Exhibit 10.67
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
AND AMENDMENT TO OTHER LOAN DOCUMENTS
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT AND AMENDMENT TO OTHER LOAN DOCUMENTS (hereinafter, this "Agreement")
is entered into as of the 31st day of July, 2002, to be effective as of the date
hereof (the "Effective Date"), by and among IDS ENGINEERING, INC., a Texas
corporation ("IDS Engineering"), THERMAIRE, INC., a Texas corporation
("Thermaire"), CONSTANT POWER MANUFACTURING, INC., a Texas corporation
("Constant Power"), INDUSTRIAL DATA SYSTEMS, INC., a Texas corporation ("Data"),
IDS ENGINEERING MANAGEMENT, LC, a Texas limited liability company
("Management"), PETROCON ENGINEERING, INC., a Texas corporation ("Petrocon"),
TRIANGLE ENGINEERS AND CONSTRUCTORS, INC., a Texas corporation ("Triangle"),
PETROCON SYSTEMS, INC., a Texas corporation ("Petrocon Systems"), PETROCON
ENGINEERING OF LOUISIANA, INC., a Louisiana corporation ("Petrocon Louisiana"),
R.P.M. ENGINEERING, INC., a Louisiana corporation ("RPM"), PETROCON CONSTRUCTION
RESOURCES, INC., a Texas corporation ("Petrocon Construction"), PETROCON
TECHNOLOGIES, INC., a Texas corporation ("Petrocon Technologies"), ALLIANCE
ENGINEERING ASSOCIATES, INC., a Texas corporation ("Alliance") (individually, a
"Borrower" and collectively, "Borrowers"), FLEET CAPITAL CORPORATION, a Rhode
Island corporation ("Fleet"), as Agent (Fleet, in such capacity, the "Agent"),
and the financial institution(s) listed on the signature pages hereof and their
respective successors and assigns (each individually a "Lender" and collectively
"Lenders").
RECITALS
A. Borrowers, Agent and Lender have entered into that certain Second
Amended and Restated Loan and Security Agreement, dated as of December 21, 2001,
as amended by that certain First Amendment to Second Amended and Restated Loan
and Security Agreement entered into as of March 26, 2002, by Borrowers, Agent
and Lender (as amended, the "Loan Agreement").
B. Borrowers, Lender and Agent desire to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE I
Definitions
1.01 Capitalized terms used in this Agreement, to the extent not otherwise
defined herein, shall have the same meaning as in the Loan Agreement, as amended
hereby.
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ARTICLE II
Amendments
2.01 Amendment to Section 2.1.1 of the Loan Agreement. Effective as of the
Effective Date, Section 2.1.1 of the Loan Agreement is hereby amended by
deleting therefrom the phrase "two and three-quarters percent (2.75%)" and
substituting therefor the phrase "two and one-half percent (2.50%)".
2.02 Additions of New Section 2.14 to the Loan Agreement. Effective as of
the Effective Date, a new Section 2.1.4 interest Rate Reduction is hereby added
to the Loan Agreement to read in its entirety as follows:
"2.1.4 Interest Rate Reduction. So long as no Default or Event of
Default has occurred and is continuing, in the event that Borrower achieves
after the effective date of the Second Amendment the Rate Reduction
Performance Factor defined below, effective upon receipt and review by
Agent of information and materials furnished by Borrower pursuant to
Section 8.1.3 of this Agreement demonstrating compliance with the Rate
Reduction Performance Factor defined below, the relevant Applicable Annual
Rate then in effect as to all outstanding Loans shall be reduced by
one-quarter of one percent (0.25%); provided, however, that as to
Eurodollar Loans, the reduction in the relevant Applicable Annual Rate
shall be effective only for Eurodollar Loans requested after the date on
which Agent has received and reviewed information and materials supplied by
Borrower demonstrating compliance with the Rate Reduction Performance
Factor set forth below. For the purposes of this Agreement, the `Rate
Reduction Performance Factor' means that Borrower is able to establish
pursuant to information and materials in form and substance satisfactory to
Agent furnished in connection with Section 8.1.3 of this Agreement that the
Fixed Charge Ratio for the twelve calendar month period ending on the last
day of each calendar month during any fiscal quarter of Borrower is greater
than 1.25 to 1.00. If the Fixed Charge Ratio for the twelve calendar month
period ending on the last day of any month is thereafter equal to or less
than 1.25 to 1.00, the relevant Applicable Annual Rate then in effect as to
all outstanding Loans shall be increased by one-quarter of one percent
(0.25%); provided, however, that Borrower shall again be able to achieve a
one-quarter of one percent (0.25%) reduction in the Applicable Annual Rate
if it thereafter again achieves the above-described Rate Reduction
Performance Factor and no Default or Event of Default has occurred and is
continuing. It is the intent of the parties that the achievement and
elimination of this one-quarter of one percent (0.25%) reduction in the
Applicable Annual Rate can continue to occur periodically during the term
of this Agreement. However, the Applicable Annual Rate may not be reduced
more than one-quarter of one percent (0.25%) pursuant to the provisions of
this Section 2.1.4."
