Commitments And Contingencies

12 Months Ended

Dec. 31, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

10. COMMITMENTS AND CONTINGENCIES

We have entered into a non-cancelable operating lease for office space that expires in 2014.Rental expense was $94,000 in 2013, $99,000 in 2012, and $181,000 in 2011. Total future minimum lease payments under this agreementas of December 31, 2013 are approximately $23,000.

We have entered into employment agreements, which provide severance benefits to several key employees. Commitments under these agreements totaled approximately $2,121,000 at December 31, 2013. Expense is not recognized until an employee is severed.

During the quarter ending March 31, 2014, the Company agreed to accept effective responsibility for 50%, or up to $50 million, of any liability incurred by Tyson in connection with its guarantee of $100 million of Bonds issued by Dynamic Fuels.  Tyson’s guarantee is secured by its letter of credit as described in Note 7.  The holders of the Bonds are entitled to draw upon the letter of credit in the event of a default under the Bonds.  Dynamic Fuels is not currently in default under the Bonds.  The Company’s obligation will continue until the Bonds, which are due in 2033, are repaid.  The Company had previously issued warrants to Tyson in exchange for Tyson’s agreement to provide the letter of credit, as described in Note 7.

 The Company agreed to accept this obligation in order to help resolve disagreements between the Company and Tyson regarding the guarantee described above which had delayed the financial reporting for Dynamic Fuels, and to avoid the possibility that an ongoing dispute with Tyson could delay or prevent the Company from completing the proposed Asset Sale to REG Synthetic.  Pursuant to the proposed asset sale, REG Synthetichas agreed to assume this obligation.  Management has not yet determined the fair value associated with the guarantee.

Three lawsuits challenging the Asset Sale have been filed. First, on December 26, 2013, Daniel Baxter, on behalf of himself and the public stockholders of Syntroleum, filed a putative class action complaint in the District Court of Tulsa County, State of Oklahoma. Second, on December 30, 2013, Philip Crawley, on behalf of himself and the public stockholders of Syntroleum, filed a putative class action complaint in the District Court of Tulsa County, State of Oklahoma. Third, on January 10, 2014, George Kashouh and Thomas Victor, on behalf of themselves and the public stockholders of Syntroleum, filed a putative class action complaint in the District Court of Tulsa, State of Oklahoma. All of the lawsuits name as defendants Syntroleum, each member of Syntroleum’s board of directors, REG, and REG Synthetic; the Baxter lawsuit also names Syntroleum’s Principal Financial Officer as a defendant. On January 14, 2014, the court issued an order consolidating the first two suits, and on February 12, 2014, the third suit was consolidated.  On January 22, 2014, the plaintiffs filed an amended consolidated petition alleging that (1) Syntroleum’s directors breached their fiduciary duties in connection with entering into the Asset Purchase Agreement, as publicly disclosed on December 17, 2013, by failing to maximize stockholder value, agreeing to onerous and unreasonable deal protection devices and failing to act in accordance with their duties of care, loyalty, and good faith, (2) Syntroleum, REG and REG Synthetic aided and abetted those alleged breaches of fiduciary duties, and (3) the combined proxy statement/prospectus omits material information regarding the proposed transaction and is otherwise misleading. Based on these allegations, the amended petition seeks to enjoin the Asset Sale, to obtain other related declaratory and injunctive relief (including rescission), and to recover the costs of the action, including reasonable attorneys’ fees.  The Baxter plaintiffs filed an Emergency Motion and Memorandum in Support to Expedite Discovery and Shorten Prescribed Time Period for Defendants to Respond to Discovery together with their original complaint, which motion was heard on January 6, 2014 and not granted.  On January 24, 2014, the original judge assigned to the consolidated matter recused herself and the matter was re-assigned to another judge.  No further hearing dates have been set in connection with the consolidated lawsuits.   On March 7, 2014, the plaintiffs in the consolidated lawsuit and Syntroleum agreed to certain supplemental disclosures in the proxy statement/prospectus and, accordingly, that the plaintiffs would not seek a preliminary injunction to enjoin a vote by Syntroleum’s stockholders on the Asset Sale on the basis of the disclosures contained in the proxy statement/prospectus.

The Company is involved in certain claims and legal proceedings arising in the ordinary course of business. Management believes there will not be any liability from the resolution of these proceedings and any liability will not have a material adverse effect on the Company’s financial condition, future results of operations or liquidity.