EXHIBIT 99.1
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into this
28th day of September, 2004, by and among ENGlobal Corporation, a Nevada
corporation formerly known as Industrial Data Systems Corporation (the
"Company"), Equus II Incorporated, a Delaware corporation ("Equus"), Alliance
2000, Ltd., a Texas limited partnership ("Alliance"), the persons and entities
listed on the attached Schedule 1 (the "Significant PEI Shareholders"), Xxxxxxx
X. Xxxxxx, acting as a shareholder representative for the Significant PEI
Shareholders (the "Shareholder Representative"), and Xxxxxx X. Xxxxxxxx, Esq.,
whose office address is 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
(the "Escrow Agent").
RECITALS:
The Company, PEI Acquisition, Inc., a Texas corporation, IDS Engineering
Management, LC, a Texas limited liability company, and Petrocon Engineering
Inc., a Texas corporation, entered into a Merger Agreement on or about July 31,
2001 (the "Merger Agreement").
In connection with the Merger Agreement, the Company, the Significant PEI
Shareholders, the Shareholder Representative, and the Escrow Agent entered into
an Indemnification Escrow Agreement, effective as of December 21, 2001 (the
"Indemnification Escrow Agreement"), and an Option Escrow Agreement, effective
as of December 21, 2001 (the "Option Escrow Agreement" and, together with the
Indemnification Escrow Agreement, the "Escrow Agreements"), pursuant to which
the Significant PEI Shareholders deposited shares of Company common stock, par
value $0.001 per share (the "Common Stock"), in an escrow account maintained by
the Escrow Agent in order to fund and secure certain obligations under the
Merger Agreement.
In addition, in connection with the Merger Agreement, the Company, Equus,
Alliance, and the Significant PEI Shareholders entered into a Voting Agreement,
dated as of December 21, 2001 (the "Voting Agreement"), which obligated the
parties thereto to vote for certain designated persons to serve on the Board of
Directors of the Company.
In connection with the Voting Agreement, the Significant PEI Shareholders
and the Shareholder Representative entered into a Voting Agreement, dated as of
December 21, 2001 (the "PEI Voting Agreement"), pursuant to which the
Significant PEI Shareholders would designate persons to serve on the Board of
Directors of the Company under the Voting Agreement.
The Company, subject to the conditions set forth in this Agreement, is
willing to distribute the Common Stock held pursuant to the Escrow Agreements to
the Significant PEI Shareholders.
The Company, Equus and Alliance desire to terminate the Voting Agreement
upon the execution of this Agreement by the Significant PEI Shareholders whose
aggregate Pro Rata Share, according to Schedule 1, is at least 51% (the
"Majority PEI Shareholders").
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The Significant PEI Shareholders and the Shareholder Representative desire
to terminate the PEI Voting Agreement upon the execution of this Agreement by
the Majority PEI Shareholders.
NOW, THEREFORE, for and in consideration of the above, the premises set
forth herein and other good and valuable consideration, the adequacy and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
1. Termination of Voting Agreement. The Company, Equus and Alliance agree
that, upon execution and delivery of this Agreement by at least the Majority PEI
Shareholders, the Voting Agreement shall be terminated and of no further force
and effect.
2. Waiver of Rights Under Indemnification Escrow Agreement. The Company
agrees that, upon the execution and delivery of this Agreement by at least the
Majority PEI Shareholders, the Company will waive its rights under the
Indemnification Escrow Agreement as to those Significant PEI Shareholders who
have executed this Agreement and delivered it to the Company. Upon such
occurrence, the Company will direct the Escrow Agent to distribute to each
Significant PEI Shareholder who has signed this Agreement, such Shareholder's
Pro Rata Share of the Common Stock held in the Indemnification Escrow. The
Indemnification Escrow Agreement shall automatically terminate when all such
Common Stock shall have been distributed by the Escrow Agent in accordance with
this Section 2.
