8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 7, 2003

SYNTROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-21911	73-1565725
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1350 South Boulder, Suite 1100 Tulsa, Oklahoma		74119-3295
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (918) 592-7900

Item 5. Other Events.

On February 7, 2003, Syntroleum Corporation (the “Company”) consummated the transactions contemplated by the Securities Purchase Agreement (the “Purchase Agreement”) dated February 5, 2003 between the Company and Michael Zilkha and Selim K. Zilkha Trust (the “Purchasers”). Such transactions included (i) the private issuance and sale of 1,000,000 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), and warrants (the “Warrants”) to purchase 1,000,000 shares of Common Stock for an aggregate purchase price of $3,000,000, (ii) the execution and delivery by the Company and the Purchasers of a Warrant Agreement relating to the Warrants (the “Warrant Agreement”) and (iii) the execution and delivery by the Company and the Purchasers of a Registration Rights Agreement (the “Registration Rights Agreement”). The Purchase Agreement includes certain representations, warranties and covenants by the parties. These representations, warranties and covenants survive the closing for a period of one year.

The descriptions of the Purchase Agreement, the Warrant Agreement and the Registration Rights Agreement set forth herein do not purport to be complete and are qualified in their entirety by the provisions of each of the Purchase Agreement, the Warrant Agreement and the Registration Rights Agreement, a copy of each of which have been filed as Exhibit 99.1, Exhibit 4.1 and Exhibit 10.1 hereto, respectively, and which are incorporated by reference herein.

The Registration Rights Agreement

Pursuant to the Registration Rights Agreement, the Company granted the holders (“Holders”) of shares of Common Stock purchased pursuant to the Purchase Agreement (the “Shares”) or received upon exercise of the Warrants (the “Warrant Shares”) registration rights with respect to the Shares and the Warrant Shares. The Holders have rights to require the Company to include their Shares and Warrant Shares in connection with registrations by the Company of shares of Common Stock under the Securities Act of 1933, as amended (the “Securities Act”). In addition, the Company agreed to file a registration statement under the Securities Act with respect to the Shares and the Warrant Shares no later than 60 days following January 1, 2004. The registration rights terminate as to any Holder at such time as such Holder may sell under Rule 144 in a three-month period all Shares and Warrant Shares then held by such Holder. Registration expenses, other than underwriting expenses, selling commissions and similar fees, fees and expenses of legal counsel for any Holder and transfer taxes, are to be paid by the Company.

The Warrant Agreement

The Warrants are exercisable during the period beginning February 7, 2003 and ending December 31, 2004 for the purchase of an aggregate of 1,000,000 shares of Common Stock at an exercise price of $6.00 per share. The number of Warrant Shares and exercise price are subject to adjustment in certain circumstances, including (i) if the Company makes a distribution of shares of Common Stock, subdivides or combines its outstanding shares of Common Stock or distributes other assets or securities to holders of Common Stock (excluding cash dividends paid out or surplus) and (ii) if the Company reclassifies its Common Stock or

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engages in a consolidation or merger with, or sells all or substantially all of its assets to, another corporation. The Company has the right to call the Warrant for redemption at a price of $0.01 per Warrant if the average last sale price of Common Stock for the preceding 20 trading days exceeds $12.00. If the Company exercises this right, it expects that the holders would exercise the Warrants.

Item 7. Financial Statements and Exhibits.

(c) Exhibits.

4.1	Warrant Agreement, dated as of February 7, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.
4.2	Form of Warrant Certificates (included in Exhibit 4.1 above).
10.1	Registration Rights Agreement, dated as of February 7, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.
99.1	Securities Purchase Agreement, dated as of February 5, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SYNTROLEUM CORPORATION
Date: February 17 , 2003	By:	/s/ KENNETH R. ROBERTS
		Kenneth R. Roberts Vice President, Finance, Planning and Administration and Chief Financial Officer

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EXHIBIT INDEX

Number	Exhibit
4.1	Warrant Agreement, dated as of February 7, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.
4.2	Form of Warrant Certificates (included in Exhibit 4.1 above).
10.1	Registration Rights Agreement, dated as of February 7, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.
99.1	Securities Purchase Agreement, dated as of February 5, 2003, by and among Syntroleum Corporation, Michael Zilkha and Selim K. Zilkha Trust.

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EX-4.1

EXHIBIT 4.1

WARRANT AGREEMENT

THIS WARRANT AGREEMENT (the “Agreement”), dated as of February 7, 2003, is made and entered into by and among Syntroleum Corporation, a Delaware corporation (the “Company”), and those persons set forth on Schedule 1 hereto (collectively the “Warrantholders” and each individually a “Warrantholder”). This Agreement is being executed in connection with the Securities Purchase Agreement of even date herewith by and among the Company and the Warrantholders (the “Purchase Agreement”).

The Company agrees to issue and sell, and the Warrantholders agree to severally purchase, for an agreed value of $0.10 per warrant, the warrants, as hereinafter described (the “Warrants”), to purchase up to an aggregate of the number of shares set forth on Schedule 1 (the “Shares”), of the Company’s Common Stock, par value $.01 per share (the “Common Stock”). The purchase and sale of the Warrants shall occur contemporaneous with, and is subject to the closing of the Purchase Agreement.

In consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder, the Company and the Warrantholders, for value received, hereby agree as follows:

Section 1. Transferability and Form of Warrants.

1.1 Registration. The Warrants shall be numbered and shall be registered on the books of the Company when issued.

1.2 Limitations on Transfer. The Warrants and the Shares shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Agreement. Each Warrantholder will cause any proposed purchaser, assignee, transferee or pledgee of the Warrants 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 Warrants may be divided or combined, upon request to the Company by a Warrantholder, into a certificate or certificates representing the right to purchase the same aggregate number of Shares. Unless the context indicates otherwise, the term “Warrantholder” shall include any transferee or transferees of the Shares that are required to be bound by the terms hereof, and the term “Warrants” shall include any and all warrants outstanding pursuant to this Agreement, including those evidenced by a certificate or certificates issued upon division, exchange or substitution pursuant to this Agreement. Each Warrantholder by his receipt of a Warrant certificate, agrees to be bound by and comply with the terms of this Agreement. Each Warrantholder represents and agrees that the Warrant (and Shares if the Warrant is exercised) is purchased only for investment, for such Warrantholder’s own account, and without any present intention to sell, or with a view to distribution of, the Warrant or Shares.

1.3 Form of Warrants. The text of the Warrants 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 Warrants is subject to adjustment upon the occurrence of

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certain events, all as hereinafter provided. The Warrant 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. A Warrant 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 Warrant or did not hold such office on the date of this Agreement.

The Warrants 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 Warrants. Each Warrant certificate shall bear the following legend:

(a) “THE WARRANTS 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 WARRANT AGREEMENT AND THE SECURITIES PURCHASE AGREEMENT COVERING THE PURCHASE OF THESE WARRANTS 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.”

(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. Each Warrantholder consents to the Company making a notation on its records and giving instructions to any registrar or transfer agent of the Warrants and the Common Stock in order to implement the restrictions on transfer established in this Agreement.

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Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be exchanged for another certificate or certificates entitling a Warrantholder to purchase a like aggregate number of Shares as the certificate or certificates surrendered then entitled such Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant certificate shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, the certificate evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute and deliver to the person entitled thereto a new Warrant certificate as so requested.

Section 3. Term of Warrants; Exercise of Warrants; Redemption.

(a) Subject to the terms of this Agreement, each Warrantholder 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 date of this Agreement, and ending at 5:00 p.m., Tulsa, Oklahoma time, on December 31, 2004 (the “Termination Date”), to exercise a Warrant and to purchase from the Company up to the number of fully paid and nonassessable Shares to which such Warrantholder 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 Warrants to be exercised, together with the purchase form on the reverse thereof duly completed and signed, and upon payment to the Company of the Warrant 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 Warrants are then exercised, but in no event for less than 100 Shares for any Warrantholder (unless less than an aggregate of 100 Shares are then purchasable under all outstanding Warrants held by a Warrantholder).

(b) Payment by each Warrantholder of the aggregate Warrant 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 Warrants and payment of such Warrant Price as aforesaid, the Company shall issue and cause to be delivered to or upon the written order of the exercising Warrantholder and in the name of the exercising Warrantholder a certificate or certificates for the number of full Shares so purchased upon the exercise of his Warrant, 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 exercising Warrantholder shall be deemed to have become a holder of record of such securities as of the date of surrender of the Warrants and payment of the Warrant 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 Warrants shall be exercisable, at the election of a Warrantholder, either in full or from time to time in part and, in the event that a certificate evidencing the Warrants 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 Warrants held by such Warrantholder will be issued by the Company.

