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As filed with the Securities and Exchange Commission on April 25, 2000
Registration No. 333-32968
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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SYNTROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1350 South Boulder, Suite 1100 73-1565725
(State of Tulsa, Oklahoma 74119-3295 (I.R.S. Employer
incorporation) (918) 592-7900 Identification No.)
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ERIC GRIMSHAW
Vice President, Secretary and General Counsel
Syntroleum Corporation
1350 South Boulder, Suite 1100
Tulsa, Oklahoma 74119-3295
(918) 592-7900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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With Copy To:
JOHN D. GEDDES
Baker Botts L.L.P.
3000 One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
(713) 229-1234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 25, 2000
PROSPECTUS
$120,000,000
[Syntroleum Logo]
Common Stock
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We may offer from time to time shares of our common stock, including the
associated preferred stock purchase rights.
The aggregate initial offering price of the common stock that we offer will
not exceed $120,000,000. We will offer the common stock in amounts, at prices
and on terms to be determined at the time of the offering.
Our common stock is listed for trading on the Nasdaq Stock Market's
National Market under the symbol "SYNM." On April 24, 2000, the last reported
sales price of our common stock on the Nasdaq National Market was $18 5/8.
We will provide the specific terms of the offering in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest. This prospectus may not be used to offer and sell our common stock
unless accompanied by a prospectus supplement.
You should consider the risk factors we describe starting on page 4 before
investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is , 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C>
About This Prospectus....................................................... 2
About Syntroleum Corporation................................................ 3
Forward-Looking Statements.................................................. 4
Where You Can Find More Information......................................... 4
Risk Factors................................................................ 6
Use of Proceeds............................................................. 16
Dilution.................................................................... 16
Description of Capital Stock................................................ 16
Plan of Distribution........................................................ 25
Legal Opinions.............................................................. 26
Experts..................................................................... 26
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission under a "shelf" registration
process. This prospectus provides you with a general description of the offered
common stock. Each time we offer common stock, we will provide a prospectus
supplement and, if applicable, a pricing supplement that will describe the
specific terms of the offering. The prospectus supplement and any pricing
supplement may also add to, update or change the information contained in this
prospectus. Please carefully read this prospectus, the prospectus supplement
and any pricing supplement, in addition to the information contained in the
documents we refer to under the heading "Where You Can Find More Information."
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ABOUT SYNTROLEUM CORPORATION
We are a leading developer, owner and licensor of a proprietary process
designed to catalytically convert natural gas into synthetic liquid
hydrocarbons. The Syntroleum Process is a simplification of traditional gas to
liquids, or "GTL," technologies aimed at substantially reducing the capital and
operating costs and the minimum economical size of a GTL plant. A primary
advantage of the Syntroleum Process over competing processes is its use of air,
rather than pure oxygen, in the conversion process. Synthetic liquid
hydrocarbons produced by the Syntroleum Process can be further processed into:
. premium, ultra-clean liquid fuels including diesel, kerosene,
gasoline, naphtha and fuel for fuel cells, and
. specialty products including synthetic lubricants, process oils, high
melting point waxes, liquid normal paraffins, drilling fluid and
chemical feedstocks.
Our business strategy is to:
. continue broadly licensing our technology for the production of
synthetic crude oil and fuels,
. use our technology to build and own plants designed to make specialty
products and fuels,
. develop alternative markets for the synthetic products of GTL plants
based on the Syntroleum Process like ultra-clean fuels and fuels for
fuel cell applications, and
. continue an aggressive research and development program alone and
with strategic partners to lower costs and expand the potential
applications for our technology.
We believe that the Syntroleum Process can be cost effective in GTL
plants with throughput levels as low as 2,000 to over 100,000 barrels per day.
Due to their relatively small size and the use of air instead of pure oxygen,
we believe GTL Plants can be placed on skids, barges and ocean-going vessels.
Although no commercial-scale GTL plant based on the Syntroleum Process has been
built to date, we have successfully demonstrated many elements and variations
of the Syntroleum Process in laboratory tests and pilot plant operations. We
are currently developing a 10,000 barrel per day specialty product GTL plant to
be constructed in Western Australia and are evaluating other potential plants.
Our principal executive offices are located at 1350 South Boulder, Suite
1100, Tulsa, Oklahoma 74119, and our telephone number at that location is (918)
592-7900. As used in this prospectus, the terms "we," "us" and "our," mean
Syntroleum Corporation, a Delaware corporation, and its subsidiaries and
predecessors, unless the context indicates otherwise.
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FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates by reference forward-looking
statements that reflect our current view of future events and financial
performance. These forward-looking statements are subject to numerous risks and
uncertainties, including those factors discussed elsewhere in or incorporated
by reference into this prospectus, the prospectus supplement, any pricing
supplement and our other filings with the SEC.
These risks and uncertainties could cause actual results or events to
differ materially from anticipated or historical results. You can identify
forward-looking statements by our use of words like "anticipate," "believe,"
"budget," "estimate," "expect," "forecast," "intend," "may," "plan," "predict,"
"project," "should" and similar expressions. Any statement that is not a
historical fact is a forward-looking statement. We caution you not to place
undue reliance on these forward-looking statements, which speak only as of
their dates. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You can read and copy these materials at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the SEC's regional offices located at Seven World Trade Center, New York, New
York 10048 and at 500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
You can obtain information about the operation of the SEC's public reference
room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a Web site
that contains information we file electronically with the SEC, which you can
access over the Internet at http://www.sec.gov. You can also obtain information
about us at the offices of the Nasdaq Stock Market, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
This prospectus is part of a registration statement we have filed with
the SEC relating to the common stock. As permitted by SEC rules, this
prospectus does not contain all of the information we have included in the
registration statement and the accompanying exhibits and schedules. You may
refer to the registration statement, exhibits and schedules for more
information about us and our common stock. The registration statement, exhibits
and schedules are available at the SEC's public reference room or through its
Web site.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference
is an important part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all the offered common stock. The documents
we incorporate by reference are:
. our Annual Report on Form 10-K for the year ended December 31, 1999,
as amended by Amendment No. 1 on Form 10-K/A, and
. the description of our common stock and associated preferred stock
purchase rights contained in our Current Report on Form 8-K dated
June 17, 1999.
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You may request a copy of these filings, other than an exhibit to these
filings unless we have specifically incorporated that exhibit by reference into
the filing, at no cost, by writing or telephoning us at the following address:
Syntroleum Corporation
1350 South Boulder, Suite 1100
Tulsa, Oklahoma 74119
Attention: Director of Investor Relations
Telephone: (918) 592-7900
You should rely only on the information contained or incorporated by
reference in this prospectus, the prospectus supplement and any pricing
supplement. We have not authorized any person, including any salesman or
broker, to provide information other than that provided in this prospectus, the
prospectus supplement or any pricing supplement. We have not authorized anyone
to provide you with different information. We are not making an offer of the
common stock in any state where the offer is not permitted. You should not
assume that the information in this prospectus, the prospectus supplement or
any pricing supplement is accurate as of any date other than the date on its
cover page.
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RISK FACTORS
You should carefully consider the risks described below or in any
prospectus supplement or pricing supplement before making an investment
decision. The risks and uncertainties described below are not the only ones
facing our company. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In that case, the trading price of the common stock could decline,
and you may lose all or part of your investment.
Risks Relating to our Technology
We might not successfully commercialize our technology, and commercial-
scale gtl plants based on the Syntroleum Process may never be successfully
constructed or operated.
To date, no commercial-scale GTL plant based on the Syntroleum Process
has been constructed. A commercial-scale GTL plant based on the Syntroleum
Process might never be successfully built either by us or by any of our
licensees. Our success depends on our ability, and the ability of our
licensees, to economically design, construct and operate GTL plants based on
the Syntroleum Process on a commercial scale. The successful commercial
construction and operation of a GTL plant based on the Syntroleum Process
depends on a variety of factors, many of which are outside our control.
Although we are currently developing the Sweetwater plant, our first
commercial-scale GTL plant, we do not know for certain when construction of
this plant will begin or when it will become operational. We do not have any
experience managing the design, construction or operation of commercial-scale
GTL plants, and we may not be successful in doing so.
Commercial-Scale GTL plants based on the Syntroleum Process might not
produce results necessary for success, including results demonstrated on a
laboratory and pilot plant basis.
A variety of results necessary for successful operation of the Syntroleum
Process could fail to occur at a commercial plant, including reactions
successfully tested on a laboratory and pilot plant basis. Results that could
cause commercial-scale GTL plants to be unsuccessful include:
. lower reaction activity than that demonstrated in laboratory and
pilot plant operations, which would increase the amount of catalyst
or number of reactors required to convert synthesis gas into liquid
hydrocarbons and increase capital and operating costs,
. shorter than anticipated catalyst life, which would require more
frequent catalyst purchases and therefore increase operating costs,
. excessive production of gaseous light hydrocarbons from the Fisher-
Tropsch reaction compared to design conditions, which would lower the
anticipated amount of liquid hydrocarbons produced and lower revenues
and margins from plant operations, and
. inability of the gas turbines or heaters integrated into the
Syntroleum Process to burn the low-heating-value tail gas that is
produced by the process, which would result in the need to
incorporate other methods to generate horsepower for the compression
process that may increase capital and operating costs.