2.03 Amendment to Section 4.1 of the Loan Agreement. Effective as of the
Effective Date, Section 4.1 of the Loan Agreement is hereby amended by deleting
therefrom the reference to the date "June 14, 2003" and substituting therefor
the date "June 30, 2005".
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2.04 Amendment to Section 4.2.3 of the Loan Agreement. Effective as of the
Effective Date, Section 4.2.3 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"4.2.3 Termination Charges. On the effective date of termination of
this Agreement for any reason, Borrower shall pay to Agent, for the account
of Lenders (in addition to the then outstanding principal, accrued interest
and other charges owing under the terms of this Agreement and any of the
other Loan Documents), as liquidated damages for the loss of the bargain
and not as a penalty, an amount equal to (i) one percent (1.00%) of the
Total Credit Facility if termination occurs on or prior to June 30, 2003,
(ii) three-quarters of one percent (0.75%) of the Total Credit Facility if
termination occurs after June 30, 2003, but on or before June 30, 2004, and
(iii) one-half of one percent (0.50%) if termination occurs after June 30,
2004, but on or prior to June 30, 2005. Notwithstanding the foregoing, if
termination occurs after June 30, 2005, no termination charge shall be
payable."
2.05 Amendment to Section 8.2.3 of the Loan Agreement. Effective as of the
Effective Date, clause (ix) of Section 8.2.3 of the Loan Agreement is hereby
amended and restated to read as follows:
"(ix) contingent obligations under any guarantee (a) by Borrower or
its Subsidiaries of any of the obligations of any other Subsidiary as
lessee under any lease which is otherwise permitted under this Agreement,
and (b) by Petrocon as to Indebtedness incurred by PEI Investments in
connection with improvements and repairs to the building located at 3155
Executive Boulevard, Beaumont, Texas, provided that the amount of such
Indebtedness does not exceed $50,000;".
2.06 Amendment to Section 8.3.1 of the Loan Agreement. Effective as of the
Effective Date, Section 8.3.1 of the Loan Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"8.3.1 Fixed Charge Ratio. Maintain, on a Consolidated Basis, as of
the last day of each calendar month set forth below, for the twelve (12)
calendar month period ending on such date, a Fixed Charge Ratio equal to or
greater than the ratio set forth below for the period corresponding
thereto:
Period Ratio
------ -----
June 30, 2002--December 31, 2002 1.10 to 1.00
January 31, 2003 and thereafter 1.15 to 1.00
2.07 Amendment to Section 8.3.2 of the Loan Agreement. Effective as of the
Effective Date, Section 8.3.2 of the Loan Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
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"8.3.2 Ratio of Senior Debt and Equus Term Note to EBITDA. Maintain,
on a Consolidated basis, as of the end of each calendar month set forth
below, a ratio of (i) the sum of (a) Borrower's Senior Debt on such date
(provided, however, that in this calculation of the Senior Debt of
Borrower, the unpaid amount of the Revolving Credit Loans on such date
shall be deemed to be the Average Monthly Revolving Credit Loan Balance for
such month) and (b) the unpaid principal amount of the Equus Term Note on
such date, to (ii) Borrower's EBITDA for the twelve- (12) calendar month
period ending on such date, equal to or less than the ratio set forth below
for the period corresponding thereto:
Period Ratio
------ -----
June 30, 2002--August 31, 2002 3.00 to 1.00
September 30, 2002-- November 30, 2002 2.75 to 1.00
December 31, 2002 and thereafter 2.50 to 1.00"
2.08 Amendment to Appendix A of the Loan Agreement; Amendment of Definition
of "Borrowing Base". Effective as of the Effective Date, the definition of
`Borrowing Base" contained in Appendix A of the Loan Agreement is amended by
deleting each reference therein to the phrase "eighty-five percent (85%)" and
substituting therefor the phrase `ninety percent (90%)".