(d) The Warrant may be redeemed at the election of the Company, as a whole but not in part, upon the terms and conditions set forth in this Section 3(d). The Company may call the Warrant for redemption at any time after such date (the “Redemption Event”) at which the Trailing Price (as defined herein) of the Common Stock exceeds $12.00. The price to be paid

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on redemption shall be $.01 per Share for which the Warrant is exercisable, appropriately adjusted in the same manner as adjustments to the Warrant Price (the “Redemption Price”). The Redemption Price shall be paid by the Company by check; however, if the Company is restricted by law or agreement from making such payment, the Company may instead make such payment in shares of Common Stock, with such Common Stock valued at the Trailing Price of the Common Stock on the fifth business day prior to the date on which such payment is to be made.

(e) The Company shall give each Warrantholder notice of redemption (in accordance with Section 12 hereof) mailed not less than 30 calendar days prior to the date set by the Company for redemption (the “Redemption Date”). Such notice shall state: (i) the Redemption Date (ii) the Redemption Price (iii) the date on which a Redemption Event occurred and (iv) the Trailing Price of the Common Stock on such date.

(f) The Warrant shall continue to be exercisable in accordance with the terms and conditions hereof until the Redemption Date. Following the Redemption Date, the Warrant shall no longer be exercisable and instead shall represent only the right to receive the Redemption Price. If the Warrant has not been exercised as of the Redemption Date, the Company shall thereupon promptly transmit to each Warrantholder funds in the amount of the Redemption Price.

(g) For purposes of this Agreement, the term the “Trailing Price” shall mean the average Market Value (as defined below) of the Common Stock for the 20 consecutive trading days immediately preceding the date in question. “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 the Nasdaq Stock Market (“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.

Section 4. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of the Warrants 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 Warrants or the Shares.

Section 5. Mutilated or Missing Warrants. In case the certificate or certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of a Warrantholder, 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

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certificate or certificates lost, stolen or destroyed, a new Warrant 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 Warrant and a bond of indemnity, if requested, also satisfactory in form and amount at the applicant’s cost. Applicants for such substitute Warrants 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 Warrants remain outstanding, out of its authorized Common Stock, such number of shares of Common Stock as shall be subject to purchase under the Warrants. On or before taking any action that would cause an adjustment pursuant to the terms of the Warrants 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. Warrant Price. The price per Share at which Shares shall be purchasable upon the exercise of the Warrants (the “Warrant Price”) shall initially be $6.00, 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 Warrants and the Warrant 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 Warrants and the Warrant Price shall be subject to adjustment as follows:

(a) In case the Company after the date hereof 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 Warrants immediately prior to such action shall be adjusted so that a Warrantholder upon exercise of the Warrants shall be entitled to receive the number of shares of Common Stock which it would have owned or would have been entitled to receive immediately following such action had the Warrants 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 a Warrant is adjusted as provided in this paragraph (a), the Warrant Price shall be adjusted by multiplying such Warrant 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 Warrants 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

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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 Warrant Price shall be adjusted by multiplying the Warrant 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 or any subsidiary of 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 Warrant Price shall be adjusted so that the same shall equal the price determined by multiplying the Warrant Price in effect 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 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

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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 (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.

(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 Warrant 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 Warrant exercised after such record date and on and before such adjustment shall have become effective (i) defer paying any cash payment pursuant to Section 9 hereof or issuing to each Warrantholder 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 Warrant Price prior to such adjustment, and (ii) not later than five business days after such adjustment shall have become effective, pay to each Warrantholder the appropriate cash payment pursuant to Section 9 hereof and issue to each Warrantholder 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 Warrants shall not have been exercised, the Warrant Price shall be adjusted to such amount as would have been received by a Warrantholder had the adjustment in such Warrant 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 Warrants or in the Warrant 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 Warrants or in the Warrant 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 Warrants or the Warrant Price is adjusted as herein provided, the Company shall cause to be promptly mailed to the Warrantholder by first class mail, postage prepaid, notice of such adjustment setting forth the number of Shares purchasable upon the exercise of the Warrants and

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the Warrant 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 Warrants or upon the exercise of the Warrants, 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 Warrants or in the Warrant Price, Warrant certificates theretofore or thereafter issued may continue to express the same number of securities and Warrant Price as are stated in the Warrant 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 Warrant certificate that it may deem appropriate and that does not affect the substance thereof; and any Warrant certificate thereafter issued, whether upon registration of, or in exchange or substitution for, an outstanding Warrant certificate, may be in the form so changed.

8.2 Par Value of Shares of Common Stock. Before taking any action which would cause an adjustment effectively reducing the portion of the Warrant Price allocable to each Share below the then par value per share of the Common Stock issuable upon exercise of the Warrants, 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 Warrants.

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 Warrant Certificates. Irrespective of any adjustments in the number of securities issuable upon exercise of Warrants or in the Warrant Price, Warrant certificates theretofore or thereafter issued may continue to express the same number of securities and Warrant Price as are stated in the Warrant 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 Warrant certificate that it may deem appropriate and that does not affect the substance thereof; and any Warrant certificate thereafter issued, whether upon registration of, or in exchange or substitution for, an outstanding Warrant 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 Warrants. If any fraction of a Share would, except for the provisions of this Section 9, be issuable on the exercise of the Warrants (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.

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Section 10. No Right as Stockholder; Notices to Warrantholder. Nothing contained in this Agreement or in the Warrants shall be construed as conferring upon any Warrantholder or its 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 any Warrantholder, all of which rights and duties owed to stockholders are disclaimed and waived by each Warrantholder. If, however, at any time prior to the expiration of the Warrants 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;

then the Company shall give notice in writing of such event to each Warrantholder, 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 Warrants (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 each Warrantholder an agreement providing that each Warrantholder shall have the right to exercise the Warrants 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 Warrants 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,

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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 each Warrantholder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. The provisions 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 each Warrantholder by first class mail, postage prepaid.

Section 12. Securities Laws; Restrictions on Transfer of Shares; Registration Rights.

(a) Each Warrantholder agrees that the Warrant and the related Shares (each of the Warrant and the Shares being referred to herein as a “Security” and together, “Securities”) are being acquired for investment and that such Warrantholder 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 this Warrant, a Warrantholder 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

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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, each Warrantholder specifically represents to the Company both at the time of initial purchase of the Warrant and at those future times as specified herein:

(1) The Warrantholder 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 its own interests. The Warrantholder is an “Accredited Investor” as that term is defined in Rule 501(a) promulgated under the Act. The Warrantholder is aware of the Company’s 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 Warrantholder is acquiring the Securities for its 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 Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. The Warrantholder 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 Warrantholders (the “Registration Rights Agreement”), the effectiveness of which registration statement may be required for the resale of the Shares. The Warrantholder has not offered or sold any portion of the Securities to be acquired by such Warrantholder 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 Warrantholder 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 Warrantholder understands that investment in the Securities is subject to a high degree of risk. The Warrantholder can bear the economic risk of its investment, including the full loss of its investment, and by reason of its business or financial experience or the business or financial experience of its professional advisors has the capacity to evaluate the merits and risks of its investment and protect its own interest in connection with the purchase of the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(2) The Warrantholder 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 Warrantholder’s investment intent and the accuracy of the Warrantholder’s representations as expressed herein and the Warrantholder will furnish the Company with such additional information as is reasonably requested by the Company in connection with such exemption.

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(3) The Warrantholder 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 Warrantholder 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 Warrantholder 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 Warrantholder further understands that it may not transfer the Warrants and that at the time it wishes to sell the Securities, it is possible that there will be no public market upon 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 Warrantholder may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period had been satisfied.

(6) The Warrantholder 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 Warrantholder’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 Warrantholder 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 Warrantholder has received satisfactory responses to the Warrantholder’s inquiries. The Warrantholder has relied solely on its own independent investigation before deciding to enter into the purchase of the Warrants contemplated hereby. Unless the Warrantholder has otherwise notified the Company in writing, the Warrantholder 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 Warrantholder has otherwise notified the Company in writing, the Warrantholder is not an employee, officer or director of the Company nor prior to the consummation of the actions contemplated hereby, is the Warrantholder the beneficial owner of 5% or more of the Common Stock of the Company.

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(c) With respect to any offer, sale or other disposition of any Securities that is not registered under the Act, each Warrantholder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Warrantholder’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 such Warrantholder that such Warrantholder 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 Warrantholder is not satisfactory to the Company, the Company shall so notify such Warrantholder 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 the aforesaid opinion of counsel for the Warrantholder, 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 Warrant has 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 a Warrantholder 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 Warrantholders or holders of Shares addressed to them it at the address set forth in Schedule 1.

