8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) June 15, 2023

ENGlobal Corporation

(Exact name of registrant as specified in its charter)

Nevada	001-14217	88-0322261
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11740 Katy Fwy – Energy Tower III, 11th floor Houston, TX	77079
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 281-878-1000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ENG	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Item 1.01. Entry into a Material Definitive Agreement

Credit Agreement

On June 15, 2023, ENGlobal Corporation, a Nevada corporation (the “Company”), entered into a Credit Agreement (the “Credit Agreement”) with Alliance 2000, Ltd., a Texas limited partnership (“Lender”), pursuant to which Lender has agreed, subject to certain terms and conditions, to extend up to two term loans in the aggregate principal amount of $1,250,000 to the Company (collectively, the “Term Loans”). In connection with entering into the Credit Agreement, (i) the Company and its subsidiaries, ENGlobal U.S., Inc., a Texas corporation, ENGlobal Government Services, Inc., a Texas corporation, and ENGlobal Technologies, LLC, a Texas limited liability company (collectively, the “Guarantors”), entered into  a Security Agreement (the “Security Agreement”) granting a security interest in favor of Lender on substantially all of the Company’s and Guarantors’ assets to secure all of the indebtedness and other obligations owed to Lender under the Credit Agreement and (ii) the Guarantors entered into a Continuing Guaranty (the “Guaranty”) pursuant to which the Guarantors guaranteed the payment of all indebtedness owed to Lender.

The Lender is the beneficial owner of more than 22% of the Company’s issued and outstanding common stock and is under the direct and indirect control of William A. Coskey, P.E., the Company’s Executive Chairman. In accordance with the charter of the Company’s Audit Committee and the Company’s policy on related party transactions, the Loan Documents (as defined below) and the transactions contemplated thereby were reviewed and approved by the Company’s Audit Committee and determined in good faith to be on terms no less favorable to the Company than could be obtained from unrelated third parties and fair to the Company and the Guarantors from a financial point of view, and were approved by all of the disinterested members of the Company’s Board of Directors.

Set forth below are certain material terms of the Credit Agreement, the Security Agreement and the Guaranty (collectively, the “Loan Documents”):

Loan Amounts:

(1)	Term Loan A: The first term loan was made on the Closing Date in an aggregate principal amount equal to $1,000,000 in a single loan which, when paid or prepaid, may not be re-borrowed.
(2)	Term Loan B: The Company may request that Lender make an additional term loan after the Closing Date to the Company in an aggregate principal amount not to exceed $250,000 in a single loan which, when paid or prepaid, may not be re-borrowed. Lender’s obligation to make Term Loan B is at Lender’s sole discretion.

Interest: The outstanding principal balance of the Term Loans will bear interest (computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at a per annum rate equal to 8.5%. Interest will be due and payable quarterly in arrears on the last business day of each fiscal quarter, with any remaining accrued but unpaid interest payable at maturity.

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Mandatory Prepayments: The Term Loans are required to be prepaid:

- If the Company receives proceeds in connection with certain designated transactions, then 50% of the Net Proceeds received will be paid to Lender.

- If the Company (i) issues any equity interests or (ii) incurs any additional indebtedness other than Permitted Indebtedness in which the aggregate capital amount raised pursuant to (i) and/or (ii) is greater than $2,000,000, then 100% of the Net Proceeds received will be paid to Lender.

Negative Covenants: The Credit Agreement is subject to negative covenants that, among other things and subject to certain exceptions, limit the Company’s ability and the ability of the Guarantors to incur indebtedness, to merge, consolidate, transfer assets or undertake certain transactions outside of the ordinary course of business, to make guarantees; to make loans, advances and investments, to make dividends and distributions, to incur liens or encumbrances, to undertake affiliate transactions and to make certain organizational changes.

Maturity Date: June 15, 2024.

Loan Fee: The Company agreed to pay to Lender a non-refundable origination fee equal to (i) 0.50% multiplied by the aggregate principal amount borrowed under Term Loan A and (ii) 0.50% multiplied by the aggregate principal amount borrowed under the Term Loan B (if any).

Collateral: The Company and Guarantors are granting Lender, for the benefit of Lender, a security interest in all of the Company and Guarantors’ now-owned and hereafter acquired property and assets of every kind.

Guaranty: Each of the Guarantors jointly and severally guarantee to Lender prompt payment of the obligations in full when due.

The foregoing description of the Loan Documents is included to provide you with information regarding their terms. It does not purport to be a complete description and is qualified in its entirety by reference to the full text of each of the Loan Documents, which are filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 hereto and are incorporated herein by reference.

Loan and Security Agreement

A portion of the proceeds of Term Loan A under the Credit Agreement were used to repay in full all indebtedness outstanding under the Loan and Security Agreement with Pacific Western Bank dba Pacific Western Business Finance, with the remainder of such proceeds to be used for general corporate purposes.

Factoring Agreement

The Company continued its factoring arrangement pursuant to that certain Accounts Receivable Purchase and Security Agreement between the Company and FundThrough USA, Inc. (the “Factoring Agreement”) whereby the Company sold certain accounts receivable subject to the terms and conditions contained therein.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 7.01 Regulation FD Disclosure

On June 20, 2023, ENGlobal Corporation issued a press release announcing the Loan Documents, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01 (including the press release attached as Exhibit 99.1 and incorporated by reference in this Item 7.01) the foregoing information, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are included with this Current Report on Form 8-K:

Exhibit No.	Description
Exhibit 10.1	Credit Agreement, dated as of June 15, 2023, by and between ENGlobal Corporation, as borrower, and Alliance 2000, Ltd., as lender.
Exhibit 10.2	Security Agreement, dated as of June 15, 2023, by and among ENGlobal Corporation, ENGlobal U.S., Inc., ENGlobal Government Services, Inc., and ENGlobal Technologies, LLC, as grantors, and Alliance 2000, Ltd., as lender.
Exhibit 10.3	Continuing Guaranty, dated as of June 15, 2023, by and among ENGlobal U.S., Inc., ENGlobal Government Services, Inc., and ENGlobal Technologies, LLC, as guarantors, and Alliance 2000, Ltd., as lender.
Exhibit 99.1	Press Release, dated June 20, 2023
Exhibit 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ENGlobal Corporation
	(Registrant)
June 20, 2023	/s/ Darren W. Spriggs
(Date)	Darren W. Spriggs, Chief Financial Officer, Treasurer and Corporate Secretary

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EX-10.1

EXHIBIT 10.1

Execution Version

CREDIT AGREEMENT

by and among

ENGLOBAL CORPORATION,

as Borrower,

and

ALLIANCE 2000, LTD.,

as Lender

Dated as of June 15, 2023

TABLE OF CONTENTS

		Page
ARTICLE I CREDIT TERMS		1
SECTION1.1.	TERM LOANS	1
SECTION1.2.	INTEREST	2
SECTION1.3.	TERM AND TERMINATION	2
SECTION1.4.	SECURITY AGREEMENT	3
ARTICLE II REPRESENTATIONS AND WARRANTIES		3
SECTION2.1.	LEGAL STATUS	3
SECTION2.2.	AUTHORIZATION AND VALIDITY	3
SECTION2.3.	LITIGATION	3
SECTION2.4.	FINANCIAL STATEMENTS	3
SECTION2.5.	TAXES	4
SECTION2.6.	ERISA	4
SECTION2.7.	OTHER OBLIGATIONS	4
SECTION2.8.	ENVIRONMENTAL MATTERS	4
SECTION2.9.	COMPLIANCE WITH LAWS, ETC	4
SECTION2.10.	NO EVENT OF DEFAULT	4
ARTICLE III CONDITIONS		5
SECTION3.1.	CONDITIONS OF INITIAL EXTENSION OF CREDIT	5
SECTION3.2.	CONDITIONS OF EACH EXTENSION OF CREDIT	5
ARTICLE IV AFFIRMATIVE COVENANTS		5
SECTION4.1.	FINANCIAL STATEMENTS	5
SECTION4.2.	ACCOUNTING RECORDS; INSPECTIONS	5
SECTION4.3.	COMPLIANCE	6
SECTION4.4.	MAINTENANCE OF PROPERTIES	6
SECTION4.5.	TAXES AND OTHER LIABILITIES	6
SECTION4.6.	NOTICE TO LENDER	6
SECTION4.7.	INSURANCE	6
SECTION4.8.	COOPERATION	6
ARTICLE V NEGATIVE COVENANTS		6
SECTION5.1.	USE OF FUNDS	7
SECTION5.2.	OTHER INDEBTEDNESS	7
SECTION5.3.	MERGER, CONSOLIDATION, TRANSFER OF ASSETS, TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS	7
SECTION5.4.	GUARANTIES	7
SECTION5.5.	LOANS, ADVANCES, INVESTMENTS	7
SECTION5.6.	DIVIDENDS, DISTRIBUTIONS	8
SECTION5.7.	LIENS	8
SECTION5.8.	AGREEMENTS NOT TO ENCUMBER	8
SECTION5.9.	AFFILIATE TRANSACTIONS	8
SECTION5.10.	ORGANIZATIONAL CHANGES	8
SECTION5.11.	CHANGE OF ACCOUNTING METHOD	8

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ARTICLE VI EVENTS OF DEFAULT		8
SECTION6.1.	EVENTS OF DEFAULT	8
SECTION6.2.	REMEDIES	9
ARTICLE VII MISCELLANEOUS		10
SECTION7.1.	CERTAIN DEFINITIONS	10
SECTION7.2.	NO WAIVER	13
SECTION7.3.	NOTICES	13
SECTION7.4.	COSTS, EXPENSES AND ATTORNEYS’ FEES	13
SECTION7.5.	TAXES	13
SECTION7.6.	GENERAL	14
SECTION7.7.	INDEMNITY	14
SECTION7.8.	GOVERNING LAW	14
SECTION7.9.	CONSEQUENTIAL DAMAGES	14
SECTION7.10.	SAVINGS CLAUSE	14
SECTION7.11.	CONFIDENTIALITY	15
SECTION7.12.	PATRIOT ACT NOTICE	15
SECTION7.13.	JURISDICTION	15
SECTION 7.14.	WAIVER OF JURY TRIAL	15

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of June 15, 2023 (the “Closing Date”), by and between ENGLOBAL CORPORATION, a Nevada corporation (“Borrower”), and ALLIANCE 2000, LTD., a Texas limited partnership (“Lender”). Certain capitalized terms used in this Agreement are defined in Section 7.1. The parties agree as follows:

ARTICLE I

CREDIT TERMS 

SECTION 1.1. TERM LOANS.

(a) Term Loan A. Subject to the terms and conditions of this Agreement, Lender agrees to make a term loan to Borrower on the Closing Date in an amount equal to $1,000,000 in a single loan which, when paid or prepaid, may not be re-borrowed (the “Term Loan A”).

