EXHIBIT 4.6
SUBSCRIPTION AGREEMENT
--------------------------
Private Offering
of Shares of
Common Stock
This Subscription Agreement (this "Agreement"), made as of the date set
forth below by and among ENGlobal Corporation, a Nevada corporation (the
"Company"), Michael L. Burrow and Alliance 2000, Ltd., a Texas limited
partnership ("Alliance 2000, Ltd.") (Michael L. Burrow and Alliance 2000, Ltd.
being referred to herein as the "Selling Stockholders") and the undersigned (the
"Subscriber"), is intended to set forth certain representations, covenants and
agreements among the Company, Selling Stockholders and the Subscriber, with
respect to the offering (the "Offering") for sale by the Selling Stockholders of
shares of Company Common Stock, par value $.001 per share (the "Common Stock"),
as described in the Private Placement Memorandum dated September 22, 2005 (the
"Memorandum"), a copy of which has been delivered to Subscriber. The Shares are
being offered by the Selling Stockholders through Energy Capital Solutions, LLC,
as placement agent (the "Placement Agent").
1. Subscription. Subject to the terms and conditions hereof, the Subscriber
hereby irrevocably subscribes for and agrees to purchase from the Selling
Stockholders the number of shares of Common Stock (the "Shares") set forth under
the Subscriber's name on the signature page hereto at a purchase price of $7.00
per share (the "Offering Price"), and the Selling Stockholders agree to sell
such Shares to the Subscriber at the Offering Price, subject to the Selling
Stockholders' right to sell to the Subscriber such lesser number of Shares as
the Selling Stockholders' may, in their sole discretion, deem necessary or
desirable.
2. Delivery of Subscription Amount; Acceptance of Subscription; Delivery of
Shares. Subscriber understands and agrees that this subscription is made subject
to the following terms and conditions:
(a) Subscriber understands that separate subscription agreements will be
executed with other Subscribers for up to 1,000,000 shares of Common Stock to be
sold by the Selling Stockholders in the Offering.
(b) Subscriber understands that a separate subscription agreement (the
"Tontine Subscription Agreement") will be executed between Tontine Capital
Partners L.P., a Delaware limited partnership ("Tontine"), and the Company for
2,000,000 shares of Common Stock to be sold by the Company at $7.00 per share. A
copy of the Tontine Subscription Agreement can be obtained by Subscriber by
sending a written request to the Company at the address set forth in Section
10(b) of this Agreement.
(c) Subscriber understands that, in addition to the risk factors set forth
in the Memorandum, the Company is not able to quantify the impact of Hurricane
Rita on its operations or financial condition. Among other matters, the Company
will lose billable hours that it would otherwise benefit from until its
operations are restored, and the Company's customers may have been impacted as a
result of the hurricane in a manner that prevents them from using the Company's
services. These factors are likely to have a material adverse impact on the
Company's operations and financial results.
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(d) Contemporaneously with the execution and delivery of this Agreement,
Subscriber shall execute and deliver the Certificate of Accredited Investor
Status, and shall submit payment in the form of a wire transfer or a check
payable to Alliance 2000, Ltd., as escrow agent, to be held in a non-interest
bearing account. Such payment shall be made in immediately available funds in
the amount equal to the Offering Price multiplied by the number of Shares for
which the Subscriber has subscribed (the "Subscription Amount") in accordance
with the Subscription Instructions set forth on Exhibit A hereto.
(e) The subscription for Shares shall be deemed to be accepted only when
this Agreement has been signed by the Company and the Selling Stockholders. The
deposit of the Subscription Amount for clearance will not be deemed an
acceptance of this Agreement.
(f) The Selling Stockholders shall have the right to reject this
subscription, in whole or in part and shall have the right to allocate Shares
among subscribers in any manner they may desire.
(g) The payment of the Subscription Amount (or, in the case of rejection of
a portion of the Subscriber's subscription, the part of the payment relating to
such rejected portion) will be returned promptly, without interest, if
Subscriber's subscription is rejected in whole or in part or if the Offering is
withdrawn or canceled.
(h) The Placement Agent and the Selling Stockholders may conduct one or
more closings of this Offering (each a "Closing") until all 1,000,000 Shares of
Common Stock offered hereby are sold.
(i) The Selling Stockholders may, in their sole discretion, terminate this
Offering at any time and reject any subscriptions then in their receipt.
(j) Certificates representing the Shares purchased will be issued in the
name of each Subscriber within 14 days of each Closing.
(k) The representations and warranties of the Company, Selling Stockholders
and Subscriber set forth herein shall be true and correct as of the date that
the Selling Stockholders accept this subscription.
3. Terms of Subscription.
(a) The subscription period will begin on or about September 20, 2005, and
will continue until such time as the Selling Stockholders terminate it in their
sole discretion.
(b) The Placement Agent will receive a fee equal to 3% of proceeds received
from sales by the Selling Stockholders. The Company shall pay all expenses in
connection with the Offering, except for those expenses that the Placement Agent
has agreed either with the Company or with the Selling Stockholders to pay.
