SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 28, 2004
ENGLOBAL CORPORATION
(Exact name of registrant as specified in its chapter)
Nevada 001-14217 88-0322261
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Century Plaza Drive, Suite 140, Houston, Texas 77073-6033
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 281-821-3200
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.02. Termination of a Material Definitive Agreement
In connection with the 2001 merger (the "Merger") of Petrocon Engineering, Inc.
("Petrocon") and a wholly-owned subsidiary of ENGlobal Corporation ("ENGlobal"),
certain former Petrocon shareholders (the "Significant PEI Shareholders")
entered into an Indemnification Escrow Agreement, a Voting Agreement, a
Significant PEI Shareholders Voting Agreement, and an Option Escrow Agreement
(collectively, the "2001 Agreements"). ENGlobal management has since determined
that, due to the cost and complexity associated with administering the 2001
Agreements, it is in the best interest of the Corporation and its stockholders
to terminate the same. As of September 28, 2004, ENGlobal and the requisite
percentage of Significant PEI Shareholders entered into a Termination Agreement
terminating the 2001 Agreements (the "Termination Agreement"). A copy of the
Termination Agreement is attached as an exhibit to this report on Form 8-K.
A brief description of the 2001 Agreements is set forth below:
1. Indemnification Escrow Agreement. Pursuant to the Indemnification Escrow
Agreement, 1,000,000 shares of ENGlobal common stock owned by the
Significant PEI Shareholders were deposited into an escrow to serve as a
fund against which ENGlobal could make claims for indemnity pursuant to the
Merger Agreement with Petrocon.
2. Voting Agreement. ENGlobal, the Significant PEI Shareholders, and certain
other parties entered into a Voting Agreement which obligated the parties
thereto to vote for certain persons to serve on the Board of Directors of
ENGlobal. The Significant PEI Shareholders also entered into a Significant
PEI Shareholders Voting Agreement governing the manner in which they would
designate three ENGlobal director nominees under the Voting Agreement and
vote the shares held in escrow.
3. Option Escrow Agreement. Pursuant to the Option Escrow Agreement, the
Significant PEI Shareholders deposited 1,737,473 shares of ENGlobal common
stock into an escrow account. The Option Escrow Agreement required that if
ENGlobal issued shares of its common stock on the exercise of incentive
options granted as replacement options for outstanding Petrocon incentive
options ("Replacement Options"), a like number of shares of ENGlobal common
stock would be surrendered from the escrow account to ENGlobal. As a
result, no dilution to ENGlobal's stockholders would occur upon the
exercise of Replacement Options. Pursuant to the terms of the Termination
Agreement, ENGlobal will purchase from the Significant PEI Shareholders who
executed the Termination Agreement their pro rata share of shares
underlying $0.96 exercisable Replacement Options. The purchase price for
these shares will be $0.96 per share. ENGlobal will also issue each
Significant PEI Shareholder his or her pro rata share of common stock
underlying Replacement Options with exercise prices in excess of $0.96 per
share.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Number Exhibit
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99.1 Termination Agreement by and among ENGlobal Corporation, Equus II
Incorporated, Alliance 2000, Ltd., Significant PEI Shareholders,
Michael L. Burrow, as shareholder representative for the
Significant PEI Shareholders, and Johnny J. Williams, Esq., as
Escrow Agent, dated September 28, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENGlobal Corporation
Date: September 30, 2004 /s/ Natalie S. Hairston
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Natalie S. Hairston, Investor Relations
Officer, Chief Governance Officer and
Corporate Secretary