(b) Term Loan B. Subject to the terms and conditions of this Agreement, Borrower may request that Lender make an additional term loan after the Closing Date to Borrower in an amount not to exceed $250,000 in a single loan which, when paid or prepaid, may not be re-borrowed (the “Term Loan B” and together with Term Loan A, the “Term Loans”) by submitting a loan request in writing to Lender prior to the Termination Date. Such loan request must be received by Lender no later than 10:00 a.m. at least three (3) Business Days prior to the proposed funding date. Lender’s obligation to make Term Loan B is at Lender’s sole discretion.

(c) Payments. The aggregate, unpaid principal amount of the Term Loans will be due and payable on the Termination Date. Each payment made under the Term Loans shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.

(d) Voluntary Prepayments. Borrower may voluntarily prepay all or any part of the outstanding principal amount under the Term Loans at any time without premium or penalty. All accrued and unpaid interest on the portion of the outstanding principal being prepaid must also be paid in full on the prepayment date.

(e) Mandatory Prepayments.

(1) Not later than three Business Days after the date such amounts are received by, or for the account of, Borrower or any of its Subsidiaries, 50% of the Net Proceeds received from any of the following shall be paid to Lender in cash: (i) the sale of the Borrower’s construction and field service business; (ii) receipt of the Borrower’s Employee Tax Retention Credit; and (iii) receipt of Borrower’s pending government services excess inventory settlement.

(2) In the event after the Closing Date, Borrower shall (i) issue any equity interests or (ii) incur any additional indebtedness other than Permitted Indebtedness in which the aggregate capital amount raised pursuant to (i) and/or (ii) is greater than $2,000,000, then by not later than three Business Days after the date such amounts are received by, or for the account of, Borrower, 100% Net Proceeds received shall be paid to Lender.

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(3) All prepayments under this Section shall be applied to prepay all or a portion of the outstanding balance first, of Term Loan A until prepaid in full, and second, to Term Loan B until prepaid in full, and shall be without premium or penalty. All accrued and unpaid interest on the full outstanding principal or the portion thereof the, as applicable, being prepaid must also be paid in full on the prepayment date.

(4) Notwithstanding anything to the contrary herein, Lender may, at its option, reject all or any portion of any mandatory prepayment of the Term Loans required to be made pursuant to Sections 1.1(e)(1) and (2) above, by notifying Borrower at least one Business Day prior to the date Borrower makes such prepayment to Lender.

SECTION 1.2. INTEREST.

(a) Interest. The outstanding principal balance of the Term Loans shall bear interest (computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at a per annum rate equal to 8.5%.

(b) Default Rate. Upon the occurrence and during the continuation of an Event of Default (a “Default Period”) and at any time following the Termination Date, at the sole discretion of Lender, (i) the outstanding principal balance of the Term Loans will bear interest at a per annum rate equal to 4.0% above the per annum rate otherwise applicable under Section 1.2(a) (such rate, the “Default Rate”). Lender may assess the Default Rate commencing as of the date of the occurrence of an Event of Default or as of any date after the occurrence of an Event of Default regardless of the date of reporting or declaration of such Event of Default.

(c) Payment of Interest. Interest will be due and payable quarterly in arrears by Borrower on the last Business Day of each fiscal quarter, with any remaining accrued but unpaid interest payable on the Termination Date.

(d) Payment of Fees. Borrower will pay to Lender a non-refundable origination fee equal to (i) 0.50% multiplied by the aggregate principal amount borrowed under the Term Loan A which will be fully earned on the date of this Agreement and payable on the Termination Date, and (ii) 0.50% multiplied by the aggregate principal amount borrowed under the Term Loan B (if any) which will be fully earned on the funding date of Term Loan B and payable on the Termination Date.

SECTION 1.3. TERM AND TERMINATION.

(a) Termination Date. Lender’s obligations under this Agreement will continue for a term ending on the earliest of the following (the “Termination Date”): (i) June 15, 2024 (the “Maturity Date”), or (ii) the date the Lender’s obligation to extend further credit under this Agreement terminates following an Event of Default. On the Termination Date, all obligations of Lender to extend credit under this Agreement will automatically terminate and all of the Obligations will immediately become due and payable without notice or demand, and Borrower will immediately repay all of the Obligations in full. No termination of the obligations of Lender will relieve or discharge Borrower of its duties, obligations, or covenants under this Agreement or under any other Loan Document.

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(b) Termination of Liens. Provided that there are no suits, actions, proceedings or claims pending or threatened against any Person who Borrower has agreed to indemnify under this Agreement, Lender will, at Borrower’s expense, release or terminate any filings or other agreements that perfect the Lender’s Liens in the Collateral upon Lender’s receipt of each of the following, in form and content satisfactory to Lender: (i) cash payment in full of all Obligations and completed performance by Borrower with respect to its other obligations under this Agreement and the other Loan Documents, (ii) a general release of all claims against Lender by Borrower relating to the Term Loans and Lender’s performance and obligations under the Loan Documents, and (iii) an agreement by Borrower, each Guarantor, and any new lender to Borrower to indemnify Lender for any payments received by that are applied to the Obligations as a final payoff that may later be returned or otherwise not paid for any reason.

SECTION 1.4. SECURITY AGREEMENT. To secure the Obligations, Borrower, Guarantors, and Lender are entering into one or more Security Agreements, pursuant to which Borrower is granting Lender, for the benefit of Lender, a security interest in all of Borrower and Guarantors’ now-owned and hereafter acquired property and assets of every kind (as amended from time to time, collectively, the “Security Agreement”). By not later than August 31, 2023, Borrower will use its commercially reasonable efforts to cause Origin Bank, its primary depositary bank, to enter into a deposit account control agreement in favor of Lender, as secured party.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Lender, which representations and warranties will survive the execution of this Agreement and will continue in full force and effect until the full and final payment, and satisfaction and discharge of all Obligations:

SECTION 2.1. LEGAL STATUS. Borrower is duly organized, validly existing and in good standing under the laws of the State of its organization and is qualified or licensed to do business and is in good standing in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could reasonably be expected to cause a Material Adverse Change. Borrower and its Subsidiaries possess, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

SECTION 2.2. AUTHORIZATION AND VALIDITY. The Loan Documents have been duly authorized and constitute legal, valid and binding agreements and obligations of Borrower, the Guarantors or the party which executes the same, enforceable in accordance with their respective terms. The execution, delivery and performance by Borrower and each Guarantor of the Loan Documents to which it is a party do not violate any provision of any law or regulation, or contravene any provision of the Borrower’s or such Guarantor’s organizational documents or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower or such Guarantor is a party or by which Borrower or such Guarantor or its respective assets may be bound.

SECTION 2.3. LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which involve more than $250,000 or which could reasonably be expected to cause a Material Adverse Change.

SECTION 2.4. FINANCIAL STATEMENTS. The annual financial statements of Borrower and its Subsidiaries dated for Borrower’s most recent fiscal year ended, and all interim financial statements delivered to Lender since such date and prior to the date of this Agreement (a) are complete and correct and present fairly the financial condition of Borrower and its Subsidiaries on a consolidated basis, (b) disclose all liabilities of Borrower and its Subsidiaries that are required to be reflected or reserved against under generally accepted accounting principles (“GAAP”), whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP consistently applied. Since the dates of such financial statements there has been no Material Adverse Change. Neither Borrower nor any of its Subsidiaries has mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Lender and except for Permitted Liens. Documents and financial statements filed with the SEC pursuant to its EDGAR system shall be deemed to have been delivered to the Lender pursuant to this Section 2.4.

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SECTION 2.5. TAXES. Borrower and each Subsidiary has timely filed all tax returns and reports of Borrower and each Subsidiary required to be filed by it, and paid when due all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon Borrower, each Subsidiary and its respective assets, income, businesses and franchises that are due and payable. Borrower does not know of any unpaid tax or assessment or proposed tax or assessment against Borrower or any of its Subsidiaries except taxes owing for current or future periods that are not yet due and payable.

SECTION 2.6. ERISA. Borrower and each Subsidiary is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time (“ERISA”); Neither Borrower nor any Subsidiary has violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower or such Subsidiary (each, a “Plan”); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower or any Subsidiary; Borrower and each Subsidiary has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP.

SECTION 2.7. OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation. No Subsidiary of Borrower is in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation

SECTION 2.8. ENVIRONMENTAL MATTERS. Borrower and its Subsidiaries are in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations related to such statutes, which govern or affect any of Borrower’s or its Subsidiaries’ operations and/or properties. None of the operations of Borrower or any of its Subsidiaries is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Neither Borrower nor any of its Subsidiaries has any material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

SECTION 2.9. COMPLIANCE WITH LAWS, ETC.Neither Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Neither Borrower nor any Subsidiary is engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower and each Subsidiary has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to result in a Material Adverse Change or subject Borrower to costs or liability in excess of $250,000. No Subsidiary of Borrower has violated any laws, ordinances or rules, the violation of which could reasonably be expected to result in a Material Adverse Change or subject such Subsidiary to costs or liability in excess of $250,000

SECTION 2.10. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and is continuing under this Agreement.

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ARTICLE III

CONDITIONS

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Lender to make Term Loan A under this Agreement is subject to the fulfillment to Lender’s satisfaction of each of the following conditions:

(a) all Loan Documents, including the Guaranty Agreement executed by each Guarantor and all other documents relating to this Agreement will have been fully executed and delivered;

(b) Uniform Commercial Code and other searches and all Uniform Commercial Code and other filings deemed necessary by Lender will have been completed and will have confirmed Lender’s first-priority Liens in the Collateral and the results thereof will be otherwise satisfactory to Lender;

(c) a letter, acceptable to Lender, from Pacific Western Bank dba Pacific Western Business Finance (“Existing Lender”) to Lender confirming the amount necessary to repay in full all of the obligations of the Borrower and its Subsidiaries owing to Existing Lender and obtain a release of all of the Liens existing in favor of Existing Lender in and to the assets of Borrower and its Subsidiaries; and

(d) all other conditions required by Lender shall have been fulfilled to Lender’s satisfaction and all other deliverables required by Lender shall have been delivered to Lender’s satisfaction

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Lender in its sole discretion to make Term Loan B as requested by Borrower at any time will be subject to the fulfillment to Lender’s satisfaction of each of the following conditions:

(a) The representations and warranties of Borrower contained in this Agreement and in the other Loan Documents shall be true and correct on and as of the date of such extension of credit as though made on and as of such date; and

(b) No Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making of such extension of credit.

Any request for an extension of credit will be deemed to be a representation by Borrower that the statements set forth in this Section 3.2 are correct as of the time of such request.

ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Lender remains committed to extend any other credit to Borrower or any Obligations remain outstanding, Borrower will and Borrower will cause each of its Subsidiaries to:

SECTION 4.1. FINANCIAL STATEMENTS. Provide to Lender the financial information set forth on Schedule A, in form and detail satisfactory to Lender, within the time periods set forth in Schedule A. Documents filed with the SEC pursuant to its EDGAR system shall be deemed to have been delivered to the Lender pursuant to this Section 4.1.