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(c) If the Subscriber is not a United States citizen, the Subscriber hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for the Shares
or any use of this Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Shares, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Shares. The Subscriber's subscription and payment for,
and his or her continued beneficial ownership of the Shares, will not violate
any applicable securities or other laws of the Subscriber's jurisdiction. The
Subscriber shall comply in all respects with all applicable provisions of
Regulation S promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
4. Registration Rights.
(a) Contemporaneous with the execution and delivery of this Agreement, the
Company and Subscriber are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit B (the "Registration Rights
Agreement"), pursuant to which the Company has agreed under certain
circumstances to register the resale of the Shares under the Securities Act and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
(b) Subscriber acknowledges that it is acquiring the Shares for its own
account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act. The
Subscriber further agrees that it will not sell, assign or transfer the Shares
at any time in violation of the Securities Act and acknowledges that, in taking
unregistered securities, it must continue to bear the economic risk of its
investment for an indefinite period of time because of the fact that the Shares
have not been registered under the Securities Act, and further realizes that the
Shares cannot be sold unless subsequently registered under the Securities Act or
an exemption from such registration is available. The Subscriber also
acknowledges that appropriate legends reflecting the status of the Shares under
the Securities Act may be placed on the face of the certificates for such shares
at the time of their transfer and delivery to the holder thereof.
(c) The Shares may not be transferred except in a transaction which is in
compliance with the Securities Act. Except as provided in the Registration
Rights Agreement, it shall be a condition to any such transfer that the Company
shall be furnished with an opinion of counsel to the holder of such Shares,
reasonably satisfactory to the Company, to the effect that the proposed transfer
would be in compliance with the Securities Act.
5. Representations, Warranties and Convenants of the Subscriber. Subscriber
hereby represents, warrants and covenants to the Company and Selling
Stockholders as follows:
(a) Subscriber is purchasing the Shares for its own account, not as a
nominee or agent, for investment purposes and not with a present view towards
resale, except pursuant to sales exempted from registration under the Securities
Act, or registered under the Securities Act as contemplated by the Registration
Rights Agreement.
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(b) The Subscriber understands that (A) the Shares (1) have not been
registered under the Securities Act or any state securities laws, (2) will be
transferred in reliance upon an exemption from the registration and prospectus
delivery requirements of the Securities Act pursuant to the so-called Section "4
1 1/2" exemption, (3) will be transferred in reliance upon exemptions from the
registration and prospectus delivery requirements of state securities laws which
relate to private offerings and (4) must be held by the Subscriber indefinitely,
and (B) the Subscriber must therefore bear the economic risk of such investment
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt therefrom.
Subscriber further understands that such exemptions depend upon, among other
things, the bona fide nature of the investment intent of the Subscriber
expressed herein. Pursuant to the foregoing, the Subscriber acknowledges that
until such time as the resale of the Shares has been registered under the
Securities Act as contemplated by the Registration Rights Agreement or otherwise
may be sold pursuant to an exemption from registration, the certificates
representing the Shares acquired by the Subscriber shall bear a restrictive
legend substantially as follows (and a stop-transfer order may be placed against
transfer of the certificates evidencing such Shares):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I)
REGISTERED UNDER THE APPLICABLE SECURITIES LAWS OR (II) AN OPINION OF
COUNSEL, WHICH OPINION AND COUNSEL ARE BOTH REASONABLY SATISFACTORY TO
THE COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH OPINION STATES
THAT THE SHARES MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION."
(c) The Subscriber has knowledge, skill and experience in financial,
business and investment matters relating to an investment of this type and is
capable of evaluating the merits and risks of such investment and protecting the
Subscriber's interest in connection with the acquisition of the Shares. The
Subscriber understands that the acquisition of the Shares is a speculative
investment and involves substantial risks and that the Subscriber could lose the
Subscriber's entire investment in the Shares. Further, the undersigned has
carefully read and considered the matters set forth under the section entitled
"Risk Factors" in the Company's Annual Report on Form 10-K and in the
Memorandum, and has taken full cognizance of and understands all of the risks
related to the purchase of the Shares. To the extent deemed necessary by the
Subscriber, the Subscriber has retained, at its own expense, and relied upon,
appropriate professional advice regarding the investment, tax and legal merits
and consequences of purchasing and owning the Shares. The Subscriber has the
ability to bear the economic risks of the Subscriber's investment in the
Company, including a complete loss of the investment, and the Subscriber has no
need for liquidity in such investment.
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(d) The Subscriber has been furnished by the Company all information (or
provided access to all information) regarding the business and financial
condition of the Company, its expected plans for future business activities, the
attributes of the Shares and the merits and risks of an investment in the Shares
which the Subscriber has requested or otherwise needs to evaluate the investment
in the Company.
