ENGlobal Corporation 654 N. Sam Houston Parkway E., Suite 400 Houston, TX 77060-5914 Attention: Mark Hess Chief Executive Officer Email: mark.hess@englobal.com
Exhibit
1.1
June 1,
2021
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ENGlobal
Corporation
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Attention:
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Chief
Executive Officer
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Email:
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Dear
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This
letter (the “Agreement”) constitutes the
agreement between A.G.P./Alliance Global Partners, as the sole
placement agent (“A.G.P.”) (A.G.P. is also referred
to herein as the “Placement Agent”), and
ENGlobal Corporation, a company organized under the laws of the
state of Nevada (the “Company”), that the Placement
Agent shall serve as the placement agent for the Company, on a
“reasonable best efforts” basis, in connection with the
proposed placement (the “Placement”) of shares of common
stock, par value, $0.001 per share (the “Shares”). The Shares actually
placed by the Placement Agent are referred to herein as the
“Placement Agent
Securities.” The Placement Agent Securities shall be
offered and sold under the Company’s registration statement
on Form S-3 (File No. 333-252572) with respect to the Placement
Agent Securities. The documents executed and delivered by the
Company and the Purchasers (as defined below) in connection with
the Placement, including, without limitation, a securities purchase
agreement (the “Purchase Agreement”), shall be collectively
referred to herein as the “Transaction Documents.” The
purchase price to the Purchasers for each Share is $2.80. The
Placement Agent may retain other brokers or dealers to act as
sub-agents or selected-dealers on its behalf in connection with the
Placement.
The
terms of the Placement shall be mutually agreed upon by the Company
and the purchasers listed in the Purchase Agreement (each, a
“Purchaser” and
collectively, the “Purchasers”), and nothing herein
constitutes that the Placement Agent would have the power or
authority to bind the Company or any Purchaser, or an obligation
for the Company to issue any Securities or complete the Placement.
The Company expressly acknowledges and agrees that the Placement
Agent’s obligations hereunder are on a reasonable best
efforts basis only and that the execution of this Agreement does
not constitute a commitment by the Placement Agent to purchase the
Securities and does not ensure the successful placement of the
Securities or any portion thereof or the success of the Placement
Agent with respect to securing any other financing on behalf of the
Company. Certain affiliates of the Placement Agent may participate
in the Placement by purchasing some of the Placement Agent
Securities. The sale of Placement Agent Securities to any Purchaser
will be evidenced by the Purchase Agreement between the Company and
such Purchaser, in a form reasonably acceptable to the Company and
the Purchaser. Capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Purchase
Agreement. Prior to the signing of any Purchase Agreement, officers
of the Company will be available to answer inquiries from
prospective Purchasers.
SECTION
1. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY; COVENANTS OF THE COMPANY.
A. Representations
of the Company. With respect to the Placement Agent
Securities, each of the representations and warranties (together
with any related disclosure schedules thereto) and covenants made
by the Company to the Purchasers in the Purchase Agreement in
connection with the Placement, is hereby incorporated herein by
reference into this Agreement (as though fully restated herein) and
is, as of the date of this Agreement and as of the Closing Date,
hereby made to, and in favor of, the Placement Agent. In addition
to the foregoing, the Company represents and warrants that there
are no affiliations with any FINRA member firm participating in the
Placement among the Company’s officers, directors or, to the
knowledge of the Company, any five percent (5.0%) or greater
stockholder of the Company.
B.
Covenants of the
Company. The Company covenants and agrees to continue to
retain (i) a firm of independent PCAOB registered public
accountants for a period of at least two (2) years after the
Closing Date and (ii) a competent transfer agent with respect to
the Placement Agent Securities for a period of two (2) years after
the Closing Date. In addition, from the date hereof until sixty
(60) days after the Closing Date, neither the Company nor any
Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common
Stock or Common Stock Equivalents.
SECTION 2.
REPRESENTATIONS OF THE PLACEMENT
AGENT. The Placement Agent represents and warrants that it
(i) is a member in good standing of the Financial Industry
Regulatory Authority (“FINRA”), (ii) is registered as a
broker/dealer under the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), (iii) is licensed as a broker/dealer under the
laws of the United States of America, applicable to the offers and
sales of the Placement Agent Securities by the Placement Agent,
(iv) is and will be a corporate body validly existing under the
laws of its place of incorporation, and (v) has full power and
authority to enter into and perform its obligations under this
Agreement. The Placement Agent will immediately notify the Company
in writing of any change in its status with respect to subsections
(i) through (v) above. The Placement Agent covenants that it will
each use its reasonable best efforts to conduct the Placement
hereunder in compliance with the provisions of this Agreement and
the requirements of applicable law.