(b) If to the Company addressed to it at 1350 South Boulder, Suite 1100, Tulsa, Oklahoma 74119-3295, Attention: Chief Financial Officer.

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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 Warrantholders 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 Warrantholders and the holders of Shares any legal or equitable right, remedy or claim under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Company, the Warrantholders 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 then current Warrantholders having the right to acquire by virtue of holding the Warrants at least 50% of the Shares which are then issuable upon exercise of the then outstanding Warrants.

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/ Kenneth L. Agee
Name:	Kenneth L. Agee
Title:	Chief Executive Officer

[WARRANTHOLDER SIGNATURE PAGES FOLLOW]

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WARRANTHOLDERS:
MICHAEL ZILKHA
/s/ Michael Zilkha
Michael Zilkha
SELIM K. ZILKHA TRUST
By:	/s/ Selim K. Zilkha
	Name: Selim K. Zilkha         Title: Trustee

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Exhibit A

“THE WARRANTS 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 WARRANT AGREEMENT AND THE SECURITIES PURCHASE AGREEMENT COVERING THE PURCHASE OF THESE WARRANTS 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.”

Warrant Certificate No.     

WARRANTS 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 “Warrantholder”), is entitled to purchase from SYNTROLEUM CORPORATION (the “Company”), at any time during the period commencing the date hereof and ending at 5:00 p.m., Tulsa, Oklahoma time, on the December 31, 2004 at a purchase price per share of $6.00, (the “Warrant 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 Warrant evidenced hereby and the Warrant Price shall be subject to adjustment from time to time as set forth in the Warrant Agreement. The Warrant may be redeemed by the Company as set forth in the Warrant Agreement.

The Warrants evidenced hereby may be exercised in whole or in part by presentation of this Warrant certificate with the Purchase Form attached hereto duly executed and simultaneous payment of the Warrant Price at the principal office of the Company. Payment of such price shall be made in cash or immediately available funds.

The Warrants evidenced hereby are issued under and in accordance with a Warrant Agreement, dated as of                      , 2003 (the “Warrant Agreement”), between the

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Company and certain Warrantholders and are subject to the terms and provisions contained in the Warrant Agreement, including certain restrictions on the exercise thereof, to all of which the Warrantholder by acceptance hereof consents.

Upon any partial exercise of the Warrants evidenced hereby, there shall be signed and issued to the Warrantholder a new Warrant certificate in respect of the Shares as to which the Warrants evidenced hereby shall not have been exercised. These Warrants may be exchanged at the office of the Company by surrender of this Warrant certificate properly endorsed for one or more new Warrants of the same aggregate number of Shares as here evidenced by the Warrant or Warrants 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 Warrants. These Warrants are transferable in the manner and subject to the restrictions set forth or referred to in the Warrant Agreement.

This Warrant Certificate does not entitle any Warrantholder 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 Warrant 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 Warrant certificate for the balance of the Shares purchasable under the within Warrant certificate be registered in the name of the undersigned Warrantholder 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 Warrant Agreement.

Dated:                

Name of Warrantholder:

(Please Print)

Address:

Signature:

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

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SCHEDULE 1

SCHEDULE OF WARRANTHOLDERS

Name	Number of Shares	Principal Address and Telephone Number and Fax Number, if any
Michael Zilkha	666,667	1001 McKinney, Suite 1900 Houston, TX 77002 (713) 265-0265 (713) 265-0284
Selim K. Zilkha Trust	333,333	750 Lausanne Road Los Angeles, CA 90077 (713) 265-0265 (713) 265-0284

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EX-10.1

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT is entered into effective as of February 7, 2003 by and among Syntroleum Corporation, a Delaware corporation (the “Company”), and the individuals listed as “Investors” on the signature pages hereto (each an “Investor” and, collectively, the “Investors”).

RECITALS

WHEREAS, the Company and the Investors are parties to that certain Securities Purchase Agreement, dated as of February 7, 2003 (the “Purchase Agreement”), providing for the sales by the Company and the purchases by the Investors of shares of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), and warrants (the “Warrants”) to purchase shares of Common Stock (the “Warrant Shares”); and

WHEREAS, the sales of the Common Stock and the Warrants to the Investors are conditioned upon granting the rights set forth herein to the respective Investors;

NOW THEREFORE, in consideration of the foregoing, the parties agree as follows:

SECTION 1

DEFINITIONS

1 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

“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).

“Closing Date” means February 7, 2003.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means each of the Investors, and any Person holding Registrable Securities to whom the rights under Section 2.1 have been transferred in accordance with Section 2.1(i) hereof.

“Indemnitee” shall have the meaning ascribed to such term in Section 2.1(f).

“Indemnified Party” shall have the meaning ascribed to such term in Section 2.1(f).

“Indemnifying Party” shall have the meaning ascribed to such term in Section 2.1(f).

“Person” shall mean any person, individual, corporation, partnership, trust or other nongovernmental entity or any governmental agency, court, authority or other body (whether foreign, federal, state, local or otherwise).

The terms “register,” “registered” and “registration” refer to the registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

“Registrable Securities” shall mean (A) the Shares, (B) the Warrant Shares, and (C) any shares of Common Stock issued as (or issuable upon the conversion of any warrant, right or other security which is issued as) a dividend or other distribution with respect to or in replacement of the Shares or the Warrant Shares; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they are held by a Holder or a permitted transferee pursuant to subsection 2.1(i) and (1) have not been disposed of pursuant to a registration statement declared effective by the SEC, (2) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, or (3) such Holder may sell under Rule 144 under the Securities Act in a three-month period all Registrable Securities then held by such Holder.

“Registration Expenses” shall mean all expenses incurred by the Company in complying with Section 2.1(a) or (b) hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and expenses of counsel for the Company, blue sky fees and expenses (for a reasonable number of states) and the expense of any special audits incident to or required by any such registration (but excluding the fees of legal counsel for any Holder).

“Registration Statement” shall mean a registration statement under the Securities Act filed by the Company with the SEC.

“Registration Period” shall have the meaning ascribed to such term in Section 2.1(d).

“SEC” means the Securities and Exchange Commission of the United States or any other U.S. federal agency at the time administering the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“Selling Expenses” shall mean all underwriting discounts and selling commissions and similar fees applicable to the sale of Registrable Securities and all fees and expenses of legal counsel for any Holder and all transfer taxes.

“Shares” means the shares of Common Stock purchased by the Investors pursuant to the Purchase Agreement.

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SECTION 2

REGISTRATION RIGHTS

1 Registration Rights.

(a) Piggyback Registration. (i) If the Company at any time proposes to register any of its Common Stock or any other of its securities (collectively with the Common Stock, “Other Securities”) under the Securities Act, whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it will at such time give prompt written notice to each Holder of its intention to do so at least 10 business days prior to the anticipated filing date of the Registration Statement relating to such registration. Such notice shall offer each such Holder the opportunity to include in such Registration Statement such number of Registrable Securities as each such Holder may request. Upon the written request of any such Holder made within 5 business days after the receipt of the Company’s notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), the Company shall effect, in the manner set forth in Section 2(d), in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so requested to be registered, provided that: if at any time after giving written notice of its intention to register any securities and prior to the effective date of such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Securities requested to be included in such registration for the same period as the delay in registering such other securities, but, in either such case, without prejudice to the rights of the Holders under Section 2(b);

(ii) If the registration referred to in the first sentence of this Section 2(a) is to be a registration in connection with an underwritten offering on behalf of either the Company or holders of securities (other than Registrable Securities) of the Company (“Other Holders”), and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of Registrable Securities requested to be included therein because such Registrable Securities are not of the same type, class or series as the securities to be offered and sold in such offering on behalf of the Company and/or the Other Holders, the Company may exclude all such Registrable Securities from such offering;

(iii) If the registration referred to in the first sentence of this Section 2(a) is to be a registration in connection with an underwritten primary offering on behalf of the Company, and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included therein because the number or

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principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Company, exceeds the aggregate number or principal amount of securities which, in such firm’s opinion, can be sold in such offering without materially and adversely affecting the offering, the Company shall include in such registration: (1) first, all securities the Company proposes to sell for its own account (“Company Securities”) and (2) second, the number or principal amount of Registrable Securities and securities, if any, requested to be included therein by Other Holders in excess of the number or principal amount of Company Securities which, in the opinion of such underwriter, can be so sold without materially and adversely affecting such offering (allocated pro rata among the Holders and the Other Holders on the basis of the number of securities (including Registrable Securities) requested to be included therein by each Holder and each such Other Holder);