(e) Subscriber is in receipt of and has carefully read and understands the
following items (collectively, the "2005 Disclosure Documents"):
(i) the Memorandum;
(ii) the Annual Report on Form 10-K of the Company filed with the SEC
for the year ended December 31, 2004;
(iii) the Company's form of Proxy Statement on Schedule 14A filed with
the SEC in April 2005;
(iv) the Quarterly Reports on Form 10-Q of the Company filed with the
SEC for the first and second quarters of 2005;
(v) the Current Reports on Form 8-K of the Company, including the 8-Ks
filed with the SEC on January 31, 2005, March 31, 2005 and August 12, 2005;
and
(vi) the Registration Statement on Form S-8 of the Company filed with
the SEC on August 24, 2005.
(f) In making the proposed investment decision, the Subscriber is relying
solely on investigations made by the Subscriber and the Subscriber's
representatives. The offer to sell the Shares was communicated to the Subscriber
in such a manner that the Subscriber was able to ask questions of and receive
answers from the management of the Company concerning the terms and conditions
of the proposed transaction and that at no time was the Subscriber presented
with or solicited by or through any advertisement, article, leaflet, public
promotional meeting, notice or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or meeting or any other form of general or public advertising or
solicitation.
(g) The Subscriber acknowledges that the Subscriber has been advised that:
(i) The Shares offered hereby have not been approved or disapproved by
the Securities and Exchange Commission (the "SEC") or any state securities
commission nor has the SEC or any state securities commission passed upon
the accuracy or adequacy of any representations by the Company or the
Selling Stockholders. Any representation to the contrary is a criminal
offense.
(ii) In making an investment decision, the Subscriber must rely on its
own examination of the Company and the terms of the Offering, including the
merits and risks involved. The Shares have not been recommended by any
federal or state securities commission or regulatory authority.
Furthermore, the foregoing authorities have not confirmed the accuracy or
determined the adequacy of any representation. Any representation to the
contrary is a criminal offense.
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(iii) The Shares will be "restricted securities" within the meaning of
Rule 144 under the Securities Act, are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Securities Act and applicable state securities laws,
pursuant to registration or exemption therefrom. The Subscriber is aware
that the Subscriber may be required to bear the financial risks of this
investment for an indefinite period of time.
(h) The Subscriber agrees to furnish the Selling Stockholders with such
other information as the Selling Stockholders may reasonably request in order to
verify the accuracy of the information contained herein and agrees to notify the
Selling Stockholders immediately of any material change in the information
provided herein that occurs prior to the acceptance of this Agreement by the
Selling Stockholders.
(i) The Subscriber further represents and warrants that the Subscriber is
an "accredited investor" within the meaning of Rule 501 of Regulation D under
the Securities Act, and Subscriber has executed the Certificate of Accredited
Investor Status, attached hereto as Exhibit C.
(j) As of the date of this Agreement the Subscriber and its affiliates do
not have, and during the 30 day period prior to the date of this Agreement the
Subscriber and its affiliates have not entered into, any "put equivalent
position" as such term is defined in Rule 16a-1 of under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or short sale positions with
respect to the Common Stock of the Company. In addition, the Subscriber shall
comply with all applicable provisions of Regulation M promulgated under the
Securities Act.
(k) If the Subscriber is a natural person, the Subscriber has reached the
age of majority in the state in which the Subscriber resides, has adequate means
of providing for the Subscriber's current financial needs and contingencies, is
able to bear the substantial economic risks of an investment in the Shares for
an indefinite period of time, has no need for liquidity in such investment and,
at the present time, could afford a complete loss of such investment.
(l) If this Agreement is executed and delivered on behalf of a partnership,
corporation, trust, estate or other entity (an "Entity"): (i) such Entity has
the full legal right and power and all authority and approval required (a) to
execute and deliver, or authorize execution and delivery of, this Agreement and
all other instruments executed and delivered by or on behalf of such Entity in
connection with the purchase of the Shares, (b) to delegate authority pursuant
to power of attorney and (c) to purchase and hold such Shares, (ii) the
signature of the party signing on behalf of such Entity is binding upon such
Entity; and (iii) such Entity has not been formed for the specific purpose of
acquiring such Shares, unless each beneficial owner of such entity is qualified
as an accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act and has submitted information
substantiating such individual qualification.
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(m) If the Subscriber is a retirement plan or is investing on behalf of a
retirement plan, the Subscriber acknowledges that investment in the Common Stock
poses additional risks including the inability to use losses generated by an
investment in the Common Stock to offset taxable income.