SECTION 3.
COMPENSATION. In consideration
of the services to be provided for hereunder, the Company shall pay
to the Placement Agent or its respective designees a total cash fee
equal to six percent (6.0%) of gross proceeds from the Placement of
the total amount of Placement Agent Securities sold (the
“Cash Fee”) and
an accountable expense allowance as set forth in Section 4 below.
The Placement Agent reserves the right to reduce any item of
compensation or adjust the terms thereof as specified herein in the
event that a determination shall be made by FINRA to the effect
that the Placement Agent’s aggregate compensation is in
excess of FINRA Rules or that the terms thereof require
adjustment.
SECTION 4.
EXPENSES. The Company agrees to
pay all costs, fees and expenses incurred by the Company in
connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including,
without limitation: (i) all expenses incident to the issuance,
delivery and qualification of the Securities (including all
printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Shares; (iii) all necessary
issue, transfer and other stamp taxes in connection with the
issuance and sale of the Placement Agent Securities; (iv) all
fees and expenses of the Company’s counsel, independent
public or certified public accountants and other advisors; (v) all
costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), the Base Prospectus and each
Prospectus Supplement, and all amendments and supplements thereto,
and this Agreement; (vi) all filing fees, reasonable
attorneys’ fees and expenses incurred by the Company in
connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the
Placement Agent Securities for offer and sale under the state
securities or blue sky laws or the securities laws of any other
country; (vii) the fees and expenses associated with including the
Placement Agent Securities on the Trading Market; and (ix) up to
$30,000 for accountable expenses related to legal fees of counsel
to the Placement Agent, IPREO software related expenses, background
check expenses, tombstones and marketing related expenses,
including road show expenses if they are incurred. Notwithstanding
the foregoing, any advance received by the Placement Agent will be
reimbursed to the Company to the extent not actually incurred in
compliance with FINRA Rule 5110(g)(4)(A). In the event that this
Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant
to the terms herein, the Company shall be obligated to pay to the
Placement Agent its actual and accountable out-of-pocket expenses
related to the transactions contemplated herein then due and
payable (including the fees and disbursements of Representative
Counsel) up to $30,000 and upon demand the Company shall pay the
full amount thereof to the Placement Agent; provided, however, that such expense cap in no
way limits or impairs the indemnification and contribution
provisions of this Agreement.
SECTION 5. INDEMNIFICATION.
A.
To the extent permitted by law, with respect to the Placement Agent
Securities, the Company will indemnify the Placement Agent and its
affiliates, stockholders, directors, officers, employees, members
and controlling persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) against all
losses, claims, damages, expenses and liabilities, as the same are
incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant
to this Agreement, except to the extent that any losses, claims,
damages, expenses or liabilities (or actions in respect thereof)
are found in a final judgment (not subject to appeal) by a court of
law to have resulted primarily and directly from a Placement
Agent’s willful misconduct or gross negligence in performing
the services described herein.
B. Promptly
after receipt by the Placement Agent of notice of any claim or the
commencement of any action or proceeding with respect to which the
Placement Agent is entitled to indemnity hereunder, the Placement
Agent will promptly notify the Company in writing of such claim or
of the commencement of such action or proceeding, but failure to so
notify the Company shall not relieve the Company from any
obligation it may have hereunder, except and only to the extent
such failure results in the forfeiture by the Company of
substantial rights and defenses. If the Company so elects or is
requested by the Placement Agent, the Company will assume the
defense of such action or proceeding and will employ counsel
reasonably satisfactory to the Placement Agent and will pay the
fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Placement Agent will be entitled to employ its own
counsel separate from counsel for the Company and from any other
party in such action if counsel for the Placement Agent reasonably
determines that it would be inappropriate under the applicable
rules of professional responsibility for the same counsel to
represent both the Company and the Placement Agent. In such event,
the reasonable fees and disbursements of no more than one such
separate counsel will be paid by the Company, in addition to fees
of local counsel. The Company will have the right to settle the
claim or proceeding, provided that the Company will not settle any
such claim, action or proceeding without the prior written consent
of the Placement Agent, which will not be unreasonably
withheld.