(iv) If the registration referred to in the first sentence of this Section 2(a) is to be a registration in connection with an underwritten secondary offering on behalf of Other Holders made pursuant to demand registration rights granted by the Company to such Other Holders (the “Initiating Holders”), and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included therein because the number or principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Initiating Holders, exceeds the aggregate number or principal amount of securities which, in such firm’s opinion, can be sold in such offering without materially and adversely affecting the offering, the Company shall include in such registration; (1) first, to the extent the registration rights granted to an Initiating Holder permit it to exclude other securities from its registration on substantially the same basis as that set forth in Section 2(a)(iii) hereof, all securities any such Initiating Holder proposes to sell for its own account, and (2) second, the number or principal amount of additional securities (including Registrable Securities) that such managing underwriter advises can be sold without materially and adversely affecting such offering, allocated pro rata among any Other Holders to which clause (1) does not apply and the Holders on the basis of the number of securities (including Registrable Securities) requested to be included therein by each Holder and each such Other Holder;

(v) The Company shall not be required to effect any registration of Registrable Securities under this Section 2(a) incidental to the registration of any of its securities in connection with stock option or other executive or employee benefit or compensation plans of the Company;

(vi) No registration of Registrable Securities effected under this Section 2(a) shall relieve the Company of its obligation to effect any registration of Registrable Securities required of the Company pursuant to Section 2(b) hereof; and

(vii) The provisions of this Section 2(a) shall not require the Company to include Registrable Securities in any registration statement of the Company that has been filed prior to the date of this Agreement.

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(b) Demand Registration. No later than 60 days following January 1, 2004, the Company will file a Registration Statement on Form S-3 with the SEC with respect to the Registrable Securities and will use its commercially reasonable best efforts to cause such Registration Statement to be declared effective by the SEC.

(c) Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to subsection 2.1(a) or (b) shall be borne by the Company. All Selling Expenses relating to the sale of securities registered by or on behalf of Holders shall be borne by such Holders pro rata on the basis of the number of securities so registered except to the extent such Selling Expense is specifically attributable to one Holder, in which case it shall be borne by such Holder.

(d) Registration Procedures. In the case of the registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will, upon reasonable request, inform each Holder as to the status of such registration, qualification and compliance. At its expense, the Company will during such time as the Holder holds Registrable Securities:

(i) use its commercially reasonable best efforts to keep such registration, and any qualification or compliance under state securities laws which the Company determines to obtain, effective until at least the first anniversary of the Closing Date or until the Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs;

(ii) furnish such number of prospectuses and other documents incident thereto as the Holders from time to time may reasonably request;

(iii) use its commercially reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Holder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition of the Registrable Securities owned by such Holder in such jurisdictions; provided, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.1(d), or (B) subject itself to income taxation in any such jurisdiction;

(iv) notify each Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such Holder, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

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(v) cause all such Registrable Securities to be listed or quoted on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed or quoted;

(vi) appoint a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement; and

(vii) The Company will use its commercially reasonable best efforts to effect the registration, qualifications or compliances (including, without limitation, the execution of any required undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with applicable securities laws, requirements or regulations) as may be so reasonably requested and as would permit or facilitate the sale and distribution of all Registrable Securities; provided that the Company shall not be obligated to take any action to effect any such state registration, qualification or compliance pursuant to this Section 2 in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service or is required to qualify in such jurisdiction, as the case may be, and except as may be required by the Securities Act.

The period of time during which the Company is required hereunder to keep the Registration Statement effective is referred to herein as “the Registration Period.”

(e) Delay of Registration. The Holders shall have no right to take any action to restrain, enjoin or otherwise delay any registration pursuant to subsection 2.1(a) or (b) hereof as a result of any controversy that may arise with respect to the interpretation or implementation of this Agreement.

(f) Indemnification.

(i) To the extent permitted by law, the Company will indemnify each Holder and each Person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which any registration, qualification or compliance has been effected pursuant to this Agreement, (each an “Indemnitee”), against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof, incident to any such registration, qualification or compliance, or based on any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Indemnitee for reasonable legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided that the Company will not be liable in the case of any untrue statement or omission to the extent that such untrue statement or omission is made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by or on behalf of such Indemnitee and stated to be specifically for use in preparation of such registration

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statement, prospectus, offering circular or other document; and provided that the Company will not be liable in any such case where the expense, claim, loss, damage or liability arises out of or is related to the failure of the Holder to comply with the covenants and agreements contained in this Agreement respecting sales of Registrable Securities; and, provided, further, that the indemnity with respect to any preliminary prospectus shall not apply to the extent that any such claim, loss, damage or liability results from the fact that a current copy of the prospectus was not sent or given to the Person asserting any such claims, losses, damages or liabilities at or prior to the written confirmation of the sale of the Registrable Securities confirmed to such Person if such current copy of the prospectus would have cured the defect giving rise to such claim, loss, damage or liability.

(ii) To the extent permitted by law, each Holder will severally, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, employees, legal counsel and accountants and each Person who controls the Company within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof, incident to any such registration, qualification or compliance, or based on any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any failure by a Holder to comply with the covenants or agreements contained in this Agreement respecting the Registrable Securities and will reimburse the Company, such directors, officers, employees, legal counsel and accountants and such controlling Person for reasonable legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided that such Holder will only be liable in the case of any untrue statement or omission to the extent that such untrue statement or omission is made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by or on behalf of the Holder and stated to be specifically for use in preparation of such registration statement, prospectus, offering circular or other document. Notwithstanding the foregoing, in no event shall a Holder be liable for any such claims, losses, damages or liabilities in excess of the proceeds received by such Holder in the offering, except in the event of fraud by such Holder.

(iii) Each party entitled to indemnification under this subsection 2.1(f) (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, unless such failure is prejudicial to the Indemnifying Party in defending such claim or litigation. An Indemnifying Party shall not be

7

liable for any settlement of an action or claim effected without its written consent (which consent will not be unreasonably withheld).

(iv) If the indemnification provided for in this subsection 2.1(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(g) Covenants of Holders.

(i) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event requiring the preparation of a supplement or amendment to a prospectus relating to Registrable Securities so that, as thereafter delivered to the Holders, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, each Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement contemplated by subsection 2.1(a) or (b) until its receipt of copies of the supplemented or amended prospectus from the Company and, if so directed by the Company, each Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

(ii) Each Holder severally agrees for a period of 90 days from the effective date of any registration (other than a registration effected solely to implement an employee benefit plan) of securities of the Company for any underwritten offering in which securities of the Company are sold not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities or any other stock of the Company held by such Holder, other than shares of Registrable Securities included in such registration, without the prior written consent of the Company or the underwriters managing such underwritten offering, as the case may be; provided that this obligation is subject to the condition that all executive officers and directors of the Company shall enter into similar agreements.

(iii) Each Holder agrees to suspend, upon request of the Company, any disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by subsection 2.1(a) of (b) during any period, not to exceed in the aggregate 90 days in any 12-month period, when the Company determines in good faith that offers and sales

8

pursuant thereto should not be made by reason of the presence of material, undisclosed circumstances or developments with respect to which the disclosure that would be required in such a prospectus is premature, would have an adverse effect on the Company or is otherwise inadvisable. Any such request by the Company shall be held confidential by the Holder.

(iv) Each Holder agrees to notify the Company, at any time when a prospectus relating to the registration statement contemplated by subsection 2.1(a) or (b) is required to be delivered by it under the Securities Act, of the occurrence of any event relating to the Holder which requires the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading relating to the Holder, and each Holder shall promptly make available to the Company the information to enable the Company to prepare any such supplement or amendment. Each Holder also agrees that, upon delivery of any notice by it to the Company of the happening of any event of the kind described in the preceding sentence of this subsection, the Holder will forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until its receipt of the copies of the supplemental or amended prospectus contemplated by this subsection, which the Company shall promptly make available to each Holder and, if so directed by the Company, each Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

(v) Each Holder shall promptly furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may request in writing or as shall be required in connection with any registration, qualification or compliance referred to in this Section 2.1. The Holder will promptly keep the Company informed as to all sales of Registerable Securities made under the Registration Statement and assist the Company in updating such information in the Registration Statement and any prospectus supplement relating thereto.

(vi) Each Holder hereby covenants with the Company (1) not to make any sale of the Shares without effectively causing the prospectus delivery requirements under the Securities Act to be satisfied, and (2) if such Shares are to be sold by any method or in any transaction other than on a national securities exchange, in the over-the-counter market, on the Nasdaq, in privately negotiated transactions, or in a combination of such methods, to notify the Company at least five business days prior to the date on which the Purchaser first offers to sell any such Shares.