SECTION 4.2. ACCOUNTING RECORDS; INSPECTIONS. Maintain a system of accounting that enables Borrower and its Subsidiaries, on a consolidated basis, to produce financial statements in accordance with GAAP. Borrower will permit any representative of Lender, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the Collateral and the other assets and properties of Borrower and its Subsidiaries and to do inspections, exams and appraisals of the Collateral and any other assets of Borrower or any of its Subsidiaries.

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SECTION 4.3. COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents under which Borrower and its Subsidiaries are organized and/or which govern Borrower and its Subsidiaries’ continued existence, and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower, its Subsidiaries and/or their business, the failure to maintain or comply with which could reasonably be expected to cause a Material Adverse Change.

SECTION 4.4. MAINTENANCE OF PROPERTIES. Keep all properties useful or necessary to Borrower’s and each Subsidiary’s business in good repair and condition, and from time to time make necessary repairs, renewals and replacements so that such properties will be fully and efficiently preserved and maintained.

SECTION 4.5. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments.

SECTION 4.6. NOTICE TO LENDER. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Lender in reasonable detail of: (a) the occurrence of any Default or Event of Default; (b) any change in the name or the organizational structure of Borrower or any Subsidiary; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; (d) a violation of any law, rule or regulation, the non-compliance with which reasonably could be expected to result in a Material Adverse Change; (e) any termination or cancellation of any insurance policy which Borrower or any Subsidiary is required to maintain, or any loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s property in excess of an aggregate of $250,000; (f) any litigation pending or threatened against Borrower or any Subsidiary which could reasonably be expected to cause a Material Adverse Change or which involves more than $250,000.

SECTION 4.7. INSURANCE. Maintain insurance customary for the business in which it is engaged and maintain all risk property insurance coverage covering the full replacement cost of the Collateral, together with general liability insurance, in each case, in form, substance, amounts, under agreements and with insurers acceptable to Lender.

SECTION 4.8. COOPERATION. Take such actions and execute and deliver to Lender such instruments and documents as Lender will request (including obtaining agreements from third parties as Lender deems necessary) to create, maintain, preserve and protect Lender’s first-priority security interest in the Collateral and Lender’s rights in the Collateral and to carry out the intent of this Agreement and the other Loan Documents.

ARTICLE V

NEGATIVE COVENANTS

Borrower covenants that so long as Lender remains committed to extend any other credit to Borrower, or any Obligations remain outstanding, Borrower will not, and Borrower will not allow any of its Subsidiaries to:

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SECTION 5.1. USE OF FUNDS. Use any of the proceeds the Term Loans or any other credit extended under this Agreement for purposes other than (i) to repay in full, the outstanding principal, accrued interest, and accrued fees and expenses owing by Borrower under Borrower’s existing credit facility with Existing Lender, (ii) to pay Lender Expenses incurred in connection with this Agreement and the other Loan Documents, and (iii) thereafter, consistent with the terms of this Agreement, for working capital and general corporate purposes of Borrower and its Subsidiaries. The Borrower will not use the proceeds of any extension of credit to purchase or carry margin stock or for any other purpose that violates the terms of Regulation T, U, or X of the Board of Governors of the Federal Reserve System.

SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any Indebtedness of Borrower or any Subsidiary, except (a) the Obligations and (b) Permitted Indebtedness. “Indebtedness” means the following, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several: (i) all obligations for borrowed money (including recourse and other obligations to repurchase accounts or chattel paper under factoring, receivables purchase or similar financing arrangement or for the deferred purchase price of property or services); (ii) all obligations in respect of surety bonds and letters of credit; (iii) all obligations evidenced by notes, bonds, debentures or other similar instruments, (iv) all capital lease obligations; (v) all obligations or liabilities of others secured by a Lien on any asset of Borrower or any Subsidiary, whether or not such obligation or liability is assumed; (vi) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices); (vii) all guaranties of the obligations of another Person. “Permitted Indebtedness” means (a) purchase money indebtedness incurred in connection with the financing of the purchase by Borrower or any Subsidiary of fixed assets (including capitalized leases) in an aggregate amount outstanding at any time not to exceed $500,000; (b) any debt incurred under the Factoring Agreement for a period not to exceed 45 days after the Closing Date; and (c) from and after 45 days following the Closing Date, any debt incurred under the Factoring Agreement in an amount not to exceed $250,000 in the aggregate at any one time outstanding.

SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS, TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS. Cause, permit, participate in or suffer to occur, any of the following: (a) merge with or consolidate with any other Person; (b) make any substantial change in the nature of Borrower’s or any Subsidiary’s business as conducted as of the Closing Date; (c) liquidate or dissolve Borrower’s business; (d) become a member or partner in a joint venture, partnership or limited liability company; (e) acquire all or substantially all of the assets of any other Person (or any division, business unit or line of business of any other entity), or acquire any assets outside the ordinary course of Borrower’s or any Subsidiary’s business; (f) sell, lease, transfer or otherwise dispose of any of Borrower’s or any Subsidiary’s assets, except for (i) the sale of inventory in the ordinary course of its business, (ii) the sale of accounts receivable pursuant to the Factoring Agreement in the ordinary course of business, or (iii) the sale of Borrower’s construction and field service business or assets related thereto; (h) create or acquire any new Subsidiary; or (i) liquidate, wind up, or dissolve itself or suspend or cease operation of a substantial portion of its business, except for the sale of the construction and field service business or assets related thereto.

SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as surety, endorser, accommodation endorser or otherwise for any liabilities or obligations of any other Person.

SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any investment in any Person, whether in the form of loans, advances, guarantees, capital contributions, or other investment (except (a) loans, advances, capital contributions and investments in the Guarantors and (b) additional other investments in amounts not to exceed an aggregate of $250,000 in any fiscal year, so long as not otherwise restricted or prohibited under any other section of this Agreement) or acquisition of Stock or Indebtedness of any Person.

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SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either in cash or any other property in respect of any stock in Borrower or redeem, retire, repurchase or otherwise acquire any Stock of Borrower, other than any redemption or repurchase by Borrower of restricted Stock of Borrower from employees or officers in the ordinary course of business and consistent with past practices.

SECTION 5.7. LIENS. Mortgage, pledge, grant or permit to exist a security interest in, or Lien upon, all or any portion of Borrower’s or any Subsidiary’s assets now owned or subsequently acquired, except (a) Liens in favor of Lender and (b) Permitted Liens. “Lien” means, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or its income, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the above, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction. “Permitted Lien” means (a) Liens for unpaid taxes, assessments, or other governmental charges or levies that are not yet delinquent; (b) the interests of lessors under operating leases and non-exclusive licensors under license agreements; (c) Liens granted pursuant to the Factoring Agreement so long as such Lien only secures Permitted Indebtness created pursuant to the Factoring Agreement; and (d) purchase-money Liens or the interests of lessors under capital leases to the extent that such Liens or interests secure Permitted Indebtedness consisting of purchase-money Indebtedness and so long as (i) such Lien attaches only to the asset purchased or acquired and the cash proceeds, and (ii) such Lien only secures the purchase-money Indebtedness that was incurred to acquire the asset purchased or acquired.

SECTION 5.8. AGREEMENTS NOT TO ENCUMBER. Agree with any Person other than Lender not to grant or allow to exist a Lien upon any of its property, or covenant to any other Person that Borrower or any Subsidiary in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s or any Subsidiary’s property.

SECTION 5.9. AFFILIATE TRANSACTIONS. Directly or indirectly enter into, or permit to exist, any material transaction with any affiliate of Borrower or any Subsidiary, except for (a) transactions that are in the ordinary course of Borrower’s or any Subsidiary’s business, and are on fair and reasonable terms that are no less favorable to Borrower or such Subsidiary than would be obtained in an arm’s length transaction with a non-affiliated Person, and (b) so long as it has been approved by Borrower’s board of directors (or comparable governing body) in accordance with applicable law, the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and directors of Borrower in the ordinary course of business and consistent with industry practice.

SECTION 5.10. ORGANIZATIONAL CHANGES. Change its name, chief executive office, principal residence, organizational documents, organizational identification number, state of organization, organizational identity or “location” as defined in Section 9-307 of the Code.

SECTION 5.11. CHANGE OF ACCOUNTING METHOD. Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP).

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1. EVENTS OF DEFAULT. The occurrence of any of the following will constitute an “Event of Default” under this Agreement:

(a) Borrower fails to pay when due any Obligation.

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(b) Any financial statement or certificate furnished to Lender in connection with, or any representation or warranty made or deemed made by Borrower or any of its Subsidiaries under this Agreement or any other Loan Document proves to be incorrect, false or misleading in any material respect when furnished or made (or deemed made).

(c) Any default in the performance of or compliance with any obligation, covenant, agreement or other provision contained in this Agreement or in any other Loan Document (other than those specifically described elsewhere in this Section 6.1), or any other obligation of Borrower or any of its Subsidiaries to Lender, continues for a period of 15 days after receipt of notice of such default or non-compliance from Lender to Borrower.

(d) Borrower or any Guarantor becomes insolvent, or becomes the subject of an Insolvency Proceeding.

(e) There exists or occurs any of the following (each, a “Material Adverse Change”): (i) any event or condition that Lender in good faith believes impairs, or is likely to impair, the prospect of payment or performance by Borrower of any of the Obligations, or any Guarantor of its obligations, or (ii) a material adverse change in the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Borrower and its Subsidiaries (taken as a whole), or (iii) a material impairment of the ability of Borrower or any Guarantor to perform its obligations under the Loan Documents or of Lender’s ability to enforce the Obligations or realize upon any of the Collateral in any material respect, or (iv) a material impairment of the enforceability or priority of Lender’s Liens with respect to any of the Collateral.

(f) The dissolution or liquidation of Borrower or any Guarantor if a corporation, limited liability company, partnership, joint venture or other type of entity; the death or incapacity of any Guarantor if an individual; Borrower or any Guarantor, or any of its directors, stockholders or members, takes action seeking to affect the dissolution or liquidation of Borrower or any Guarantor.

(g) Lender fails to have a first-priority security interest in the Collateral, subject to no other Liens except Permitted Liens.

(h) Any Guarantor repudiates or revokes or purports to repudiate or revoke any obligation under its Guaranty or under any other Loan Document to which it is a party.

SECTION 6.2. REMEDIES. Upon the occurrence and during the continuation of an Event of Default, Lender may (in each case under clause (a) or (b) by written notice to Borrower; provided that no such notice shall be required with respect to an Event of Default with respect to Borrower under Section 6.1(d)): (a) declare the Obligations immediately due and payable, at which time such Obligations shall be immediately due and payable and Borrower shall be obligated to immediately repay all of such Obligations in full, without presentment, demand, protest, notice of dishonor, or other notice of any kind or other requirement of any kind, all of which are hereby expressly waived by Borrower; (b) declare the obligations, if any, of Lender to make further extensions of credit under this Agreement and any of the Loan Documents terminated, at which time such obligations will immediately cease and terminate; and (c) exercise any or all rights, powers and remedies available under the Security Agreement and each of the other Loan Documents, or accorded by law or equity. All rights, powers and remedies of Lender may be exercised at any time by Lender and from time to time after the occurrence and during the continuation of an Event of Default, and the same are cumulative and not exclusive, and will be in addition to any other rights, powers or remedies provided by law or equity. Upon the occurrence of any Default or Event of Default described in Section 6.1(d) with respect to Borrower, any obligation of Lender to provide any further extensions of credit hereunder shall automatically terminate and the Obligations shall automatically and immediately become due and payable.

