that the Options and the related Shares (each of the
Options and the Shares being referred to herein as a “Security” and together, “Securities”) are being acquired for investment and that the Holder will not purchase, offer, sell or otherwise dispose of any of the Securities except
under circumstances which will not result in a violation of the Act. In order to exercise these Options, the Holder must be able to confirm and shall confirm in writing, by executing a certificate to be supplied by the Company, all of the
representations and other covenants contained in this Agreement, including that the Securities so purchased are being acquired for investment and not with a view toward distribution or resale. The Shares (unless registered under the Act) shall be
stamped or imprinted with, in addition to any other appropriate or required legend, a legend in substantially the following form: 
  
 “THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND ANY PROSPECTUS DELIVERY
REQUIREMENTS ARE NOT APPLICABLE OR (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.” 
  
 (b) In addition, the Holder specifically represents to the Company both at the time of the grant of the Options and at those future times as specified
herein: 
  
 (1) The Holder has experience in analyzing and
investing in companies like the Company and is capable of evaluating the merits and risks of an investment in the Company and has the capacity to protect his own interests. The Holder is an “Accredited Investor” as that term is defined in
Rule 501(a) promulgated under the Act. The Holder is aware of the Company’s 
  

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 business affairs and financial condition, and has acquired information about the Company sufficient to reach an informed
and knowledgeable decision to acquire the Securities. The Holder is acquiring the Securities for his own account for investment purposes only not as a nominee or agent and not with a view to, or for the resale in connection with, any
“distribution” thereof for purposes of the Act. The Holder acknowledges the Company’s obligation to file a registration statement with respect to the Shares as set forth in the Registration Rights Agreement dated as of the date hereof
by and among the Company and the Holders (the “Registration Rights Agreement”), the effectiveness of which registration statement may be required for the resale of the Shares. The Holder has not offered or sold any portion of the
Securities to be acquired by the Holder and has no present intention of reselling or otherwise disposing of any portion of such Securities either currently or after the passage of a fixed or determinable period of time or upon the occurrence or
nonoccurrence of any predetermined event or circumstance, and in particular the Holder has no current intention to resell the Shares under such registration statement nor would it have such intention if such registration statement were effective as
of the date of purchase. The Holder understands that investment in the Securities is subject to a high degree of risk. The Holder can bear the economic risk of his investment, including the full loss of his investment, and by reason of his business
or financial experience or the business or financial experience of his professional advisors has the capacity to evaluate the merits and risks of his investment and protect his own interest in connection with the purchase of the Securities.

  
 (2) The Holder understands that the Securities have not been
and except as provided in the Registration Rights Agreement with respect to the Shares will not be registered under the Act or any applicable State securities law in reliance upon a specific exemption therefrom, which exemption depends upon, among
other things, the bona fide nature of the Holder’s investment intent and the accuracy of the Holder’s representations as expressed herein and the Holder will furnish the Company with such additional information as is reasonably requested
by the Company in connection with such exemption. 
  
 (3) The
Holder further understands that the Securities must be held indefinitely unless subsequently registered under the Act and any applicable state securities laws, or unless exemptions from registration are otherwise available. Moreover, the Holder
understands that the Company is under no obligation to and does not expect to register the Securities except as provided for in the Registration Rights Agreement with respect to the Shares. 
  
 (4) The Holder is aware of the provisions of Rule 144, promulgated under the
Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an Affiliate of such issuer), in a nonpublic offering subject to the satisfaction of
certain conditions, if applicable, including, among other things: The availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the Securities to be sold; the
sale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934, as amended) and the amount of securities
being sold during any three-month period not exceeding the specified limitations stated therein. 
  
 (5) The Holder further understands that he may not transfer the Options and that at the time he wishes to sell the Securities, it is possible that there
will be no public market upon 
  

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 which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the
current public information requirements of Rule 144, and that, in such event, the Holder may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period had been satisfied. 
  
 (6) The Holder further understands that in the event all of the requirements
of Rule 144 are not satisfied, registration under the Act or compliance with registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their respective brokers who participate in such actions do so at their own risk. 
  