2.09 Amendment to Appendix A of the Loan Agreement; Amendment of
Definition of "EBITDA". Effective as of the Effective Date, the definition of
"EBITDA" contained in Appendix A of the Loan Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"EBITDA - for any fiscal period of Borrower, means an amount equal to
(a) the sum of (i) Adjusted Net Earnings From Operations for such period,
plus (ii) Interest Expense for such period, plus (iii) income tax expense
for such period, plus, (iv) depreciation and amortization for such period.
For purposes of the calculation of any of the financial covenants set forth
in Section 8.3 of this Agreement for which EBITDA is relevant (but only for
such purposes), (x) all non-cash expenses of Borrower during the period
covered by such financial covenant shall be added back to the calculation
of EBITDA for such period, but will be subtracted during the period in
which actually paid and (y) all merger-related costs incurred in connection
with the IDSC Merger shall be added back to the calculation of EBITDA for
the period such merger-related costs were actually expensed."
2.10 Amendment to Appendix A of the Loan Agreement; Amendment of Definition
of "Eligible Account". Effective as of the Effective Date, the definition of
"Eligible Account" contained in Appendix A of the Loan Agreement is hereby
amended as follows:
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(a) Clause (viii) of such definition is amended and restated to read
in its entirety as follows:
"(viii) it arises from a sale to an Account Debtor with its
principal office, assets or place of business outside the United
States, unless the sale (a) is backed by an irrevocable letter of
credit issued or confirmed by Bank and is in form and substance
acceptable to Agent, payable in the full amount of the Account and/or
Performance Account in freely convertible Dollars at a place of
payment within the United States or (b) is covered by foreign credit
insurance in form and substance acceptable to Agent; provided,
however, that during the period beginning with the effective date of
the Second Amendment and continuing for one hundred eighty (180) days
thereafter (but only during such 180 day period), an Account or
Performance Account arising from a sale to an Account Debtor with its
principal office, assets or place of business outside the United
States which otherwise would be an Eligible Account except for the
preceding provisions of this clause (viii), shall not be excluded as
an Eligible Account solely because it is not backed by such an
irrevocable letter of credit or covered by such foreign credit
insurance; however, this proviso shall not apply with respect to any
such Account or Performance Account to the extent the total unpaid
amount of all such Accounts and Performance Accounts exceed $500,000
at any time during this 180 day period, to the extent of such
excess;".
(b) Clause (xviii) of such definition is amended by deleting
therefrom the dollar amount "$2,352,941" and substituting therefor the
dollar amount "$3,333,333."
2.11 Amendment to Appendix A of the Loan Agreement; Addition of Definition
of "Second Amendment". Effective as of the Effective Date, a new definition,
"Second Amendment", is hereby added to Appendix A of the Loan Agreement, such
new definition to read in its entirety as follows:
"Second Amendment -- that certain Second Amendment to Second Amended
and Restated Loan and Security Agreement and Amendment to Other Loan
Documents executed by Borrower, Agent and Lenders."
2.12 References to Industrial Data Systems Corporation in Loan Documents.
Effective as of the Effective Date, all references in each Loan Document to
"Industrial Data Systems Corporation" or "IDSC" shall be deemed to be references
to "ENGlobal Corporation" in order to reflect that Industrial Data Systems
Corporation, a Nevada corporation, has changed its name to ENGlobal Corporation.
