-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MBx0/aJXnvFrPzyRGTx8yzT6D01yEN5nRcXNyDWZFm7XpulIi5QynM5JhKzddxF3 7Tz0Fw5b8fPCvd6+5zsRJg== 0001050502-07-000203.txt : 20070523 0001050502-07-000203.hdr.sgml : 20070523 20070523125143 ACCESSION NUMBER: 0001050502-07-000203 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070402 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070523 DATE AS OF CHANGE: 20070523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENGLOBAL CORP CENTRAL INDEX KEY: 0000933738 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 880322261 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14217 FILM NUMBER: 07873224 BUSINESS ADDRESS: STREET 1: 654 N. SAM HOUSTON PKWY E STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060-5914 BUSINESS PHONE: 281-878-1000 MAIL ADDRESS: STREET 1: 654 N. SAM HOUSTON PKWY E STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060-5914 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL DATA SYSTEMS CORP DATE OF NAME CHANGE: 19970123 8-K 1 englobal8k4-207.txt 8-K UNITED STATES 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): April 2, 2007 ENGlobal Corporation - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Nevada - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-14217 88-0322261 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 654 N. Sam Houston Pkwy E., Suite 400, Houston, Texas 77060-5914 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 281-878-1000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers On April 2, 2007, Michael L. Burrow retired from his positions as Chairman of the Board and Chief Executive Officer, and announced his intention to retire as President on May 18, 2007. The Company entered into a Separation Agreement and Release with Mr. Burrow, providing for severance payments equal to his current salary for a period of up to one year following the date of his retirement. In addition, Mr. Burrow's health, medical, and dental insurance policies will remain in effect for the one-year period following the date of his retirement. The Separation Agreement and Release included customary covenants, including a release by Mr. Burrow of any liability relating to his employment by the Company. In connection with the Separation Agreement and Release, the Company, Mr. Burrow, and Alliance 2000, Ltd. ("Alliance"), a partnership controlled by William A. Coskey and Hulda Coskey, entered into a Second Amended and Restated Alliance 2000, Ltd. Stock Option Agreement. Under the amended agreement, Mr. Burrow's option to acquire shares from Alliance will not expire on his retirement, but rather will remain in existence until December 20, 2011. In exchange, Mr. Burrow agreed to certain covenants, including non-competition and non-interference covenants. The foregoing descriptions of the Separation Agreement and Release and the Second Amended and Restated Alliance 2000, Ltd. Stock Option Agreement do not purport to be complete and are qualified in their entirety by reference to the agreements, which are filed as Exhibits 10.1 and 10.2, and are incorporated herein by reference. Item 9.01 Financial Statements and Exhibits (d) Exhibits Exhibit Number Description -------------- ----------- 10.1 Separation Agreement and Release dated April 2, 2007, between ENGlobal Corporation and Michael L. Burrow. 10.2 Second Amended and Restated Alliance Stock Option Agreement dated to be effective as of December 20, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ENGlobal Corporation Date: May 23, 2007 By: /s/ Natalie S. Hairston ------------------------------- Natalie S. Hairston, Investor Relations Officer, Chief Governance Officer, and Corporate Secretary EXHIBIT LIST Exhibit Number Description - -------------- ----------- 10.1 Separation Agreement and Release dated April 2, 2007, between ENGlobal Corporation and Michael L. Burrow. 10.2 Second Amended and Restated Alliance Stock Option Agreement dated to be effective as of December 20, 2006. EX-10.1 2 englobal8k4-2101.txt SEPARATION AGREEMENT Exhibit 10.1 SEPARATION AGREEMENT AND RELEASE -------------------------------- This Separation Agreement and Release (this "Agreement"), dated April 2, 2007, (the "Effective Date"), sets forth the mutual agreement of ENGlobal Corporation, a Nevada corporation, for itself and its subsidiaries and affiliates (collectively "ENGlobal"), and Michael L. Burrow ("Burrow"), regarding Burrow's separation from employment with ENGlobal. Terms not otherwise defined in this Agreement shall have the meanings ascribed to them in that certain Key Executive Employment Agreement dated January 1, 2006 between ENGlobal and Burrow (the "Employment Agreement"). RECITALS: Burrow has been employed by and has served as an officer and a member of the Board of Directors of ENGlobal since December 2001. On the Effective Date, Burrow resigned as President and Chief Executive Officer, as a member of ENGlobal' s Board of Directors, and as an employee of ENGlobal. The parties to this Agreement have decided to resolve any differences that may exist in connection with Burrow's employment with ENGlobal, service on ENGlobal's Board of Directors, and separation therefrom. The parties desire to keep the terms of this Agreement confidential, to be knows only by the parties to this Agreement and their attorneys, except as otherwise required by law. NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained, including the recitals set forth above, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement agree as follows: 1. Consideration from ENGlobal. If Burrow signs this Agreement, does not revoke this Agreement, and complies fully with this Agreement, ENGlobal will provide Burrow with the following valuable consideration, a portion of which is expressly agreed to be in addition to anything to which Burrow is currently entitled and not otherwise required by ENGlobal's policies, procedures, or practices: (a) Severance Payments. (i) During the Initial Severance Benefit Period, ENGlobal will pay Burrow severance benefits (subject to applicable tax and other withholdings) in payroll period installments in accordance with ENGlobal's normal payroll policies, in an amount equal to the monthly amount of Burrow's Annual Salary in effect at the Effective Date. In addition, ENGlobal will (under the same cost sharing arrangements as were in place prior to the Effective Date), continue to include Burrow and his eligible dependents under the coverage of all group