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ARTICLE VII

MISCELLANEOUS

SECTION 7.1. CERTAIN DEFINITIONS. The following terms will have the following meanings:

“Bankruptcy Code” means Title 11 of the United States Code as in effect from time to time.

“Borrower” has the meaning set forth in the preamble to this Agreement.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close under to the rules and regulations of the Federal Reserve System.

“Closing Date” has the meaning set forth in the preamble to this Agreement.

“Code” means the Texas Uniform Commercial Code, as in effect from time to time. To the extent that defined terms set forth in this Agreement have different meanings under different Articles under the Uniform Commercial Code, the meaning assigned to such defined term under Article 9 of the Uniform Commercial Code will control.

“Collateral” means all real and personal property in which Lender has been granted a security interest or Lien pursuant to the Security Agreement or any other Loan Document, together with any products and proceeds of the foregoing, including, without limitation, the “Collateral” as defined in the Security Agreement.

“Default” means an event, condition or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

“Default Period” has the meaning set forth in Section 1.2(b).

“Default Rate” has the meaning set forth in Section 1.2(b).

“Disposition” means the sale, assignment, transfer, license, lease (as lessor), exchange, or other disposition of any asset by any Person (including any sale and leaseback transaction), or the granting of any option or other right to do any of the foregoing.

“Employee Tax Retention Credit” means that certain federal tax credit authorized pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and granted to Borrower subject to compliance with the relevant conditions outlined in the CARES Act.

“ERISA” has the meaning set forth in Section 2.6.

“Event of Default” has the meaning set forth in Section 6.1.

“Existing Lender” shall have the meaning set forth in Section 3.1.

“Factoring Agreement” means that certain Accounts Receivable Purchase and Security Agreement dated as of March 14, 2023 by and between Borrower and FundThrough USA, Inc. for the factoring of accounts receivable by Borrower and its Subsidiaries.

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“GAAP” has the meaning set forth in Section 2.4.

“Guarantor” means each of ENGlobal U.S., Inc., a Texas corporation, ENGlobal Government Services, Inc., a Texas corporation, and ENGlobal Technologies, LLC, a Texas limited liability company.

“Guaranty” means the Guaranty in favor of Lender executed and delivered by the Guarantors.

“Indebtedness” has the meaning set forth in Section 5.2.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, receiverships, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Lender” has the meaning set forth in the preamble to this Agreement.

“Lender Expenses” has the meaning set forth in Section 7.4.

“Lien” has the meaning set forth in Section 5.7.

“Loan Documents” means this Agreement, the Security Agreement, the Guaranty, instrument, agreement and other document required by this Agreement or at any time entered into or delivered to Lender in connection with this Agreement and the Term Loans.

“Material Adverse Change” has the meaning set forth in Section 6.1(e).

“Maturity Date” has the meaning set forth in Section 1.3(a).

“Net Proceeds” means (a) with respect to any Disposition of any asset by any Person, the aggregate amount of cash from such Disposition received by, or paid to or for the account of, such Person, net of (i) out-of-pocket costs, fees, and expenses, and (ii) amounts applied upon the closing of such Disposition to repay Indebtedness secured by a Permitted Lien on such asset, and (b) with respect to the issuance of equity securities, debt securities, subordinated debt, or similar instruments, or the incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants fees, underwriting discounts and commissions and other fees and expenses actually incurred in connection with such issuance.

“Obligations” means (a) the Term Loans, debts, principal, interest (including any interest that accrues after the beginning of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to letters of credit (irrespective of whether contingent), premiums, liabilities, obligations (including indemnification obligations), fees, Lender Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by Borrower under or evidenced by this Agreement or any of the other Loan Documents or otherwise owing to Lender under any other present or future document, instrument or agreement, and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, sole, joint, several or joint and several, incurred in the past or now existing or hereafter arising, however arising, and including all interest not paid when due, and all other expenses or other amounts that Borrower is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents. Any reference in this Agreement or in the Loan Documents to the Obligations will include all or any portion of the Obligations and any extensions, modifications, renewals, or alterations of the Obligations, both prior and subsequent to any Insolvency Proceeding.

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“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Pass-Through Tax Liabilities” means the amount of state and federal income tax paid or to be paid by the owner of any Stock in Borrower on taxable income earned by Borrower and attributable to such owner as a result of Borrower’s “pass-through” tax status, assuming the highest marginal income tax rate for federal and state (for the state or states in which any equity owner is liable for income taxes with respect to such income) income tax purposes, after taking into account any deduction for state income taxes in calculating the federal income tax liability and all other deductions, credits, deferrals and other reductions available to such owners from or through Borrower.

“Patriot Act” means Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).

“Permitted Indebtedness” has the meaning set forth in Section 5.2.

“Permitted Lien” has the meaning set forth in Section 5.7.

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and their political subdivisions.

“Plan” has the meaning set forth in Section 2.6.

“SEC” means the U.S. Securities and Exchange Commission.

“Security Agreement” has the meaning set forth in Section 1.4.

“Stock” means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other equity security.

“Subsidiary” of a Person means a corporation, partnership, limited liability company or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company or other entity. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of Borrower.

“Taxes” has the meaning set forth in Section 7.5.

“Term Loan A” has the meaning set forth in Section 1.1(a).

“Term Loan B” has the meaning set forth in Section 1.1(b).

“Term Loans” has the meaning set forth in Section 1.1(b).

“Termination Date” has the meaning set forth in Section 1.3(a).

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SECTION 7.2. NO WAIVER. No delay, failure or discontinuance of Lender in exercising any right, power or remedy under any of the Loan Documents will affect or operate as a waiver of such right, power or remedy; nor will any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Lender of any breach of or default (including any Default or Event of Default) under any of the Loan Documents must be in writing and will be effective only to the extent set forth in such writing.

SECTION 7.3. NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the address of such party set forth below each party’s name on the signature page of this Agreement or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand will be deemed given or made as follows: (a) if sent by hand delivery or overnight courier, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; (c) if sent by telecopy, upon receipt; and (d) if sent by electronic mail, upon sender’s receipt of an acknowledgment from the intended recipient (such as by “return receipt requested” function, as available, return email or other written acknowledgment).

SECTION 7.4. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower will pay to Lender immediately upon demand the full amount of the following (collectively, “Lender Expenses”): all payments, advances, charges, costs and expenses, including without limitation reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Lender’s in-house counsel), appraisal fees, consultant fees, audit fees, and exam fees expended or incurred by Lender in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, perfection of Lender’s Liens in the Collateral, Lender’s continued administration of this Agreement and the other Loan Documents, and the preparation of any amendments, waivers or other agreements, instruments or documents relating to this Agreement or the other Loan Documents, or in connection with any “workout” or restructuring, (b) the enforcement of Lender’s rights and/or the collection of any amounts which become due to Lender under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to Borrower or any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the above incurred in connection with any Insolvency Proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Lender or any other Person) relating to Borrower or any other Person and (d) any of the Collateral and other examinations, appraisals, evaluations, audits and inspections. Borrower’s obligations set forth in this Section 7.4 will survive any termination of this Agreement or repayment of the Obligations and will for all purposes continue in full force and effect.

SECTION 7.5. TAXES. All payments made by Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or subsequently imposed by any jurisdiction or by any political subdivision or taxing authority and all related interest, penalties or similar liabilities (collectively, “Taxes”) and in the event any deduction or withholding of such Taxes is required, Borrower agrees to pay the full amount of such Taxes.

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SECTION 7.6. GENERAL. This Agreement will be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided that Borrower may not assign or transfer any of its interests, rights or obligations under this Agreement without Lender’s prior written consent. Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender’s rights and benefits under this Agreement and the other Loan Documents. This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Lender with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter of this Agreement. This Agreement may be amended or modified only in writing signed by each party to this Agreement. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other Person will be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party. Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents. If any provision of this Agreement or any other Loan Document will be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement or the other Loan Documents. This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed to be an original, and all of which when taken together will constitute one and the same Agreement. If more than one, the liability of each Borrower under this Agreement will be joint and several. Delivery of an executed counterpart of this Agreement by facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement and any party’s failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

SECTION 7.7. INDEMNITY. Borrower indemnifies Lender and its Subsidiaries, directors, officers, employees, representatives, agents, and attorneys, and holds them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including reasonable attorneys’ fees), of every kind, which they may sustain or incur based upon or arising out of any of the Obligations, this Agreement, any of the Loan Documents, or the Collateral or any relationship or agreement between Lender and Borrower, or any other matter, relating to Borrower, the Obligations or the Collateral; provided that this indemnity will not extend to damages that a court of competent jurisdiction finally determines in a non-appealable judgment to have been caused by the indemnitee’s own gross negligence or willful misconduct. Regardless of any provision in this Agreement to the contrary, the indemnity agreement set forth in this section will survive any termination of this Agreement or repayment of the Obligations and will for all purposes continue in full force and effect.

SECTION 7.8. GOVERNING LAW. The validity of this Agreement and the other Loan Documents (unless otherwise expressly provided in such Loan Document) and the construction, interpretation, and enforcement of this Agreement and the other Loan Documents, and the rights of the parties, as well as all claims, controversies or disputes arising under or related to this Agreement and the other Loan Documents will be determined under, governed by and construed in accordance with the laws of the State of Texas without regard conflicts of laws principles.

SECTION 7.9. CONSEQUENTIAL DAMAGES. No claim may be made by Borrower against Lender, or any Subsidiary, director, officer, employee, representative, agent, attorney or attorney-in-fact of any of them for any special, indirect, consequential, or punitive damages in respect of any claim for breach of contract or other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Loan Document or any related act, omission, or event, and Borrower waives, releases, and agrees not to sue upon any claim for such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

SECTION 7.10. SAVINGS CLAUSE. If at any time the interest rate set forth in any of the Loan Documents exceeds the maximum interest rate allowable under applicable law, the interest rate will be deemed to be such maximum interest rate allowable under applicable law.

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SECTION 7.11. CONFIDENTIALITY. Lender agrees that material, non-public information regarding Borrower, its Subsidiaries, its operations, assets, and existing and contemplated business plans will be treated by Lender in a confidential manner, and will not be disclosed by Lender to Persons who are not parties to this Agreement, except (i) to Lender’s attorneys, representatives, agents and other advisors and to officers, directors and employees of Lender, (ii) as required by law or by any court, governmental or regulatory authority, (iii) as agreed by Borrower, (iv) if such information becomes generally available to the public, (v) in connection with the assignment, participation or pledge of Lender’s interest in this Agreement, (vi) to equity owners of Borrower, and (vii) in connection with any litigation or adversary proceeding involving claims related to this Agreement or the exercise by Lender of any right or remedy under this Agreement, any other Loan Document or at law.