(vii) Each Holder acknowledges and agrees that the Registrable Securities sold pursuant to the registration statement described in this Section are not transferable on the books of the Company unless the stock certificate submitted to the transfer agent evidencing such Shares is accompanied by a certificate reasonably satisfactory to the Company to the effect that (A) the Registrable Securities have been sold in accordance with such registration statement and (B) the requirement of delivering a current prospectus has been satisfied.

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(viii) Each Holder agrees that it will not effect any disposition of the Registrable Securities that would constitute a sale within the meaning of the Securities Act except as contemplated in the registration statement referred to in this Section 2.1. Each Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to such registration statement that constitutes a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law.

(h) Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

(i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times; and

(ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act.

(i) Transfer of Registration Rights. The rights to cause the Company to register Registrable Securities granted to the Holders by the Company under subsection 2.1(a) and (b) may be assigned in full by a Holder to an Affiliate of such Holder; provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws; (ii) such Holder gives prior written notice to the Company; and (iii) such transferee agrees to comply with the terms and provisions of this Agreement and the Purchase Agreement and such transfer is otherwise in compliance with this Agreement and the Purchase Agreement. Except as specifically permitted by this paragraph (i), the rights of a Holder with respect to Registrable Securities as set out herein shall not be transferable to any other Person, and any attempted transfer shall cause all rights of such Holder therein to be forfeited.

SECTION 3

MISCELLANEOUS

1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any principles of conflicts of law thereof.

2 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, invalid, unenforceable or void, this Agreement shall continue in full force and effect without said provision. In such event, the parties shall negotiate, in good faith, a legal, valid and binding substitute provision which most nearly effects the intent of the parties in entering into this Agreement.

3 Notices. All notices and other communications required or permitted hereunder shall be in writing (or in the form of a telex or telecopy (confirmed in writing) to be given only during the recipient’s normal business hours unless arrangements have otherwise been made to receive such notice by telex or telecopy outside of normal business hours) and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand, messenger, or telex

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or telecopy (as provided above) addressed (a) if to an Investor, at such address as such Investor shall have furnished to the Company in writing or (b) if to the Company, one copy should be sent to its principal executive offices and addressed to the attention of the President, or at such other address as the Company shall have furnished to the Investors.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if by telex or telecopy pursuant to the above, when received.

4 Facsimile Signatures. Any signature page delivered by a fax machine or telecopy machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party which requests it.

5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one instrument.

6 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

7 Termination. Except as otherwise provided herein, this Agreement shall terminate on the tenth anniversary of the date hereof.

8 Waivers and Amendments. With the written consent of the Company and the Holders holding at least a majority of the Registrable Securities, any provision of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely) or amended. Upon the effectuation of each such waiver or amendment, the Company shall promptly give written notice thereof to the Holders, if any, who have not previously received notice thereof or consented thereto in writing.

9 Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

10 Entire Agreement; Amendment. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject hereof.

11 Construction. Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender or the neuter.

12 Interpretation. The parties hereto acknowledge and agree that: (i) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement, and (ii) the terms and provisions of this

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Agreement shall be construed fairly as to all parties hereto and not in favor of or against any party, regardless of which party was generally responsible for the preparation of this Agreement.

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written.

SYNTROLEUM CORPORATION
By:	/s/ Kenneth L. Agee
	Name: Kenneth L. Agee
	Title:    Chief Executive Officer

INVESTORS:

MICHAEL ZILKHA

/s/ Michael Zilkha

Michael Zilkha

SELIM K. ZILKHA TRUST
By:	/s/ Selim K. Zilkha
	Name: Selim K. Zilkha Title:   Trustee

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EX-99.1

EXHIBIT 99.1

SYNTROLEUM CORPORATION

SECURITIES PURCHASE AGREEMENT

February 5, 2003

TABLE OF CONTENTS

		Page
SYNTROLEUM CORPORATION		1
SECURITIES PURCHASE AGREEMENT February 5, 2003		1
TABLE OF CONTENTS		i
SECURITIES PURCHASE AGREEMENT		1
SECTION 1. AUTHORIZATION AND SALE OF SECURITIES		1
1.1	Authorization	1
1.2	Sale of the Securities	1
SECTION 2. CLOSING DATE; DELIVERY		1
2.1	Closing	1
2.2	Delivery	1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY		2
3.1	Organization and Standing; Subsidiaries; Charter and Bylaws	2
3.2	Capitalization	2
3.3	Authorization	3
3.4	SEC Reports	3
3.5	No Conflicts	4
3.6	Governmental Consent, etc.	4
3.7	Litigation	4
3.8	Brokers or Finders	4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS		5
4.1	Experience; Accredited Investor	5
4.2	Investment	5
4.3	Access to Data	6
4.4	Authorization	6
4.5	Address and Social Security or Taxpayer Identification Number	6
4.6	Litigation, etc.	6
4.7	Governmental Consent, etc.	7
4.8	Brokers or Finders	7
SECTION 5. CONDITIONS TO CLOSING BY THE PURCHASERS		7
5.1	Representations and Warranties Correct	7
5.2	Covenants	7
5.3	No Legal Order Pending	7
5.4	No Law Prohibiting or Restricting Such Sale	7
5.5	Compliance Certificate	7
5.6	Registration Rights Agreement	7

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5.7	Opinion of Company’s Counsel	7
5.8	Proceedings and Documents; Legal Matters	7
5.9	Good Standing Certificate	8
5.10	Secretary’s Certificate	8
SECTION 6. CONDITIONS TO CLOSING BY THE COMPANY		8
6.1	Representations	8
6.2	Covenants	8
6.3	No Legal Order Pending	8
6.4	No Law Prohibiting or Restricting Such Sale	8
SECTION 7. RESTRICTIONS ON TRANSFERABILITY OF SHARES; COMPLIANCE WITH SECURITIES ACT		8
7.1	Restrictions on Transferability	8
7.2	Restrictive Legend	9
SECTION 8. COVENANTS		10
8.1	Fulfillment of Closing Conditions	10
8.2	Confidentiality	10
8.3	Publicity	11
SECTION 9. MISCELLANEOUS		11
9.1	Governing Law	11
9.2	Survival	11
9.3	Successors and Assigns	11
9.4	Entire Agreement; Amendment	11
9.5	Costs and Expenses	11
9.6	Notices, etc.	11
9.7	Delays or Omissions	12
9.8	Severability	12
9.9	Titles and Subtitles	12
9.10	Counterparts	12
9.11	Construction	12
9.12	Definitions	12
9.13	Facsimile Signatures	13

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EXHIBITS

A	—	Schedule of and Signature Page for Purchasers
A-1	—	Purchaser Social Security or Taxpayer Identification Number and Address Schedule
B	—	Investor Questionnaire
C	—	Form of Warrant Agreement
D	—	Form of Registration Rights Agreement
E	—	Form of Opinion of Baker Botts L.L.P.

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SECURITIES PURCHASE AGREEMENT

This Agreement is entered into effective as of February 5, 2003 by and among SYNTROLEUM CORPORATION, a Delaware corporation (the “Company”), and each of the persons or entities listed on the Schedule of and Signature Page for Purchasers attached hereto as Exhibit A (each a “Purchaser” and, collectively, the “Purchasers”).

SECTION 1.

AUTHORIZATION AND SALE OF SECURITIES

1.1 Authorization. The Company has authorized the sale and issuance of up to 1,000,000 shares of its common stock, par value $0.01 per share (the “Common Stock”), and up to 1,000,000 warrants (the “Warrants”) to purchase shares of Common Stock (the “Warrant Shares”), at the Closing (as hereinafter defined).

1.2 Sale of the Securities. Subject to the terms and conditions hereof, the Purchasers will, severally and not jointly, buy from the Company, and the Company will issue and sell to the Purchasers, severally and not jointly, the number of shares of Common Stock (the “Shares”) and Warrants in the respective aggregate amounts set forth opposite each Purchaser’s name on Exhibit A at an aggregate per share and per Warrant purchase price of $3.00, as set forth on Exhibit A. Each Warrant entitles the holder to purchase one share of Common Stock and shall be in the form attached to the warrant agreement (the “Warrant Agreement”) set forth in Exhibit C. The Shares and the Warrants are together referred to herein as “Securities.” The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Securities to each of the Purchasers are separate sales.

SECTION 2.