health, medical and dental insurance policies, plans and programs maintained by ENGlobal during the Initial Severance Benefit Period for ENGlobal's employees, or management employees, generally. (ii) ENGlobal hereby extends the Restricted Period, and ENGlobal will pay Burrow severance benefits (subject to applicable tax and other withholdings) during the Second Severance Benefit Period, in payroll period installments in accordance with ENGlobal's normal payroll policies, in an amount equal to the monthly amount of Burrow's Annual Salary in effect at the Effective Date. In addition, ENGlobal will (under the same cost sharing arrangements as were in place prior to the Effective Date), continue to include Burrow and his eligible dependents under the coverage of all group health, medical and dental insurance policies, plans and programs maintained by ENGlobal during the Second Severance Benefit Period for ENGlobal's employees, or management employees, generally. (b) Benefits and Expenses. (i) Burrow understands and agrees that balances or vested balances Burrow has in any ENGlobal benefit plan will be available to Burrow consistent with applicable law, regulations and the administrative provisions of the various plan documents. Except as provided in Section 1(b)(ii), any options to acquire shares of ENGlobal's common stock will expire or be exercisable in accordance with the terms and provisions of the applicable agreement, plans and plan documents. Burrow further understands that he will not receive any grants of stock or options from ENGlobal in the future. (ii) On the Effective Date, ENGlobal and Alliance 2000, Ltd. will enter into the Second Amended and Restated Alliance Stock Option Agreement attached as Exhibit A. (iii) Burrow agrees that he will not conduct any market transactions in ENGlobal stock (including purchasing or selling shares and moving funds in or out of the ENGlobal 401(k) Plan) until ENGlobal files its definitive proxy statement on Schedule 14A for year 2007. This restriction shall not impede Burrow's ability to exercise his vested options to acquire shares of ENGlobal common stock as permitted under the applicable option agreements. (iv) ENGlobal agrees to reimburse Burrow for all reasonable business expenses incurred through March 31, 2007. 2. Release. (a) Burrow hereby knowingly and voluntarily waives, relieves, releases, acquits and forever discharges ENGlobal, and its predecessors, parent and affiliated companies, successors and assigns, officers, directors, agents, employees, shareholders, attorneys, accountants, employee benefit plans and trustees, and any and all other related individuals and entities (collectively, the "Releasees"), from any and all claims, debts, liabilities, demands, obligations, liens, promises, acts, agreements, costs, expenses (including, but not limited to, attorneys' fees), damages, actions and causes of action, of any nature whatsoever, including, without limitation, any statutory, civil or administrative claim, or any claim, arising out of facts, whether known or unknown, suspected or unsuspected, fixed or contingent, apparent or not, including, but not limited to, any claims based on, arising out of, related to or connected with Burrow's employment with, or termination of employment from, ENGlobal, including but not limited to, any claims arising from federal, state 2 or local laws which prohibit discrimination on the basis of race, national origin, religion, age, sex, marital status, pregnancy, disability, perceived disability, ancestry, sexual orientation, family or personal leave, or any other form of discrimination, or from any common law claims of any kind, including, but not limited to, contract, tort, or property rights, including, but not limited to, breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contract or current or prospective economic advantage, fraud, deceit, breach of privacy, misrepresentation, defamation, wrongful termination, tortious infliction of emotional distress, loss of consortium and breach of fiduciary duty, violation of public policy and any other common law claim of any kind whatsoever, and claims for severance pay, sick leave, family leave, vacation, life insurance, bonuses, health insurance, disability or medical insurance or any other fringe benefit or compensation, or from any and all rights or claims arising under the Civil Rights Act of 1964, as amended, 42 U.S.C. ss.ss. 2000e, et seq.; the Americans with Disabilities Act, 42 U.S.C. ss.ss. 12101, et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. ss.ss. 621 et seq.; the Older Workers Benefit Protection Act; the Sarbanes-Oxley Act of 2002, including the whistleblower provisions thereof; the Texas Commission on Human Rights Act, Tex. Labor Code ss.ss. 21.001, et seq. (prohibiting discrimination based upon age, race, sex, religion, national origin or disability); the Family & Medical Leave Act; the Employee Retirement Income Security Act of 1974; and the Worker Adjustment Retraining and Notification Act. Claims which cannot be waived by law are excluded from the release provisions of this Section 2; however, Burrow does waive his right to any monetary recovery should any agency pursue claims against any Releasee on Burrow's behalf. (b) Burrow understands and agrees, in compliance with any statute or ordinance which requires a specific release of unknown claims or benefits, that this Agreement includes a release of unknown claims, and Burrow hereby expressly waives and relinquishes any and all claims, rights or benefits that Burrow may have which are unknown to Burrow at the time of the execution of this Agreement. Burrow understands and agrees that if, hereafter, Burrow discovers facts different from or in addition to those which Burrow now knows or believes to be true, that the waivers and releases of this Agreement shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of such fact. (c) If Burrow is at least 40 years old, Burrow agrees and expressly acknowledges that this Agreement includes a waiver and release of all claims which Burrow has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss.ss. 621, et seq. ("ADEA"), the Older Workers Benefit Protection Act, as amended, or any equivalent or comparable provision of federal, state or local law, including, without limitation, the Texas Commission on Human Rights Act. The following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Agreement by Burrow: (i) The waiver and release of claims under ADEA contained in this Agreement do not cover rights or claims that may arise after the date on which Burrow signs this Agreement. (ii) This Agreement involves consideration in addition to anything of value to which Burrow is already entitled. 