(n) The Subscriber understands and confirms that the Company and Selling
Stockholders will rely on the representations and covenants contained herein in
effecting the transactions contemplated by this Agreement and the other
Transaction Documents (as defined herein). All representations and warranties
provided to the Company and Selling Stockholders furnished by or on behalf of
the Subscriber, taken as a whole, are true and correct and do not contain any
untrue statement of material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
6. Representations, Warranties and Covenants of the Company. Except as set
forth in the Company's Disclosure Schedule attached hereto, the Company
represents and warrants to the Subscriber as follows:
(a) The Company has no subsidiaries other than the following: ENGlobal
Corporate Services, Inc., a Texas corporation, ENGlobal Constant Power, Inc., a
Texas corporation, ENGlobal Engineering, Inc., a Texas corporation, ENGlobal
Systems, Inc., a Texas corporation, ENGlobal Construction Resources, Inc., a
Texas corporation, RPM Engineering, Inc., d/b/a ENGlobal Engineering, Inc., a
Louisiana corporation, ENGlobal Automation Group, Inc., a Texas corporation,
ENGlobal Canada ULC, a Novia Scotia unlimited liability company, ENGlobal Design
Group, Inc., a Texas corporation, and Thermaire, Inc., a Texas corporation, PEI
Investments JV, a Texas joint venture, and EPIC ENGlobal, LLC, a Texas limited
liability company (collectively, the "Subsidiaries"). The Company and each of
its Subsidiaries is a corporation, limited partnership, limited liability
company or unlimited liability duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, with corporate or limited partnership power and authority to own,
lease, use and operate its properties and to carry on its business as now
operated and conducted. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation or limited partnership to do business and is
in good standing in each jurisdiction in which its ownership or use of property
or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not have any material adverse effect on the business, operations, assets,
financial condition or prospects of the Company (a "Material Adverse Effect").
(b) The Company has all requisite corporate power and authority to enter
into and perform this Agreement, the Registrations Rights Agreement, and each of
the other documents contemplated by this Agreement (collectively, the
"Transaction Documents"), and to consummate the transactions contemplated hereby
and thereby, in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and each of the other Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company. This Agreement
and each of the other Transaction Documents will constitute upon execution and
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delivery by the Company, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by: (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect that limit creditors'
rights generally; (ii) equitable limitations on the availability of specific
remedies; (iii) principles of equity (regardless of whether such enforcement is
considered in a proceeding in law or in equity); and (iv) to the extent rights
to indemnification and contribution may be limited by federal securities laws or
the public policy underlying such laws.
(c) As of the date hereof, the authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock, of which 23,966,283 shares are
issued and outstanding, and 652,377 shares are held by the Company as treasury
shares, and 2,265,167 shares of preferred stock, $.001 par value, all of which
are designated as Series A redeemable convertible preferred stock, and none of
which are outstanding. All outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the date hereof, the
Company had outstanding options to purchase 1,399,355 shares of Common Stock, as
well as 2,086,769 shares of Common Stock that may be issued under its Employee
Stock Purchase Plan. As of the date of this Agreement, except to the extent
described in the preceding sentence and Schedule 6(c) attached hereto [Alliance
2000 options], (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock, and (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except the Registration Rights Agreement. Except as may be described in any
documents which have been publicly filed by any of the Company's stockholders,
to the Company's knowledge, there are no agreements between the Company's
stockholders with respect to the voting or transfer of the Company's capital
stock or with respect to any other aspect of the Company's affairs.
(d) The execution, delivery and performance of this Agreement and each of
the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (i)
conflict with or result in a violation of any provision of the Restated Articles
of Incorporation, as amended, of the Company or the bylaws, as amended, of the
Company, (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
patent, patent license or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any federal, state,
local, municipal, foreign, international, multinational or other law, rule,
regulation, order, judgment, decree, ordinance, policy or directive, including
those entered, issued, made, rendered or required by any court, administrative
or other governmental body, agency or authority, or any arbitrator
(collectively, a "Legal Requirement") applicable to the Company or any of its
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Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Certificate or
Articles of Incorporation, bylaws or other organizational documents and neither
the Company nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time would result in a default) under, and neither
the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any property or assets
of the Company or any of its Subsidiaries is bound or affected, except for
possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. Except with respect to any additional listing
applications and other filings related to the listing of the Shares to be filed
with the American Stock Exchange as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations
under the Transaction Documents. All consents, authorizations, orders, filings
and registrations that the Company is required to effect or obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof.
(e) Since December 31, 2003, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Act and the
Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the "SEC Documents"), or has
timely filed for a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes, year end adjustments or may be condensed or summary statements) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
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ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements of the Company
included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (x) liabilities incurred in the ordinary course of
business subsequent to December 31, 2004, and (y) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such financial
statements, which, individually or taken in the aggregate would not reasonably
be expected to have a Material Adverse Effect.
(g) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act).
Such disclosure controls and procedures: (i) are designed to ensure that
material information relating to the Company and its Subsidiaries is made known
the Company's chief executive officer and its chief financial officer by others
within those entities, particularly during the periods in which the Company's
reports and filings under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of the end of the most recent annual period
reported to the SEC, and (iii) are effective to perform the functions for which
they were established.
(h) Except with respect to the transactions contemplated hereby and by each
of the other Transaction Documents and except as disclosed in the 2005
Disclosure Documents or has been disclosed in any public disclosure as defined
in Section 101(e) of Regulations FD promulgated under the Exchange Act, since
December 31, 2004,: (i) the Company and each of its Subsidiaries has conducted
its business only in the ordinary course, consistent with past practice, and
since that date, no changes have occurred which would reasonably be expected to
have a Material Adverse Effect; and (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
on the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the SEC.