CLOSING DATE; DELIVERY

2.1 Closing. The closing of the purchase and sale of the Securities hereunder will be held at Syntroleum Corporation, Syntroleum Plaza, 1350 South Boulder, Suite 1100, Tulsa, Oklahoma 74119, on or prior to February 7, 2003 (the “Closing”), or at such other time and place upon which the Company and the Purchasers acquiring in the aggregate more than 50% of the Securities to be sold pursuant to the terms hereof mutually agree upon orally or in writing (the date of the Closing is hereinafter referred to as the “Closing Date”).

2.2 Delivery. At the Closing, the Company will deliver to each Purchaser a certificate or certificates, registered in such Purchaser’s name representing the number of Shares and Warrants in the amount set forth opposite such Purchaser’s name on Exhibit A hereto, against payment of the purchase price therefor, by wire transfer to the Company in accordance with its instructions.

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SECTION 3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth on the disclosure schedule prepared by the Company and delivered to the Purchasers, dated as of the date hereof (the “Disclosure Schedule”), the Company represents and warrants to each Purchaser both as of the date hereof and again as of the Closing as follows:

3.1 Organization and Standing; Subsidiaries; Charter and Bylaws. The Company and each of its Subsidiaries (as hereinafter defined) is a corporation, partnership or limited liability company duly organized, existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its Subsidiaries has all requisite corporate, partnership or limited liability company power and authority to own and operate their respective properties and assets, and to carry on their business as presently conducted. The Company and each of its Subsidiaries currently is qualified to do business in each jurisdiction where the failure to be so qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the assets, liabilities, financial condition, operating results or business of the Company and its Subsidiaries, taken as a whole (a “Material Adverse Effect”). The Company has made available to Purchasers a true, correct and complete copy of the Company’s Certificate of Incorporation, as in full force and effect on the date hereof (the “Charter”), and a true, correct and complete copy of the Company’s Bylaws as in full force and effect on the date hereof (the “Bylaws”).

3.2 Capitalization. The authorized capital stock of the Company consists of 155,000,000 shares, 150,000,000 shares of which are designated as Common Stock, 250,000 shares of which are designated as Series A Junior Participating Preferred Stock, par value $0.01 per share (“Series A Junior Preferred Stock”), and 4,750,000 shares of which is undesignated preferred stock, par value $.01 per share (“Undesignated Stock”). As of January 1, 2003, there were 32,760,357 shares of Common Stock outstanding and there were no shares of Series A Junior Preferred Stock or Undesignated Stock outstanding. The outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid and nonassessable. As of the date hereof, (i) an aggregate of 5,000,000 shares are reserved for issuance under the Company’s 1993 Stock Option and Incentive Plan, and 3,418,280 shares of Common Stock are issuable pursuant to outstanding stock options granted pursuant to the Company’s 1993 Stock Option and Incentive Plan, (ii) an aggregate of 332,827 shares (one percent of the number of shares of Common Stock outstanding on January 1, 2003) are reserved for issuance under the Company’s Stock Option Plan for Outside Directors, and 99,117 shares of Common Stock are issuable pursuant to outstanding stock options granted pursuant to the Company’s Stock Option Plan for Outside Directors, (iii) an aggregate of 1,025,198 shares are reserved for issuance pursuant to stock options granted to Company consultants, and officers outside of the Company’s 1993 Stock Option and Incentive Plan and (iv) an aggregate of 462,850 shares are reserved pursuant to stock options granted pursuant to the SLH Corporation 1997 Stock Incentive Plan Each outstanding share of Common Stock carries a stock purchase right, which rights entitle the holder to buy one-sixth of one one-hundredth of a share of junior preferred stock at a price of $125 per one one-hundredth of a share pursuant to the provisions of the Company’s Amended and Restated Rights Agreement dated as of January 31, 1997 and amended and restated as of June 17, 1999. Except as described in this Agreement or in the Disclosure Schedule, there are no other options, warrants, conversion privileges or other

2

contractual rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company’s capital stock or other securities.

3.3 Authorization. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to sell and issue the Securities and the Warrant Shares hereunder and to carry out and perform its obligations under the terms of this Agreement. All corporate action on the part of the Company, its directors and its stockholders necessary for the authorization, execution, delivery and performance of this Agreement by the Company, the authorization, sale, issuance and delivery of the Securities and the Warrant Shares and the performance of all of the Company’s obligations hereunder has been taken or will have been taken prior to the Closing. This Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforcement is subject to the effect of (i) any applicable bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Upon issuance in accordance with the provisions of this Agreement, the Shares will be validly issued, fully paid and nonassessable. Upon issuance of the Warrant Shares upon exercise of the Warrants in accordance with the Warrant Agreement, the Warrant Shares will be validly issued, fully paid and nonassessable. The issuance and sale of the Shares contemplated hereby and the Warrant Shares upon conversion of the Warrants will not give rise to any preemptive rights or rights of first refusal on behalf of any person.

3.4 SEC Reports. The Company has previously made available to the Purchasers true and complete copies of its (i) Annual Report on Form 10-K (as amended by Amendment No. 1 thereto on Form 10-K/A) for its fiscal year ended December 31, 2001, (ii) Quarterly Reports on Form 10-Q for its quarterly periods ended March 31, 1999, June 30, 1999 (as amended by Amendments No. 1 and No. 2 thereto on Form 10-Q/A) and September 30, 1999, (iii) Current Reports on Form 8-K dated July 16, 2002, August 13, 2002 and October 4, 2002, (iv) definitive proxy statement for its 2002 annual stockholders meeting, and (v) any other reports or registration statements filed by the Company with the Securities and Exchange Commission (the “Commission”) since January 1, 2002, except for preliminary material, which are all the documents that the Company was required to file since that date (collectively, the “SEC Reports”). As of their respective dates, the SEC Reports complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission thereunder applicable to such SEC Reports. As of their respective dates, the SEC Reports, when read together with previously filed SEC Reports, did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, except as updated, corrected or superceded by subsequently filed SEC Reports. Except as may be indicated therein or in the notes thereto, the audited consolidated financial statements and unaudited interim financial statements of the Company included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as of the dates indicated and the results of operations, changes in stockholders’ equity and cash flows of the Company for the period

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indicated. Since September 30, 2002, there has been no change in the assets, liabilities, financial condition, operating results or business of the Company and its Subsidiaries, taken as a whole, from that reflected in the audited consolidated financial statements and unaudited interim financial statements of the Company included in the SEC reports, except changes in the ordinary course of business that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.5 No Conflicts. The execution, delivery and performance of this Agreement, including the issuance of the Securities and the Warrant Shares, have not resulted and will not (i) result in any violation of or conflict with, or constitute a default under, the Company’s Charter or Bylaws, (ii) result in any violation of or conflict with, or constitute a material default under, any mortgage, indebtedness, lease, indenture, contract, agreement, license, instrument, judgment, order, decree, statute, law, ordinance, rule or regulation to which the Company or any of its Subsidiaries is party or otherwise subject to (subject to any notices of sale required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), required notices or filings with the NNM or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods therefor), or (iii) result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of clauses (ii) or (iii) as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.6 Governmental Consent, etc. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the execution, delivery and performance of this Agreement, except any notices of sale required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act, required notices or filings with the NNM or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods therefor.

3.7 Litigation. There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any Subsidiary of the Company that questions the validity of this Agreement or the right of the Company to enter into such agreement, or to consummate the transactions contemplated hereby, or that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or that would reasonably be expected to materially adversely affect the Company’s ability to consummate the transaction contemplated hereby.

3.8 Brokers or Finders. The Company has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charge in connection with this Agreement.

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SECTION 4.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser severally represents and warrants to the Company both as of the date hereof and again as of the Closing, as to such Purchaser only, as follows:

4.1 Experience; Accredited Investor. Such Purchaser is a sophisticated investor and has experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that such Purchaser is capable of evaluating the merits and risks of his investment in the Company and has the capacity to protect such Purchaser’s own interests. Further, such Purchaser recognizes that an investment in the Company is highly speculative and involves significant risks (including those identified in the SEC Reports) including a complete loss of such investment. In addition, such Purchaser is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act and has accurately completed the questionnaire attached hereto as Exhibit B. Such Purchaser (i) has no need for liquidity in the investment in the Shares, (ii) is able to bear the substantial economic risk of an investment in the Shares for an indefinite period and (iii) could afford the complete loss of such Purchaser’s investment in the Shares.