SECTION 7.12. PATRIOT ACT NOTICE. Lender notifies Borrower and Guarantors that pursuant to the requirements of the Patriot Act, Lender is required to obtain, verify and record information that identifies Borrower and Guarantors, which information includes the name and address of Borrower and Guarantors and other information that will allow Lender to identify Borrower and Guarantors in accordance with the Patriot Act. In addition, if Lender is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for Borrower and Guarantors, and (b) OFAC/PEP searches and customary individual background checks of Borrower’s and Guarantors’ senior management and key principals, and Borrower and Guarantors agree to cooperate in respect of the conduct of such searches and further agree that the reasonable costs and charges for such searches shall constitute Lender Expenses.

SECTION 7.13. JURISDICTION. All actions or proceedings arising in connection with this Agreement and the other Loan Documents may be tried and litigated in the State of Texas and, to the extent permitted by applicable law, federal courts located in the City of Houston and the County of Harris, State of Texas; provided that any suit seeking enforcement against any Collateral or other property may be brought, at Lender’s option, in the courts of any jurisdiction where Lender elects to bring such action or where such Collateral or other property may be found. Borrower and Lender waive, to the extent permitted under applicable law, any right they may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section 7.13.

SECTION 7.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[SIGNATURE PAGE FOLLOWS]

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The parties have caused this Agreement to be executed as of the date first written above.

LENDER:

ALLIANCE 2000, LTD.

a Texas limited partnership

/s/ William A. Coskey

William A. Coskey, President

BHC Management Corp., General Ptr.

Alliance 2000, Ltd.

Signature Page to Credit Agreement

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BORROWER:

ENGLOBAL CORPORATION

a Nevada corporation

/s/Darren Spriggs

Darren Spriggs, Chief Financial Officer

Signature Page to Credit Agreement

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SCHEDULE A TO CREDIT AGREEMENT

FINANCIAL STATEMENTS

as soon as available, but within 45 days after the end of each quarter	an unaudited balance sheet, income statement, statement of cash flow, and statement of owner’s equity with respect to the Borrower on a consolidated basis during such period and compared to the prior period and plan, prepared in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes, together with a corresponding discussion and analysis of results from management; and
as soon as available, but within 120 days after the end of each fiscal year	financial statements of Borrower on a consolidated basis for such fiscal year, audited by independent certified public accountants reasonably acceptable to Lender, prepared in accordance with GAAP, and certified, without any qualifications (including any (A) “going concern” or like qualification or exception, (B) qualification or exception as to the scope of such audit, or (C) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of cash flow, and statement of owner’s equity and, if prepared, such accountants’ letter to management); and
as soon as available, but 30 days before the start of each of Borrower’s fiscal years,	copies of Borrower’s forecasted (a) balance sheets, (b) profit and loss statements, (c) availability projections, and (d) cash flow statements, all prepared on a basis consistent with Borrower’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions, in form and substance satisfactory to Lender, in its sole discretion, for the next fiscal year, on a monthly basis, certified by the chief financial officer of Borrower as being such officer’s good faith estimate of the financial performance of the Borrower during the period covered.
on request of Lender	such other information as Lender may request in its sole discretion

Schedule A

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EX-10.2

EXHIBIT 10.2

Execution Version

SECURITY AGREEMENT

Dated June 15, 2023

1 BACKGROUND. ENGLOBAL CORPORATION, a Nevada corporation (“Borrower”) and ALLIANCE 2000, LTD., a Texas limited partnership (“Lender”) have entered into a Credit Agreement, dated as of the date hereof (such agreement, together with all amendments, restatements, supplemented, and modifications, the “Credit Agreement”). Borrower and each other Grantor are members of the same affiliated group of companies, and Grantors will derive direct and indirect economic benefit from the Term Loans and other financial accommodations under the Credit Agreement and other Loan Documents. It is the intention of the parties hereto that this Security Agreement create a security interest in the Collateral in favor of Lender securing the payment and performance of the Term Loans and the other obligations of the Grantors under the Loan Documents, and that such security interest shall be perfected and have the priority described herein.

2 Definitional Provisions. Capitalized terms not otherwise defined herein have the meaning specified in the Credit Agreement, and, to the extent of any conflict, terms as defined therein shall control (provided, that, a more expansive or explanatory definition shall not be deemed a conflict). Capitalized terms not defined either herein or in the Credit Agreement have the meaning specified in Chapters 1, 8 and 9 of the Uniform Commercial Code as in effect from time to time in the State of Texas or, where applicable as to specific items or types of Collateral, any other relevant state (the “UCC”).

3 GRANT OF SECURITY INTEREST. For valuable consideration, each of the undersigned ENGLOBAL CORPORATION, a Nevada corporation, ENGLOBAL U.S., INC., a Texas corporation, ENGLOBAL GOVERNMENT SERVICES, INC., a Texas corporation, and ENGLOBAL TECHNOLOGIES, LLC, a Texas limited liability company (each of them a “Grantor” and collectively the “Grantors”), hereby grants and transfers to Lender a security interest in all of the following property of such Grantor, whether now owned or hereafter acquired, created, or existing, however such Grantor’s interest therein may arise or appear, and wherever located: (i) Accounts (including health-care-insurance receivables and credit card receivables); (ii) securities entitlements, securities accounts, commodity accounts, commodity contracts and investment property; (iii) Deposit Accounts; (iv) instruments (including promissory notes); (v) documents (including warehouse receipts); (vi) chattel paper (including electronic chattel paper and tangible chattel paper); (vii) inventory; (viii) goods of every nature, including stock-in-trade, goods on consignment, standing timber that is to be cut and removed under a conveyance or contract for sale, the unborn young of animals, crops grown, growing, or to be grown, manufactured homes, computer programs embedded in such goods and farm products; (ix) equipment; (x) fixtures; (xi) agricultural liens; (xii) as-extracted collateral; (xiii) commercial tort claims, if any; (xiv) Letters of Credit and Letter of Credit Rights; (xv) general intangibles, of every kind and description, including payment intangibles, software, computer information, source codes, object codes, records and data, customer lists, choses in action, claims (including claims for indemnification or breach of warranty), books, records, patents and patent applications, copyrights, trademarks, tradenames, tradestyles, trademark applications, goodwill, blueprints, drawings, designs and plans, trade secrets, contracts, licenses, license agreements, formulas, tax and any other types of refunds, returned and unearned insurance premiums, and rights and claims under insurance policies; (xvi) supporting obligations for any of the foregoing property; (xvii) property of any Grantor now or hereafter in the Lender’s possession or in transit to or from, or under the custody or control of, Lender or any affiliate thereof; (xviii) money, cash and cash equivalents; (xix) Licenses, and (xx) any and all other personal property and assets of the Grantors (collectively called “Collateral”), together with all proceeds thereof, including whatever is acquired when any of the Collateral or proceeds thereof are sold, leased, licensed, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary and whatever is collected on or distributed on account thereof, including without limitation, (i) all rights to payment however evidenced, (ii) all goods returned by or repossessed from Grantors’ customers, (iii) rights arising out of Collateral, (iv) claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the Collateral, (v) insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the Collateral, (vi) returned insurance premiums, and (vii) all rights to payment with respect to any claim or cause of action affecting or relating to any of the foregoing (hereinafter called “Proceeds”).

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4 OBLIGATIONS SECURED. The obligations secured hereby are the payment and performance of: (a) all present and future Indebtedness of Grantors to Lender, provided however that the obligations secured hereby shall not include any Indebtedness of Grantors to Lender (i) to the extent that the terms of the agreement(s) giving rise to such Indebtedness expressly state that such Indebtedness is unsecured or not secured by this Agreement, or otherwise expressly disclaim the security interest created hereby as security for such Indebtedness, or (ii) that is secured by any real property; and (b) all obligations of Grantors and rights of Lender under this Agreement. As used in this Agreement, “Indebtedness” is used in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Grantor, or any of them, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement, and whether Grantor may be liable individually or jointly with others, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable, and includes without limitation, all loans and indebtedness incurred by ENGlobal Corporation, as borrower (“Borrower”), under the Credit Agreement.

5 TERMINATION. This Agreement will terminate upon the performance of all obligations of Grantors to Lender secured hereby, including without limitation, the payment of all Indebtedness of Grantors to Lender secured hereby, and the termination of all commitments of Lender to extend credit to Grantors that would constitute Indebtedness to Lender secured hereby, existing at the time Lender receives written notice from Grantors of the termination of this Agreement.

6 OBLIGATIONS OF LENDER. Lender has no obligation to make any loans hereunder. Any money received by Lender in respect of the Collateral may be deposited, at Lender’s option, into a non-interest bearing account over which Grantors shall have no control, and the same shall, for all purposes, be deemed Collateral hereunder. Lender shall not be required to apply such money to the Indebtedness or other obligations secured hereby or to remit such money to Grantors or to any other party until the full payment of all Indebtedness of Grantors to Lender secured hereby, and the termination of all commitments to Lender to extend credit to Grantors.

7 REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants to Lender that: (a) such Grantor’s legal name is exactly as set forth on the first page of this Agreement, and all of the relevant Grantor’s organizational documents or agreements delivered to Lender are complete and accurate in every respect; (b) Grantor is the owner and has possession or control of the Collateral and Proceeds; (c) Grantor has the exclusive right to grant a security interest in the Collateral and Proceeds; (d) all Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs, default, prepayment, defenses and conditions precedent of any kind or character, except the lien created hereby or as otherwise agreed to by Lender, or as heretofore disclosed by such Grantor to Lender, in writing; (e) all statements contained herein and, where applicable, in the Collateral are true and complete in all material respects; (f) no financing statement covering any of the Collateral or Proceeds, and naming any secured party other than Lender, is on file in any public office; (g) where Collateral consists of rights to payment, all persons appearing to be obligated on the Collateral and Proceeds have authority and capacity to contract and are bound as they appear to be, all property subject to chattel paper has been properly registered and filed in compliance with law and to perfect the interest of the relevant Grantor in such property, and all such Collateral and Proceeds comply with all applicable laws concerning form, content and manner of preparation and execution, including where applicable Federal Reserve Regulation Z and any State consumer credit laws; and (h) where the Collateral consists of equipment, fixtures, or specific goods, such Grantor is not in the business of selling goods of the kind included within such Collateral, and each Grantor acknowledges that no sale or other disposition of any such Collateral, including without limitation, any such Collateral which such Grantor may deem to be surplus, has been consented to or acquiesced in by Lender, except as specifically set forth in writing by Lender.

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8 COVENANTS OF GRANTORS.