(i) There is no Action pending or, to the knowledge of the Company or any
of its Subsidiaries, overtly threatened against or affecting the Company or any
of its Subsidiaries that (i) adversely affects or challenges the legality,
validity or enforceability of the Agreement, or (ii) would, if there were an
unfavorable decision, have or reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries, nor any director or
officer thereof (in his or her capacity as such), is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending any investigation by the
SEC involving the Company or any current or former director or officer of the
Company (in his or her capacity as such). The SEC has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company under the Exchange Act or the Securities Act. As used in this
Agreement, "Action" means any action, suit claim, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation against or affecting the Company, any of its Subsidiaries or any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency, regulatory authority (federal, state, county, local or
foreign), public board, stock market, stock exchange or trading facility.
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(j) To the Company's knowledge, the Company and each of its Subsidiaries
owns or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, copyrights,
trademarks, trademark applications, service marks, service names, trade names
and copyrights ("Intellectual Property") necessary to enable it to conduct its
business as now operated (and, to the Company's knowledge, as presently
contemplated to be operated in the future); there is no claim or Action by any
person pertaining to, or proceeding pending, or to the Company's knowledge
threatened, which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to conduct its
business as now operated and to the Company's knowledge, the Company's or its
Subsidiaries' current products and processes do not infringe on any Intellectual
Property or other rights held by any person, except where any such infringement
would not reasonably be expected to have a Material Adverse Effect.
(k) The Company and each of its Subsidiaries has made or filed all federal,
state and foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax.
(l) The Company and each of its Subsidiaries is in possession of all
material franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to
own, lease and operate its properties and to carry on its business as it is now
being conducted (collectively, "Permits"), except when the failure to have same
would not result in a Material Adverse Effect, and would not prohibit or
otherwise materially interfere with the ability of the Company to continue
business in the ordinary course or perform its obligations under this Agreement
and under its other material agreements. There is no Action pending or, to the
knowledge of the Company, threatened regarding suspension or cancellation of any
of the Permits. Neither the Company nor any of its Subsidiaries is in conflict
with, or in default or violation of, any of the Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
(m) Since December 31, 2004, except as set forth in any document filed with
the SEC, and except with respect to comments received from the SEC to the
Company's Annual Report on Form 10-K for the period ended December 31, 2004,
which are described in the Disclosure Schedule hereto, no event has occurred or,
to the knowledge of the Company, circumstance exists that (with or without
notice or lapse of time): (i) may constitute or result in a violation by the
Company or any of its Subsidiaries, or a failure on the part of the Company or
its Subsidiaries to comply with, any Legal Requirement; or (ii) may give rise to
any obligation on the part of the Company or any of its Subsidiaries to
undertake, or to bear all or any portion of the cost of, any remedial action of
11
any nature in connection with a failure to comply with any Legal Requirement,
except in either case that would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice or other communication from any regulatory authority or any other person,
nor does the Company have any knowledge regarding: (x) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement, or (y) any actual, alleged, possible or potential obligation on the
part of the Company or any of its Subsidiaries to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature in connection with
a failure to comply with any Legal Requirement, except in either case that would
not reasonably be expected to have a Material Adverse Effect.
(n) The Company is in compliance in all material respects with the
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder that are applicable to it. The Company will become
subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 as
of December 31, 2005, if its public float on June 30, 2005 is $75,000,000 or
more.
(o) The Company is, and has reason to believe that for the foreseeable
future it will continue to be, in compliance with all applicable rules of the
American Stock Exchange, including all listing and corporate governance
requirements. The Company has not, at any time since December 31, 2004, received
notice from the American Stock Exchange that the Company is not in compliance
with the listing or maintenance requirements thereof.
(p) "Environmental Laws" shall mean, collectively, all Legal Requirements,
including any federal, state, local or foreign statute, laws, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials. Except for such
matters as could not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, (i) the Company and its Subsidiaries have
complied and are in compliance with all applicable Environmental Laws; (ii)
without limiting the generality of the foregoing, the Company and its
Subsidiaries have obtained, have complied, and are in compliance with all
Permits that are required pursuant to Environmental Laws for the occupation of
their respective facilities and the operation of their respective businesses;
(iii) none of the Company or its Subsidiaries has received any written notice,
report or other information regarding any actual or alleged violation of
Environmental Laws, or any liabilities or potential liabilities (including
fines, penalties, costs and expenses), including any investigatory, remedial or
corrective obligations, relating to any of them or their respective facilities
arising under Environmental Laws, nor, to the knowledge of the Company is there
any factual basis therefore; (iv) there are no underground storage tanks,
polychlorinated biphenyls, urea formaldehyde or other hazardous substances
(other than small quantities of hazardous substances for use in the ordinary
12
course of the operation of the Company's and its Subsidiaries' respective
businesses, which are stored and maintained in accordance and in compliance with
all applicable Environmental Laws), in, on, over, under or at any real property
owned or operated by the Company and/or its Subsidiaries; (v) there are no
conditions existing at any real property or with respect to the Company or any
of its Subsidiaries that require remedial or corrective action, removal,
monitoring or closure pursuant to the Environmental Laws and (vi) to the
knowledge of the Company, neither the Company nor any of its Subsidiaries has
contractually, by operation of law, or otherwise amended or succeeded to any
liabilities arising under any Environmental Laws of any predecessors or any
other Person.