4.2 Investment. Such Purchaser is acquiring the Shares for investment for such Purchaser’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Such Purchaser has not offered or sold any portion of the Shares to be acquired by it and has no present intention of reselling or otherwise disposing of any portion of such Shares 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. Such Purchaser understands that the Shares to be purchased have not been, and will not be, registered under the Securities Act or qualified under applicable blue sky or other state securities laws by reason of specific exemptions from the registration provisions of the Securities Act and the qualification provisions of applicable blue sky and other state securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Purchaser’s representations as expressed herein. Such Purchaser understands that no Federal or state agency has passed upon the Shares or made any finding or determination as to the fairness of the investment or any recommendation or endorsement of the Shares. Such Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Such Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act, which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. In acquiring the Shares, such Purchaser is acting on such Purchaser’s own behalf and is not acting together with any other person or entity (including any other Purchasers) for the purpose of acquiring, holding, voting or disposing of the Shares within the meaning of Section 13(d) of the Exchange Act. If such Purchaser is not a natural person, it was not formed solely for purposes of making this investment. Unless such Purchaser has otherwise notified the Company in writing, such Purchaser is not, and has not been within the 90 days prior to the Closing Date, an officer, director, employee, agent or affiliate of the Company or of any other Purchaser. Unless such Purchaser has otherwise notified the Company in writing, such Purchaser is not a broker or dealer of securities, nor prior to the Closing Date is such Purchaser the beneficial owner of 5% or

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more of the Common Stock. Such Purchaser has not prior to the date hereof directly or indirectly, through related parties, affiliates or otherwise (a) sold “short” or “short against the box” (as those terms are generally understood) any equity security of the Company; or (b) otherwise engaged in any transaction which involves hedging of its position in, or reducing of its economic exposure to, the securities of the Company.

4.3 Access to Data. Such Purchaser has read carefully and understands this agreement and has consulted with such Purchaser’s own attorney, accountant or investment advisor with respect to the investment contemplated hereby and its suitability for such Purchaser. Such Purchaser has received a copy of the SEC Reports. Such Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with its management and has had the opportunity to review the Company’s facilities. Such Purchaser also has had opportunity to ask questions of officers of the Company. Such Purchaser’s taking advantage of any such opportunity however, does not limit or modify the representations and warranties of the Company in Section 3 hereof or the right of any of the Purchasers to rely thereon. Such Purchaser has relied solely upon the information provided by the Company in the SEC Reports and this Agreement in making the decision to invest in the Shares.

4.4 Authorization. Such Purchaser has all requisite power and authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement. If such Purchaser is a corporation or other entity, all corporate action on the part of such Purchaser, such Purchaser’s directors and stockholders (or similar action on the part of such Purchaser if it is an entity other than a corporation) necessary for the authorization, execution, delivery and performance of this Agreement by such Purchaser, the purchase of the Shares and the performance of all of such Purchaser’s obligations hereunder has been taken or will be taken prior to the Closing. This Agreement constitutes the valid and legally binding obligation of such Purchaser, enforceable in accordance with its terms, except as such enforcement is subject to the effect of (i) any applicable bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

4.5 Address and Social Security or Taxpayer Identification Number. The address and social security or taxpayer identification number set forth opposite such Purchaser’s name on the Purchaser Address and Social Security or Taxpayer Identification Number Schedule attached hereto as Exhibit A-1 are true and correct, such address is such Purchaser’s resident or principal place of business, and such Purchaser has no present intention of changing such residence or principal place of business to any other state or jurisdiction.

4.6 Litigation, etc. There is no action, suit, proceeding or investigation pending or, to such Purchaser’s knowledge, currently threatened against such Purchaser that questions the validity of this Agreement or the right of such Purchaser to enter into such agreement, or to consummate the transactions contemplated hereby, or that would reasonably be expected to materially adversely affect such Purchaser’s ability to consummate the transaction contemplated hereby.

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4.7 Governmental Consent, etc. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of such Purchaser is required in connection with the execution, delivery and performance of this Agreement.

4.8 Brokers or Finders. Such Purchaser has not incurred, and will not incur, directly or indirectly, as a result of any action taken by such Purchaser, any liability for brokerage or finders’ fees or agents’ commissions or any similar charge in connection with this Agreement.

SECTION 5.

CONDITIONS TO CLOSING BY THE PURCHASERS

Each Purchaser’s obligation to purchase the Shares at the Closing is, at the option of such Purchaser, subject to the fulfillment of the following conditions:

5.1 Representations and Warranties Correct. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same effect as though such representations and warranties had been made on the Closing Date except to the extent any such representation specifically references an earlier date.

5.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with.

5.3 No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

5.4 No Law Prohibiting or Restricting Such Sale There shall not be in effect any law, rule or regulation prohibiting or restricting such purchase or requiring any consent or approval of any person prior to such purchase which shall not have been obtained.

5.5 Compliance Certificate. The Company shall have delivered to the Purchasers a certificate executed by the President and the Chief Financial Officer of the Company, dated the Closing Date, and certifying as to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this Agreement.

5.6 Registration Rights Agreement. The Company shall have executed and delivered to the Purchasers, a Registration Rights Agreement, substantially in the Form of Exhibit D hereto.

5.7 Opinion of Company’s Counsel. The Purchasers shall have received from Baker Botts L.L.P., counsel to the Company, an opinion addressed to the Purchasers, dated the Closing Date, substantially in the form of Exhibit E hereto

5.8 Proceedings and Documents; Legal Matters. All corporate and other proceedings in connection with the transactions contemplated at the Closing, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Purchasers. All

7

material matters of a legal nature which pertain to this Agreement and the transactions contemplated hereby, shall be reasonably approved by the Purchasers on advice of counsel.

5.9 Good Standing Certificate. The Company shall have delivered to the Purchasers a Certificate dated as of a recent date issued by the Secretary of State of Delaware to the effect that the Company is legally existing and in good standing.

5.10 Secretary’s Certificate. The Company shall have delivered to the Purchasers a certificate executed by the Secretary of the Company dated as of the Closing, certifying as to (a) the directors resolutions authorizing the transactions contemplated by this Agreement; (b) the Charter of the Company; (c) the Bylaws of the Company; (d) the incumbency of the Chief Executive Officer, President, Chief Financial Officer and Secretary of the Company; and (e) such other matters as the Purchasers may reasonably request.

SECTION 6.

CONDITIONS TO CLOSING BY THE COMPANY

The Company’s obligation to sell and issue the Shares at the Closing is, at the option of the Company, subject to the fulfillment as of the Closing Date of the following conditions:

6.1 Representations. The representations made by the Purchasers in Section 4 hereof shall be true and correct in all material respects on the Closing Date with the same effect as though such representations and warranties had been made on the Closing Date except to the extent any such representation specifically references an earlier date.

6.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchasers on or prior to the Closing Date shall have been performed or complied with.

6.3 No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

6.4 No Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting or restricting such sale and issuance or requiring any consent or approval of any person prior to such sale and issuance which shall not have been obtained.

SECTION 7.

RESTRICTIONS ON TRANSFERABILITY OF SHARES;

COMPLIANCE WITH SECURITIES ACT

7.1 Restrictions on Transferability. Each Purchaser acknowledges that the Shares, the Warrant Shares and the Warrants referred to herein are “restricted securities” as such term is defined in Rule 144(a)(3) under the Securities Act. Each Purchaser agrees that it has not and will not make any offer, sale or other transfer of the Shares, the Warrant Shares or the Warrants by any means which would not comply with applicable law or this Agreement or which would otherwise impose upon the Company any obligation to satisfy any public filing or

8

registration requirement. Each Purchaser further agrees that it will not offer, sell or transfer the Shares, the Warrant Shares or the Warrants unless:

(a) there is then in effect a registration statement under the Securities Act covering such proposed disposition (the “Registration Statement”) and such disposition is made in accordance with the Registration Statement; or

(b) such Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and, if requested by the Company, it shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition is exempt from registration of such shares under the Securities Act or any applicable state, foreign or other securities laws.

Each Purchaser acknowledges that the Company is under no obligation to aid such Purchaser in obtaining any exemption from registration requirements in connection with a proposed disposition. Each Purchaser also acknowledges that such Purchaser shall be responsible for compliance with all conditions on transfer imposed by any securities administrator of any state and for any expenses incurred by the Company for legal or accounting services in connection with reviewing such a proposed transfer and issuing opinions in connection therewith. Each Purchaser understands and agrees that any disposition of the Shares, the Warrant Shares or the Warrants in violation of this Agreement shall be null and void, and that no transfer of the Shares, the Warrant Shares or the Warrants shall be made by the Company or the transfer agent for the Common Stock upon the Company’s stock transfer books or records unless and until there has been compliance with the terms of this Agreement, the Securities Act, any applicable state and foreign securities law and any other laws. Each Purchaser agrees that it will not transfer the Shares, the Warrant Shares or the Warrants, other than pursuant to a Registration Statement or in a transaction that complies with Rule 144, unless the transferee agrees to be bound by the restrictions on transfer contained herein to the same extent as if it were an original Purchaser.