In addition, these plants could experience mechanical difficulties,
either related or unrelated to elements of the Syntroleum Process.
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Many of Our competitors have significantly more financial and other
resources than our Company, and GTL Technologies Developed by our competitors
could become more commercially successful than our technology or render our
technology obsolete.
The development of GTL technology is highly competitive, and other GTL
technologies could become more commercially successful than our technology. The
Syntroleum Process is based on chemistry that has been used by several
companies in synthetic fuel projects over the past 60 years. Our competitors
include major integrated oil companies that have developed or are developing
competing GTL technologies, including Exxon, Shell, Sasol, BP Amoco and Conoco.
Each of these companies has significantly more financial and other resources
than us to spend for research and development of their respective technologies
and for funding construction and operation of commercial-scale GTL plants.
These competitors could offer to license their technology to others. In
addition, several small companies have developed, and are continuing to
develop, competing GTL technologies. The Department of Energy has also
sponsored a number of research programs relating to GTL technology, including a
recent program relating to the development of a ceramic membrane technology
that could potentially lower the cost of competitive processes.
As GTL technologies continue to be developed by our competitors, one or
more of our current technologies may become obsolete. Our ability to create and
maintain technological advantages is critical to our future success. As new
technologies develop, we may be placed at a competitive disadvantage, and
competitive pressures may force us to implement new technologies at substantial
cost. We may not be able to successfully develop, or expend the financial
resources necessary to acquire new technology.
Our ability to protect our intellectual property rights involves many
complexities and uncertainties, and commercialization of the syntroleum process
could give rise to claims that our technology infringes upon the rights of
others.
Our success depends on our ability to protect our intellectual property
rights, which involves complex legal, scientific and factual questions and
uncertainties. We rely on a combination of patents, copyrights, trademarks,
trade secret laws and contractual restrictions to protect our proprietary
rights. We cannot assure you that additional patents will be granted, and our
existing patents might not provide us with commercial benefit or might be
infringed upon, invalidated or circumvented by others. In addition, the
availability of patents in foreign markets, and the nature of any protection
against competition that may be afforded by those patents, are often difficult
to predict and vary significantly from country to country. Our licensors or we
may choose not to seek, or may be unable to obtain, patent protection in a
country that could potentially be an important market for our GTL technology.
The confidentiality agreements that are designed to protect our trade secrets
could be breached, and we might not have adequate remedies for the breach. In
addition, our trade secrets and proprietary know-how might otherwise become
known or be independently discovered by others.
Commercialization of the Syntroleum Process may give rise to claims that
our technologies infringe upon the patents or other proprietary rights of
others. Although it is our policy to regularly review patents that may have
applicability in the GTL industry, we may not become aware of these patents or
rights until after we have made a substantial investment in the development and
commercialization of those technologies. Legal actions could be brought against
us, our partners or licensees, claiming damages and seeking an injunction that
would prevent us, our partners or licensees, from testing, marketing or
commercializing the affected technologies. Major energy companies seeking to
gain a competitive advantage may have an interest in bringing one of these
actions. If an infringement action was successful, in addition to potential
liability for damages, our partners, our licensees or we could be required to
obtain a license in order to continue to test, market or commercialize the
affected technologies. Any required license might not be made available or, if
available, might not be available on acceptable terms, and we could be
prevented entirely from testing, marketing or commercializing the affected
technology. We may have to expend substantial resources in litigation, either
in enforcing our patents, defending against the infringement claims of others,
or both. Many possible claimants, like the energy companies that have or may be
developing proprietary GTL technologies
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competitive with the Syntroleum Process, have significantly more resources to
spend on litigation. We can give no assurance that third parties will not
claim infringement by us with respect to past, present or future GTL
technologies. In any potential intellectual property dispute involving us, our
licensees could also become the target of litigation.
We could have potential indemnification liabilities to licensees
relating to the operation of gtl plants based on the Syntroleum Process or
intellectual property disputes.
Our license agreements require us to indemnify the licensee, subject to
a cap of 50% of the license fees received, against specified losses relating
to, among other things:
. the use of patent rights and technical information relating to the
Syntroleum Process,
. acts or omissions by us in connection with process design packages
for plants, and
. performance guarantees that may be provided by us.
Our indemnification obligations could result in substantial expenses and
liabilities to us in the event that intellectual property rights claims are
made against us or our licensees, or GTL plants based on the Syntroleum
Process fail to operate as designed.
If improvements to the syntroleum process are not commercially viable,
the design and construction of lower-cost GTL plants based on the Syntroleum
Process could be delayed or prevented.
A number of improvements to the Syntroleum Process are in various early
stages of development. These improvements will require substantial additional
investment, development and testing prior to their commercialization. We might
not be successful in developing these improvements and, if developed, they may
not be capable of being utilized on a commercial basis. If improvements to the
Syntroleum Process currently under development do not become commercially
viable on a timely basis, the total potential market for GTL plants that could
be built by us and our partners and by our licensees could be significantly
limited.
For example, improvements to the heat integration of the Syntroleum
Process designed to lower capital and operating costs are currently under
development. These improvements may not occur because further integration of
the gas turbine into the process might not be technically feasible due to the
operating tolerances of the materials in the gas turbine. In addition, our
horizontal reactor, which is designed to have a low center of gravity for
marine applications, may not be capable of commercial application due to
operational difficulties which could limit the market for floating GTL plants.
The economic application of our technology depends on favorable plant
operating conditions.
The economic application of GTL technology depends on favorable plant
operating conditions. Among the operating conditions that impact plant
economics are the site location, infrastructure, weather conditions, the size
of the equipment, the quality of the natural gas feedstock, the type of plant
products and whether the natural gas converted by the plant is associated with
oil reserves. For example, if a plant is located in an area that requires the
construction of substantial infrastructure, plant economics would be adversely
affected. In addition, plants that are not designed to produce specialty
products or other high margin products and plants that are not used to convert
natural gas that is associated with oil reserves will be more dependent on
favorable natural gas and oil prices than plants designed for those uses and
are not expected to be cost-effective at price levels below the range of at
least $15 to $20 per barrel for oil.
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Industry rejection of our technology would make the construction of GTL
plants based on the Syntroleum Process more difficult or impossible and
adversely affect our ability to receive future license fees.
As is typical in the case of a new and rapidly evolving technology,
demand and industry acceptance for our GTL technology is subject to a high
level of uncertainty. Failure by the industry to accept our technology would
make our construction of GTL plants more difficult or impossible and adversely
affect our ability to receive future license fees and to generate other
revenue. Should a high profile industry participant adopt the Syntroleum
Process and fail to achieve success or should any commercial GTL plant based on
the Syntroleum Process fail to achieve success, other industry participants'
perception of the Syntroleum Process could be adversely affected. In addition,
some oil companies may be motivated to seek to prevent industry acceptance of
GTL technology based on their belief that widespread adoption of GTL technology
might negatively impact their competitive position.
Risks Relating to Our Business
We have incurred losses and anticipate continued losses.
As of December 31, 1999, we had negative retained earnings of $43.6
million. We have not yet achieved profitability and expect to continue to incur
net losses until we recognize sufficient revenues from licensing activities,
GTL plants or other sources. Because we do not have an operating history upon
which an evaluation of our prospects can be based, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by small companies seeking to develop new and rapidly evolving
technologies. To address these risks, we must, among other things, respond to
competitive factors, continue to attract, retain and motivate qualified
personnel, and commercialize and continue to upgrade our GTL technologies. We
may not be successful in addressing these risks. We can give no assurance that
we will achieve or sustain profitability.
Our anticipated expense levels are based in part on our expectations as
to future operating activities and are not based on historical financial data.
We plan to increase our capital expenditures to fund the design and
construction of GTL plants, increase our operating expenses to fund greater
levels of research and development, and increase our marketing and operational
capabilities. These expenses may not subsequently be followed by increased
revenues or cash flows.
The economic application of GTL plants based on the Syntroleum Process
depends on favorable crude oil prices and other commodity prices.
Our belief that the Syntroleum Process can be cost effective at GTL
plants with throughput levels from as low as 2,000 to over 100,000 barrels per
day is based on our assumption that oil prices in the range of at least $15 to
$20 per barrel will prevail. However, the markets for oil and natural gas have
historically been very volatile and are likely to continue to be very volatile
in the future. Although current crude oil prices are relatively high, during
1998 crude oil prices fell to historically low levels of below $10 per barrel
for a period of time and could return to low levels in the future.