(q) Except for any lien for current taxes not yet delinquent or which are
being contested in good faith and by appropriate proceedings, the Company and
its Subsidiaries have good and marketable title to all real property and all
personal property owned by them which is material to the business of the Company
and its Subsidiaries. Any leases of real property and facilities of the Company
and its Subsidiaries are valid and effective in accordance with their respective
terms, except as would not have a Material Adverse Effect.
(r) Except pursuant to the Registration Rights Agreement (including the
Registration Rights Agreement to be entered into with Tontine) effective upon
the Closing, neither the Company nor any Subsidiary is currently subject to any
agreement providing any person or entity any rights (including piggyback
registration rights) to have any securities of the Company or any Subsidiary
registered with the SEC or registered or qualified with any other governmental
authority.
(s) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act, and the Company has taken no action designed to, or which, to the
knowledge of the Company, is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act. The Company is eligible
to register its Common Stock for resale under Form S-3 promulgated under the
Securities Act.
(t) No labor or employment dispute exists or, to the knowledge of the
Company, is imminent or threatened, with respect to any of the employees of the
Company that has, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(u) Except as set forth in the SEC Documents, none of the officers or
directors of the Company, and to the knowledge of the Company, none of the
employees of the Company, is presently a party to any transaction or agreement
with the Company (other than for services as employees, officers and directors)
exceeding $60,000, including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(v) The Company and its Subsidiaries have insurance policies in full force
and effect of a type, covering such risks and in such amounts, and having such
deductibles and exclusions as are customary for conducting businesses and owing
assets similar in nature and scope to those of the Company and its Subsidiaries.
The amounts of all such insurance policies and the risks covered thereby are in
accordance in all material respects with all material contracts and agreements
13
to which the Company and/or its Subsidiaries is a party and with all applicable
Legal Requirements. With respect to each such insurance policy: (i) the policy
is valid, outstanding and enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect that limit creditors'
rights generally, equitable limitations on the availability of specific remedies
and principles of equity (regardless of whether such enforcement is considered
in a proceeding in law or in equity); (ii) neither the Company nor any of its
Subsidiaries is in breach or default with respect to its obligations thereunder
in any material respect; and (iii) no party to the policy has repudiated, or
given notice of an intent to repudiate, any provision thereof.
(w) The Company will file with the SEC a Form 8-K disclosing the Offering
within two (2) business days of the final Closing of the Offering and attach the
relevant agreements to either such Form 8-K or the Company's Report on Form 10-Q
for the quarter ended September 30, 2005.
(x) The Company understands and confirms that the Subscriber will rely on
the representations and covenants contained herein in effecting the transactions
contemplated by this Agreement and the other Transaction Documents. All
representations and warranties provided to the Subscriber including the
disclosures in the Company's disclosure schedules attached hereto furnished by
or on behalf of the Company, taken as a whole are true and correct and do not
contain any untrue statement of material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
its Subsidiaries or its or their businesses, properties, prospects, operations
or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not been
so publicly announced or disclosed.
7. Representations, Warranties and Covenants of the Selling Stockholders.
Each Selling Stockholder, severally and not jointly, represents and warrants to
the Subscriber as follows:
(a) This Agreement constitutes a valid and legally binding obligation of
the Selling Stockholder, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained herein may be limited by
applicable federal or state securities laws.
(b) Selling Stockholder holds good and marketable title to all of the
Shares to be sold by the Selling Stockholder under this Agreement, free and
clear of any liens, encumbrances, claims, security interests or other
restrictions. There are no claims pending or, to the Selling Stockholder's
knowledge, threatened against the Selling Stockholder that concern or affect
title to any of the Shares to be sold by the Selling Stockholder under this
Agreement, or that seek to compel the transfer of such Shares.
14
(c) There is no action, suit or proceeding before any court, governmental
agency or body, domestic or foreign, now pending or, to the knowledge of the
Selling Stockholder, overtly threatened against the Selling Stockholder wherein
an unfavorable decision, ruling or finding would reasonably be expected to
adversely affect the validity or enforceability of, or the authority or ability
of the Selling Stockholder to perform its obligations under this Agreement.
(d) Other than its arrangement with the Placement Agent, which has been
disclosed to the Subscriber, the Selling Stockholder has taken no action which
would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the
transactions contemplated hereby.
(e) The Selling Stockholders represent and warrant that they are not in
possession of any material non-public information concerning the Company.
(f) The Selling Stockholder agrees that, during the period beginning on the
date 14 days prior to the date on which any registration statement filed
pursuant to the Registration Rights Agreement is declared effective under the
Securities Act (the "Effective Date"), and continuing to and including the date
90 days after the Effective Date, the Selling Stockholder will not, directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,
make any short sale or otherwise dispose of, any shares of Common Stock of the
Company, or any options or warrants to purchase any shares of Common Stock of
the Company, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock of the Company, whether
now owned or hereafter acquired, owned directly by the Selling Stockholder
(including holding as a custodian) or with respect to which the Selling
Stockholder has beneficial ownership within the rules and regulations of the
SEC.