7.2 Restrictive Legend. Each certificate representing (i) the Shares, the Warrant Shares and the Warrants, and (ii) any other securities issued in respect of the Shares, the Warrant Shares and the Warrants upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall be stamped or otherwise imprinted with a legend in the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT.

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Each Purchaser consents to the Company making a notation on its records and giving instructions to any transfer agent of the Common Stock in order to implement the restrictions on transfer established in this Section 7. The certificates for Warrants and the Warrant Shares will include such legend as is specified in the Warrant Agreement.

SECTION 8.

COVENANTS

8.1 Fulfillment of Closing Conditions. The Company and each Purchaser agrees to use its commercially reasonable best efforts to cause the fulfillment of the closing conditions (to the extent, in whole or in part, within its or his direct or indirect control) set forth in Sections 5 and 6 hereof.

8.2 Confidentiality. For the purposes of this Section 8.2, the term “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary of the Company in connection with the transactions contemplated by or otherwise pursuant to this Agreement (including, without limitation, any information regarding the transactions contemplated hereby provided prior to the Closing Date), provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by any Purchaser or any person or entity acting on such Purchaser’s behalf, or (c) otherwise becomes known to any Purchaser other than through disclosure by the Company or any Subsidiary of the Company. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by the purchased Shares), (ii) its financial advisors and other professional advisors who are made aware of the confidential nature of such information, (iii) any other Purchaser, or (iv) any other person or entity to which such delivery or disclosure may be necessary or appropriate (x) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (y) in response to any subpoena or other legal process or (z) in connection with any litigation to which such Purchaser is a party. Each Purchaser agrees to provide the Company with reasonable prior notice of any proposed delivery or disclosure of Confidential Information pursuant to clause (iv) of the foregoing sentence and to use commercially reasonable best efforts to cause the person or entity to which such delivery or disclosure is made to agree in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 8.2. Each Purchaser hereby acknowledges that such Purchaser is aware, and that such Purchaser will advise its representatives who have knowledge of Confidential Information, that the United States securities laws prohibit any person who has material, non-public information concerning the Company from purchasing or selling securities of the Company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities, and such Purchaser agrees to comply and cause its representatives to comply with such laws.

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8.3 Publicity. The Company and each Purchaser agrees not to issue any press release or make any public announcement with respect to this Agreement or the transactions contemplated hereby unless the prior written consents of the other parties hereto have been obtained, which consents shall not be unreasonably withheld; provided however, that the Company may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case it will use its best efforts to advise the Purchasers prior to making such disclosure).

SECTION 9.

MISCELLANEOUS

9.1 Governing Law. This Agreement shall be governed and construed in all respects in accordance with the laws of the State of Delaware as applied to agreements made and performed in Delaware by residents of the State of Delaware.

9.2 Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by Purchasers and the closing of the transactions contemplated hereby for a period of one year.

9.3 Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

9.4 Entire Agreement; Amendment. This Agreement and the other documents delivered pursuant hereto at the Closing constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. 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 holders of a majority of the Shares issued and issuable hereunder may waive, modify or amend, on behalf of all such holders, any provisions hereof.

9.5 Costs and Expenses. Each party hereto shall pay its own costs and expenses incurred in connection herewith, including the fees of its counsel, auditors and other representatives, whether or not the transactions contemplated hereby are consummated.

9.6 Notices, etc. All notices and other communications required or permitted hereunder shall be in writing (or in the form of a telex or telecopy (confirmed in writing) to be given only during the recipient’s normal business hours unless arrangements have otherwise been made to receive such notice by telex or telecopy outside of normal business hours) and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, or telex or telecopy (as provided above) addressed (a) if to a Purchaser, at such address as such Purchaser shall have furnished to the Company in writing or (b) if to any other holder of any Shares, at such address as such holder shall have furnished the Company in writing or, until any such holder so furnishes an address to the Company, then to the address of the last

11

holder of such Shares who has so furnished an address to the Company or (c) if to the Company, sent to its principal executive offices and addressed to the attention of the President, or at such other address as the Company shall have furnished to the Purchasers.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid or, if by telex or telecopy, when received and confirmed in the manner provided above.

9.7 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any holder of any Shares, upon any breach or default of the Company under this Agreement shall impair any such right, power or remedy of such holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any holder of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

9.8 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, invalid, unenforceable or void, this Agreement shall continue in full force and effect without said provision. In such event, the parties shall negotiate, in good faith, a legal, valid and enforceable substitute provision which most nearly effects the intent of the parties in entering into this Agreement.

9.9 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement.

9.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

9.11 Construction. Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender or the neuter.

9.12 Definitions. The following terms shall have the following meanings:

“Business Day” shall mean a day Monday through Friday on which banks are generally open for business in New York.

“NASD” shall mean National Association of Securities Dealers, Inc.

“NNM” shall mean Nasdaq National Market.

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“Subsidiary” shall mean any corporation or other organization, whether incorporated or unincorporated, of which the Company directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization, or any organization of which the Company is a general partner.

9.13 Facsimile Signatures. Any signature page delivered by a fax machine or telecopy machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party which requests it.

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The foregoing agreement is hereby executed as of the date first above written.

SYNTROLEUM CORPORATION

By:	/s/    Kenneth L. Agee
	Name:	Kenneth L. Agee
	Title:	Chief Executive Officer

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EXHIBIT A

Schedule of and Signature Page for Purchasers

Purchaser	Signature	Number of Shares	Number of Warrants	Aggregate Purchase Price
Michael Zilkha	/s/ Michael Zilkha	666,667	666,667	$	2,000,001.00
Selim K. Zilkha Trust	By: /s/ Selim K. Zilkha       Name: Selim K. Zilkha       Title: Trustee		333,333	$	999,999.00
Total:		1,000,000	1,000,000	$	3,000,000.00

A-1

EXHIBIT A-1

Purchaser Social Security or Taxpayer Identification Number and Address Schedule

Purchaser	Social Security or Taxpayer Identification Number	Address
Michael Zilkha	###-##-####	1001 McKinney, Suite 1900 Houston, TX 77002
Selim K. Zilkha Trust	###-##-####	750 Lausanne Road Los Angeles, CA 90077

A-1-1

EXHIBIT B

INVESTOR QUESTIONNAIRE

Purchaser Name

The Purchaser represents and warrants that it comes within each category marked below, and that for any category marked, it has truthfully set forth the factual basis or reason the Purchaser comes within that category. The undersigned agrees to furnish any additional information that the Company deems necessary in order to verify the answers set forth below.

— (a)	The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with its spouse, presently exceeds $1,000,000.
	Explanation. In calculating net worth you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.
— (b)	The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with their spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and loses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.
— (c)	The undersigned is a director or executive officer of the Company.
— (d)	The undersigned is a bank; a savings and loan association, insurance company, registered investment company; registered business development company; licensed small business investment (“SBIC”); and employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or is a self directed plan with investment decisions made solely by persons that are accredited investors.
	(describe entity)

B-1

— (e)	The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940;
	(describe entity)
— (f)	The undersigned is a corporation, partnership, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and with total assets in excess of $5,000,000;
	(describe entity)
— (g)	The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, where the purchase is directed by a “sophisticated person” as defined in Regulation 506(b)(2)(ii).
— (h)	the undersigned is an entity all the equity owners of which are “accredited investors” within one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement.
	(describe entity)

THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE TO YOU OF THE FOREGOING REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT YOU WILL RELY ON THEM.

B-2

B. MANNER IN WHICH TITLE TO BE HELD (check one)

1. —	Individual Ownership
2. —	Community Property
3. —	Joint Tenant with Right of Survivorship (both parties must sign)
4. —	Partnership
5. —	Tenants in Common
6. —	Corporation
7. —	Trust
8. —	Other

C. NASD AFFILIATION

If the Purchaser is a member of the NASD or an affiliate or associate (within the meaning of the rules of the NASD) of such a member, so indicate below and describe any applicable affiliation or association. If none, so state.

IN WITNESS WHEREOF, the undersigned has executed the Questionnaire on                                    , 2003.

(Signature)

(Title for Entity)

B-3

EXHIBIT C

FORM OF WARRANT AGREEMENT

C-1

EXHIBIT D

FORM OF REGISTRATION RIGHTS AGREEMENT

D-1

EXHIBIT E

FORM OF OPINION OF BAKER BOTTS L.L.P.

D-2