Because the synthetic crude oil, liquid fuels and specialty products that
GTL plants based on the Syntroleum Process are expected to produce will compete
in markets with oil and refined petroleum products, and because natural gas
will be used as the feedstock at these GTL plants, an increase in natural gas
prices relative to prices for oil and refined products, or a decrease in prices
for oil and refined products, could adversely affect the operating results of
these plants. Higher than anticipated costs for the catalysts and other
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materials used in these plants could also adversely affect operating results.
Factors that could cause changes in the prices and availability of oil, natural
gas and refined products include:
. the level of consumer product demand,
. weather conditions,
. domestic and foreign government regulation,
. the actions of the Organization of Petroleum Exporting Countries,
. political conditions in oil and natural gas producing countries,
. the supply of foreign crude oil and natural gas,
. the location of GTL plants relative to natural gas reserves and
pipelines,
. the capacities of pipelines,
. fluctuations in seasonal demand, and
. the price and availability of alternative fuels and overall economic
conditions.
We cannot predict the future markets and prices for oil, natural gas,
refined products or other materials used in the Syntroleum Process.
GTL plants will depend on the availability of natural gas at economic
prices, and alternative uses of natural gas could be preferred in many
circumstances.
GTL plants will depend on the availability of natural gas at economic
prices. The market for natural gas is highly competitive in many areas of the
world, and in many circumstances, the sale of natural gas for use as a
feedstock in a GTL plant will not be the highest value market for the owner of
the natural gas. The cryogenic conversion of natural gas to liquefied natural
gas, may compete with our GTL plants for use of natural gas as feedstocks in
many locations. Local commercial, residential and industrial consumer markets,
power generation, ammonia, methanol and petrochemicals are also alternative
markets for natural gas. Unlike us, many of our competitors also produce or
have access to large volumes of natural gas, which may be used in connection
with their GTL operations. The availability of natural gas at economic prices
for use as a feedstock for GTL plants may also depend on the production costs
for the gas and whether natural gas pipelines are located in the areas where
these plants are located. New pipelines may be built in, or existing pipelines
may be expanded into, areas where GTL plants are built, and this may affect the
operating margins of these plants as other markets compete for the natural gas
feedstocks. The United States and Western Europe have well-developed natural
gas markets. In these markets, the relationship between natural gas prices and
liquid hydrocarbon prices would likely make investments in GTL plants that
produce fuels uneconomic in many circumstances based upon current market,
environmental and regulatory conditions. Other areas around the world that have
developed local markets for natural gas may also have higher valued uses for
natural gas than as feedstocks for GTL plants. In addition, the
commercialization of GTL technologies may have an adverse effect on the
availability of natural gas at economic prices.
We will need to obtain funds from additional financings or other sources,
and if we do not receive these funds we might need to delay or eliminate our
expenditures, including those for capital projects.
We have expended and will continue to expend a substantial amount of
funds to continue the research and development of our technologies, to market
the Syntroleum Process and to design and construct GTL plants. We intend to
obtain additional funds for our GTL plant projects primarily through a
combination of equity and debt project financing, and plan to finance the
Sweetwater plant primarily through non-recourse debt financing at the project
level. We also intend to obtain additional funds through collaborative or other
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arrangements with strategic partners and others and debt and equity financing
in the capital markets. Financing may not be available when needed or on terms
acceptable or favorable to us. If adequate funds are not available, we may be
required to delay or to eliminate expenditures for our capital projects,
research and development, and other activities. We could also be forced to
license to third parties the rights to commercialize additional products or
technologies that we would otherwise seek to develop ourselves. If we obtain
additional funds by issuing equity securities, dilution to stockholders may
occur. In addition, preferred stock could be issued in the future without
stockholder approval and the terms of our preferred stock could include
dividend, liquidation, conversion, voting and other rights that are more
favorable than the rights of the holders of our common stock.
Assuming the commercial success of the plants based on the Syntroleum
Process, we expect that license fees, catalyst sales and sales of specialty
products from GTL plants in which we own an interest will be a source of funds
for operations. However, we may not receive any of these revenues, and these
revenues may not be sufficient for capital expenditures or operations and may
not be received within the expected time frame. If we are unable to generate
funds from operations, our need to obtain funds through financing activities
will be increased.
The construction of the Sweetwater plant and other GTL plants based on
the Syntroleum Process will be subject to the risks of delay and cost overruns
inherent in any large construction project.
The construction of GTL plants based on the Syntroleum Process, including
the Sweetwater plant we are currently developing and plan to construct in
Western Australia, will be subject to the risks of delay or cost overruns
inherent in any large construction project resulting from numerous factors,
including the following:
. shortages of equipment, materials or skilled labor,
. unscheduled delays in the delivery of ordered materials and
equipment,
. engineering problems, including those relating to the commissioning
of newly designed equipment,
. work stoppages,
. weather interference,
. unanticipated cost increases, and
. difficulty in obtaining necessary permits or approvals.
Our receipt of license fees depends on substantial efforts by our
licensees, and our licensees could choose not to construct a gtl plant based on
the Syntroleum Process or to pursue alternative GTL technologies.
Our licensees will control whether any plant site licenses are issued
and, as a result, whether any additional license fees are due under our license
agreements. Licensees may need to undertake substantial activities and
investments before any plant site license is issued and license fees are due.
These activities may include performing feasibility studies, obtaining
regulatory approvals and permits, obtaining preliminary cost estimates and
final design and engineering for the plant, obtaining a sufficient dedicated
supply of natural gas, obtaining adequate commitments for the purchase of the
plant's products, and obtaining the financing for construction of the plant.
The licensee will control the amount and timing of resources devoted to these
activities. Whether licensees are willing to expend the resources necessary to
construct GTL plants will depend on a variety of factors outside our control,
including the prevailing view of prices for crude oil, natural gas and refined
products. In addition, our license agreements may be terminated by the
licensee, with or without cause, upon 90 days' notice to us. If we do not
receive payments under our license agreements, we may not have sufficient
resources to implement our business strategy. Our licensees are not restricted
from pursuing alternative GTL technologies on their own or in collaboration
with others, including our competitors.
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Our future plans could be harmed if we are unable to attract or retain
key personnel.
Our success substantially depends on the performance of our executive
officers, including Kenneth L. Agee (our founder, Chief Executive Officer and
Chairman of the Board and inventor with respect to many of our patents and
patent applications), and Mark A. Agee (our President and Chief Operating
Officer). Given the technological nature of our business, we also depend on our
scientific and technical personnel. Our efforts to develop and commercialize
our technology have placed a significant strain on our scientific and technical
personnel, as well as our operational and administrative resources. Our ability
to implement our business strategy may be constrained, and the timing of
implementation may be impacted, if we are unable to attract and retain
sufficient personnel. At March 31, 2000, we had 73 full-time employees. Except
for a $500,000 life insurance policy held by us on the life Kenneth L. Agee, we
do not maintain "key person" life insurance policies on any of our employees.
We depend on strategic relationships with manufacturing and engineering
companies, and failure by these companies to provide necessary components or
services could negatively impact our business.
We intend to, and believe our licensees will, utilize third party
component manufacturers in the design and construction of GTL plants based on
the Syntroleum Process. If any third party manufacturer is unable to acquire
raw materials or to provide components of GTL plants based on the Syntroleum
Process in commercial quantities in a timely manner and within specifications,
we or our licensees could experience material delays, or construction plans
could be canceled, while alternative suppliers or manufacturers are identified
and prepare for production. We have no experience in manufacturing and do not
have any manufacturing facilities. Consequently, we will depend on third
parties to manufacture components of GTL plants based on the Syntroleum
Process. We have conducted development activities with third parties relating
to our proprietary catalysts and turbines that may be used in the Syntroleum
Process, and other manufacturing companies may not have the same expertise as
these companies.
We also intend to utilize third parties to provide engineering services
in connection with our efforts to commercialize the Syntroleum Process. If
these engineering firms are unable to provide requisite services or performance
guarantees, we or our licensees could experience material delays, or
construction plans could be canceled, while alternative engineering firms are
identified and become familiar with the Syntroleum Process. We have no
experience in providing engineering services and have a limited engineering
staff. Consequently, we will depend on third parties to provide necessary
engineering services, and these firms may be asked by licensees or financial
participants in plants to provide performance guarantees in connection with the
design and construction of GTL plants based on the Syntroleum Process.
Our operating results may be volatile due to a variety of factors and are
not a meaningful indicator of future performance.
We expect to experience significant fluctuations in future annual and
quarterly operating results because of the unpredictability of many factors
that impact our business. These factors include:
. timing of any construction by us or our licensees of GTL plants,
. demand for licenses of the Syntroleum Process and receipt and revenue
recognition of license fees,
. oil and gas prices,
. timing and amount of research and development expenditures,
. demand for specialty products,
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. introduction or enhancement of GTL technologies by us and our
competitors,
. market acceptance of new technologies, and
. general economic conditions.
As a result, we believe that period-to-period comparisons of our results
of operations are not meaningful and should not be relied upon as any
indication of future performance. Due to all of the foregoing factors, it may
be that in some future year or quarter our operating results will be below the
expectations of public market analysts and investors. In that event, the price
of our common stock would likely be materially adversely affected.