(a) Each Grantor agrees in general: (i) to pay Indebtedness secured hereby when due; (ii) to indemnify Lender against all losses, claims, demands, liabilities and expenses of every kind caused by property subject hereto; (iii) to permit Lender to exercise its powers; (iv) to execute and deliver such documents as Lender deems necessary to create, perfect and continue the security interests contemplated hereby; (v) not to change its name, and as applicable, its chief executive office, its principal residence or the jurisdiction in which it is organized and/or registered without giving Lender prior written notice thereof; (vi) not to change the places where such Grantor keeps any Collateral or such Grantor’s records concerning the Collateral and Proceeds without giving Lender prior written notice of the address to which the relevant Grantor is moving same; (vii) not to sell, lease, transfer or otherwise dispose of all or a substantial or material portion of such Grantor’s assets except in the ordinary course of its business, nor accomplish any of the above by virtue of a division or similar transaction; and (viii) to cooperate with Lender in perfecting all security interests granted herein and in obtaining such agreements from third parties as Lender deems necessary, proper or convenient in connection with the preservation, perfection or enforcement of any of its rights hereunder.

(b) Each Grantor agrees with regard to the Collateral and Proceeds, unless Lender agrees otherwise in writing: (i) that Lender is authorized to file financing statements in the name of such Grantor to perfect Lender’s security interest in Collateral and Proceeds; (ii) where applicable, to operate the Collateral in accordance with all applicable statutes, rules and regulations relating to the use and control thereof, and not to use any Collateral for any unlawful purpose or in any way that would void any insurance required to be carried in connection therewith; (iii) not to remove the Collateral from such Grantor’s premises except in the ordinary course of such Grantor’s business; (iv) to pay when due all license fees, registration fees and other charges in connection with any Collateral; (v) not to permit any lien on the Collateral or Proceeds, including without limitation, liens arising from repairs to or storage of the Collateral, except in favor of Lender; (vi) not to sell, hypothecate or dispose of (including, by illustration, merger, conversion or division), nor permit the transfer by operation of law of, any of the Collateral or Proceeds or any interest therein, except sales of inventory to buyers in the ordinary course of such Grantor’s business; (vii) to permit Lender to inspect the Collateral at any time; (viii) to keep, in accordance with generally accepted accounting principles, complete and accurate records regarding all Collateral and Proceeds, and to permit Lender to inspect the same and make copies thereof at any reasonable time; (ix) if requested by Lender, to receive and use reasonable diligence to collect Collateral consisting of accounts and other rights to payment and Proceeds, in trust and as the property of Lender, and to immediately endorse as appropriate and deliver such Collateral and Proceeds to Lender daily in the exact form in which they are received together with a collection report in form satisfactory to Lender; (x) not to commingle Collateral or Proceeds, or collections thereunder, with other property; (xi) to give only normal allowances and credits and to advise Lender thereof immediately in writing if they affect any rights to payment or Proceeds in any material respect; (xii) from time to time, when requested by Lender, to prepare and deliver a schedule of all Collateral and Proceeds subject to this Agreement and to assign in writing and deliver to Lender all accounts, contracts, leases and other chattel paper, instruments, documents and other evidences thereof; (xiii) in the event Lender elects to receive payments of rights to payment or Proceeds hereunder, to pay all expenses incurred by Lender in connection therewith, including expenses of accounting, correspondence, collection efforts, reporting to account or contract Grantors, filing, recording, record keeping and expenses incidental thereto; and (xiv) to provide any service and do any other acts which may be necessary to maintain, preserve and protect all Collateral and, as appropriate and applicable, to keep all Collateral in good and saleable condition, to deal with the Collateral in accordance with the standards and practices adhered to generally by users and manufacturers of like property, and to keep all Collateral and Proceeds free and clear of all defenses, rights of offset and counterclaims.

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9 POWERS OF LENDER. Each Grantor appoints Lender its true attorney in fact to perform any of the following powers, which are coupled with an interest, are irrevocable until termination of this Agreement and may be exercised from time to time by Lender’s officers and employees, or any of them, whether or not such Grantor is in default: (a) to perform any obligation of such Grantor hereunder in that Grantor’s name or otherwise; (b) to give notice to account Grantors or others of Lender’s rights in the Collateral and Proceeds, to enforce or forebear from enforcing the same and make extension and modification agreements with respect thereto; (c) to release persons liable on Collateral or Proceeds and to give receipts and acquittances and compromise disputes in connection therewith; (d) to release or substitute security securing obligations owing to such Grantor; (e) to resort in any order to security securing obligations owing to the relevant Grantor; (f) to prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, statements of assignment, applications for registration or like papers to perfect, preserve or release Lender’s interest in the Collateral and Proceeds; (g) to receive, open and read mail addressed to such Grantor; (h) to take cash, instruments for the payment of money and other property to which Lender is entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to endorse, collect, deliver and receive payment under instruments for the payment of money constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver and receive payment under insurance claims, and to collect and receive payment of and endorse any instrument in payment of loss or returned premiums or any other insurance refund or return, and to apply such amounts received by Lender, at Lender’s sole option, toward repayment of the Indebtedness secured hereby or, where appropriate, replacement of the Collateral; (l) to exercise all rights, powers and remedies which such Grantor would have, but for this Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to enter onto such Grantor’s premises in inspecting the Collateral; (n) to make withdrawals from and to close deposit accounts or other accounts with any financial institution, wherever located, into which Proceeds may have been deposited, and to apply funds so withdrawn to payment of the Indebtedness secured hereby; (o) to preserve or release the interest evidenced by chattel paper to which Lender is entitled hereunder and to endorse and deliver any evidence of title incidental thereto; and (p) to do all acts and things and execute all documents in the name of the relevant Grantor or otherwise, deemed by Lender as necessary, proper and convenient in connection with the preservation, perfection or enforcement of its rights hereunder.

10 PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Grantor agrees to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and assessments against the Collateral and Proceeds, and upon the failure of any Grantor to do so, Lender at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Any such payments made by Lender shall be obligations of such Grantor to Lender, due and payable immediately upon demand, and at Lender’s option and subject to any restrictions under applicable law pertaining to usury, together with interest at a rate determined in accordance with the provisions of this Agreement, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement.

11 EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: (a) any default in the payment or performance of any obligation, or any defined event of default, under (i) the Credit Agreement, (ii) this Agreement, (iii) any other Loan Documents or (iv) any other agreement between any Grantor and Lender, including without limitation any loan agreement, relating to or executed in connection with any Indebtedness; (b) any representation or warranty made by any Grantor herein shall prove to be incorrect, false or misleading in any material respect when made; (c) any Grantor shall fail to observe or perform any obligation or agreement contained herein; (d) any impairment of the rights of Lender in any Collateral or Proceeds, or any attachment or like levy on any property of any Grantor; and (e) Lender, in good faith, believes any or all of the Collateral and/or Proceeds to be in danger of misuse, dissipation, commingling, loss, theft, damage or destruction, or otherwise in jeopardy or unsatisfactory in character or value.

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12 REMEDIES. Upon the occurrence of any Event of Default, Lender shall have the right to declare immediately due and payable all or any Indebtedness secured hereby and to terminate any commitments to make loans or otherwise extend credit to any Grantor. Lender shall have all other rights, powers, privileges and remedies granted to a secured party upon default under the UCC or the Business and Commerce Code of the jurisdiction identified in Section 20 below, or otherwise provided by law, including without limitation, the right (a) to contact all persons obligated to any Grantor on any Collateral or Proceeds and to instruct such persons to deliver all Collateral and/or Proceeds directly to Lender, and (b) to sell, lease, license or otherwise dispose of any or all Collateral. In addition to any other remedies set forth in this Agreement, each Grantor authorizes Lender to engage in “electronic self-help” as defined in and in accordance with applicable law. All rights, powers, privileges and remedies of Lender shall be cumulative. No delay, failure or discontinuance of Lender in exercising any right, power, privilege or remedy hereunder shall affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single or partial exercise of any such right, power, privilege or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. Any waiver, permit, consent or approval of any kind by Lender of any default hereunder, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing. It is agreed that public or private sales or other dispositions, for cash or on credit, to a wholesaler or retailer or investor, or user of property of the types subject to this Agreement, or public auctions, are all commercially reasonable since differences in the prices generally realized in the different kinds of dispositions are ordinarily offset by the differences in the costs and credit risks of such dispositions. While an Event of Default exists: (a) Grantors will deliver to Lender from time to time, as requested by Lender, current lists of all Collateral and Proceeds; (b) Grantors will not dispose of any Collateral or Proceeds except on terms approved by Lender; (c) at Lender’s request, Grantors will assemble and deliver all Collateral and Proceeds, and books and records pertaining thereto, to Lender at a reasonably convenient place designated by Lender; (d) Lender may, at any time, liquidate any time deposits pledged to Lender hereunder and apply the Proceeds thereof to payment of the Indebtedness secured hereby, whether or not said time deposits have matured and notwithstanding the fact that such liquidation may give rise to penalties for early withdrawal of funds; and (e) Lender may, without notice to any Grantor, enter onto a Grantor’s premises and take possession of the Collateral. With respect to any sale or other disposition by Lender of any Collateral subject to this Agreement, each Grantor hereby expressly grants to Lender the right to sell such Collateral using any or all of such Grantor’s trademarks, trade names, trade name rights and/or proprietary labels or marks. Each Grantor further agrees that Lender shall have no obligation to process or prepare any Collateral for sale or other disposition.

13 DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of Collateral hereunder, Lender may disclaim all warranties of title, possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral or Proceeds, or any part thereof, may be applied by Lender to the payment of expenses incurred by Lender in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds may be applied by Lender toward the payment of the Indebtedness secured hereby in such order of application as Lender may from time to time elect. Upon the transfer of all or any part of the Indebtedness secured hereby, Lender may transfer all or any part of the Collateral or Proceeds and shall be fully discharged thereafter from all liability and responsibility with respect to any of the foregoing so transferred, and the transferee shall be vested with all rights and powers of Lender hereunder with respect to any of the foregoing so transferred; but with respect to any Collateral or Proceeds not so transferred, Lender shall retain all rights, powers, privileges and remedies herein given.

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14 STATUTE OF LIMITATIONS. Until all Indebtedness secured hereby shall have been paid in full and all commitments by Lender to extend credit to Grantors that would constitute Indebtedness secured hereby have been terminated, the power of sale or other disposition and all other rights, powers, privileges and remedies granted to Lender hereunder shall, to the extent permitted by law, continue to exist and may be exercised by Lender at any time and from time to time irrespective of the fact that the Indebtedness secured hereby or any part thereof may have become barred by any statute of limitations, or that the personal liability of any Grantor may have ceased, unless such liability shall have ceased due to the payment in full of all Indebtedness secured hereunder.

15 MISCELLANEOUS. When there is more than one Grantor named herein: (a) the word “Grantor” shall mean all or any one or more of them as the context requires; (b) the obligations of each Grantor hereunder are joint and several; and (c) until all Indebtedness secured hereby shall have been paid in full, no Grantor shall have any right of subrogation or contribution, and each Grantor hereby waives any benefit of or right to participate in any of the Collateral or Proceeds or any other security now or hereafter held by Lender. Each Grantor hereby waives any right to require Lender to (i) proceed against such Grantor or any other person, (ii) marshal assets or proceed against or exhaust any security from such Grantor or any other person, (iii) perform any obligation of such Grantor with respect to any Collateral or Proceeds, and (iv) make any presentment or demand, or give any notices of any kind, including without limitation, any notice of nonpayment or nonperformance, protest, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration hereunder or in connection with any Collateral or Proceeds. Each Grantor further waives any right to direct the application of payments or security for any Indebtedness of Grantors or indebtedness of customers of Grantors.

