Exhibit 10.1
 
KEY EXECUTIVE EMPLOYMENT AGREEMENT
THIS KEY EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), effective August 9,
2008, is between ENGlobal Corporation, a Nevada corporation (the “Company”), and
Rochelle D. Leedy, a resident of Spring, Texas (the “Executive”). The Company
and the Executive agree as follows:
 
1.    Employment, Duties and Acceptance.
 
1.1    Employment by the Company. The Company agrees to employ the Executive as
President of ENGlobal Automation Group, Inc., a Texas corporation, and as
President of ENGlobal Systems, Inc., a Texas corporation, for the duration of
the Employment Term (as defined in Section 2), to render such services and to
perform such duties as are normally associated with and inherent in the
executive capacity in which the Executive will be serving, as well as such other
duties, which are not inconsistent with the Executive's position with the
Company, as shall from time to time reasonably be assigned to her by the Board
of Directors of the Company (the “Board of Directors”).
 
1.2    Extent of Service. The Executive agrees to render the services required
of her under Section 1.1. During the Employment Term, the Executive shall devote
her full business time, attention and energy to the business of the Company and
the performance of her duties under this Agreement. The foregoing shall not,
however, prohibit the Executive from making and managing personal investments,
or from engaging in civic or charitable activities, that do not materially
impair the performance of her duties under this Agreement. If appointed or
elected, as applicable, the Executive also shall serve during all or any part of
the Employment Term as any other officer and/or as a director of the Company or
any of its subsidiaries or affiliates, without any additional compensation other
than that specified in this Agreement.
 
1.3    Place of Performance. The Executive shall be based in the
Houston/Beaumont Metropolitan Area, and nothing in this Agreement shall require
the Executive to relocate her base of employment or principal place of residence
from the Houston/Beaumont Metropolitan Area.
 
2.    Employment Term. The term of the Executive's employment under this
Agreement (the “Employment Term”) shall commence on August 9, 2008 (the
“Commencement Date”), and shall expire on December 31, 2010, (the “Expiration
Date”), unless extended by the Company or earlier terminated as herein provided.
At the end of the Employment Term, this Agreement shall be automatically renewed
from year to year thereafter, unless (a) Employee's employment has been
terminated prior to such day, or (b) not later than 60 days prior to such day,
either party to this Agreement shall have given written notice to the other
party that he or it does not wish to extend further the Expiration Date (and the
Employment Term).
 
3.    Compensation and Other Benefits.
 
3.1    Annual Salary. As compensation for services to be rendered under this
Agreement, the Company shall pay the Executive a salary (the “Annual Salary”),
subject to such increases as the Board of Directors may, in its discretion,
approve, at a rate of $200,000 per annum. The Executive shall also be eligible,
during the Employment Term, to receive such other compensation, whether in the
form of cash bonuses, incentive compensation, stock options, stock appreciation
rights, restricted stock awards or otherwise (collectively, the “Additional
Compensation”), as the Board of Directors (or any committee of the Board) may,
in its discretion, approve. The Annual Salary and the Additional Compensation
shall be payable in accordance with the applicable payroll and/or other
compensation policies and plans of the Company as in effect from time to time
during the Employment Term, less such deductions as shall be required to be
withheld by applicable law and regulations.

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3.2    Participation in Employee Benefit Plans. The Executive shall be
permitted, during the Employment Term, if and to the extent he is and continues
to meet all applicable eligibility requirements, to participate in any group
life, hospitalization or disability insurance plan, health program, pension
plan, similar benefit plan or other “fringe benefits” of the Company, which may
be available to all other similarly situated members of the Company's executive
management on generally the same terms.
 
3.3    Reimbursement of Business Expenses. The Executive may incur reasonable,
ordinary and necessary business expenses in the course of her performance of her
duties under this Agreement, including expenses for travel, food and
entertainment. The Company shall reimburse the Executive for all such business
expenses if (i) the expenses are incurred by the Executive in accordance with
the Company's business expense reimbursement policy, if any, as may be
established and modified by the Company from time to time, and (ii) the
Executive provides to the Company a record of and appropriate receipts for (A)
the amount of the expense, (B) the date, place and nature of the expense, (C)
the business reason for the expense and (D) the names, occupations and other
data concerning individuals entertained sufficient to establish their business
relationship to the Company. The Company shall have no obligation to reimburse
the Executive for expenses that are not incurred and substantiated as required
by this Section 3.3.
 