We are subject to extensive laws relating to the protection of the
environment, and these laws may increase the cost of designing, constructing
and operating our GTL plants.
We are subject to extensive laws and regulations relating to the
protection of the environment. Violators of these laws and regulations may be
subject to substantial fines, criminal sanctions or third party lawsuits and
may be required to install costly pollution control equipment or, in some
extreme cases, curtail operations. Our GTL plants will generally be required to
obtain permits under applicable environmental laws and various permits for
industrial siting and construction. Compliance with environmental laws and
regulations, and any requisite permits, may increase the costs of designing,
constructing and operating our GTL plants. We may also face exposure to actual
or potential claims and lawsuits involving environmental matters with respect
to our current real estate inventory as well as previously owned real estate.
We plan to construct GTL plants in foreign countries, where we would be
subject to risks of a political nature and other risks inherent in foreign
operations.
We plan to construct GTL plants in foreign countries, where we would be
subject to risks of a political nature and other risks inherent in foreign
operations. These risks include changes in domestic and foreign taxation,
currency exchange risks, labor disputes and uncertain political and economic
environments as well as risk of war, civil disturbances or other events that
could limit or disrupt production and markets or result in the deprivation of
contract rights or the taking of property by nationalization or appropriation
without fair compensation. International operations and investments may also be
adversely affected by laws and policies of the United States affecting foreign
trade, investment and taxation, which could affect the conduct or profitability
of these operations.
Sufficient markets for the synthetic products of the Syntroleum Process
or products which utilize these synthetic products, including fuel cells, may
never develop or may take longer to develop than we anticipate.
Sufficient markets may never develop for the synthetic products of the
Syntroleum Process, or may develop more slowly than we anticipate. The
development of sufficient markets for the synthetic products of the Syntroleum
Process may be affected by many factors, some of which are out of our control,
including:
. the cost competitiveness of the synthetic products of the Syntroleum
Process
. consumer reluctance to try a new product,
. environmental, safety and regulatory requirements, and
. the emergence of more competitive products.
In addition, a new market may fail to develop for products which utilize
our synthetic products. For example, the establishment of a market for the use
of these products as fuel for fuel cells is uncertain, in part because fuel
cells represent an emerging market, and we do not know whether distributors
will want to sell them or if end-users will want to use them.
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If sufficient markets fail to develop or develops more slowly than we
anticipate, we may be unable to recover the losses we will have incurred in the
development of our technology and may never achieve profitability.
Risks Relating to the Offering
The concentrated ownership of our common stock may have the effect of
delaying or preventing a change of control of our Company.
As of March 31, 2000, our directors and officers beneficially owned
approximately 43% of the outstanding shares of our common stock. As a result,
our directors and officers, to the extent they act together, will be in a
position to significantly influence the outcome of matters requiring a
stockholder vote, including the election of directors, the adoption or
amendment of provisions in our certificate of incorporation or bylaws and the
approval of mergers and other significant corporate transactions. This
concentrated ownership of our common stock may have the effect of delaying or
preventing a change of control of our company.
Our stock price may continue to be volatile and could decline following
this offering.
Historically, the market price of our common stock has been very
volatile. The trading price of our common stock is expected to continue to be
subject to substantial volatility in response to numerous factors, including
publicity regarding actual or potential results with respect to development of
the Syntroleum Process and design, construction and commercial operation of
plants using our process, announcements of technological innovations by others
with competing GTL processes, developments concerning intellectual property
rights, including claims of infringement, annual and quarterly variances in
operating results, changes in energy prices, competition, changes in financial
estimates by securities analysts, any differences in actual results and results
expected by investors and analysts, investor perception of our favorable or
unfavorable prospects and other events or factors. In addition, the stock
market has experienced and continues to experience significant price and volume
volatility that has affected the market price of equity securities of many
companies. This volatility has often been unrelated to the operating
performance of those companies. These broad market fluctuations may adversely
affect the market price of our common stock. There is no guarantee that an
active public market for our common stock will be sustained.
Provisions in our Charter documents and Delaware law may delay or prevent
an acquisition of our company, which could decrease the value of our common
stock.
Our certificate of incorporation and bylaws and Delaware law contain
provisions that could make it difficult for a third party to acquire our
company without the consent of our board of directors. The provisions of our
certificate of incorporation and bylaws include a classified board of directors
with staggered terms, supermajority voting requirements for business
combinations with owners of 10% or more of our common stock and restrictions on
the ability of stockholders to take action by written consent. In addition, our
board of directors has adopted a stockholder rights plan, and is authorized to
set the terms of our preferred stock without stockholder approval. Delaware law
also imposes some restrictions on mergers and other business combinations
between our company and owners of 15% or more of our common stock. These
provisions apply even if an acquisition proposal is considered beneficial by
some stockholders and could depress the value of our common stock.
Future Sales of our common stock could adversely affect our stock price.
Substantial sales of our common stock in the public market following this
offering, or the perception by the market that those sales could occur, could
lower our stock price or make it difficult for us to raise additional equity
capital in the future. These sales could include sales of shares of our common
stock by our
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directors and officers, who beneficially owned approximately 43% of the
outstanding shares of our common stock as of March 31, 2000. We cannot predict
if future sales of our common stock, or the availability of our common stock
for sale, will harm the market price for our common stock or our ability to
raise capital by offering equity securities.
You could suffer immediate and substantial dilution.
In any offering of our common stock, the public offering price per share
of common stock could be substantially higher than the net tangible book value
per share immediately after the offering. If we obtain additional funds by
issuing equity securities, dilution to stockholders may occur. The prospectus
supplement will set forth the information regarding any dilutive effect of an
offering of our common stock.
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USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement or any
pricing supplement, we will use the net proceeds from the sale of the offered
common stock for general corporate purposes. These purposes may include capital
expenditures, working capital, repayment or refinancing of indebtedness,
acquisitions and repurchases and redemptions of securities. Pending any
specific application, we may initially invest funds in short-term marketable
securities or apply them to the reduction of short-term indebtedness.
DILUTION
Our net tangible book value at December 31, 1999 was $.92 per share of
common stock. Net tangible book value per share of common stock is determined
by dividing our tangible net worth, which is tangible assets less liabilities,
by the total number of shares of our common stock outstanding. Purchasers of
our common stock in an offering may experience immediate dilution in net
tangible book value per share. The prospectus supplement will set forth the
information regarding any dilutive effect of an offering of our common stock.
DESCRIPTION OF CAPITAL STOCK
The total number of shares of all classes of stock that we have authority
to issue is 155,000,000, consisting of 150,000,000 shares of common stock, par
value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01
per share. We had 27,297,168 shares of common stock outstanding as of March 1,
2000. We have authorized and reserved for issuance 250,000 shares of junior
participating preferred stock in connection with the preferred stock purchase
rights described below.
Common Stock
The holders of common stock are entitled to one vote per share on all
matters voted on by our stockholders, including the election of directors,
except as may, in the future, be provided in any resolutions adopted by our
board of directors with respect to any series of preferred stock. Except as
otherwise required by law or provided in any resolution adopted by the board of
directors with respect to any series of preferred stock, the holders of shares
of common stock exclusively possess all voting power of our stockholders.
Subject to any preferential rights of any outstanding series of preferred
stock, the holders of common stock are entitled to those dividends as may be
declared from time to time by the board of directors from funds available for
dividends and, upon liquidation, are entitled to receive pro rata all of our
assets available for distribution to our stockholders.
Preferred Stock
Our board of directors is authorized to establish one or more series of
preferred stock and to determine, with respect to any series of preferred
stock, the powers, designation, preferences and rights of each series and the
qualifications, limitations or restrictions of each series, including:
. the designation of the series,
. the number of shares of the series, which number the board of
directors may, except where otherwise provided in the preferred stock
designation, increase or decrease, but not below the number of shares
of that series then outstanding,
. whether dividends, if any, will be cumulative or noncumulative and
the dividend rate and the preferences, if any, of the series,
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. the dates on which dividends, if any, will be payable,
. the redemption rights and price or prices, if any, for shares of the
series,
. the terms and amounts of any sinking fund provided for the purchase
or redemption of shares of the series,
. the amounts payable on, and the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of our affairs,
. whether the shares of the series will be convertible into or
exchangeable for shares of any other class or series, or any other
security, of our company or any other corporation, and, if so, the
specification of that class or series or that other security, the
conversion or exchange price or prices or rate or rates, any
adjustments to those prices or rates, the date or dates as of which
such shares will be convertible or exchangeable and all other terms
and conditions of the conversion or exchange,
. restrictions on the issuance of shares of the same series, or of any
other class or series, and
. the voting rights, if any, of the holders of shares of any series.
The authorized shares of preferred stock, as well as shares of common
stock, are available for issuance without further action by our stockholders,
unless stockholder action is required by the rules of any stock exchange or
automated quotation system on which our securities are listed or traded. If the
approval of our stockholders is not required for the issuance of shares of
preferred stock, par value $.01 per share, or common stock, the board of
directors may determine not to seek stockholder approval.