3. Distribution of Common Stock and Property from Option Escrow
Agreement. The Company agrees to waive its rights under the Option Escrow
Agreement upon the conditions set forth in this Section 3. Once at least the
Majority PEI Shareholders have executed this Agreement and delivered it to the
Company,
(a) the Company will purchase from each Majority PEI Shareholder who
has signed this Agreement, such Majority PEI Shareholder's Pro Rata Share of the
Common Stock held in the Option Escrow in connection with the outstanding
Surviving Options (as defined in the Option Escrow Agreement) to purchase Common
Stock at $0.96 per share. In exchange for such shares, the Company shall pay the
Majority PEI Shareholders the sum of $0.96 per share, to be paid in three equal
installments, the first such installment to be paid on or before December 31,
2004, the second installment to be paid on or before December 31, 2005, and the
third installment to be paid on or before December 31, 2006; and
(b) the Company will instruct the Escrow Agent to distribute to each
Majority PEI Shareholder who has signed and delivered this Agreement, such
Majority PEI Shareholder's Pro Rata Share of all other shares of Common Stock
then held in the Option Escrow Agreement.
4. Termination of PEI Voting Agreement. Upon the distribution of all shares
from the Escrow Agreements, the PEI Voting Agreement shall terminate.
5. Release. Each party to this Agreement, on behalf of itself and its
respective investors, officers, directors, principals, shareholders, partners,
members, administrators, employees, agents, representatives, attorneys or
insurers, or any of their parents, affiliated companies, divisions,
partnerships, predecessors, successors, personal representatives, executors,
heirs and assigns (collectively, the "Releasing Parties"), hereby releases,
waives, remises and forever discharges the other parties to this Agreement and
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each of their respective investors, officers, directors, principals,
shareholders, partners, members, administrators, employees, agents,
representatives, attorneys or insurers, and any of their respective parents,
affiliated companies, divisions, partnerships, predecessors, successors,
personal representatives, executors, heirs and assigns (all of whom are
hereafter separately and collectively referred to as the "Released Parties"), of
and from all claims, actions, causes of action, demands, controversies, suits,
contracts, agreements, debts, accounts, sums of money, damages, judgments,
duties, liabilities, and obligations of every kind and nature whatsoever,
whether known or unknown, accrued or unaccrued, contingent or absolute,
liquidated or unliquidated, at law or in equity (including but not limited to
breaches of fiduciary duty, fraud, and violations of federal and state
securities law), that the Releasing Parties have had, now have or may hereafter
have against any of the Released Parties based on, arising out or by virtue of,
relating or pertaining to, or resulting from or in connection with, any act,
action, conduct, contract, agreement, breach of duty, violation of statute or
law, omission, transaction, occurrence, or event relating to the Merger
Agreement and the agreements entered into in connection with the Merger
Agreement, including, without limitation, the agreements which have been or may
be terminated by this Agreement; provided, however, that the release granted in
this Section 5 shall not be deemed to release the Released Parties from any
obligations under this Agreement.
6. Representations of the Parties. The undersigned parties hereby represent
and warrant that (i) they have not been induced to execute this Agreement by any
statement, act or representation by, or on behalf of, anyone, except as may be
contained in this Agreement; (ii) except for the other parties hereto, their
execution, delivery and performance of this Agreement will not require the
consent of any third party; and (iii) they have full legal authority to execute,
deliver, enter into and perform this Agreement, and that this Agreement is their
valid and legally binding obligation, enforceable against them in accordance
with its terms.
7. Miscellaneous.
(a) Counterparts. This Agreement may be executed by facsimile and in
two or more counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one agreement. Signatures transmitted via
facsimile shall be deemed originals for purposes of this Agreement.
(b) Governing Law. This Agreement shall be construed, performed, and
enforced in accordance with, and governed by, the internal laws of the State of
Texas, without giving effect to the principles of conflict of laws thereof that
direct the application of the laws of a different state. Venue for any disputes
pursuant to this Agreement shall be in Xxxxxx County, Texas, and the parties
agree to submit to the jurisdiction of the state and federal courts in Xxxxxx
County, Texas.
(c) Amendments and Waivers. This Agreement may be amended or modified,
and any of the terms, covenants, representations, warranties, or conditions
hereof may be waived, only by a written instrument executed by the parties
hereto, or in the case of a waiver, by the party waiving compliance. Any waiver
by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as a further or
continuing waiver of any such conditions, or of the breach of any other
provision, term, covenant, representation, or warranty of this Agreement.