3 (iii) Burrow is advised to consult an attorney before signing this Agreement. If Burrow executes this Agreement prior to the expiration of the period specified in Section 2(c)(iv), Burrow does so voluntarily and after having had the opportunity to consult with an attorney. (iv) Burrow is granted 21 days after Burrow is presented with this Agreement to consider this Agreement. (v) Burrow will have the right to revoke the waiver and release of claims under the ADEA within seven days of signing this Agreement. This Section 2(c) shall not become effective or enforceable until the revocation period has expired, and Burrow understands and agrees that no consideration shall be paid to Burrow pursuant to this Agreement until the revocation period has expired without the waiver and release of claims under ADEA having been revoked. 3. Non-Admission of Liability. The parties are entering into this Agreement to, among other things, resolve any claims or differences that may exist between them. By entering into this Agreement, neither Burrow nor ENGlobal admit any liability or wrongdoing. 4. Company Documents, Information or Property. Burrow agrees that he will promptly, and in any event no later than 5:00 p.m. on May 18th, 2007, return to ENGlobal any and all electronic and/or paper documents relating to ENGlobal or its business operations (and any and all copies thereof, whether in paper form or electronic form), computer equipment, badges, credit cards and any other ENGlobal property in Burrow's possession or control. Burrow agrees that he will not take any such documents or property from the control or premises of ENGlobal and that if, at any time after his separation from ENGlobal, Burrow should come into possession of any such documents or property, Burrow will return such documents or property to ENGlobal immediately. 5. Employment Agreement and Other Agreements. Burrow agrees that, except as otherwise provided in this Agreement, the provisions of Sections 4, 5.5, 7 and 8 of the Employment Agreement and the stock option agreements that Burrow previously entered into with ENGlobal remain in full force and effect. 6. Cooperation. Burrow agrees that he will give ENGlobal his full cooperation in connection with any claims, lawsuits, or proceedings that relate in any manner to Burrow's conduct or duties at ENGlobal or that are based on facts about which Burrow obtained personal knowledge while employed at ENGlobal. In return, ENGlobal agrees to reimburse Burrow for his direct and reasonable out-of-pocket expenses (including reasonable attorneys' fees) incurred with respect to rendering such cooperation. Burrow further agrees that he will not voluntarily become a party to, or directly or indirectly aid or encourage any other party in connection with, any lawsuit, claim, demand, or adversarial or investigatory proceeding of any kind involving ENGlobal or any of the Releasees that relates in any material way to his employment with ENGlobal or that is based on facts about which Burrow obtained personal knowledge while employed with ENGlobal. Burrow's compliance with a subpoena or other legally compulsive process will not be a violation of this provision. 4 7. Confidentiality. Burrow agrees that, except as may be required by law, court order, regulation, or to enforce this Agreement, he will keep the terms, amount and fact of this Agreement completely confidential. The confidentiality of the terms and conditions contained in this Agreement are part of the consideration inducing ENGlobal to enter into this Agreement. If Burrow or his spouse, attorneys, or accountants breach the promises contained in this Section, ENGlobal shall withhold payment of any sums due under this Agreement, Burrow shall return all monies already paid pursuant to this Agreement, and Burrow shall be liable for any additional damages, including any attorneys' fees and costs incurred. Any such action permitted to ENGlobal by the foregoing, however, will not affect or impair any of Burrow's obligations or promises made pursuant to this Agreement including without limitation, the release of claims in Section 2. Notwithstanding the foregoing, Burrow may disclose pertinent information concerning this Agreement to Burrow's attorneys, tax advisors and financial planners, and Burrow's spouse and other close family members provided they have previously been informed of and have agreed to be bound by this confidentiality clause. Burrow understands and agrees that a breach of this confidentiality clause by any of the above named individuals will be deemed a breach of this Agreement by Burrow. 8. Non-Disparagement. Burrow agrees that, except as may be required by law or court order, Burrow will not, directly or indirectly, make any statement, oral or written, or perform any act or omission which is or could be detrimental in any material respect to the reputation or goodwill of ENGlobal or any Releasee. If Burrow breaches the promises contained in this Section, ENGlobal shall withhold payment of any sums due under this Agreement, Burrow shall return all monies already paid pursuant to this Agreement, and Burrow shall be liable for any additional damages, including any attorneys' fees and costs incurred. Any such action permitted to ENGlobal by the foregoing, however, will not affect or impair any of Burrow's obligations or promises made pursuant to this Agreement including without limitation, the release of claims in Section 2. Further, ENGlobal agrees that except as may be required by law or court order, ENGlobal will not, directly or indirectly, make any statement, oral or written, or perform any act or omission which is or could be detrimental in any material respect to the reputation or goodwill of Burrow. 9. No Re-Employment. As part of the consideration inducing ENGlobal to enter into this Agreement, Burrow agrees never to reapply for employment with ENGlobal, its parents and subsidiaries, and understands that if he does, such application will be rejected pursuant to this Agreement. 10. Nature of Settlement. The parties agree to be responsible for their own federal income tax obligations, if any. Burrow further agrees to indemnify ENGlobal from and against any damages and penalties associated with any of Burrow's income tax obligations arising from this settlement. 