Although our board of directors has no intention at the present time of
doing so, it could issue a series of preferred stock that could, depending on
the terms of that series, impede the completion of a merger, tender offer or
other takeover attempt. Our board of directors will make any determination to
issue shares based on its judgment as to our best interests and the best
interests of our stockholders. Our board of directors, in so acting, could
issue preferred stock having terms that could discourage an acquisition
attempt, including a tender offer or other transaction that some, or a majority
of, our stockholders might believe to be in their best interests or that might
result in stockholders receiving a premium for their stock over the then
current market price of the stock.
Preferred Stock Purchase Rights
One preferred share purchase right is currently associated with each
outstanding share of our common stock. Each of these rights entitles the
registered holder to purchase from us one six-hundredth of a share of our
junior preferred stock, par value $.01 per share, at a purchase price of
$125.00 per one one-hundredth of a share, subject to adjustment.
The rights will have anti-takeover effects. The rights could cause
substantial dilution to a person or group that attempts to acquire us and
effect a change in the composition of our board of directors on terms not
approved by the board of directors, including by means of a tender offer at a
premium to the market price. The rights should not interfere with any merger or
business combination approved by the board of directors because the rights may
be redeemed by us at the redemption price prior to the time that a person has
become an acquiring person.
The following summary of the material terms of the rights is qualified in
its entirety by reference to the form of the Amended and Restated Rights
Agreement, a copy of which is incorporated by reference as an exhibit to this
Registration Statement.
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Evidence and Transferability of Rights. The rights will be evidenced by
the certificates representing shares of common stock until the earlier to occur
of:
. 10 days following a public announcement made by us or an "acquiring
person" that a person or group of affiliated or associated persons
has become an "acquiring person," which occurs when that person or
group has acquired beneficial ownership of 25% or more of the then
outstanding shares of common stock, or
. 10 business days, or a later date established by our board of
directors before the time any person or group becomes an acquiring
person, following the commencement of, or the first public
announcement of an intention of any person or group to make, a tender
offer or exchange offer that, if completed, would result in the
beneficial ownership by a person or group of 25% or more of the
outstanding shares of common stock.
The date that the rights are no longer evidenced by the certificates
representing shares of common stock is referred to as the "rights distribution
date." Neither Kenneth L. Agee nor Mark A. Agee nor members of their immediate
families, nor any of their affiliates or associates, individually or
collectively, will be deemed an acquiring person.
Until the rights distribution date or the earlier redemption or
expiration of the rights:
. the rights will be transferred with and only with the transfer of
shares of common stock,
. certificates representing shares of common stock will contain a
notation incorporating the terms of the rights by reference, and
. the surrender for transfer of any certificate representing shares of
common stock will also constitute the transfer of the rights
associated with the shares of common stock represented by that
certificate.
As soon as practicable following the rights distribution date, separate
certificates evidencing the rights will be mailed to holders of record of the
shares of common stock as of the close of business on the rights distribution
date and those separate rights certificates alone will evidence the rights.
Exercisability of Rights. The rights are not exercisable until the rights
distribution date. The rights will expire on January 31, 2007, unless the
expiration date is extended or unless the rights are earlier redeemed or
exchanged by us, in each case, as described below.
If any person becomes an acquiring person, each holder of a right, other
than rights beneficially owned by the acquiring person, which will be void,
will after the date that any person became an acquiring person have the right
to receive upon exercise of those rights at the then current exercise price
that number of shares of common stock having a market value of two times the
exercise price of the right. If, at any time on or after the date that any
person has become an acquiring person, we are acquired in a merger or other
business combination transaction or 50% or more of our consolidated assets or
earning power are sold, each holder of a right will after the date of that
transaction have the right to receive, upon the exercise of those rights at the
then current exercise price of the right, that number of shares of common stock
of the acquiring company which at the time of that transaction will have a
market value of two times the exercise price of the right.
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The purchase price payable, and the number of shares of junior preferred
stock or other securities or property issuable, upon exercise of the rights are
subject to adjustment from time to time to prevent dilution in the following
circumstances:
. in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of junior preferred stock,
. upon the grant to holders of the shares of junior preferred stock of
specified rights, options or warrants to subscribe for or purchase
shares of junior preferred stock at a price, or securities
convertible into shares of junior preferred stock with a conversion
price less than the then current market price of the shares of junior
preferred stock, or
. upon the distribution to holders of the shares of junior preferred
stock of evidences of indebtedness or assets, excluding regular
periodic cash dividends paid out of earnings or retained earnings or
dividends payable in shares of junior preferred stock, or of
subscription rights or warrants other than those referred to above.
The number of outstanding rights and the number of shares of junior
preferred stock issuable upon exercise of each right are also subject to
adjustment in the event of a stock split of the common stock or a stock
dividend on the common stock payable in common stock or subdivisions,
consolidations or combinations of the common stock occurring, in any such case,
prior to the rights distribution date.
With specified exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
the purchase price. No fractional shares of junior preferred stock will be
issued, other than fractions which are integral multiples of one one-hundredth
of a share of junior preferred stock, which may, at our election, be evidenced
by depositary receipts. In lieu of those fractional shares, an adjustment in
cash will be made based on the market price of the shares of junior preferred
stock on the last trading day prior to the date of exercise.
Until a right is exercised, the holder of a right will have no rights as
a stockholder of our company, including the right to vote or to receive
dividends.
Terms of Junior Preferred Stock. Shares of junior preferred stock
purchasable upon exercise of the rights will not be redeemable. Each share of
junior preferred stock will be entitled to a minimum preferential quarterly
dividend payment of $1.00 per share but will be entitled to an aggregate
dividend equal to 600 times the dividend declared per share of common stock. In
the event of liquidation, the holders of the junior preferred stock will be
entitled to a minimum preferential liquidation payment of $600 per share but
will be entitled to an aggregate payment equal to 600 times the payment made
per share of common stock. Each share of junior preferred stock will have 600
votes, together with the common stock. Finally, in the event of any merger,
consolidation or other transaction in which the common stock is exchanged, each
share of junior preferred stock will be entitled to receive an amount equal to
600 times the amount received per share of common stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights of
the junior preferred stock, the value of the one six-hundredth interest in a
share of junior preferred stock purchasable upon exercise of each right should
approximate the value of one share of common stock.
Exchange or Redemption. At any time after any person becomes an acquiring
person and before the acquisition by that person of 50% or more of the
outstanding shares of common stock, our board of directors may exchange the
rights, in whole or in part, at an exchange ratio of one share of common stock,
or in the event there are not sufficient shares of common stock authorized to
be issued, one six-hundredth of a share of junior preferred stock, per right,
subject to adjustment. This exchange will not apply to rights owned by the
acquiring person which will have become void.
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At any time before any person becomes an acquiring person, our board of
directors may redeem the rights in whole, but not in part, at a price of $.01
per right.
The redemption of the rights may be made effective at any time, on any
basis and with any conditions as our board of directors in its sole discretion
may establish. Immediately upon any redemption of the rights, the rights will
terminate and holders of rights will only receive the redemption price.
Amendment. The terms of the rights may be amended by our board of
directors without the consent of the holders of the rights, including an
amendment to:
. lower the threshold at which a person becomes an acquiring person,
and
. lower the percentage of common stock proposed to be acquired in a
tender or exchange offer that would cause the rights distribution
date to occur to not less than the greater of (1) the sum of .001%
and the largest percentage of the outstanding common stock then known
to us to be beneficially owned by any person or group of affiliated
or associated persons and (2) 10%, except that, from and after the
time that any person or group of affiliated or associated persons
becomes an acquiring person, no amendment may adversely affect the
interests of the holders of the rights.
Restrictions on Business Combinations
Our charter provides that "business combinations" involving an
"interested stockholder" must be approved by the holders of at least 66 2/3% of
the voting power of the shares not owned by the interested stockholder, unless
the business combination is either approved by a majority of "continuing
directors" or meets specified requirements regarding price and procedure.
"Continuing directors" is generally defined in our charter as follows:
. directors who are unaffiliated with the interested stockholder and
joined the board before the party to the transaction became an
interested stockholder, or
. directors who are unaffiliated with the interested stockholder and
are elected to fill a vacancy and whose election is recommended by a
majority of continuing directors then on the board.
Our charter also provides that the initial directors named in our charter
who are unaffiliated with the interested stockholder are "continuing
directors."
A "business combination" is generally defined in our charter as follows:
. any merger or consolidation of our company or one of our subsidiaries
with any interested stockholder,
. any disposition, in one transaction or a series of transactions, to
or with any interested stockholder of any assets of our company or
any of our subsidiaries having an aggregate fair market value of
$10,000,000 or more,
. the issuance or transfer by us or any of our subsidiaries of any
securities of our company or any of our subsidiaries to any
interested stockholder, in exchange for property having an aggregate
fair market value of $10,000,000 or more,
. the adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of an interested stockholder, or
. any reclassification of securities, or recapitalization of our
company, or any merger or consolidation of our company with any of
our subsidiaries or any other transaction that has the
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effect, directly or indirectly, of increasing the proportionate share
of the outstanding shares of any class of our equity or convertible
securities of our company or any of our subsidiaries that are
directly or indirectly owned by any interested stockholder.