4.    Restrictive Covenants
 
4.1    Covenants Against Competition. On the Commencement Date and during the
Employment Term, the Company will provide confidential information to the
Executive. The Executive acknowledges that her employer is (i) is engaged in the
business of designing, upgrading, programming, fabricating and servicing process
plant automation, control and analytical systems (the “Business”); (ii) the
Executive is one of a limited number of persons who has performed a significant
role in developing the Business; (iii) the Business is conducted throughout the
United States; (iv) the Company will give her possession of, and access to,
trade secrets of, and confidential, proprietary information concerning the
Business; (v) the agreements and covenants contained in this Section 4
(collectively, the “Restrictive Covenants”) are essential to protect the
Business and the goodwill of the Company; and (vi) the Restrictive Covenants
will not impair her ability to engage in a wide array of other professional
activities. Accordingly, the Executive agrees as follows:
 
4.1.1    Competitive Activities. During the Restricted Period, the Executive
shall not (A) engage, anywhere within the Territory (as hereinafter defined), as
an officer, director or in any other managerial capacity or as an owner,
co-owner or other investor or creditor in or of, whether as an employee,
independent contractor, consultant or advisor, in any business that is directly
competitive with the Business within the territory surrounding each office or
facility (each a “Facility”) at which the Executive was employed by the Company
within the one-year period immediately preceding the date of the Executive's
termination of employment (for purposes of this Section 4.1, the territory
surrounding a Facility shall be: (1) the city, town or village in which the
Facility is located, (2) the county or parish in which the Facility is located,
(3) the counties or parishes contiguous to the county or parish in which the
Facility is located and (4) the area located within 100 miles of the Facility,
all of such locations being herein collectively called the “Territory”), or (B)
call on any person or entity that at the time is, or at any time within one-year
prior to the date of termination of the Executive's employment was, a customer
of this Business of the Company for the purpose of soliciting or selling any
product or service which is then sold or offered within the Territory by this
Business of the Company if the Executive has knowledge of that customer
relationship; provided, however, that nothing in this Section 4.1.1 shall
prohibit the Executive from owning, directly or indirectly, solely as an
investment, securities of any entity traded on any national securities exchange
or over-the-counter market if the Executive is not a controlling person of, or a
member of a group which controls, such entity and does not, directly or
indirectly, own one percent or more of any class of securities of such entity.
As used in this Section 4, the term “Restricted Period” means the period
beginning on the Commencement Date and ending on the expiration of the Total
Severance Benefit Period (as defined in Section 5.5).

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4.1.2    Confidential Information; Personal Relationships. During the Restricted
Period and thereafter, the Executive shall keep secret and retain in strict
confidence, and shall not use for the benefit of herself or others, all
confidential matters of the Company, including, without limitation, “know-how,”
trade secrets, customer lists, details of client or consultant contracts,
pricing policies, bidding practices and procedures, operational methods,
marketing plans or strategies, project development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of production,
manufacture and installation, technical processes, designs and design projects,
inventions and research projects of the Company learned by the Executive
heretofore or during the Restricted Period. The obligation to keep the Company's
information confidential shall continue in full force and effect after the
Employment Term.
 
4.1.3    Property of the Company. All memoranda, notes, lists, records and other
documents or papers (and all copies thereof, including such items stored in
computer memories, on microfiche or by any other means), made or compiled by or
on behalf of the Executive, or made available to the Executive relating to the
Company, other than purely personal matters, are and shall be the Company's
property and shall be destroyed or delivered to the Company promptly upon the
termination of the Executive's employment (whether such termination is for
Cause, as hereinafter defined, or otherwise) or at any other time on request of
the Company. Upon termination of the Executive's employment, the Company may
also request that Executive deliver to the Company a written certification of
the Executive's compliance with its obligations under this Section 4.1.3.
 