2.13 Amendment Fee. Borrowers hereby agree to pay Agent, for the benefit of
Lender, in immediately available funds, a $35,000 amendment fee, which fee shall
be deemed fully earned and non-refundable, and shall be due and payable as of
the date of execution of this Amendment by Borrowers.
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ARTICLE III
Conditions Precedent
3.01 Conditions to Effectiveness. Notwithstanding anything herein to the
contrary, the effectiveness of this Agreement is subject to the satisfaction of
the following conditions precedent, unless specifically waived in writing by
Agent and Lender:
(a) Agent shall have received, in form and substance satisfactory to
Agent, (i) this Agreement, duly executed by Borrowers, (ii) the Consent,
Ratification and Release attached hereto, duly executed by each Guarantor,
(iii) a consent to this Amendment, duly executed by each holder of
Subordinated Debt, and (iv) such additional documents, instruments and
information as Agent or its legal counsel, Patton Boggs LLP, may request.
(b) All corporate proceedings taken in connection with the
transactions contemplated by this Agreement and the agreements described in
clause (a) above and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal counsel,
Patton Boggs LLP.
(c) Agent shall have received payment, in immediately available funds,
of the $35,000 amendment fee provided for in Section 2.12 of this
Agreement.
ARTICLE IV
No Waiver
4.01 Nothing contained herein shall be construed as a waiver by Agent or
Lender of any covenant or provision of the Loan Agreement, the other Loan
Documents, this Agreement, or of any other contract or instrument between
Borrowers and Agent and/or Lender, and Agent and/or Lender's failure at any time
or times hereafter to require strict performance by Borrowers of any provision
thereof shall not waive, affect or diminish any right of Agent and/or Lender to
thereafter demand strict compliance therewith. Agent and Lender hereby reserve
all rights granted under the Loan Agreement, the other Loan Documents, this
Agreement and any other contract or instrument between Borrowers, Agent and/or
Lender.
ARTICLE V
Ratifications, Representations and Warranties
5.01 Ratifications. The terms and provisions set forth in this Agreement
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the other Loan Documents, and except as expressly
modified and superseded by this Agreement, the terms and provisions of the Loan
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Borrowers, Agent and Lender agree that the
Loan Agreement and the other Loan Documents, as amended hereby, shall continue
to be legal, valid, binding and enforceable in accordance with their respective
terms.
5.02 Representations and Warranties. Borrowers hereby represent and warrant
to Agent and
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Lender that (a) the execution, delivery and performance of this Agreement and
any and all other Loan Documents executed and/or delivered in connection
herewith have been authorized by all requisite corporate action on the part of
Borrowers and will not violate the Articles of Incorporation or Bylaws of
Borrowers; (b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (c) no Event of Default or Default
under the Loan Agreement has occurred and is continuing, unless such Event of
Default or Default has been specifically waived in writing by Agent and Lender;
(d) Borrowers are in full compliance with all covenants and agreements contained
in the Loan Agreement and the other Loan Documents, as amended hereby; and (e)
Borrowers have not amended their Articles of Incorporation or Bylaws since the
date of the original, unamended Loan Agreement.
ARTICLE VI
Miscellaneous Provisions
6.01 Survival of Representations and Warranties. All representations and
warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Agreement,
shall survive the execution and delivery of this Agreement and the other Loan
Documents, and no investigation by Agent or Lender or any closing shall affect
the representations and warranties or the right of Agent or Lender to rely upon
them.
6.02 Reference to Loan Agreement. Each of the Loan Documents, including the
Loan Agreement and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Loan Agreement, as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Loan Agreement shall mean a reference to
the Loan Agreement, as amended hereby.
6.03 Expenses of Agent and Lender. As provided in the Loan Agreement,
Borrowers agree to pay on demand all costs and expenses incurred by Agent and
Lender in connection with the preparation, negotiation and execution of this
Agreement and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Agent's and Lender's legal counsel, and all
costs and expenses incurred by Agent and/or Lender in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Documents, including, without limitation, the costs
and fees of Agent's and Lender's legal counsel.
6.04 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 Successors and Assigns. This Agreement is binding upon and shall inure
to the benefit of Agent, Lender and Borrowers and their respective successors
and assigns, except
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Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of Lender.