An "interested stockholder" is generally defined in our charter as any
person who or which:
. itself, or along with its affiliates, is the beneficial owner,
directly or indirectly, of more than 10% of our then outstanding
voting stock,
. is one of our affiliates and at any time within the two-year period
immediately before the date in question was itself, or along with its
affiliates, the beneficial owner, directly or indirectly, of 10% or
more of our then outstanding voting stock, or
. is an assignee of or has otherwise succeeded to any of our voting
stock that was at any time within the two-year period immediately
before the date in question beneficially owned by an interested
stockholder, if that assignment or succession occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
The provisions in our charter restricting business combinations with
interested stockholders also generally apply to an interested stockholder's
affiliates.
To satisfy the price and procedure requirements of these provisions, the
following criteria must be satisfied:
. the total amount of the cash and the fair market value of
consideration other than cash to be received per share by holders of
our capital stock is at least equal to the highest of
(1) the highest price per share paid by the interested stockholder
in transactions during the two-year period before the announcement
of the transaction or in the transaction in which it became an
interested stockholder,
(2) the fair market value of the stock on the date of announcement
of the transaction or the date of the transaction in which it became
an interested stockholder, whichever is higher,
(3) the amount determined under clause (2) above multiplied by the
ratio of (A) the highest price per share paid by the interested
stockholder for any shares during the two-year period before the
date of announcement of the transaction to (B) the fair market value
of the stock on the first day in that two-year period on which the
interested stockholder acquired any shares of stock, and
(4) in the case of preferred stock, the highest preferential
amount per share to which stockholders are entitled in the event of
any voluntary or involuntary liquidation, dissolution or winding up
of our company,
. generally, the consideration to be received by holders of a
particular class of outstanding voting stock is in cash or in the
same form as the interested stockholder has previously paid for
shares of that class of voting stock,
. after the interested stockholder has become an interested stockholder
and before the completion of the business combination, specified
actions or omissions have not occurred with respect to dividends and
the interested stockholder has not become the beneficial owner of any
additional voting stock except as part of the transaction which
results in the interested stockholder becoming an interested
stockholder,
. after the interested stockholder has become an interested
stockholder, the interested stockholder has not received, except
proportionately as a shareholder, any financial assistance or tax
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advantages provided by the corporation, whether in anticipation of or
in connection with the business combination or otherwise, and
. a proxy or information statement describing the proposed business
combination and complying with the requirements of the Securities
Exchange Act of 1934 is mailed to stockholders at least 30 days
before the completion of the business combination.
Section 203 of the Delaware General Corporation Law provides that,
subject to specified exceptions, a corporation may not engage in a broad range
of business combinations with any "interested stockholder" for a three-year
period following the time that the stockholder becomes an interested
stockholder unless:
. prior to that time, the board of directors of the corporation
approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder,
. upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding, shares
owned by persons who are both officers and directors of the
corporation and shares held by specified employee stock ownership
plans, or
. on or after that time, the business combination is approved by the
board of directors of the corporation and approved at an annual
meeting or special meeting of stockholders by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not owned
by the interested stockholder.
In general, an "interested stockholder" is defined for purposes of Section 203
to include any person that is
. the owner of 15% or more of the outstanding voting stock of the
corporation, or
. an affiliate or associate of the corporation that was the owner of
15% or more of the outstanding voting stock of the corporation at any
time within the previous three years.
Section 203 permits a corporation to opt out of these provisions, although we
have not done so. Our board of directors has, however, approved the transaction
which resulted in both Kenneth L. Agee and Mark A. Agee becoming interested
stockholders. As a result, the provisions of Section 203 are not applicable to
either Kenneth L. Agee or Mark A. Agee.
Amendments to Charter
Amendments of our charter generally require the approval of the holders
of a majority of the outstanding stock entitled to vote on the amendment, and
if the amendment would increase or decrease the number of authorized shares of
any class or series or the par value of shares of that class or series or would
adversely affect the rights, powers or preferences of that class or series, a
majority of the outstanding stock of that class or series also would be
required to approve the amendment. However, the approval of the board of
directors and the affirmative vote of 80% of the stock entitled to vote in the
election of directors is required for the amendment or repeal of, or the
adoption of provisions that are inconsistent with, the provisions of our
charter regarding:
. powers of the board of directors with respect to the bylaws and our
accounts and books, and
. the number, election and classification of our directors.
22
<PAGE>
In addition, the amendment or repeal of, or the adoption of provisions
that are inconsistent with, the provisions of our charter regarding votes
required for business combinations with interested stockholders described
above requires the approval of our board of directors and the affirmative vote
of 66 2/3% of the holders of stock entitled to vote in the election of
directors and not owned directly or indirectly by interested stockholders or
their affiliates.
Amendments to Bylaws
Our board of directors may adopt, alter or amend the bylaws. In addition
to meeting notice requirements, our bylaws provide that the affirmative vote
of the holders of at least 80% of the voting power of the then outstanding
voting stock, voting together as a single class, is required for stockholders
to alter, amend or repeal any provision of the bylaws or to adopt any
additional bylaws.
Special Meetings of Stockholders
Subject to the rights of holders of any series of preferred stock or any
other series or class of stock as set forth in our charter, our bylaws provide
that a special meeting may be called only by the chairman of the board of
directors or by the board of directors pursuant to a resolution adopted by a
majority of the total number of our directors (including vacancies). The
business permitted to be conducted at any special meeting of stockholders is
limited to the business brought before the meeting pursuant to the notice of
meeting.
Stockholder Action by Written Consent
Our charter provides that corporate action may not be taken by written
consent of stockholders.
Advance Notice Provisions for Stockholder Director Nominations and Stockholder
Proposals
Our bylaws establish an advance notice procedure for stockholders to
make nominations of candidates for election as directors or to bring other
business before an annual meeting of our stockholders.
Our bylaws provide that only individuals who are nominated pursuant to
the notice of meeting or by, or at the direction of, our chairman of the board
of directors or our board of directors, or by a stockholder who has given
timely written notice to our secretary before the meeting at which directors
are to be elected, will be eligible for election as one of our directors. The
bylaws also provide that at an annual meeting only business may be conducted
as has been brought before the meeting by, or at the direction of, the
chairman of the board or our board of directors, or by a stockholder who has
given timely written notice to our secretary of the stockholder's intention to
bring that business before the meeting.
Under these provisions, for notice of stockholder director nominations
or proposals to be made at an annual meeting to be timely, the notice must
generally be received by us:
. not less than 70 days nor more than 90 days before the first
anniversary of the previous year's annual meeting, or
. if the date of the annual meeting is advanced by more than 20 days,
or delayed by more than 70 days, from the anniversary date, not
earlier than 90 days before the meeting and not later than the later
of (1) 70 days before the meeting and (2) 10 days after public
announcement of the date of the meeting is first made.
However, if the number of directors to be elected is increased and there
is no public announcement naming all of the nominees for director or
specifying the size of the increased board of directors at least 80 days
before the first anniversary of the preceding year's annual meeting, a
stockholder's notice will be timely,
23
<PAGE>
but only with respect to nominees for any new positions created by that
increase, if it is received by us not later than 10 days after the public
announcement is first made by us. If directors are to be elected at a special
meeting, the notice must be received by us not earlier than 90 days before the
meeting and not later than the later of (1) 70 days before the meeting and (2)
10 days after public announcement of the date of the meeting. Stockholders may
not bring business before a special meeting of stockholders under the bylaws.
Under the bylaws, a stockholder's notice to us proposing to nominate an
individual for election as a director must contain specified information,
including the identity and address of the nominating stockholder and the
beneficial owner, if any, the class and number of shares of stock that are
owned beneficially and of record by the stockholder and the beneficial owner,
and all information regarding the proposed nominee that would be required to be
included in a proxy statement soliciting proxies for the proposed nominee.
Under the bylaws, a stockholder's notice relating to the conduct of business
other than the nomination of directors must contain specified information about
the proposed business and about the proposing stockholders, including a brief
description of the business the stockholder proposes to bring before the
meeting, the reasons for conducting the business at the meeting, the name and
address of the stockholder and the beneficial owner, if any, the class and
number of shares of stock owned beneficially and of record by the stockholder
and the beneficial owner, and any material interest of the stockholder and the
beneficial owner, if any, in the business so proposed. If the chairman of the
board or other officer presiding at a meeting determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the bylaws, that person will not be eligible for election as a director,
or that business will not be conducted at the meeting, as the case may be.