C. The
Company agrees to notify the Placement Agent promptly of the
assertion against it or any other person of any claim or the
commencement of any action or proceeding relating to a transaction
contemplated by this Agreement.
D. If
for any reason the foregoing indemnity is unavailable to the
Placement Agent or insufficient to hold the Placement Agent
harmless, then the Company shall contribute to the amount paid or
payable by the Placement Agent as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to
reflect not only the relative benefits received by the Company on
the one hand and the Placement Agent on the other, but also the
relative fault of the Company on the one hand and the liable
Placement Agent on the other that resulted in such losses, claims,
damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in respect
of losses, claims, damages and liabilities referred to above shall
be deemed to include any legal or other fees and expenses incurred
in defending any litigation, proceeding or other action or claim.
Notwithstanding the provisions hereof, the liable Placement
Agent’s share of the liability hereunder shall not be in
excess of the amount of fees actually received, or to be received,
by such Placement Agent under this Agreement (excluding any amounts
received as reimbursement of expenses incurred by such Placement
Agent).
E. These
indemnification provisions shall remain in full force and effect
whether or not the transaction contemplated by this Agreement is
completed and shall survive the termination of this Agreement, and
shall be in addition to any liability that the Company might
otherwise have to any indemnified party under this Agreement or
otherwise.
SECTION 6. ENGAGEMENT
TERM. The Placement Agent’s engagement hereunder will
be until the earlier of (i) June 8, 2021 and (ii) the Closing Date.
The date of termination of this Agreement is referred to herein as
the “Termination
Date.” In the event, however, in the course of the
Placement Agent’s performance of due diligence it deems, it
necessary to terminate the engagement, the Placement Agent may do
so prior to the Termination Date. The Company may elect to
terminate the engagement hereunder for any reason prior to the
Termination Date but will remain responsible for fees pursuant to
Section 3 hereof with respect to the Placement Agent Securities if
sold in the Placement. Notwithstanding anything to the contrary
contained herein, the provisions concerning the Company’s
obligation to pay any fees actually earned pursuant to Section 3
hereof and the provisions concerning confidentiality,
indemnification and contribution contained herein will survive any
expiration or termination of this Agreement. If this Agreement is
terminated prior to the completion of the Placement, all fees due
to the Placement Agent as set forth in Section 3 shall be paid by
the Company to the Placement Agent on or before the Termination
Date (in the event such fees are earned or owed as of the
Termination Date). The Placement Agent agrees not to use any
confidential information concerning the Company provided to the
Placement Agent by the Company for any purposes other than those
contemplated under this Agreement.
SECTION 7. PLACEMENT
AGENT INFORMATION. The Company agrees that any information
or advice rendered by the Placement Agent in connection with this
engagement is for the confidential use of the Company only in their
evaluation of the Placement and, except as otherwise required by
law, the Company will not disclose or otherwise refer to the advice
or information in any manner without each of the Placement
Agent’s prior written consent.
SECTION 8. NO
FIDUCIARY RELATIONSHIP. This Agreement does not create, and
shall not be construed as creating rights enforceable by any person
or entity not a party hereto, except those entitled hereto by
virtue of the indemnification provisions hereof. The Company
acknowledges and agrees that the Placement Agent is not and shall
not be construed as a fiduciary of the Company and shall have no
duties or liabilities to the equity holders or the creditors of the
Company or any other person by virtue of this Agreement or the
retention of the Placement Agent hereunder, all of which are hereby
expressly waived.
SECTION 9. CLOSING.
The obligations of the Placement Agent, and the closing of the sale
of the Placement Agent Securities hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations
and warranties on the part of the Company contained herein and in
the Purchase Agreement, to the performance by the Company of its
obligations hereunder, and to each of the following additional
terms and conditions, except as otherwise disclosed to and
acknowledged and waived by the Placement Agent:
A.
All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of
this Agreement, the Placement Agent Securities, and all other legal
matters relating to this Agreement and the transactions
contemplated hereby with respect to the Placement Agent Securities
shall be reasonably satisfactory in all material respects to the
Placement Agent.
B.
The Placement Agent shall have received from outside counsel to the
Company such counsel’s written opinion and negative assurance
with respect to the Placement Agent Securities, addressed to the
Placement Agent and dated as of the Closing Date, in form and
substance reasonably satisfactory to the Placement
Agent.