 (7) To the Holder’s knowledge, the Company has made available copies of the Company’s reports filed under the Exchange Act since the beginning
of the Company’s current fiscal year. The Holder has had a reasonable opportunity to ask questions relating to and otherwise discuss the Company’s business, management and financial affairs with the Company’s management, customers and
other parties, and the Holder has received satisfactory responses to the Holder’s inquiries. The Holder has relied solely on his own independent investigation before deciding to enter into the purchase of the Options contemplated hereby. Unless
the Holder has otherwise notified the Company in writing, the Holder is not, and has not been within the ninety (90) days prior to the closing date of the purchase of the Securities, a broker or dealer of securities. Unless the Holder has otherwise
notified the Company in writing, the Holder is not an employee, officer or director of the Company nor prior to the consummation of the actions contemplated hereby, is the Holder the beneficial owner of 5% or more of the Common Stock of the Company.

  
 (c) With respect to any offer, sale or other disposition of
any Securities that is not registered under the Act, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of the Holder’s counsel, if reasonably requested
by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Securities and indicating whether or
not under the Act, certificates for the Securities in question to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Such opinion must be
satisfactory to the Company in its reasonable judgment and shall state that it may be relied upon by counsel to the Company, and any stock exchange or transfer agent. Promptly upon receiving such written notice and satisfactory opinion, if so
requested, the Company shall notify the Holder that the Holder may sell or otherwise dispose of such Securities all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this subsection (c)
that the opinion of counsel for the Holder is not satisfactory to the Company, the Company shall so notify the Holder promptly after such determination has been made and shall specify in detail the legal analysis supporting any such conclusion. Each
certificate representing the Securities thus transferred (except a transfer registered under the Act or a transfer of Shares pursuant to Rule 144) shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance
with such laws, unless in 
  

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 the aforesaid opinion of counsel for the Holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. 
  
 (d) Prior to any transfer of the Securities (except a transfer registered under the Act or a transfer of Shares pursuant to Rule 144), the proposed
transferee shall agree in writing with the Company to be bound by the terms of this Agreement (whether or not the Options have been exercised or otherwise outstanding) as if an original signatory hereto and the proposed transferee must be able to
and must make representations as set forth in this Section 12. 
  
 (e) As used in this Section 12, “Affiliate” shall mean, with respect to any person, any other person controlling, controlled by or under direct or indirect common control with such person (for the purposes of this definition
“control,” when used with respect to any specified person, shall mean the power to direct the management and policies of such person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” shall have meanings correlative to the foregoing). 
  
 Section 13.    Notices. Any notice pursuant to this Agreement by the Company or by the Holder or a holder of Shares shall be in
writing and shall be deemed to have been duly given if delivered or mailed by certified mail, return receipt requested: 
  
 (a) If to the Holder or holders of Shares, addressed to them at TI Capital Management, 9200 Sunset Boulevard, Penthouse 2, Los Angeles, California, 90069.

  
 (b) If to the Company, addressed to it at 4322 South 49th West
Avenue, Tulsa, Oklahoma 74107, Attention: Chief Financial Officer. 
  
 Each party
may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice in accordance herewith to the other party. 
  
 Section 14.    Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company, the Holder
or the holders of Shares shall bind and inure to the benefit of their respective successors and assigns hereunder. 
  
 Section 15.    Applicable Law. This Agreement shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be construed in accordance with the laws of said State. 
  
 Section 16.    Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Holder and the holders of Shares any
legal or equitable right, remedy or claim 
  

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 under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Company, the Holder and the
holders of Shares. 
  
 Section
17.    Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 
  
 Section 18.    Amendment. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is
sought; provided, however, that any provisions hereof may be amended, waived, discharged or terminated upon the written consent of the Company and the Holder having the right to acquire by virtue of holding the Options at least 50% of the Shares
which are then issuable upon exercise of the then outstanding Options. 
  
 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed, all as of the day and year first above written. 
  

	SYNTROLEUM CORPORATION
		
	By:	 	 /s/ John B. Holmes, Jr.