16 NOTICES. All notices, requests and demands required under this Agreement must be in writing, addressed to Lender at the address specified in any other loan documents entered into between Grantors and Lender and to Grantors at the addresses of its chief executive offices specified below or to such other address as any party may designate by written notice to each other party, and shall be deemed to have been given or made as follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

17 COSTS, EXPENSES AND ATTORNEYS’ FEES. Grantors shall pay to Lender immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Lender’s in-house counsel to the extent permissible), expended or incurred by Lender in connection with (a) the perfection and preservation of the Collateral or Lender’s interest therein, and (b) the realization, enforcement and exercise of any right, power, privilege or remedy conferred by this Agreement, whether or not suit is brought or foreclosure is commenced, and where suit is brought, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Lender or any other person) relating to Grantors or in any way affecting any of the Collateral or Lender’s ability to exercise any of its rights or remedies with respect thereto. Subject to any restriction under applicable law pertaining to usury, all of the foregoing shall be paid by Guarantor with interest from the date of demand until paid in full at the rate per annum specified in Section 1.2(a) of the Credit Agreement. Notwithstanding anything in this Agreement to the contrary, reasonable attorneys’ fees shall not exceed the amount permitted by law.

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18 SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties, and may be amended or modified only in writing signed by Lender and Grantors.

19 SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Agreement.

20 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Texas, without reference to the conflicts of law or choice of law principles thereof.

21 INSURANCE PROVISIONS. Grantors agree with regard to the Collateral and Proceeds, unless Lender agrees otherwise in writing, to insure the Collateral with Lender named as loss payee, in form, substance and amounts, under agreements, against risks and liabilities, and with insurance companies reasonably satisfactory to the Lender.

COLLATERAL PROTECTION INSURANCE NOTICE. (A) EACH GRANTOR IS REQUIRED TO: (i) KEEP THE COLLATERAL INSURED AGAINST DAMAGE IN THE AMOUNT LENDER SPECIFIES; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (iii) NAME LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS; (B) EACH GRANTOR MUST, IF REQUIRED BY LENDER, DELIVER TO BENEFICIARY A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS THEREFOR; AND (C) IF ANY GRANTOR FAILS TO MEET ANY REQUIREMENT LISTED IN CLAUSES (A) OR (B) HEREOF, LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF SUCH GRANTOR AT SUCH GRANTOR'S EXPENSE.

22 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been duly executed by Grantors, intending to be legally bound hereby, as of the date first set forth above.

ENGLOBAL CORPORATION

a Nevada corporation

/s/Darren Spriggs

Darren Spriggs, Chief Financial Officer

ENGLOBAL U.S., INC.,

a Texas corporation

/s/Darren Spriggs

Darren Spriggs, Chief Financial Officer

ENGLOBAL GOVERNMENT SERVICES, INC.,

a Texas corporation

Darren Spriggs

Darren Spriggs, Chief Financial Officer

ENGLOBAL TECHNOLOGIES, LLC,

a Texas limited liability company

/s/Darren Spriggs

Darren Spriggs, Chief Financial Officer

Signature Page to Security Agreement

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EX-10.3

EXHIBIT 10.3

Execution Version

CONTINUING GUARANTY

(ENGlobal U.S., Inc., ENGlobal Government Services, Inc., and ENGlobal Technologies, LLC)

Dated June 15, 2023

BACKGROUND. ENGLOBAL CORPORATION, a Nevada corporation (“Borrower”) and ALLIANCE 2000, LTD., a Texas limited partnership (“Lender”) have entered into a Credit Agreement, dated as of the date hereof (such agreement, together with all amendments, restatements, supplemented, and modifications, the “Credit Agreement”). Borrower and each Guarantor are members of the same affiliated group of companies, and Guarantors will derive direct and indirect economic benefit from the Term Loans and other financial accommodations under the Credit Agreement and other Loan Documents.

AGREEMENT

1. GUARANTY; DEFINITIONS. In consideration of any credit or other financial accommodation heretofore, now or hereafter extended or made to Borrower by Lender, and for other valuable consideration, the undersigned ENGLOBAL U.S., INC., a Texas corporation, ENGLOBAL GOVERNMENT SERVICES, INC., a Texas corporation, and ENGLOBAL TECHNOLOGIES, LLC, a Texas limited liability company (Each a “Guarantor” and collectively, the “Guarantors”), jointly and severally unconditionally guarantee and promise to pay to Lender, or order, on demand in lawful money of the United States of America and in immediately available funds, any and all Indebtedness of the Borrower to Lender, all without relief from valuation and appraisement laws as applicable. The term “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrower, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable, and includes without limitation, all loans and indebtedness incurred by Borrower under the Credit Agreement. Capitalized terms not otherwise defined herein have the meaning specified in the Credit Agreement, and, to the extent of any conflict, terms as defined therein shall control (provided, that, a more expansive or explanatory definition shall not be deemed a conflict). This Guaranty is a guaranty of payment and not collection.

2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER OTHER GUARANTIES. This is a continuing guaranty and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of the Borrower to Lender, including that arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of any of the Borrower or Guarantors or any other event or proceeding affecting any of the Borrower or Guarantors. This Guaranty shall not apply to any new Indebtedness created after actual receipt by Lender of written notice of its revocation as to such new Indebtedness; provided however, that loans or advances made by Lender to the Borrower after revocation under commitments existing prior to receipt by Lender of such revocation, and extensions, renewals or modifications, of any kind, of Indebtedness incurred by the Borrower or committed by Lender prior to receipt by Lender of such revocation, shall not be considered new Indebtedness. Any such notice must be sent to Lender by registered U.S. mail, postage prepaid, addressed to its office at 3 Dashwood Court, The Hills, Texas 78738 or at such other address as Lender shall from time to time designate. Any payment by either Guarantor shall not reduce Guarantors’ maximum obligation hereunder unless written notice to that effect is actually received by Lender at or prior to the time of such payment. The obligations of each Guarantor hereunder shall be in addition to any obligations of such Guarantor under any other guaranties of any liabilities or obligations of the Borrower or any other persons heretofore or hereafter given to Lender unless said other guaranties are expressly modified or revoked in writing; and this Guaranty shall not, unless expressly herein provided, affect or invalidate any such other guaranties.

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3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and several and independent of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against any Guarantor whether action is brought against the Borrower or any other person, or whether the Borrower or any other person is joined in any such action or actions. Each Guarantor acknowledges that this Guaranty is absolute and unconditional, there are no conditions precedent to the effectiveness of this Guaranty, and this Guaranty is in full force and effect and is binding on such Guarantor as of the date written below, regardless of whether Lender obtains collateral or any guaranties from others or takes any other action contemplated by such Guarantor. To the extent permitted by applicable law, each Guarantor waives the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement thereof, and each Guarantor agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to such Guarantor’s liability hereunder. The liability of Guarantors hereunder shall be reinstated and revived and the rights of Lender shall continue if and to the extent for any reason any amount at any time paid on account of any Indebtedness guaranteed hereby is rescinded or must otherwise be restored by Lender, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by Lender in its sole discretion; provided however, that if Lender chooses to contest any such matter at the request of any Guarantor, such Guarantor agrees to indemnify and hold Lender harmless from and against all costs and expenses, including reasonable attorneys’ fees, expended or incurred by Lender in connection therewith, including without limitation, in any litigation with respect thereto.

4. AUTHORIZATIONS TO LENDER. Each Guarantor authorizes Lender either before or after revocation hereof, without notice to, demand on, or consent of Guarantor, and without affecting such Guarantor’s liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; (b) do any and all of the following with respect to any document or instrument now or hereafter entered into in connection with the Indebtedness or otherwise evidencing and/or securing any portion of the Indebtedness (collectively, the “Loan Documents”): (i) amend, amend and restate, supplement, replace, or otherwise modify any Loan Document; (ii) waive compliance with any provision of any Loan Document on any number of occasions; (iii) consent to departure from any provision of any Loan Document on any number of occasions; and/or (iv) forbear from exercising any rights or remedies of Lender in connection with a breach of any provision of any Loan Document for any duration of time and on any number of occasions; (c) take and hold security for the payment of this Guaranty or the Indebtedness or any portion thereof, and exchange, enforce, waive, subordinate or release any such security; (d) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Lender in its discretion may determine; (e) release or substitute any one or more of the endorsers or any other guarantors of the Indebtedness, or any portion thereof, or any other party thereto; and (f) apply payments received by Lender from the Borrower to any Indebtedness of the Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not such Indebtedness is covered by this Guaranty, and each Guarantor hereby waives any provision of law regarding application of payments which specifies otherwise. Lender may without notice assign this Guaranty in whole or in part.

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5. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. Each Guarantor represents and warrants to Lender that: (a) this Guaranty is executed at Borrower’s request; (b) Lender has made no representation to any Guarantor as to the creditworthiness of the Borrower; and (c) each Guarantor has established adequate means of obtaining from the Borrower on a continuing basis financial and other information pertaining to Borrower’s financial condition. Each Guarantor agrees with Lender: (i) to keep adequately informed from such means of any facts, events or circumstances which might in any way affect such Guarantor’s risks hereunder; (ii) that Lender shall have no obligation to disclose to Guarantors any information or material about the Borrower which is acquired by Lender in any manner; (iii) upon Lender’s request, each Guarantor shall provide to Lender copies of such Guarantor’s financial statements; and (iv) that each Guarantor shall not, without Lender’s prior written consent, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or a substantial or material part of such Guarantor’s assets other than in the ordinary course of such Guarantor’s business, nor accomplish any of the above by virtue of a division or similar transaction.

7. SUBORDINATION. Any Indebtedness of the Borrower now or hereafter held by any Guarantor is hereby subordinated to the Indebtedness of Borrower to Lender. Such Indebtedness of Borrower to any Guarantor is assigned to Lender as security for this Guaranty and the Indebtedness and, if Lender requests, shall be collected and received by the relevant Guarantor as trustee for Lender and paid over to Lender on account of the Indebtedness of Borrower to Lender but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty. Any notes or other instruments now or hereafter evidencing such Indebtedness of the Borrower to any Guarantor shall be marked with a legend that the same are subject to this Guaranty and, if Lender so requests, shall be delivered to Lender. Lender is hereby authorized in the name of each Guarantor from time to time to file financing statements and continuation statements and execute such other documents and take such other action as Lender deems necessary or appropriate to perfect, preserve and enforce its rights hereunder.

8. REMEDIES; NO WAIVER. All rights, powers and remedies of Lender hereunder are cumulative. No delay, failure or discontinuance of Lender in exercising any right, power or remedy hereunder shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Lender of any breach of this Guaranty, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing.