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(d) Construction. All pronouns used in this Agreement shall be
construed to include the masculine, feminine, neuter, singular or plural, as the
identity of the antecedent may require. The rule of construction that documents
are to be construed strictly against the drafter shall be disregarded as each
party to this Agreement has had an opportunity to consult with his own attorney
regarding the terms of this Agreement. The section headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
(e) 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.
(f) Effective Date. This Agreement shall be effective as follows:
(i) The termination of the Voting Agreement shall be effective on
receipt of signatures from the Majority PEI Shareholders.
(ii) The Company's waiver of rights under the Escrow Agreements
shall be effective, as to each Significant PEI Shareholder who signs this
Agreement, upon the receipt of signatures from at least the Majority PEI
Shareholders.
(iii) The PEI Voting Agreement shall terminate upon the
distribution of all shares of Common Stock from the Escrow Agreements.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Termination
Agreement as of the day and year first written above.
ENGLOBAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, President
[Signature Page to Termination Agreement.]
EQUUS II INCORPORATED
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------------
Title: President
-----------------------------------------
[Signature Page to Termination Agreement.]
ALLIANCE 2000, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, its General Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, its General Partner
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
X.X. XXXXXX FAMILY PARTNERSHIP, LTD.
By: /s/ X. X. Xxxxxx
-----------------------------------------
Name: X. X. Xxxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxx Xx-Xxxxxx
-----------------------------------------
Xxxxx Xx-Xxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
XXXXXXX X. XXXXXX FAMILY PARTNERSHIP,
LTD.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SHAREHOLDER
THE XXXX XXXXX FAMILY LIMITED
PARTNERSHIP, LTD.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxx X. Xxxxx
-----------------------------------------
Xxxx X. Xxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxx, Xx.
-----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
XXXXX GROUP, LTD.
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
XXXXXX X. XXXXXXX FAMILY PARTNERSHIP,
LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxx X. Xxxxxx, Xx.
-----------------------------------------
Xxxx X. Xxxxxx, Xx.
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
THE XXXXXXXX X. XXXXXXXX FAMILY
PARTNERSHIP, LTD.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Title:
-----------------------------------------
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxx Xxxxx
-----------------------------------------
Xxxxx Xxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx or Xxxxxxx Xxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
[Signature Page to Termination Agreement.]
SIGNIFICANT PEI SHAREHOLDER:
/s/ Xxxxx X. Xxxxxx, Xx.
-----------------------------------------
Xxxxx X. Xxxxxx, Xx.
[Signature Page to Termination Agreement.]
SHAREHOLDER REPRESENTATIVE
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
[Signature Page to Termination Agreement.]
ESCROW AGENT
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
[Signature Page to Termination Agreement.]
SCHEDULE 1
Significant PEI Shareholders
----------------------------
Name Pro Rata Share
---- --------------
X.X. Xxxxxx Family Partnership, Ltd. 10.759%
Xxxxxxx X. Xxxxxx 8.967%
Equus II Incorporated 13.208%
Xxxxx Xx-Xxxxxx 9.051%
Xxxxxxx X. Xxxxxxxx 8.627%
Xxxxx X. Xxxxxx 7.780%
Xxxxxx X. Xxxxxxxxx 4.766%
Xxxxxx X. Xxxxx 3.830%
Xxxxxxx X. Xxxxxx Family Partnership, Ltd. 3.666%
The Xxxx Xxxxx Family Limited Partnership, Ltd. 3.370%
Xxxx X. Xxxxx 1.628%
Xxxxx X. Xxxxx 3.346%
Xxxxxx X. Xxxxxx, Xx. 2.803%
Xxxxx Group, Ltd. 2.298%
Xxxxxx X. Xxxxxxx 2.162%
Xxxxxx X. Xxxxxxx Family Partnership, Ltd. 2.073%
Xxxx X. Xxxxxx, Xx. 2.036%
The Xxxxxxxx X. Xxxxxxxx Family Partnership, Ltd. 2.022%
Xxxxxx X. Xxxxx 1.755%
Xxxxx Xxxxx 1.594%
Xxxxxxx or Xxxxxxx Xxxxxx 1.460%
Xxxxxx X. Xxxxxx 1.628%
Xxxxx X. Xxxxxx, Xx. 1.169%