Classification of Directors
Our charter provides that directors will be divided into three classes
serving staggered three-year terms so that approximately one-third of the board
of directors is elected each year. Our charter also provides that, subject to
the rights of the holders of any series of preferred stock or any other series
or class of stock as set forth in the charter to elect additional directors
under specified circumstances, the number of directors is fixed in accordance
with the bylaws. Our bylaws provide that the number of directors is to be fixed
from time to time pursuant to a resolution adopted by a majority of the board
of directors (including vacancies) but will not consist of more than 11 nor
less than three directors. As of March 7, 2000, the board of directors
consisted of nine persons.
The classification of directors makes it more difficult for stockholders
to change the composition of the board of directors. At least two annual
meetings of stockholders, instead of one, will be required to effect a change
in a majority of the board of directors.
Removal of Directors; Filling Vacancies on the Board of Directors
Our charter provides that a director may be removed only for cause and
only by the affirmative vote of the holders of at least 80% of the voting power
of the then outstanding voting stock, voting together as a single class.
Under our bylaws, newly created directorships resulting from any increase
in the number of directors or any vacancies on the board of directors may be
filled by the affirmative vote of a majority of the directors then in office,
subject to the rights, if any, of holders of our preferred stock. In addition,
our bylaws provide that the directors elected to fill vacancies on the board of
directors will hold office until the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires.
24
<PAGE>
PLAN OF DISTRIBUTION
We may sell the offered common stock in and outside the United States
through underwriters or dealers, directly to purchasers or through agents. The
prospectus supplement will set forth the following information:
. the terms of the offering,
. the names of any underwriters or agents,
. the purchase price,
. the net proceeds to us,
. any delayed delivery arrangements,
. any underwriting discounts and other items constituting underwriters'
compensation,
. the initial public offering price, and
. any discounts or concessions allowed or reallowed or paid to dealers.
Sale Through Underwriters or Dealers
If we use underwriters in the sale, the underwriters will acquire the
common stock for their own account. The underwriters may resell the common
stock from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer common stock to the public either
through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. Unless we
inform you otherwise in the prospectus supplement, the obligations of the
underwriters to purchase the common stock will be subject to conditions, and
the underwriters will be obligated to purchase all the offered common stock if
they purchase any of the offered common stock. The underwriters may change from
time to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the common stock in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, in which selling concessions
allowed to syndicate members or other broker-dealers for the offered common
stock sold for their account may be reclaimed by the syndicate if the offered
common stock is repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered common stock, which may be higher than the price
that might otherwise prevail in the open market. If commenced, these activities
may be discontinued at any time.
If we use dealers in the sale of common stock, we will sell the common
stock to them as principals. They may then resell that common stock to the
public at varying prices determined by the dealers at the time of resale. The
dealers participating in any sale of our common stock may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any sale of that common stock. We will include in the prospectus supplement the
names of the dealers and the terms of the transaction.
Direct Sales and Sales Through Agents
We may sell the common stock directly. In that event, no underwriters or
agents would be involved. We may also sell the common stock through agents we
designate from time to time. In the prospectus supplement, we will name any
agent involved in the offer or sale of the offered common stock, and we will
describe any commissions payable by us to the agent. Unless we inform you
otherwise in the prospectus
25
<PAGE>
supplement, any agent will agree to use its reasonable best efforts to solicit
purchases for the period of its appointment.
We may sell the common stock directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the
Securities Act of 1933 with respect to any sale of that common stock. We will
describe the terms of any of these sales in the prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from selected types of institutions
to purchase common stock from us at the public offering price under delayed
delivery contracts. These contracts would provide for payment and delivery on a
specified date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The prospectus supplement
will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the agents, dealers and underwriters to
indemnify them against civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute with respect to payments that the
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters may engage in transactions with us or may perform services for us
in the ordinary course of their businesses.
LEGAL OPINIONS
Eric Grimshaw, our Vice President, Secretary and General Counsel, or
Baker Botts L.L.P., our outside legal counsel, will issue an opinion about the
legality of the offered common stock for us. Any underwriters will be advised
about issues relating to any offering by their own legal counsel.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by
Syntroleum Corporation (together with its predecessors, the "Company") in
connection with the offering described in this Registration Statement.
<TABLE>
<S> <C>
Registration Fee................................................... $ 31,680
Nasdaq National Market listing fee................................. 17,500
Printing expenses.................................................. 100,000
Accounting fees and expenses....................................... 75,000
Legal fees and expenses............................................ 100,000
Miscellaneous...................................................... 25,820
--------
Total............................................................ $350,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Limitation of Liability of Directors
The Company's Certificate of Incorporation provides that a director of
the Company will not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability resulting from the following:
. for any breach of the director's duty of loyalty to the Company or its
stockholders,
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
. under Section 174 of the General Corporation Law of the State of
Delaware (the "DGCL"), which concerns unlawful payments of dividends,
stock purchases or redemptions, or
. for any transaction from which the director derived an improper
personal benefit.
While the Company's Certificate of Incorporation provides directors with
protection from awards for monetary damages for breaches of their duty of care,
it does not eliminate such duty. Accordingly, the Company's Certificate of
Incorporation will have no effect on the availability of equitable remedies
such as an injunction or rescission based on a director's breach of his or her
duty of care. The provisions of the Company's Certificate of Incorporation
described above apply to an officer of the Company only if he or she is a
director of the Company and is acting in his or her capacity as director, and
do not apply to officers of the Company who are not directors.
Indemnification of Directors and Officers.
The Company's Certificate of Incorporation provides that each person who
is or was or had agreed to become a director or officer of the Company, or each
such person who is or was serving or who had agreed to serve at the request of
the Company as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person), will be indemnified by the Company,
in accordance with the Company's Bylaws, to the fullest extent permitted from
time to time by the DGCL, as the same exists or may hereafter be amended (but,
if permitted by applicable law, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) or any other applicable laws as presently or hereafter in
effect. The Company may, by action of the Company's Board of Directors, provide
indemnification to employees and agents of the Company, and to
II-1
<PAGE>
persons serving as employees or agents of another corporation, partnership,
joint venture, trust or other enterprise, at the request of the Company, with
the same scope and effect as the foregoing indemnification of directors and
officers. The Company may be required to indemnify any person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Company's Board of Directors or is a proceeding to enforce such person's claim
to indemnification pursuant to the rights granted by the Company's Certificate
of Incorporation or otherwise by the Company.
The Company's Bylaws provide that each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative is or was a director or officer of the Company
or is or was serving at the request of the Company as a director or officer of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such Proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, will be indemnified and held harmless by the Company to the fullest
extent authorized by the DGCL as the same exists or may in the future be
amended (but, if permitted by applicable law, in the case of any such
amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification will continue
as to a person who has ceased to be a director or officer and will inure to the
benefit of his or her heirs, executors and administrators; provided, however,
except as described in the second following paragraph with respect to
Proceedings to enforce rights to indemnification, the Company will indemnify
any such person seeking indemnification in connection with a Proceeding (or
part thereof) initiated by such person only if such Proceeding (or part
thereof) was authorized by the Company's Board of Directors.
Pursuant to the Company's Bylaws, to obtain indemnification, a claimant
is to submit to the Company a written request for indemnification. Upon such
written request by a claimant, a determination, if required by applicable law,
with respect to the claimant's entitlement to indemnification will be made, if
requested by the claimant, by independent legal counsel, or if the claimant
does not so request, by the Company's Board of Directors by a majority vote of
the disinterested directors even though less than a quorum or, if there are no
disinterested directors or the disinterested directors so direct, by
independent legal counsel in a written opinion to the Company's Board of
Directors, or if the disinterested directors so direct, by the stockholders of
the Company. In the event the determination of entitlement to indemnification
is to be made by independent legal counsel at the request of the claimant, the
independent legal counsel will be selected by the Company's Board of Directors
unless there has occurred within two years prior to the date of the
commencement of the action, suit or proceeding for which indemnification is
claimed a change of control, in which case the independent legal counsel will
be selected by the claimant unless the claimant requests that such selection be
made by the Company's Board of Directors.
Pursuant to the Company's Bylaws, if a claim described in the paragraph
above the preceding paragraph is not paid in full by the Company within thirty
days after a written claim pursuant to the preceding paragraph has been
received by the Company, the claimant may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant will also be entitled to be paid
the expense of prosecuting such claim. The Company's Bylaws provide that it
will be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Company) that the claimant has not met the standard of conduct
which makes it permissible under the DGCL for the Company to indemnify the
claimant for the amount claimed, but the burden of proving such defense will be
on the Company. Neither the failure of the Company (including the disinterested
directors, independent legal counsel or stockholders) to have made a
determination prior to the
II-2
<PAGE>
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the DGCL, nor an actual determination by the Company (including
the disinterested directors, independent legal counsel or stockholders) that
the claimant has not met such applicable standard of conduct, will be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct. However, the Company will be precluded from
asserting that the procedures and presumptions set forth in the Company's
Bylaws are not valid, binding and enforceable and will be bound by a
determination pursuant to the procedures set forth in the Company's Bylaws that
the claimant is entitled to indemnification in any suit brought by a claimant
pursuant to the Company's Bylaws.