9. COSTS, EXPENSES AND ATTORNEYS’ FEES. Guarantors shall pay to Lender immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Lender’s in-house counsel to the extent permissible), expended or incurred by Lender in connection with the enforcement of any of Lender’s rights, powers or remedies and/or the collection of any amounts which become due to Lender under this Guaranty, and the prosecution or defense of any action in any way related to this Guaranty, whether or not suit is brought, and if suit is brought, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Lender or any other person) relating to any Guarantor or any other person or entity. Subject to any restriction under applicable law pertaining to usury, all of the foregoing shall be paid by Guarantor with interest from the date of demand until paid in full at the rate per annum specified in Section 1.2(a) of the Credit Agreement. Notwithstanding anything in this Guaranty to the contrary, reasonable attorneys’ fees shall not exceed the maximum amount permitted by law.

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10. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Guarantors may not assign or transfer any of their interests or rights hereunder without Lender’s prior written consent. Each Guarantor acknowledges that Lender has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Borrower to Lender and any obligations with respect thereto, including this Guaranty. In connection therewith, Lender may disclose all documents and information which Lender now has or hereafter acquires relating to any Guarantor and/or this Guaranty, whether furnished by Borrower, Guarantors or otherwise. Each Guarantor further agrees that Lender may disclose such documents and information to Borrower.

11. AMENDMENT. This Guaranty may be amended or modified only in writing signed by Lender and Guarantors.

12. COUNTERPARTS; GOVERNING LAW. This Guaranty may be executed in as many counterparts as may be required to reflect all parties assent; all counterparts will collectively constitute a single agreement. This Guaranty shall be governed by and construed in accordance with the laws of Texas, without reference to the conflicts of law or choice of law principles thereof.

13. GUARANTORS’ WAIVERS.

(a) Each Guarantor waives any right to require Lender to: (i) proceed against the Borrower or any other person; (ii) marshal assets or proceed against or exhaust any security held from the Borrower or any other person; (iii) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from the Borrower or any other person; (iv) take any other action or pursue any other remedy in Lender's power; or (v) make any presentment or demand for performance, or give any notices of any kind, including, without limitation, any notice of nonperformance, protest, notice of protest or notice of dishonor, notice of intention to accelerate or notice of acceleration hereunder or in connection with any obligations or evidences of Indebtedness held by Lender as security for or which constitute in whole or in part the Indebtedness guaranteed hereunder, or in connection with the creation of new or additional Indebtedness; or (vi) set off against the Indebtedness the fair value of any real or personal property given as collateral for the Indebtedness (whether such right of setoff arises under statute or otherwise). In addition to the foregoing, each Guarantor specifically waives any statutory right it might have to require Lender to proceed against Borrower or any collateral that secures the Indebtedness.

(b) Each Guarantor waives any defense to its obligations hereunder based upon or arising by reason of: (i) any disability or other defense of the Borrower or any other person; (ii) the cessation or limitation from any cause whatsoever, other than payment in full, of the Indebtedness of the Borrower or any other person; (iii) any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of the Borrower which is a corporation, limited liability company, partnership or other type of entity, or any defect in the formation of the Borrower; (iv) the application by the Borrower of the proceeds of the Indebtedness for purposes other than the purposes represented by Borrower to, or intended or understood by, Lender or Guarantors; (v) any act or omission by Lender which directly or indirectly results in or aids the discharge of the Borrower or any portion of the Indebtedness by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Lender against the Borrower; (vi) any impairment of the value of any interest in security for the Indebtedness or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (vii) any modification of the Indebtedness, in any form whatsoever, including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; or (viii) or any requirement that Lender give any notice of acceptance of this Guaranty. Until all Indebtedness shall have been paid in full, Guarantors shall have no right of subrogation, and each Guarantor waives any right to enforce any remedy which Lender now has or may hereafter have against the Borrower or any other person and waives any benefit of, or any right to participate in, any security now or hereafter held by Lender. To the fullest extent permitted by applicable law, each Guarantor waives all rights of a surety and the benefits of any applicable suretyship law, statute or regulation, and without limiting any of the waivers set forth herein, each Guarantor further waives any other fact or event that, in the absence of this provision, would or might constitute or afford a legal or equitable discharge or release of or defense to Borrower.

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(c) Each Guarantor further waives all rights and defenses such Guarantor may have arising out of (i) any election of remedies by Lender, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Indebtedness, destroys such Guarantor's rights of subrogation or such Guarantor's rights to proceed against the Borrower for reimbursement, or (ii) any loss of rights any Guarantor may suffer by reason of any rights, powers or remedies of the Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the Indebtedness, whether by operation of law or otherwise, including any rights Guarantors may have to claim a fair market credit with respect to a deficiency or have a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness, and each Guarantor waives any right such Guarantor may have under any “one-action” rule. Each Guarantor further waives the benefit of any homestead, exemption or other similar laws.

14. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Each Guarantor warrants and agrees that each of the waivers set forth herein is made with such Guarantor's full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any waiver or other provision of this Guaranty shall be held to be prohibited by or invalid under applicable public policy or law, such waiver or other provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such waiver or other provision or any remaining provisions of this Guaranty.

15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE INDEBTEDNESS.

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IN WITNESS WHEREOF, each undersigned Guarantor has executed this Guaranty, intending to be legally bound hereby, as of the date first set forth above.

ENGLOBAL U.S., INC.,

a Texas corporation

/s/Darren Spriggs

Darren Spriggs, Chief Financial Officer

ENGLOBAL GOVERNMENT SERVICES, INC.,

a Texas corporation

/s/ Darren Spriggs

Darren Spriggs, Chief Financial Officer

ENGLOBAL TECHNOLOGIES, LLC,

a Texas limited liability company

/s/ Darren Spriggs

Darren Spriggs, Chief Financial Officer

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EX-99.1

EXHIBIT 99.1

ENGlobal Announces Payoff of Pacific Western Credit Facility, New Credit Agreement and Operational Update

HOUSTON, TX / ACCESSWIRE / June 20, 2023 / ENGlobal Corporation (NASDAQ:ENG) (“ENGlobal” or the “Company”), a leading provider of innovative engineering project solutions for the energy industry, today announced that it has repaid its credit facility with Pacific Western Business Finance in full and entered into a new credit agreement with Alliance 2000, Ltd., the family limited partnership of ENGlobal Executive Chairman William A. Coskey, P.E.

The new term loan facility provides for an initial term loan of $1,000,000 and, under certain conditions, an additional term loan of $250,000. During the one-year term of the loan, the Company will make interest-only payments on a quarterly basis. The loan carries an annual interest rate of 8.5% and has an origination fee of 0.5%, payable upon maturity.

“We appreciate Pac West working with us as we repositioned the Company and our credit profile and are grateful for the flexibility they provided at the initial maturity date of the credit facility,” said Kevin Palma, Chairman of the Company’s Audit Committee. “We are also grateful for our Chairman, Bill Coskey, believing in the future of ENGlobal and providing a very reasonable term loan to allow the Company to continue its repositioning and financial improvement plan. The Company has made significant progress in the four months since Bill returned to day-to-day operations and, while there is significant work yet to do, we are confident in his commitment and ability to continue to improve the financial and operating conditions of ENGlobal. The loan interest rate of 8.5% is nearly 2% below our previous credit facility and reduces the payment and fee burden on the Company.”

Alliance 2000 Ltd. is the beneficial owner of more than 22% of the Company’s issued and outstanding common stock and is controlled by William A. Coskey, P.E., the Company’s Executive Chairman. In accordance with the charter of the Company’s Audit Committee and the Company’s policy on related party transactions, the loan documents and the resulting transactions were reviewed and approved by the Company’s Audit Committee and determined in good faith to be on terms no less favorable to the Company than could be obtained from unrelated third parties and fair to the Company from a financial point of view, and were approved by all of the disinterested members of the Company’s Board of Directors.

“Since returning to ENGlobal on a full-time basis, I have seen a meaningful improvement in our operations, a significant reduction in costs and a renewed sense of optimism from our people,” said Mr. Coskey. “My additional financial commitment is based on the belief that we now have a team in place that is committed to returning ENGlobal to its roots as a leading engineering and automation services company.”

Operational Update

While the Company expects to post a net loss in the second quarter, ENGlobal’s monthly results have improved consistently over the past three months. The Company has closed its construction and field services business and reduced overall payroll by nearly 50% from the peak four months ago. The Company is focused on full-service engineering and automation project work as well as procurement, fabrication, automation integration, and third-party construction management. 

“The construction and field service business is a challenging business that requires significant working capital, and is characterized by thin margins and significant execution risk,” added Coskey. “As we evaluated our businesses, we determined we had much better opportunities for profitability and uses of capital. We have completed all of our construction commitments which will preserve capital and mitigate further losses.”

ENGlobal has also streamlined its engineering assets into a single engineering projects group to focus on middle-market projects across the energy value chain. It has reduced its focus on large-scale renewable project developers that have little capital, poor payment history and typically require significant capital investments.  The Company remains committed to designing and fabricating modular process packaged plants for traditional and renewable energy applications. As part of our engineering offerings, ENGlobal continues to grow its fabrication capabilities and is considering a number of strategic alternatives to create capabilities complementary to our current offerings.

As of May 31, 2023 the Company’s enterprise-wide backlog was over $16 million with several opportunities to significantly add to the backlog through project awards in the coming months. “We continue to bid and win awards across our business lines,” added Coskey. “Our ongoing focus will be on improving margins, controlling overhead and regaining profitability. While we have some work to do to get there, we believe we now have the right team and strategies in place to be successful.  We have plenty more to accomplish in the coming months with a goal of profitability as we enter 2024.”

About ENGlobal

ENGlobal Corporation is a leading provider of engineering project solutions for the traditional and renewable energy industry. ENGlobal operates through two business segments: Commercial and Government Services. The Commercial segment provides engineering, design, fabrication, construction management and integration of automated control systems. The Government Services segment provides engineering, design, installation, operations, and maintenance of various government, public sector, and international facilities, specializing in turnkey automation and instrumentation systems for the U.S. Defense industry. Further information about the Company and its businesses is available at www.englobal.com.

For further information, please email IR@englobal.com.

Cautionary Note Regarding Forward Looking Statements

The statements above regarding the Company's expectations, including those relating to its future results, its future operations and certain other matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ENGlobal's filings with the Securities and Exchange Commission, including the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings.

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XML

Cover	Jun. 15, 2023
Cover [Abstract]
Entity Registrant Name	ENGlobal Corporation
Entity Central Index Key	0000933738
Document Type	8-K
Amendment Flag	false
Entity Emerging Growth Company	false
Document Period End Date	Jun. 15, 2023
Entity Incorporation State Country Code	NV
Entity File Number	001-14217
Entity Tax Identification Number	88-0322261
Entity Address Address Line 1	11740 Katy Fwy – Energy Tower III
Entity Address Address Line 2	11th floor
Entity Address City Or Town	Houston
Entity Address State Or Province	TX
Entity Address Postal Zip Code	77079
City Area Code	281
Local Phone Number	878-1000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $0.001 par value
Trading Symbol	ENG
Security Exchange Name	NASDAQ