Exhibit 10.1


 


SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of May 29, 2016 (the “Amendment Date”), is made between (i)
ENGLOBAL CORPORATION, a Nevada corporation (“ENGlobal Holdings”), ENGLOBAL U.S., INC., a Texas corporation (“ENGlobal
U.S.”), and ENGLOBAL GOVERNMENT SERVICES, INC., a Texas corporation (“ENGlobal Government;” ENGlobal
Government, together with ENGlobal U.S. and ENGlobal Holdings, and together with any Subsidiary that becomes a “Borrower”
hereafter pursuant to the operation and effect of Section 7.12, hereinafter sometimes collectively called “Borrowers”
and individually called a “Borrower”); (ii) ENGLOBAL INTERNATIONAL, INC., a corporation organized under the
BVI Business Companies Act of 2004, as amended (“ENGlobal International”) and ENGLOBAL EMERGING MARKETS, INC.,
a Texas corporation (“ENGlobal Emerging Markets;” ENGlobal Emerging Markets, together with ENGlobal International,
and together with any Subsidiary that becomes a “Subsidiary Guarantor” hereafter pursuant to the operation and
effect of Section 7.12, hereinafter sometimes collectively called “Subsidiary Guarantors” and individually
called a “Subsidiary Guarantor”; and the Subsidiary Guarantors, together with the Borrowers, hereinafter sometimes
collectively called the “Obligors” and individually called an “Obligor”) and (iii) REGIONS
BANK, an Alabama bank (“Lender”), for the purpose of amending that certain Loan and Security Agreement, dated
as of September 16, 2014, made between Obligors and Lender (which, as modified or amended to date, and as further modified and
amended hereby, is called herein the “Loan Agreement”) to memorialize the consent of Lender to certain transactions
contemplated by Borrowers, the making of certain amendments and modifications to the Loan Agreement as a condition thereto, and
certain related matters, all as described more particularly below.


 


1.                 
Incorporation of Definitions. Capitalized terms used in this Amendment, but not expressly defined herein, shall have
the same meanings as given to such terms in the Loan Agreement. Section references used in this Amendment shall mean and refer
to Sections references in the Loan Agreement.


 


2.                 
Amendments. Lender and Obligors agree that the Loan Agreement shall be amended and modified, effective as of the
Second Amendment Effective Date (as defined hereinbelow) , as follows:


 


2.1                   
New Definitions. The following new defined terms shall be added to Section 1.2 of the Loan Agreement in the appropriate
alphabetical order:


 


“Second
Amendment” means the Second Amendment to Loan and Security Agreement, dated as of the Second Amendment Effective
Date, made between the parties hereto, amending this Agreement.


 


“Second
Amendment Effective Date” means the “Amendment Date,” as that term is defined in the Second Amendment.


 


2.2                   
Financial Covenant Change. Section 8.2(a) of the Loan Agreement is amended by adding thereto, at the end thereof,
the following:


 






     


     

    

Notwithstanding the foregoing, however,
commencing with the Fiscal Month ending April 30, 2016, and continuing through and including the Fiscal Month ending December 31,
2016 only, compliance with the foregoing Fixed Charge Coverage Ratio financial covenant shall be suspended and beginning not later
than the Second Amendment Effective Date, and continuing at all times thereafter through December 31, 2016, Borrowers shall be
required, in lieu thereof, to meet the following conditions: (1) to reduce all Working Capital Obligations outstanding to zero
(0), and thereafter maintain all Working Capital Obligations at zero (0), except (a) as may be necessary to accommodate for intraday
cash management activities, and (b) for up to $500,000, in aggregate amount, of Letter of Credit Obligations outstanding at any
one time, and (2) to maintain with Lender unrestricted cash in a Collections Account equal to not less than $5,000,000. Commencing
on January 1, 2017, and continuing at all times thereafter, compliance with the foregoing Fixed Charge Coverage Ratio financial
covenant shall be restored, and Borrowers shall be obliged to comply at all times therewith.