	 Name: John B. Holmes, Jr.
 Title: Chief Operating Officer



  

	HOLDER
		
	 	 	 /s/ Ziad Ghandour


	 	 	 Ziad Ghandour



  
  
  
  
  

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 Exhibit A 
  
 “THE OPTIONS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED AND ANY PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE OR (III) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES. COPIES OF THE OPTION AGREEMENT AND THE LETTER AGREEMENT COVERING THE GRANT OF THESE
OPTIONS AND VARIOUS REQUIREMENTS, INCLUDING WITHOUT LIMITATION PROVISIONS RESTRICTING THEIR TRANSFER, MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.” 
  
 Option Certificate No.
             
  
 OPTIONS TO PURCHASE 
              SHARES
OF COMMON STOCK 
  
 SYNTROLEUM CORPORATION 
  
 INCORPORATED UNDER THE LAWS 
 OF THE STATE OF DELAWARE 
  
 This certifies that, for value received,                  , the
registered holder hereof (the “Holder”), is entitled to purchase from SYNTROLEUM CORPORATION (the “Company”), at any time during the period commencing on the applicable Vesting Date (as defined in the Option Agreement referenced
below) and ending at 5:00 p.m., Tulsa, Oklahoma time, on the second anniversary of the applicable Vesting Date at a purchase price per share of $             , (the “Option
Price”) the number of shares of Common Stock of the Company set forth above (the “Shares”). The number of shares of Common Stock of the Company purchasable upon exercise of each Option evidenced hereby and the Option Price shall be
subject to adjustment from time to time as set forth in the Option Agreement. The Options may be redeemed by the Company as set forth in the Option Agreement. 
  

The Options evidenced hereby may be exercised in whole or in part by presentation of this Option certificate with the Purchase Form attached hereto
duly executed and simultaneous payment of the Option Price at the principal office of the Company. Payment of such price shall be made in cash or immediately available funds. 
  
 The Options evidenced hereby are issued under and in accordance with an Option Agreement, dated as of October
             , 2003 (the “Option Agreement”), between the Company and 
  

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 the Holder and are subject to the terms and provisions contained in the Option Agreement, including certain restrictions
on the exercise thereof, to all of which the Holder by acceptance hereof consents. 
  
 Upon any partial exercise of the Options evidenced hereby, there shall be signed and issued to the Holder a new Option certificate in respect of the Shares as to which the Options evidenced hereby shall not have been
exercised. These Options may be exchanged at the office of the Company by surrender of this Option certificate properly endorsed for one or more new Options of the same aggregate number of Shares as here evidenced by the Option or Options exchanged.
No fractional shares of Common Stock will be issued upon the exercise of rights to purchase hereunder, but the Company shall pay the cash value of any fraction upon the exercise of one or more Options. These Options are transferable in the manner
and subject to the restrictions set forth or referred to in the Option Agreement. 
  
 This Option Certificate does not entitle the Holder to any of the rights of a stockholder of the Company. 
  

	SYNTROLEUM CORPORATION
		
	By:	 	 
	 	

	 Name:
	 	 
	 	

	 Title:
	 	 
	 	



  
 Dated:
                 , 2003 
  

	ATTEST:
	
	  
	

	 Secretary


  
  
  

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 SYNTROLEUM CORPORATION 
 PURCHASE FORM 
  
 SYNTROLEUM CORPORATION

 1350 South Boulder, Suite 1100 
 Tulsa, Oklahoma 74119-3295

  
 The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Option certificate for, and to purchase thereunder,              shares of Common Stock (the “Shares”) provided for therein, and
requests that certificates for the Shares be issued in the name of: 
  

	

	
	

	
	


 (Please Print or Type Name, Address and Social Security Number or Taxpayer Identification Number)

  
 and, if said number of Shares shall not be all the Shares purchasable
thereunder, that a new Option certificate for the balance of the Shares purchasable under the within Option certificate be registered in the name of the undersigned Holder as below indicated and delivered to the address stated below. The undersigned
has also submitted to the Company a certificate in which it has made the representations and covenants required in Section 12 of the Option Agreement. 
  

	Dated:
	

	
	Name of Holder:
	
	

	(Please Print)
	Address:
	

	
	 
	

	
	 Signature:

	


  
 Note: The above signature must
correspond with the name as written upon the face of this Option certificate in every particular, without alteration or enlargement or any change whatever. 
  

 3