(g) The Selling Stockholder understands and confirms that the Subscriber
will rely on the representations and covenants contained herein in effecting the
transactions contemplated by this Agreement and the other Transaction Documents.
All representations and warranties provided to the Subscriber furnished by or on
behalf of the Selling Stockholder, taken as a whole, are true and correct and do
not contain any untrue statement of material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
8. Understandings. The Subscriber understands, acknowledges and agrees with
the Company and the Selling Stockholders as follows:
(a) This Subscription may be rejected, in whole or in part, by the Selling
Stockholders in their sole and absolute discretion, at any time before the
Closing, notwithstanding prior receipt by the undersigned of notice of
acceptance of the undersigned's Subscription. The Selling Stockholders may
terminate this Offering at any time in their sole and absolute discretion. The
execution of this Agreement or solicitation of the investment contemplated
hereby, shall create no obligation of the Selling Stockholders to accept any
subscription or complete the Offering.
(b) Except as set forth in Section 8(a) above, the Subscriber hereby
acknowledges and agrees that the subscription hereunder is irrevocable by the
Subscriber, that, except as required by law, the Subscriber is not entitled to
15
cancel, terminate or revoke this Agreement or any agreements of the Subscriber
hereunder, and that this Agreement and such other agreements shall survive the
death or disability of the Subscriber and shall be binding upon and inure to the
benefit of the parties and their respective heirs, executors, administrators,
successors, legal representatives and permitted assigns. If the Subscriber is
more than one person, the obligations of the Subscriber hereunder shall be joint
and several and the agreements, representations, warranties and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such
person and his/her heirs, executors, administrators, successors, legal
representatives and permitted assigns.
(c) No federal or state agency has made any finding or determination as to
the accuracy or adequacy of the Memorandum or as to the suitability of this
offering for investment nor any recommendation or endorsement of the Shares.
(d) The Offering is intended to be exempt from registration under the
so-called Section "4 1 1/2" exemption under the Securities Act, which is
dependent upon the truth, completeness and accuracy of the statements made by
the Subscriber herein.
(e) There is only a limited public market for the Common Stock. There can
be no assurance that the Subscriber will be able to sell or dispose of the
Shares. It is understood that in order not to jeopardize the Offering's exempt
status under the Section "4 1 1/2" exemption, any transferee will, at a minimum,
be required to fulfill the investor suitability requirements thereunder.
(f) The representations, warranties and agreements of the Subscriber
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects on
and as of the date of the Closing of the sale of the Shares as if made on and as
of such date and shall survive the execution and delivery of this Agreement and
the purchase of the Shares.
9. Survival; Indemnification. All representations, warranties and covenants
contained in this Agreement and the indemnification contained in this Section 9
shall survive (i) the acceptance of this Agreement by the Selling Stockholders,
(ii) changes in the transactions, documents and instruments described herein
which are not material or which are to the benefit of Subscriber, and (iii) the
death or disability of Subscriber or the Selling Stockholders. Subscriber
acknowledges the meaning and legal consequences of the representations,
warranties and covenants in Section 5 hereof and that the Selling Stockholders
and the Company have relied upon such representations, warranties and covenants
in determining Subscriber's qualification and suitability to purchase the
Shares. Each party to this Agreement agrees to indemnify, defend and hold
harmless the other parties, and their respective officers, directors, employees,
agents and controlling persons, from and against any and all losses, claims,
damages, liabilities, expenses (including attorneys' fees and disbursements),
judgments or amounts paid in settlement of actions arising out of or resulting
from the untruth of any representation of the indemnifying party herein or the
breach of any warranty or covenant herein by the indemnifying party.
Notwithstanding the foregoing, however, no representation, warranty, covenant or
acknowledgment made herein by Subscriber shall in any manner be deemed to
constitute a waiver of any rights granted to it under the Securities Act or
state securities laws.
16
10. Notices. All notices and other communications provided for herein shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) if to the Selling Stockholders, to the following address:
William A. Coskey, P.E. c/o
ENGlobal Corporation
654 N. Sam Houston Pkwy. E
Suite 400
Houston, Texas 77060-5914
(281) 878-1010
Michael L. Burrow, P.E. c/o
ENGlobal Corporation
P. O. Box 20397
Beaumont, Texas 77720-2420
(b) if to the Company, to the following address:
ENGlobal Corporation
654 N. Sam Houston Pkwy. E
Suite 400
Houston, Texas 77060-5914
(281) 878-1010 Attn: William A. Coskey (281) 878-1010
(c) if to Subscriber, to the address set forth on the signature page
hereto.
(d) or at such other address as any party shall have specified by notice in
writing to the others.