11. Dispute Resolution. With the exception of claims for injunctive relief, each of the parties consents to attempt to resolve any dispute among them by mediation. If the parties are unable to resolve their claims in mediation, then the parties consent to submit any and all claims or controversies arising in connection with this Agreement to binding arbitration and agree that such arbitration shall be in accordance with the then current Commercial Arbitration Procedures of the American Arbitration Association before an arbitrator who is licensed to practice law. 5 However, the arbitration need not be conducted under the auspices of the American Arbitration Association. The cost of mediation will be shared equally between the parties. The prevailing party in arbitration, if arbitration is necessary, may be awarded attorneys' fees by the arbitrator; provided that no person shall be considered to be a prevailing party if it recovers less in such proceeding than the highest written offer of settlement from the party from which it seeks to recover. Except as required by law, all mediation and arbitration proceedings shall be kept strictly confidential by the parties. 12. Applicable Law and Venue. This Agreement shall be interpreted in all respects by the laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas, and the venue for the resolution of any disputes (location of any lawsuit) shall be solely in the state and federal courts of Harris County, Texas. 13. Severability. If any provision of this Agreement is held by final judgment to be invalid, illegal or unenforceable, such invalid, illegal or unenforceable provision shall be severed from the remainder of this Agreement, and the remainder of this Agreement shall be enforced. In addition, the invalid, illegal or unenforceable provision shall be deemed to be automatically modified, and, as so modified, to be included in this Agreement, such modification being made to the minimum extent necessary to render the provision valid, legal and enforceable. Notwithstanding the foregoing, however, if the severed or modified provision concerns all or a portion of the essential consideration to be delivered under this Agreement by one party to the other, the remaining provisions of this Agreement shall also be modified to the extent necessary to equitably adjust the parties' respective rights and obligations hereunder. 14. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement and each party has had the opportunity to review this Agreement with its own attorney. Accordingly, if an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and pronouns in the masculine, feminine, or neuter gender will include each other gender. Headings are used for convenience only, and are not to be given substantive effect. All references to section numbers and exhibits in this Agreement are references to sections and exhibits in this Agreement, unless otherwise specifically indicated. All exhibits and schedules are incorporated in this Agreement as if set forth herein in full. Recitals are part of this Agreement and shall be considered in its interpretation. 15. Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. 16. No Other Consideration. Burrow affirms that the terms stated in this Agreement constitute the only consideration for signing this Agreement, that no other promises or agreements of any kind have been made by any person or entity to cause him to execute this Agreement, and that he fully understands the meaning and intent of this Agreement, including, but not limited to, its final 6 and binding effect. Burrow agrees that, except as expressly set forth in this Agreement, he is not entitled to receive from ENGlobal the payment or distribution of any amounts of pay, benefits, cash, stock, stock options or other type of property. 17. Entire Agreement. This Agreement contains the entire understanding between the parties concerning the subject matter contained in this Agreement and supersedes any prior employment or similar agreements between the parties, with the exception of those provisions of Burrow's Employment Agreement set forth in Section 5 that are intended to survive the termination of employment, which continue to be binding in accordance with their terms. 18. Sufficient Consideration. Burrow acknowledges that the consideration recited in this Agreement is adequate to make it final and binding, and is in addition to payments or benefits to which Burrow would otherwise be entitled as a former employee of ENGlobal. 19. Modification of Agreement. This Agreement may not be modified by any subsequent agreement unless the modifying agreement is in writing and is signed by all the parties. 20. Revocation Period. Burrow has been advised, both orally and by this writing, of his right to consult with an attorney before entering this Agreement. Burrow shall have a period of 21 days from the date of delivery of this Agreement to consider the Agreement; Burrow understands and acknowledges that any changes made to the Agreement, whether material or immaterial, will not re-start this 21-day period. Burrow shall have seven days following his execution of this Agreement during which he may revoke the Agreement by providing ENGlobal written notice of his revocation. If this Agreement is not revoked by Burrow during said seven-day period, it shall be deemed accepted. The Agreement shall not be effective or enforceable until the revocation period has expired. BURROW HAS CAREFULLY READ THE FOREGOING AGREEMENT AND HE UNDERSTANDS THE CONTENTS THEREOF AND HE EXECUTES THE AGREEMENT AS HIS OWN FREE ACT AND DEED. * * * * * * 7 DELIVERED TO BURROW THE 30th DAY OF MARCH, 2007. /s/ Michael L. Burrow Date: April 2, 2007 - --------------------- ------------------- Michael L. Burrow ENGLOBAL CORPORATION By: /s/ William A. Coskey Date: April 2, 2007 - ------------------------- ------------------- Name: William A. Coskey Title: Chairman 8 EXHIBIT A --------- SECOND AMENDED AND RESTATED ALLIANCE STOCK OPTION AGREEMENT EX-10.2 3 englobal8k4-2102.txt AGREEMENT Exhibit 10.2 SECOND AMENDED AND RESTATED ALLIANCE STOCK OPTION AGREEMENT PART I Optionee: Michael L. Burrow Grant Date: December 21, 2001 Extension Date: December 20, 2006 Vesting: The option granted hereunder shall vest only upon the consummation of a "Company Sale Event" as defined herein. Aggregate Number of Option Shares: 300,000 Exercise Price per Share 12/21/06 to 12/20/07 $1.56 12/21/07 to 12/20/08 $1.95 12/21/08 to 12/21/09 $2.44 12/21/09 to 12/20/10 $3.05 12/21/10 to 12/20/11 $3.81 Lapse Date Any options not exercised on or prior to December 20, 2011 (the "Expiration Date") shall lapse and be of no further force and effect. Part II of this Agreement is attached hereto and incorporated herein for all purposes. EXECUTED to be effective as of the Grant Date set forth above. ENGLOBAL CORPORATION ALLIANCE 2000, LTD. By: /s/ William A. Coskey BHC Management Corporation - ------------------------------ General Partner William A. Coskey, Chairman By: /s/ William A. Coskey ------------------------- William A. Coskey, President OPTIONEE Signature: /s/ Michael L. Burrow -------------------------- Michael L. Burrow 7955 Shire Lane Beaumont, TX 77706 SS#: ###-##-#### SECOND AMENDED AND RESTATED ALLIANCE STOCK OPTION AGREEMENT PART I Optionee: Michael L. Burrow Grant Date: July 29, 2005 Extension Date: December 20, 2006 Vesting: The option granted hereunder shall vest only upon the consummation of a "Company Sale Event" as defined herein. Aggregate Number of Option Shares: 65,000 Exercise Price per Share 12/21/06 to 12/20/07 $1.56 12/21/07 to 12/20/08 $1.95 12/21/08 to 12/21/09 $2.44 12/21/09 to 12/20/10 $3.05 12/21/10 to 12/20/11 $3.81 Lapse Date Any options not exercised on or prior to December 20, 2011 (the "Expiration Date") shall lapse and be of no further force and effect. Part II of this Agreement is attached hereto and incorporated herein for all purposes. EXECUTED to be effective as of the Grant Date set forth above. ENGLOBAL CORPORATION ALLIANCE 2000, LTD. By: /s/ William A. Coskey BHC Management Corporation ------------------------------- General Partner William A. Coskey, Chairman By: /s/ William A. Coskey ------------------------- William A. Coskey, President OPTIONEE Signature: /s/ Michael L. Burrow ------------------------- Michael L. Burrow 7955 Shire Lane Beaumont, TX 77706 SS#: ###-##-#### PART II This Amended and Restated Stock Option Agreement (this "Agreement") is made and entered into by and between Alliance 2000, Ltd., a Texas limited partnership (the "Alliance"), ENGlobal Corporation, formerly known as Industrial Data Systems Corporation (the "Company" or "ENGlobal") and the optionee named on Part I (the "Optionee"), as of the date set forth on Part I (the "Grant Date"). This Agreement is entered into pursuant to that certain Option Pool Agreement by and between ENGlobal (including its subsidiaries) and Alliance dated to be effective December 21, 2001, together with an amendment and restatement of the Option Pool Agreement dated to be effective December 20, 2006. RECITALS: Alliance and the Company entered into an Option Pool Agreement on December 21, 2001 in order to provide an incentive for key employees of the Company and of its subsidiaries to remain in the service of the Company or its subsidiaries, to extend to them the opportunity to acquire a proprietary interest in the Company so that they would apply their best efforts for the benefit of the Company and its subsidiaries, and would aid the Company in attracting able persons to enter the service of the Company and its subsidiaries. To accomplish these purposes, Alliance agreed, in accordance with the terms of an Agreement and Plan of Merger dated July 31, 2001, to give certain current and future employees of ENGlobal options to acquire up to 2,600,000 shares of the common stock, par value, $.001 per share (the "Common Stock"), of ENGlobal held by Alliance in accordance with the terms of the Option Pool Agreement. On December 20, 2006, Alliance, the Company, and Optionee amended and restated the terms of the unexpired options granted under the Option Pool Agreement to extend the expiration date to December 20, 2011. In consideration of the execution and delivery by Optionee of a Separation Agreement and Full & Final Release of Claims, and for other good and valuable consideration, Alliance, the Company and Optionee wish to amend certain terms of this Agreement. NOW, THEREFORE, parties agree as follows: 1. Grant of the Option. Alliance hereby extends the term of the option granted to Optionee under the Option Pool Agreement (the "Option") to purchase from Alliance the aggregate number of shares set forth on Part 1 (such number being subject to adjustment as provided below and as provided in Section 8) of common stock, $0.001 par value per share, of the Company (the "Shares") on the terms and conditions set forth in this Agreement. The Option may be exercised in whole or in part, subject to the terms and conditions of this Agreement. The Option is not intended to qualify as an "incentive stock option" under Section 422 of the Code. 2. Exercise Price. The price at which the Optionee shall be entitled to purchase the Shares shall be dependent on the date of exercise, as set forth on Part I subject to adjustment as provided in Section 8. 3. Vesting and Term of the Option. (a) General. The Option shall vest and be exercisable in the hands of the Optionee only upon the consummation of a Company Sale Event. A "Company Sale Event" is (i) a sale of substantially all of the assets of the company to a person or entity that is not an affiliate of the Company, (ii) any sale in a single transaction or in a series of related and substantially similar contemporaneous transactions of the issued and outstanding securities of the Company representing 50% or more of the total number of shares of the Company then outstanding to any person or entity that is not an affiliate of the selling shareholders, or (iii) any merger, consolidation or reorganization of the Company with or into one or more entities that are not Affiliates of the Company, as a result of which less than 50% of the outstanding voting securities, partnership interests or membership interests of the surviving or resulting entity are owned by the holders of the Company's securities (or their Affiliates) immediately prior to such merger, consolidation or reorganization. Notwithstanding anything to the contrary provided herein, the issuance of securities by the Company in an acquisition by the Company or by any of its subsidiaries of another business shall not constitute a Company Sale Event. Options which shall have vested shall be referred to as "Vested Options". (b) Expiration. Notwithstanding any other provision contained herein to the contrary, the unexercised portion of the Option, if any, will automatically and without notice terminate on December 21, 2011 (the "Expiration Date"). 