6.06 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
6.07 Effect of Waiver. No consent or waiver, express or implied, by Agent
or Lender to or for any breach of or deviation from any covenant or condition by
Borrowers shall be deemed a consent to or waiver of any other breach of the same
or any other covenant, condition or duty.
6.08 Headings. The headings, captions, and arrangements used in this
Agreement are or convenience only and shall not affect the interpretation of
this Agreement.
6.09 Applicable Law. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
6.10 Final Agreement. THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE
ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON
THE DATE THIS AGREEMENT IS EXECUTED. THE LOAN DOCUMENTS, AS AMENDED HEREBY, MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AGREEMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWERS,
AGENT AND LENDER.
6.11 Release. EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM AGENT AND/OR LENDER. EACH BORROWER HEREBY VOLUNTARILY
AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND LENDER, THEIR RESPECTIVE
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS
EXECUTED, WHICH
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SUCH BORROWER MAY NOW OR HEREAFFER HAVE AGAINST AGENT AND/OR LENDER, THEIR
RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER
AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT.
[The Remainder of this Page intentionally Left Blank]
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ACCEPTED as of the date first written above.
BORROWERS:
IDS ENGINEERING, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
THERMAIRE, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
CONSTANT POWER MANUFACTURING, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
INDUSTRIAL DATA SYSTEMS, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
IDS ENGINEERING MANAGEMENT, LC
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
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PETROCON ENGINEERING, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
TRIANGLE ENGINEERS AND CONSTRUCTORS, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
PETROCON SYSTEMS, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
PETROCON ENGINEERING OF LOUISIANA, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
R.P.M. ENGINEERING, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
PETROCON CONSTRUCTION RESOURCES, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
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PETROCON TECHNOLOGIES, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
ALLIANCE ENGINEERING ASSOCIATES, INC.
By: /s/ Robert W. Raiford
-------------------------------
Name: Robert W. Raiford
Title: CFO
Accepted in Dallas, Dallas County, Texas:
AGENT:
FLEET CAPITAL CORPORATION
By: /s/ Dan Hughes
-------------------------------
Name: Dan A. Hughes
Title: Vice President
LENDERS:
FLEET CAPITAL CORPORATION
By: /s/ Dan Hughes
-------------------------------
Name: Dan A. Hughes
Title: Vice President
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CONSENT, RATIFICATION AND RELEASE
Each of the undersigned hereby consents to the terms of the within and
foregoing Agreement, confirms and ratifies the terms of its guaranty agreement
relating to the Obligations and of each collateral document it has executed in
connection with the Obligations (collectively, the "Documents"), and
acknowledges that the Documents to which it is a party are in full force and
effect and ratifies the same, that it has no defense, counterclaim, set-off or
any other claim to diminish its liability under such Documents, that its consent
is not required to the effectiveness of the within and foregoing Agreement, and
that no consent by it is required for the effectiveness of any future amendment,
modification, forbearance or other action with respect to the Loans, the
Collateral, or any of the other Loan Documents. EACH OF THE UNDERSIGNED HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES EACH OF AGENT AND EACH
LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES,
AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS
EXECUTED, WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST AGENT OR ANY
LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN
DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT.
ENGLOBAL CORPORATION, formerly known as
INDUSTRIAL DATA SYSTEMS CORPORATION
By: /s/ William A. Coskey
-------------------------------------
Name: William A. Coskey
Title: President
IDS ENGINEERING, INC.
By: /s/ Robert W. Raiford
-------------------------------------
Name: Robert W. Raiford
Title: CFO
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THERMAIRE, INC.
By: /s/ Robert W. Raiford
-------------------------------------
Name: Robert W. Raiford
Title: CFO
CONSTANT POWER MANUFACTURING, INC.
By: /s/ Robert W. Raiford
-------------------------------------
Name: Robert W. Raiford
Title: CFO
INDUSTRIAL DATA SYSTEMS, INC.
By: /s/ Robert W. Raiford
-------------------------------------
Name: Robert W. Raiford
Title: CFO
IDS ENGINEERING MANAGEMENT, LC
By: /s/ Robert W. Raiford
-------------------------------------
Name: Robert W. Raiford
Title: CFO
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