 


3.                 
Conditions Precedent. Completion of the following to Lender’s satisfaction shall constitute express conditions
precedent to the effectiveness of the consent set forth in Section 2 above and the amendments set forth in Section 2 above: (i)
the Obligors party hereto and thereto shall have executed and delivered to Lender this Amendment and the consent and re-affirmation
of the Subsidiary Guarantors attached hereto (this Amendment and such consent and re-affirmation, collectively, the “Amendment
Documents”); (ii) all representations and warranties set forth in Section 4 below shall be true and correct in all material
respects as of the Amendment Date and after giving effect hereto and thereto, in each instance, as witnessed by Obligors’
execution and delivery hereof and thereof to the extent party hereto and thereto; and (iii) Borrowers shall have paid to Lender
an amendment fee of $20,000, in cash, which shall be paid by Borrowers on the Second Amendment Effective Date, shall be fully earned
by Lender on such date and shall not be refundable in whole or in part after payment in any event.


 


4.                 
Representations and Warranties. In order to induce Lender to enter into this Amendment, each Obligor hereby represents
and warrants to Lender as follows:


 


4.1                   
Legal Right. Each Obligor has the full power, right and legal authority to execute, deliver and perform its obligations
under this Amendment and each other Amendment Document to which it is party.


 


4.2                   
Authorization; No Consents. Each Obligor has taken all action necessary to authorize the execution and delivery of,
and the performance of its obligations under, this Amendment and any other Amendment Documents to which it is party; and no consent
or approval of any Person, or registration or filing with any Governmental Entity, is required in connection herewith, except such
as has been obtained or made and is in full force and effect.


 


4.3                   
Enforceability. This Amendment together with the other Amendment Documents to which such Obligor is party constitute
a legal, valid and binding obligations of each Obligor, enforceable against Obligor in accordance with their respective terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium or similar laws affecting the rights
of creditors generally.


 






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4.4                   
No Default. After giving effect hereto, no Default or Event of Default has occurred and is continuing or would result
from the execution, delivery and performance by each Obligor of this Amendment or any other Amendment Documents to which it is
party.


 


4.5                   
Existing Representations. The representations and warranties contained in the Loan Agreement and in each of the other
Loan Documents to which each Obligor is a party are true and complete in all material respects on and as of the date hereof as
though made on and as of the date hereof except for (i) changes which have occurred and which were not prohibited by the terms
of the Loan Agreement or such other Loan Documents, or otherwise consented to in writing by Lender, including pursuant hereto,
(ii) to the extent that any such representation or warranty related to an earlier date, and (iii) as are affected by transactions
specifically and expressly contemplated by the Loan Agreement.


 


5.                 
Reference to and Effect on the Documents.


 


5.1                   
References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import, and each reference to the Loan Agreement in the other Loan Documents other than the
Loan Agreement, shall mean and be a reference to the Loan Agreement as amended hereby.


 


5.2                   
Effect. Except as specifically amended hereby, the Loan Agreement and all other Loan Documents, and all other documents,
agreements, instruments or writings entered into in connection therewith, shall remain in full force and effect, and are hereby
ratified, confirmed and acknowledged by Obligors. The consents set forth herein are limited precisely as written and shall not
be deemed to (i) be a consent to any amendment, waiver or other modification of any other term or conditions of the Loan Agreement,
any other Loan Document, or any document delivered pursuant thereto, or (ii) prejudice any right or rights which Lender may now
or in the future have in connection with the Loan Agreement or any other Loan Document, or (iii) constitute a novation of the Loan
Agreement or any other Loan Document.


 


6.                 
Governing Law. This Amendment together with the other Amendment Documents (if any) and the rights and obligations
of the parties hereunder and thereunder, respectively, shall be governed by, and construed and interpreted in accordance with the
substantive laws of the Jurisdiction, without regard to its conflict of laws principles.