C. The
Placement Agent shall have received an executed FINRA questionnaire
from each of the Company and the Company’s executive officers
and directors, and 10% or greater securityholders, as well as
executed Lock-Up Agreements from the Company’s executive
officers and directors.
D.
The Shares shall be registered under the Exchange Act. The Company
shall have taken no action designed to, or likely to have the
effect of terminating the registration of the Common Stocks under
the Exchange Act or delisting or suspending from trading the Shares
from the Trading Market or other applicable U.S. national exchange,
nor has the Company received any information suggesting that the
Commission or the Trading Market or other U.S. applicable national
exchange is contemplating terminating such registration or
listing.
E.
No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Placement Agent Securities or
materially and adversely affect or potentially and adversely affect
the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance or sale of the
Placement Agent Securities or materially and adversely affect or
potentially and adversely affect the business or operations of the
Company.
F.
The Company shall have entered into a Purchase Agreement with each
of the Purchasers of the Placement Agent Securities and such
agreements shall be in full force and effect and shall contain
representations, warranties and covenants of the Company as agreed
upon between the Company and the Purchasers.
G.
FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In
addition, the Company shall, if requested by the Placement Agent,
make or authorize Placement Agent’s counsel to make on the
Company’s behalf, any filing with the FINRA Corporate
Financing Department pursuant to FINRA Rule 5110 with respect to
the Placement and pay all filing fees required in connection
therewith.
If any
of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, all obligations
of the Placement Agent hereunder may be cancelled by the Placement
Agent at, or at any time prior to, the Closing Date. Notice of such
cancellation shall be given to the Company in writing or orally.
Any such oral notice shall be confirmed promptly thereafter in
writing.
SECTION 10. GOVERNING
LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely in such State, without
regard to principles of conflicts of law. This Agreement may not be
assigned by either party without the prior written consent of the
other party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and
permitted assigns. Any right to trial by jury with respect to any
dispute arising under this Agreement or any transaction or conduct
in connection herewith is waived. Any dispute arising under this
Agreement may be brought into the courts of the State of New York
or into the Federal Court located in New York, New York and, by
execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of aforesaid courts. Each party
hereto hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If
either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.
SECTION
11. ENTIRE AGREEMENT/MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings, relating to the subject matter hereof. If any
provision of this Agreement is determined to be invalid or
unenforceable in any respect, such determination will not affect
such provision in any other respect or any other provision of this
Agreement, which will remain in full force and effect. This
Agreement may not be amended or otherwise modified or waived except
by an instrument in writing signed by both the Placement Agent and
the Company. The representations, warranties, agreements and
covenants contained herein shall survive the Closing Date of the
Placement and delivery of the Placement Agent Securities. This
Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission or a .pdf
format file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such
facsimile or .pdf signature page were an original
thereof.
SECTION 12. NOTICES.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is sent to the email
address specified on the signature pages attached hereto prior to
6:30 p.m. (New York City time) on a business day, (b) the next
business day after the date of transmission, if such notice or
communication is sent to the email address on the signature pages
attached hereto on a day that is not a business day or later than
6:30 p.m. (New York City time) on any business day, (c) the third
business day following the date of mailing, if sent by U.S.
internationally recognized air courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages hereto.
SECTION
13. Press Announcements. The
Company agrees that the Placement Agent shall, on and after the
Closing Date, have the right to reference the Placement and the
Placement Agent’s role in connection therewith in the
Placement Agent’s marketing materials and on its website and
to place advertisements in financial and other newspapers and
journals, in each case at its own expense.
[The
remainder of this page has been intentionally left
blank.]
Please
confirm that the foregoing correctly sets forth our agreement by
signing and returning to the Placement Agent the enclosed copy of
this Agreement.
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Very
truly yours,
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A.G.P./ALLIANCE GLOBAL PARTNERS
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By:
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/s/
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Name:
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Title: Managing
Director
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Address
for notice:
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
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Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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[Signature
Page to Placement Agency Agreement.]
Accepted and Agreed
to as of
the
date first written above:
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ENGLOBAL CORPORATION
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By:
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/s/
▇▇▇▇ ▇. ▇▇▇▇
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Name:
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Title: Chief
Executive Officer
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Address
for notice:
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ENGlobal
Corporation
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▇▇▇ ▇.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention:
▇▇▇▇ ▇▇▇▇
Chief
Executive Officer
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Email:
▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
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[Signature
Page to Placement Agency Agreement.]