4.1.4    Employees of the Company. During the Employment Term and the Restricted
Period, the Executive shall not, directly or indirectly, recruit or solicit any
employee of the Company away from the Company or encourage any such employee to
terminate their employment with the Company.
 
4.1.5    Consultants of the Company. During the Employment Term and the
Restricted Period, the Executive shall not, directly or indirectly, recruit or
solicit any consultant then under contract with the Company or encourage such
consultant to terminate such relationship.
 
4.1.6    Acquisition Candidates. During the Employment Term and the Restricted
Period, the Executive shall not call on any Acquisition Candidate (as defined
below in this Section 4.1.6), with the knowledge of such Acquisition Candidate's
status as such, for the purpose of acquiring, or arranging the acquisition of,
that Acquisition Candidate by any person or entity other than the Company.
“Acquisition Candidate” means any person or entity engaged in any of the
businesses of providing engineering services, including planning, design
procurement, construction management, in-plant maintenance, field inspection and
control system services, and (i) which was called on by the Company in
connection with the possible acquisition by the Company of all or any part of
that person's or entity's business, or (ii) with respect to which the Company
has made an acquisition analysis.
 
4.1.7    Agreement Ancillary to Other Agreements. This covenant not to compete
is ancillary to and part of other agreements between Company and Executive,
including, but not limited to: (i) Company's agreement to disclose, and to
continue to disclose its confidential information to Executive; and
(ii) Company's agreement to employ Executive for the Employment Term.
 
4.2    Rights and Remedies upon Breach. If the Executive breaches or threatens
to commit a breach of the Restrictive Covenants, the Company shall have the
following rights and remedies, each of which shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to the Company under law or in
equity:
 
4.2.1    Injunctive Relief. The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company.

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4.2.2    Accounting. The right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Executive as the result
of any transaction constituting a breach of the Restrictive Covenants.
 
4.3    Severability of Covenants. The Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographical and temporal
scope and in all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, are invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected, and the
Restrictive Covenants shall be given full effect, without regard to the invalid
portions.
 
4.4    Reformation. If any court determines that any Restrictive Covenant, or
any part thereof, is unenforceable because of the duration or geographic scope
of such provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
 
4.5    Enforceability. The Company and the Executive intend to and hereby confer
exclusive jurisdiction to enforce the Restrictive Covenants upon the federal and
state courts of Harris County, Texas, without reference to principles governing
choice or conflicts of law (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
 
5.    Termination.
 
5.1    Termination upon Death. If the Executive dies during the Employment Term,
this Agreement shall terminate, except that the Executive's legal
representatives, successors, heirs or assigns shall be entitled to receive the
Annual Salary, the Additional Compensation and other accrued benefits, if any,
earned up to the date of the Executive's death; provided, however, if any
Additional Compensation or other benefits are governed by the provisions of any
written employee benefit plan or policy of the Company, any written agreement
contemplated thereunder or any other separate written agreement entered into
between the Executive and the Company, the terms and conditions of such plan,
policy or agreement shall control in the event of any discrepancy or conflict
with the provisions of this Agreement regarding such Additional Compensation or
other benefit upon the death, termination or disability of the Executive.
 
5.2    Termination for Cause. At any time during the Employment Term, the
Company shall have the right to terminate the Executive's employment under this
Agreement and discharge the Executive for Cause, exercisable upon the service of
written notice upon the Executive. If such right is exercised, the Company's
obligation to the Executive shall be limited to the payment of any unpaid Annual
Salary, Additional Compensation and other benefits, if any, accrued up to the
effective date specified in the Company's notice of termination (which date
shall not be retroactive). “Cause” shall mean the determination that (i) after
30 days written notice and a right to cure, Executive has failed to cure a
material breach of the terms of this Agreement, (ii) after receipt of a written
warning, the Executive has failed or refused to follow the reasonable policies,
performance objectives, or directives established by the Board of Directors or
executive officers of the Company senior to the Executive, (iii) the Executive
has misappropriated money or other assets or properties of the Company or any
subsidiary or affiliate of the Company, (iv) the Executive has been convicted of
any felony or other serious crime, (v) the Executive's employment performance
has been substantially impaired by chronic absenteeism, alcoholism or drug
addiction, or (vi) the Executive has exhibited moral turpitude relevant to her
office or employment with the Company or any subsidiary or affiliate of the
Company.
 