4. Method of Exercising Option. The Optionee may exercise any Vested Option concurrently with the consummation of a Company Sale Event. The Company shall give Optionee at least 30 days notice of the contemplated consummation of a Company Sale Event. Optionee may exercise this Option within 20 days of the receipt of such notice as to some or all of the Option Shares by delivery to the Company and to Alliance of a written notice in the form attached as Exhibit A (the "Exercise Notice"), which Exercise Notice shall be effective, subject to the requirements of this Agreement, on the later of the date received by both of the Company and Alliance. The Exercise Notice shall state the Optionee's election to exercise the Option, the number of Options in respect of which an election to exercise has been made, the method of payment elected (see Section 5), the exact name or names in which the Shares then being purchased will be registered and the social security number of the Optionee. The Exercise Notice must be signed by the Optionee and must be accompanied by payment of the aggregate Exercise Price of the Shares then being purchased, determined in accordance with Part I. All Shares delivered by Alliance upon exercise of the Options as provided in this Agreement shall be fully paid and nonassessable upon delivery. Unless the Shares issued upon the exercise of the Options are then the subject of a registration statement effective under the Securities Act of 1933, as amended ("Securities Act") (and, if required, there is available for delivery a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act), the delivery of the Exercise Notice shall be deemed to be the making by the person delivering such Exercise Notice of the representations, acknowledgments and agreements which would be contained in the Investment Letter referred to in Section 9. 5. Method of Payment for Options. If the Company Sale Event results in a cash payment to the Company's stockholders, Optionee may elect to have the cash payment due to Alliance from Optionee upon exercise of the options deducted from the consideration Optionee could otherwise receive on the consummation of the Company Sale Event if the stock were held by Optionee, and the amount deducted shall be deemed paid by Optionee to Alliance as the Exercise Price. Otherwise, unless permitted by Alliance, the full Exercise Price for the Shares purchased upon the exercise of the Vested Options (i.e. the number of Shares being purchased multiplied by the Exercise Price per Share) must be made in cash, unless Alliance and the Company approve an exercise in assets other than cash. which approval may be granted or withheld in the sole discretion of the Company and Alliance. Alliance will accept payment by cashier's check, personal check, provided that if such personal check is returned for insufficient funds, payment for the Shares and for any applicable taxes required to be withheld by the Company shall be deemed not to have occurred. In addition, the Option shall not be deemed to be exercised until the Optionee has provided payment to the Company for withholding taxes, if any, which may be due with respect to such exercise. 6. Delivery of Shares. No Shares and no consideration received on a Company Sale Event shall be delivered to the Optionee upon exercise of the Option until (1) the Exercise Price for such Shares being purchased is paid in full in the manner provided in this Agreement by deduction or otherwise as provided in Section 5; (ii) all the applicable taxes required to be withheld have been paid or withheld in full; and (iii) if required by the Board of Directors, the Optionee has delivered to the Company and Alliance an Investment Letter in form and content satisfactory to the Company as provided in Section 10. (a) This Option shall not be transferable by the Optionee, unless Alliance and the Company approve the transfer of this Option, which approval may be granted or withheld in the sole discretion of the Company and Alliance. (b) If Optionee attempts or purports to transfer, assign, pledge or hypothecate this Option, or any rights and privileges in connection herewith, in any way, whether by operation of law or otherwise, this Agreement and the Option granted hereunder will automatically terminate and the Option will thereafter be null and void. 7. Adjustments. If there is any change in the capital structure of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares or similar event (a "Restructuring"), the rights of the Optionee shall be adjusted accordingly, i.e., the number of Shares exercisable hereunder shall be increased proportionately, and the price (including Exercise Price) for each Share shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Options remain exercisable or subject to restrictions. Nothing in this Agreement shall affect in any way the right or power of the Company to make or authorize any Restructuring. 8. Securities Act. Alliance will not be required to deliver any Shares pursuant to the exercise of all or any part of the Option if, in the reasonable opinion of counsel for Alliance, such delivery would violate the Securities Act or any other applicable federal or state securities laws or regulations. Alliance or the Company may require that the Optionee, prior to the transfer of any such Shares pursuant to exercise of the Option, sign and deliver to the Company a written statement (an "Investment Letter") stating that (a) the Optionee is purchasing the Shares for his own account and other than the Company Sale Event, is not purchasing the Shares with a view to, or for sale in connection with, any distribution thereof; he has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof and he does not currently have any reason to anticipate a change in the foregoing: (b) the Optionee understands that the Shares have not been registered under the Securities Act or any applicable state securities laws or regulations and, therefore, cannot be offered or resold unless the Shares are so registered or an applicable exemption from registration is available; and (c) the Optionee agrees that the certificates representing the Shares may bear a legend to the effect set forth in clause (b) above. The Investment Letter must be in form and substance acceptable to the Company in its reasonable discretion. 