 


7.                 
Headings. Section headings and captions used in this Amendment and the other Amendment Documents (if any) are included
herein for convenience of reference only and shall not constitute a part of this Amendment or any other Amendment Document for
any other purpose.


 


8.                 
Successors. This Amendment and each of the other Amendment Documents (if any) shall be binding upon the permitted
successors and assigns of the parties hereto and thereto.


 


9.                 
Counterparts. This Amendment and each of the other Amendment Documents (if any) may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment
and the other Amendment Documents by signing any such counterpart. Delivery by any party hereto of an executed counterpart of a
signature page to this Amendment or any Amendment Document by telecopy, Adobe PDF file or other form of electronic transmission
shall be effective as delivery of a manually executed counterpart thereof, and shall be effective as an original thereof, provided
that any party hereto making delivery by such means shall also deliver an original executed counterpart to Lender, but the failure
of such party to do so shall not affect the validity, binding effect or enforceability of this Amendment.


 






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10.             
Loan Document. Each of this Amendment and all other Amendment Documents (if any) shall constitute Loan Documents
under the Loan Agreement and be governed and construed accordingly.


 


11.             
No Offsets. Each Obligor hereby acknowledges and agrees that as of the Amendment Effective Date it has no known offsets,
defenses, claims, or counterclaims against Lender with respect to the Obligations.


 


12.             
Entire Agreement. This Amendment and the other Amendment Documents, together, constitute the entire agreement between
the parties in respect of the subject matter hereof, and may not be contradicted by evidence of prior, contemporaneous or oral
agreements between the parties. There are no unwritten oral agreements between Obligors and Lender in regard to the subject matter
hereof.


 


 


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WITNESS the hands of Borrowers and Lender as
of the date first above written.


 


 


	 	 	“BORROWERS”
	 	 	 
	 	 	ENGLOBAL CORPORATION
	 	 	 
	 	 	By:  	/s/ Mark Hess
	 	 	Name: 	Mark Hess
	 	 	Title: 	Treasurer and Chief Financial Officer
	 	 	 
	 	 	 
	 	 	ENGLOBAL U.S., INC.
	 	 	 
	 	 	By:  	/s/ Mark Hess
	 	 	Name: 	Mark Hess
	 	 	Title:	Treasurer and Chief Financial Officer
	 	 	 
	 	 	 
	 	 	ENGLOBAL GOVERNMENT SERVICES, INC. 
	 	 	 
	 	 	By: 	/s/ Mark Hess
	 	 	Name: 	Mark Hess
	 	 	Title: 	Treasurer and Chief Financial Officer
	 	 	 
	 	 	 
	 	 	 






 





 



     


     

    




 





	 	 	“LENDER”
	 	 	 
	 	 	REGIONS BANK 
	 	 	 
	 	 	By:  	/s/ Gregory Garbuz
	 	 	Name: 	Gregory Garbuz
	 	 	Title: 	Vice President
	 	 	 



 


 











 


 


 


 


 






     


     

    

 


CONSENT AND REAFFIRMATION OF GUARANTORS


 


 


The undersigned, being a Subsidiary Guarantor,
as defined in the Loan and Security Agreement being amended pursuant to the within and foregoing Second Amendment to Loan and Security
Agreement, does hereby acknowledge receipt of said amendment, consents thereto, agrees to be bound thereby and further agrees in
connection therewith that its, his or her Guaranty, as defined in such Loan and Security Agreement, shall continue in full force
and effect notwithstanding the execution and delivery thereof and the performance of the parties thereunder.


 


 





	 	 	ENGLOBAL INTERNATIONAL, INC.
	 	 	 
	 	 	By:  	/s/ Mark Hess
	 	 	Name: 	Mark Hess
	 	 	Title: 	Treasurer and Chief Financial Officer
	 	 	 
	 	 	 
	 	 	ENGLOBAL EMERGING MARKETS, INC.
	 	 	 
	 	 	By:  	/s/ Mark Hess
	 	 	Name: 	Mark Hess
	 	 	Title:	Treasurer and Chief Financial Officer