5.3    Termination Without Cause. At any time during the Employment Term, the
Company shall have the right to terminate the Executive's employment under this
Agreement and discharge the Executive without Cause, exercisable upon the
service of written notice to the Executive. If such right is exercised, the
Company's obligation to the Executive shall be as set forth in Section 5.5.

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5.4    Termination upon Disability. If during the Employment Term the Executive
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of a competent physician licensed to practice
medicine in the United States, so that the Executive is unable to substantially
perform her services hereunder with reasonable accommodation either for (i) a
period of three consecutive months, or (ii) shorter periods aggregating three
months during any period of twelve consecutive months, then the Company may at
any time after the last day of the three consecutive months of disability, or
the day on which the shorter periods of disability equal an aggregate of three
months within a period of twelve consecutive months, terminate the Executive's
employment hereunder, exercisable upon the service of written notice to the
Executive. If such right is exercised, the Company's obligation to the Executive
shall be as set forth in Section 5.5.
 
5.5    Severance Benefit.
 
5.5.1    Initial Severance Benefit Period. If at any time during or after the
Employment Term, the Executive's employment by the Company is terminated for any
reason other than (i) a termination for Cause, (ii) her voluntary resignation
(including in breach of this Agreement), or (iii) her death, then for a period
of six months following the date of termination of the Executive's employment
(the “Initial Severance Benefit Period”), the Company shall continue to (a) pay
to the Executive, in payroll period installments in accordance with the
Company's normal payroll policies, the monthly amount of Executive's Annual
Salary in effect at the date of termination of her employment, subject to the
limitation of Section 5.5.4 and (b) under the same cost sharing arrangements as
were in place prior to termination, continue to include the Executive and her
eligible dependents under the coverage of all group health, medical and dental
insurance policies maintained by the Company during the Initial Severance
Benefit Period for the Company's management employees.
 
5.5.2    Second Severance Benefit Period. The Company, at its option, which
shall be exercisable by a written notice sent to the Executive at least 60 days
prior to the expiration of the Initial Severance Benefit Period, may elect to
extend the Initial Severance Benefit Period for a period of an additional six
months following the expiration of the Initial Severance Benefit Period (the
“Second Severance Benefit Period”). If the Company so elects to extend the
Initial Severance Benefit Period, the Company, during the Second Severance
Benefit Period shall (i) pay to the Executive, in payroll period installments in
accordance with the Company's normal payroll policies, an amount equal to 50% of
the monthly amount of Executive's Annual Salary in effect at the date of
termination of her employment, subject to the limitation of Section 5.5.4 and
(ii) under the same cost sharing arrangements as were in place prior to
termination, continue to include the Executive and her eligible dependants under
the coverage of all group health, medical and dental insurance policies
maintained by the Company during the Second Severance Benefit Period, for the
Company's management employees.
 
5.5.3    Total Severance Benefit Period. For purposes of Section 4.1.1 and
elsewhere in this Agreement, the term “Total Severance Benefit Period” means the
total period (including the Initial Severance Benefit Period and, if applicable,
the Second Severance Benefit Period) during which the Company is obligated to
pay and provide, and performs its obligations to pay and provide, severance
benefits to the Executive under this Section 5.5.
 
5.5.4    Limitation. Notwithstanding the foregoing, the total severance benefits
described in this Section 5.5 (other than cost sharing arrangements as were in
place prior to termination which continue to include the Executive and her
eligible dependents under the coverage of all group health, medical and dental
insurance policies maintained by the Company during the Total Severance Benefit
Period) shall in no event exceed two times the maximum amount that may be taken
into account under a qualified plan pursuant to Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the “Code”) for the year in which the
Executive's employment with the Company is terminated.