9. Notice. All notices required or permitted under this Agreement, including an Exercise Notice, must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which actually received by the Company properly addressed to the person who is to receive it. An Exercise Notice shall be effective when actually received by the Company and Alliance; in writing and in conformance with this Agreement. Until changed in accordance herewith, the Company, Alliance and the Optionee specify their respective addresses as set forth below: Company: ENGlobal Corporation 654 N. Sam Houston Pkwy. E Suite 400 Houston, Texas 77060-5914 Attention: Corporate Secretary Alliance: ALLIANCE 2000, LTD. 654 N. Sam Houston Pkwy. E Suite 400 Houston, Texas 77060-5914 Attention: General Partner Optionee: As indicated on Part I 10. Information Confidential. As partial consideration for the granting of this Option, the Optionee agrees that he will keep confidential all information and knowledge that he has relating to the Options granted hereunder; provided, however, that such information may lie disclosed as required by law and may be given in confidence to the Optionee's spouse, tax and financial advisors, or a financial institution to the extent that such information is necessary to obtain a loan. 11. [INTENTIONALLY DELETED] 12. No Obligation to Exercise. The Optionee shall have no obligation to exercise any Option granted by this Agreement. 13. Governing Law: Construction. This Agreement shall be governed by the laws of the State of Texas without regard to choice of law and conflicts of law principles which direct the application of the laws of a different state. Any disputes relating to this Agreement shall be heard in the state and federal courts of Harris County, Texas. Titles and headings are for ease of reference only and shall not be considered in construing this Agreement. Pronouns shall be deemed to include the masculine, feminine, neuter, singular and plural as the context may require. References to sections and exhibits are to Sections and Exhibits of this Agreement unless otherwise indicated. All such Exhibits are incorporated in this Agreement by reference and are a part hereof. 14. Amendments. This Agreement may be amended only by a written agreement executed by Alliance, the Company and the Optionee. 15. Proprietary Information. In consideration of Alliance's grant of this Option and in further consideration of the Company's agreement to provide Optionee with confidential information of the Company, Optionee agrees to keep confidential and not to use or to disclose to others at any time during the term of this Agreement or after its termination, except as expressly consented to in writing by the Company or required by law, any secrets or confidential technology or proprietary information of the Company, including, without limitation, any customer list, marketing plans or materials, or other trade secrets of the Company, or any matter or thing ascertained by Optionee through Optionee's affiliation with the Company, the use or disclosure of which matter or thing might reasonably be construed to be contrary to the best interests of the Company or to give any other party a competitive advantage to the Company. Optionee further agrees that if Optionee's employment with the Company is terminated for any reason, Optionee will neither take nor retain, without prior written authorization from the Company, any documents pertaining to the Company. Without limiting the generality or the foregoing, Optionee agrees that he will not retain, use or disclose any papers, customer lists, marketing materials or information, books, records, files, or other documents, copies thereof, or notes or other materials derived therefrom, or other confidential information of any kind belonging to the Company pertaining to the Company's business, sales, financial condition, or products, and that he will delete all such information from any electronic or other storage owned by Optionee or under Optionee's control. Within five days of a written request from the Company, Optionee will provide the Company with a signed affidavit verifying that all such confidential information has been returned to the Company or destroyed, and has been deleted from electronic or other storage. Without limiting other possible remedies to the Company for the breach of this covenant, Optionee agrees that injunctive or other equitable relief shall be available to enforce this covenant, such relief to be without the necessity of posting a bond, cash, or otherwise. Optionee further agrees that if any restriction contained in this Section is held by any court to be unenforceable or unreasonable, a lesser restriction shall be enforced in its place and remaining restrictions contained herein shall be enforced independently of each other. Optionee's obligations under this Section apply to all confidential information of the Company as well as to any and all confidential information relating to the Company's subsidiaries and affiliates. 16. Noncompetition. (a) Basis of Covenants. The Company's business involves providing engineering, technical staffing, automation and control systems, field inspection, and land management and regulatory services to the petroleum refining petrochemical, pipeline, production, and process industries throughout the United States and internationally. Optionee recognizes that the Company's and Alliance's decision to enter into the original Alliance Stock Operation Agreement and to grant the Option herein granted is induced primarily because of the covenants and assurances made by Optionee in this Agreement and the extension of the termination date provided for in this Agreement is induced primarily by Optionee's effective date of the Separation Agreement and Full and Final Release of Claims signed on the date of this Agreement, and that irrevocable harm and damage will be done to the Company and Alliance if Optionee violates the obligation to maintain the confidentiality of proprietary information, or competes with the Company. Optionee stipulates and agrees that the consideration given by the Company and Alliance in granting this Option and in granting Optionee access to the confidential information of the Company gives rise to the Company's and Alliance's interest in the promises made by Optionee in this paragraph; further, Optionee stipulates that the promises Optionee makes in this paragraph are designed to enforce the promises made by Optionee, including those set forth in paragraph 15. Optionee will continue to receive the Company's proprietary information and will receive