11. Notification of Changes. Subscriber agrees and covenants to notify the
Selling Stockholders immediately upon the occurrence of any event prior to the
consummation of this Offering that would cause any representation, warranty,
covenant or other statement contained in this Agreement to be false or incorrect
or of any change in any statement made herein occurring prior to the
consummation of this Offering.
12. Assignability. This Agreement is not assignable by the Subscriber, and
may not be modified, waived or terminated except by an instrument in writing
signed by the party against whom enforcement of such modification, waiver or
termination is sought.
13. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns, and
the agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, legal representatives and assigns.
17
14. Obligations Irrevocable. The obligations of the Subscriber shall be
irrevocable, except with the consent of the Selling Stockholders, until the
consummation or termination of the Offering.
15. Entire Agreement. This Agreement constitutes the entire agreement of
the Subscriber, the Company and the Selling Stockholders relating to the matters
contained herein, superseding all prior contracts or agreements, whether oral or
written.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to the
principles of conflicts of law thereof that would require the application of the
laws of any jurisdiction other than Nevada.
17. Severability. If any provision of this Agreement or the application
thereof to Subscriber or any circumstance shall be held invalid or unenforceable
to any extent, the remainder of this Agreement and the application of such
provision to other subscriptions or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
18. Construction. The headings in this Agreement are inserted for
convenience and identification only and are not intended to describe, interpret,
define, or limit the scope, extent or intent of this Agreement or any provision
hereof. The rule of construction that an agreement shall be construed strictly
against the drafter shall not apply to this Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
20. Counsel. Subscriber hereby acknowledges that the Company, the Selling
Stockholders and their counsel, _________________, represent the interests of
the Company and the Selling Stockholders and not those of the Subscriber in any
agreement (including this Agreement) to which the Company or the Selling
Stockholders are a party.
[Signature Page to follow]
18
IN WITNESS WHEREOF, Subscriber has executed this Subscription Agreement as
of __________ __, 2005.
SUBSCRIBER
________________________________
Number of Shares: ______________
Offering Price per Share: $_____
Subscription Amount: $_________
By: ___________________________
Name:___________________________
Title:__________________________
Address: ______________________
________________________________
________________________________
IN WITNESS WHEREOF, the Company has executed this Subscription Agreement as
of __________ __, 2005.
ENGLOBAL CORPORATION
a Nevada corporation
By:_____________________________
Name:
Title:
Michael L. Burrow hereby accepts the foregoing subscription subject to the
terms and conditions hereof as of ____________ __, 2005.
________________________________
Michael L. Burrow
Alliance 2000, Ltd. hereby accepts the foregoing subscription subject to
the terms and conditions hereof as of ____________ __, 2005.
ALLIANCE 2000, LTD.
a Texas limited partnership
By:_____________________________
Name: William A. Coskey, its
General Partner
Exhibit A
---------
SUBSCRIPTION INSTRUCTIONS
(1) If you are subscribing for the purchase of Shares, please date and sign
the signature page to this Subscription Agreement in the applicable spaces.
Please signify the amount of Shares you are purchasing by inserting such amount
in the space provided for on the signature page to the Agreement.
(2) Complete and sign the accompanying Accredited Investor Certificate.
(3) Send all completed documents to:
________________________, Escrow Agent
________________________
________________________
Attn: _______________
Telephone: (___) __________
(4) Submit a check made payable to ______________________, as escrow agent,
to the address below or transmit funds via wire to the following account
of__________________________.
[ ]
[ ]
[ ]
[ ]
ABA ________________________
Acct # _______________________
in either case in an amount equal to the number of shares you are purchasing
multiplied by the Offering Price.
ATTENTION SUBSCRIBERS: NO SUBSCRIPTION WILL BE ACCEPTED UNLESS ALL DOCUMENTATION
PRESCRIBED HEREIN IS FULLY COMPLETED AND EXECUTED. ANY MATERIALS RECEIVED THAT
ARE INCOMPLETE IN ANY RESPECT WILL BE RETURNED BY THE ESCROW AGENT, UPON RECEIPT
OF INSTRUCTIONS BY THE COMPANY.
Exhibit B
---------
REGISTRATION RIGHTS AGREEMENT
Exhibit C
---------
CERTIFICATE OF ACCREDITED INVESTOR STATUS
Except as may be indicated by the undersigned below, the undersigned is an
"accredited investor," as that term is defined in Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"). The undersigned has
checked the box below indicating the basis on which he is representing his
status as an "accredited investor":
[ ] a bank as defined in Section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended; an insurance company as
defined in Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a small
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, and such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are "accredited
investors";
[ ] a private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
[ ] an organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000;
[ ] a natural person whose individual net worth, or joint net worth with the
undersigned's spouse, at the time of this purchase exceeds $1,000,000;
[ ] a natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with the undersigned's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
[ ] a trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
the prospective investment;
[ ] an entity in which all of the equity holders are "accredited investors" by
virtue of their meeting one or more of the above standards; or
[ ] an individual who is a director or executive officer of ENGlobal
Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Accredited Investor Status effective as of the __ day of ___________, 2005.
__________________________________
Name of Subscriber
By: ________________________
Name: ______________________
Title: _____________________