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6.    Insurance. The Company may, from time to time, apply for and take out, in
its own name and at its own expense, naming itself or others as the designated
beneficiary (which it may change from time to time), policies for health,
accident, disability or other insurance upon the Executive or her life, in any
amount or amounts that it may deem necessary or appropriate to protect its
interest. The Executive agrees to aid the Company in procuring such insurance by
submitting to reasonable medical examinations and by filling out, executing and
delivering such applications and other instruments in writing as may reasonably
be required by an insurance company or companies to which any application or
applications for insurance may be made by or for the Company.
 
7.    Arbitration.
 
7.1    Binding Effect. Except as provided in Section 7.2, any and all
controversies, claims or disputes by the Executive or the Company relating to
the provisions or obligations under this Agreement, or with respect to the
employment or termination thereof, shall be submitted to final and binding
arbitration in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association in effect at the time a demand for arbitration
is made. It is the intention of the Executive and the Company that this
Arbitration provision shall be enforceable under the Federal Arbitration Act.
Venue for any arbitration will lie exclusively in Harris County, Texas.
 
7.2    Excluded Matters. This Arbitration provision shall not apply to any
claims for workers' compensation benefits, unemployment compensation benefits,
or claims by the Company for injunctive relief available under this Agreement.
 
8.    Other Provisions.
 
8.1    Section 409A. The benefits provided under Section 5.5 of this Agreement
are intended to qualify as benefits from a “separation pay plan” (as such term
is defined in Code Section 409A); this Agreement is not intended to provide for
the deferral of compensation for purposes of Code Section 409A and the Treasury
Regulations issued thereunder. Notwithstanding the preceding sentence, if at the
time of payment of any benefits hereunder, the Company determines that this
Agreement will not so qualify and will otherwise provide for the deferral of
compensation, then (i) Sections 5.5.2 and 5.5.4 of this Agreement shall not be
effective, and (ii) if Executive is a “specified employee” within the meaning of
Section 409A of the Code (as determined in accordance with the methodology
established by the Company as in effect on the date of Executive's termination
of employment), all amounts that would otherwise be payable and benefits that
would otherwise be provided hereunder during the six-month period immediately
following Executive's termination of employment shall instead be paid on the
first business day after the date that is six months following the date of
Executive's termination of employment to the extent such delayed payment is
required to comply with the provisions of Section 409A of the Code.
 
8.2    Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
sent by facsimile transmission or, if mailed, five days after the date of
deposit in the United States mail, as follows:
 
if to the Company, to:
 
Chairman of the Compensation Committee
 
 
654 N. Sam Houston Pkwy E., Suite 400
 
 
Houston, Texas 77060-5914
 
 
 
if to the Executive, to:
 
Rochelle D. Leedy
 
 
18610 Arlan Lake Drive
 
 
Spring, Texas 77388

    
Either party may change its address for notice hereunder by notice to the other
party.
 

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8.3    Entire Agreement. This Agreement, contains the entire agreement and
understanding between the parties with respect to its subject matter and
supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
 
8.4    Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
 
8.5    Governing Law; Venue. This Agreement, and all matters related to this
Agreement, shall be governed by, and construed in accordance with, the laws of
the State of Texas without reference to principles governing choice or conflicts
of law (whether of the State of Texas or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Texas. Venue shall exclusively lie in the state and federal courts of Harris
County, Texas.
 
8.6    Assignment. This Agreement, and any rights and obligations hereunder, may
not be assigned by any party hereto without the prior written consent of the
other party, except that the Company may assign this Agreement to any of its
subsidiaries or affiliates or to any successor by merger or sale of all or
substantially all of the Company's assets, without the Executive's consent
provided such assignment does not diminish any of the Executive's benefits,
rights or obligations hereunder.
 
8.7    Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
8.8    Headings; Construction. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement. Each party has had the opportunity to review this Agreement with
an attorney, and the rule of construction that contracts are to be construed
against the drafter shall not apply to this Agreement.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written:
 
 
 
ENGLOBAL CORPORATION
 
 
 
 
 
 
 
 
 
By:  /s/ William A. Coskey
 
 
 
 
Name: William A. Coskey
 
 
 
 
Title: Chief Executive Officer
 
 
 
 
 
 
 
 
 
EXECUTIVE
 
 
 
 
 /s/ Rochelle D. Leedy
 
 
 
 
Rochelle D. Leedy
 

 

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