training of substantial value as a result of his affiliation with the Company. (b) Noncompetition Covenant. Optionee agrees that for as long as Optionee has rights to acquire Shares under this Agreement, Optionee shall not, directly or indirectly, as an employee, employer, contractor, consultant, agent, principal, shareholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business or practice that is in competition in any manner whatsoever with the business of the Company. (c) Non-Interference Covenant. Optionee covenants and agrees that, for a period of one year subsequent to the termination, for whatever reason, of his employment with the Company, that Optionee shall not recruit, hire or attempt to recruit or hire, directly or by assisting others, any other employees of the Company, nor shall Optionee contact or communicate with any other employees of the Company for the purpose of inducing other employees to terminate their employment with the Company. For purposes of this covenant, "other employees" means employees who are actively employed by the Company at the time of the attempted recruiting or hiring. (d) Remedies. (i) This covenant shall be construed as an agreement ancillary to the other provisions of this Agreement and the existence of any claim or cause of action of Optionee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or Alliance of this covenant. Without limiting other possible remedies to the Company or Alliance for breach of this covenant, Optionee agrees that injunctive or other equitable relief will be available to enforce the covenants of this provision, such relief to be without the necessity of posting a bond, cash, or otherwise. (ii) If Optionee violates any of the covenants of this paragraph 16, the term of the restriction violated shall be extended by the amount of time that Optionee was in violation. (iii) The Company, Alliance and Optionee further agree that if any restriction contained in this paragraph 16 is held by any appropriate forum to be unenforceable or unreasonable, a lesser restriction will be enforced in its place and remaining restrictions contained herein will be enforced independently of each other. Optionee agrees to pay any attorneys fees and expenses incurred by the Company or Alliance if the Company or Alliance chooses, in their sole discretion, to enforce any provision hereunder. (iv) If Optionee violates paragraph 15 or 16 of this Agreement at a time that he holds Options, the Options shall be immediately cancelled and shall have no further force and effect. In addition, if Optionee violates paragraph 15 or 16 of this Agreement following his exercise of Options, he shall forfeit to the Company an amount equal to the difference between the fair market value on the date of exercise for the Option exercised and the Exercise Price. This amount shall be paid to the Company in addition to payment of all other damages that the Company and Alliance has suffered as a result of Optionee's breach and in addition to all other relief to which the Company is entitled under this Agreement and under applicable law. 17. No Rights as a Shareholder. Optionee shall not by virtue of this Agreement, have any rights as a shareholder until the date of the issuance to the Optionee of Shares pursuant to a valid Exercise Notice. 18. Severability. If any provision of this Agreement is held by final judgment of a court of competent jurisdiction to be invalid, illegal or unenforceable, such invalid, illegal or unenforceable provision shall be severed from the remainder of this Agreement, and the remainder of this Agreement shall be enforced. In addition, the invalid, illegal or unenforceable provision shall be deemed to be automatically modified, and, as so modified, to be included in this Agreement, such modification being made to the minimum extent necessary to render the provision valid, legal and enforceable. Notwithstanding the foregoing, however, if the severed or modified provision concerns all or a portion of the essential consideration to be delivered under this Agreement by one party to the other, the remaining, provisions of this Agreement shall also be modified to the extent necessary to equitably adjust the parties' respective rights and obligations hereunder. 19. Entire Agreement. Except as provided below, this Agreement, including the exhibits and schedules attached hereto, if any, contains the entire agreement of the parties with respect to the subject matters hereto, and supersedes all prior agreements between them, whether oral or written, of any nature whatsoever with respect to the subject matter hereof. However, this Agreement does not supersede any agreements between Optionee and the Company for options granted under the Company's Incentive Stock Option Plan, or the Company's rights under any agreement between Optionee and the Company that protects the Company's proprietary information or intellectual property; rather all such rights of the Company under any such agreements shall be in addition to the rights granted herein. EXHIBIT A - EXERCISE NOTICE Notice is hereby given to the Company of Optionee's election to exercise Options as follows: Name of Optionee (please print):_______________________________ Optionee's Social Security Number:_____________________________ A. Number of Shares to be purchased: B. Exercise Price per Share: $ C. Method of payment (Check One): Cash: Other- as authorized By Alliance: D. Exercise Price tendered herewith: (A x B) $ E. Market Price per Share on date of Exercise: $ F. Difference Between Market Price and Exercise Price $ (E - B): G. Total Difference (F x A): $ H. Withholding Tax Rate: ______% I Amount of Tax Withholding tendered herewith (G x H): $ J. Total Amount Due on Exercise (D + I): $ *Upon exercise of Options, the Company may collect withholding tax on the difference between the market value of the Shares on the day of the exercise less the exercise price (the "difference"). This difference Will be included on a Form W2 issued to the Optionee following the end of the year. Exact name(s) for Share certificate(s): Date:________________________ __________________________________ Signature of Optionee PLEASE COMPLETE AND SIGN THIS NOTICE AND RETURN IT TO BOTH: ENGlobal Corporation Alliance 2000, Ltd. 654 N. Sam Houston Pkwy. E 654 N. Sam Houston Pkwy. E Suite 400 Suite 400 Houston, Texas 77060-5914 Houston, Texas 77060-5914 ATTN: Corporate Secretary Attention: General Partner -----END PRIVACY-ENHANCED MESSAGE-----