The Company's Bylaws provide that the right to indemnification and the
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in the Company's Bylaws will not be exclusive of any
other right which any person may have or may in the future acquire under any
statute, provision of the Company's Certificate of Incorporation, the Company's
Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise. The Company's Bylaws permit the Company to maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Company or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the Company
would have the power to indemnify such person against such expense, liability
or loss under the DGCL. In addition, the Company's Bylaws authorize the
Company, to the extent authorized from time to time by the Company's Board of
Directors, to grant rights to indemnification and rights to be paid by the
Company the expenses incurred in defending any Proceeding in advance of its
final disposition to any employee or agent of the Company to the fullest extent
of the provisions of the Company's Bylaws with respect to the indemnification
and advancement of expenses of directors and officers of the Company.
The Company's Bylaws provide that the right to indemnification conferred
therein is a contract right and includes the right to be paid by the Company
the expenses incurred in defending any Proceeding in advance of its final
disposition, except that if the DGCL requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
Proceeding, will be made only upon delivery to the Company of an undertaking by
or on behalf of such director or officer, to repay all amounts so advanced if
it is ultimately determined that such director of officer is not entitled to be
indemnified under the Company's Bylaws or otherwise.
The Company has entered into indemnification agreements with each of its
directors and executive officers that contractually provide for indemnification
and expense advancement and include related provisions meant to facilitate the
indemnitees' receipt of such benefits. These provisions cover, among other
things: (i) specification of the method of determining entitlement to
indemnification and the selection of independent counsel that will in some
cases make such determination; (ii) specification of certain time periods by
which certain payments or determinations must be made and actions must be
taken; and (iii) the establishment of certain presumptions in favor of an
indemnitee. The benefits of certain of these provisions are available to an
indemnitee only if there has been a change in control (as defined).
The Company currently has directors' and officers' insurance that insures
directors and officers of the Company with respect to claims made for alleged
"wrongful acts" in their roles as directors or officers of the Company and its
subsidiaries. The insurance also insures the Company for claims against the
Company's directors or officers in situations in which the Company has an
obligation to defend and/or indemnify its directors and officers.
II-3
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
*1 Form of Underwriting Agreement
+4.1 Certificate of Incorporation of the Company (incorporated by reference
to Annex B to the Proxy Statement of the Company filed with the SEC on
May 12, 1999)
+4.2 Bylaws of the Company (incorporated by reference to Appendix C to the
Proxy Statement of the Company filed with the SEC on May 12, 1999)
+4.3 Amended and Restated Rights Agreement dated as of January 31, 1997 and
Amended and Restated as of June 17, 1999 (incorporated by reference to
Exhibit 4.4 of the Company's Current Report on Form 8-K filed with the
SEC on June 17, 1999)
+4.4 Certificate of Designations of Series A Junior Participating Preferred
Stock of the Company, dated June 16, 1999 (incorporated by reference
to Exhibit 4.5 of the Company's Current Report on Form 8-K filed with
the SEC on June 17, 1999)
5.1 Opinion of Baker Botts L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1)
23.3 Consent of Petroconsultants, Inc.
++24 Powers of Attorney (included on signature page)
</TABLE>
- --------
+Incorporated by reference as indicated.
* To be filed by a post-effective amendment to this Registration Statement or
as an exhibit to a Current Report on Form 8-K.
++ Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a further post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment no. 1 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Tulsa, the State of Oklahoma, on
April 25, 2000.
Syntroleum Corporation
/s/ Eric Grimshaw
By: _________________________________
Eric Grimshaw
Vice President, Secretary and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 25, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
* Chief Executive Officer
______________________________________ and Chairman of the Board
Kenneth L. Agee (Principal Executive
Officer)
* President, Chief Operating
______________________________________ Officer and Director
Mark A. Agee
* Vice President and Chief
______________________________________ Financial Officer
Randall M. Thompson (Principal Financial
Officer)
* Controller (Principal
______________________________________ Accounting Officer)
Carla S. Covey
* Director
______________________________________
Alvin R. Albe, Jr.
* Director
______________________________________
Frank M. Bumstead
* Director
______________________________________
Robert A. Day
* Director
______________________________________
P. Anthony Jacobs
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
* Director
______________________________________
Robert Rosene, Jr.
* Director
______________________________________
James R. Seward
* Director
______________________________________
J. Edward Sheridan
/s/ Eric Grimshaw
*By: _________________________________
Eric Grimshaw
Attorney-in-Fact
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No.
-------
<C> <S>
*1 Form of Underwriting Agreement
+4.1 Certificate of Incorporation of the Company (incorporated by reference
to Annex B to the Proxy Statement of the Company filed with the SEC on
May 12, 1999)
+4.2 Bylaws of the Company (incorporated by reference to Appendix C to the
Proxy Statement of the Company filed with the SEC on May 12, 1999)
+4.3 Amended and Restated Rights Agreement dated as of January 31, 1997 and
Amended and Restated as of June 17, 1999 (incorporated by reference to
Exhibit 4.4 of the Company's Current Report on Form 8-K filed with the
SEC on June 17, 1999)
+4.4 Certificate of Designations of Series A Junior Participating Preferred
Stock of the Company, dated June 16, 1999 (incorporated by reference
to Exhibit 4.5 of the Company's Current Report on Form
8-K filed with the SEC on June 17, 1999)
5.1 Opinion of Baker Botts L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1)
23.3 Consent of Petroconsultants, Inc.
++24 Powers of Attorney (included on signature page)
</TABLE>
- --------
+Incorporated by reference as indicated.
* To be filed by a post-effective amendment to this Registration Statement or
as an exhibit to a Current Report on Form 8-K.
++ Previously filed.
II-8
<PAGE>
EXHIBIT 5.1
[Letterhead of Baker Botts L.L.P.]
April 24, 2000
Syntroleum Corporation
1350 South Boulder, Suite 1100
Tulsa, Oklahoma 74119
Gentlemen:
As set forth in the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by Syntroleum Corporation, a Delaware corporation (the
"Company"), under the Securities Act of 1933, as amended (the "Act"), relating
to shares of common stock, par value $.01 per share, of the Company ("Common
Stock") that may be issued and sold by the Company from time to time pursuant
to Rule 415 under the Act for an aggregate initial offering price not to exceed
$120,000,000, certain legal matters in connection with the Common Stock are
being passed upon for you by us.
In our capacity as your counsel in the connection referred to above, we
have examined (i) the Certificate of Incorporation and By-Laws of the Company
(together, the "Charter Documents"), and (ii) the originals, or copies
certified or otherwise identified, of corporate records of the Company,
certificates of public officials and of representatives of the Company,
statutes and other instruments and documents as a basis for the opinions
hereafter expressed.
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective under the Act; (ii) a prospectus
supplement will have been prepared and filed with the Securities and Exchange
Commission describing the terms of the offering of Common Stock; (iii) all
Common Stock will be issued and sold in compliance with applicable federal and
state securities laws and in the manner stated in the Registration Statement
and the applicable prospectus supplement; (iv) a definitive purchase,
underwriting or similar agreement with respect to any Common Stock offered will
have been duly authorized and validly executed and delivered by the Company and
the other parties thereto; and (v) there will be sufficient shares of Common
Stock authorized under the Company's Charter Documents and not otherwise
reserved for issuance.
Based upon and subject to the forgoing, we are of the opinion that:
1. The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of
Delaware.
2. When (i) the Board of Directors of the Company or, to the
extent permitted by the General Corporation Law of the State of
Delaware and the Company's Charter Documents, a duly constituted
and acting committee thereof (such Board of Directors of committee
being hereinafter referred to as the "Board") has taken all
necessary corporate action to approve the issuance thereof and the
terms of the offering of shares of Common Stock and related
matters, and (ii) certificates representing the shares of Common
Stock have been duly executed, countersigned, registered and
delivered, or if uncertificated, valid book-entry notations are
made in the share register of the Company, in accordance with the
applicable definitive purchase, underwriting or similar agreement
approved by the Board upon payment of the consideration thereof
(not less than the par value of the Common Stock) provided for
therein, the shares of Common Stock will be duly authorized,
validly issued, fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion of counsel as Exhibit 5.1
to the Registration Statement. We also consent to the reference to our Firm
under the heading "Legal Opinions" in the prospectus forming a part of the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ Baker Botts L.L.P.
JDG/DPE
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated January 18, 2000, included in Syntroleum
Corporation's Form 10-K/A for the year ended December 31, 1999, and to all
references to our Firm included in or made a part of this Amendment No. 1 to
Form S-3 Registration Statement File No. 333-32968.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
April 24, 2000
<PAGE>
EXHIBIT 23.3
CONSENT
We hereby consent to the incorporation by reference in this registration
statement on Form S-3 of the reference to us and to the resource study dated
September 17, 1997 prepared by us included in Syntroleum Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
Petroconsultants, Inc.
By: /s/ Mark Rose
V.P--IHS Energy
reference S-43, 44
April 24, 2000
