EXHIBIT 10.57
 
SECOND AMENDMENT TO CREDIT AGREEMENT
AND WAIVER OF DEFAULT
 
THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of
February 28, 2011, by and between ENGLOBAL CORPORATION, a Nevada corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
 
RECITALS
 
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of December 29, 2009, as amended from time to time ("Credit Agreement").
 
WHEREAS, Borrower is in default of certain provisions of the Credit Agreement.
 
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.
 
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree that the Credit Agreement
shall be amended as follows:

1.    Section 1.1. (c) is hereby deleted in its entirety, and the following
substituted therefor:
 
"(c)    Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby letters of credit for the account of Borrower (each,
a “Letter of Credit” and collectively, “Letters of Credit”): provided however,
that the aggregate undrawn amount of all outstanding Letters of Credit shall not
at any time exceed Two Million Dollars ($2,000,000.00). The form and substance
of each Letter of Credit shall be subject to approval by Bank, in its sole
discretion. The undrawn amount of all Letters of Credit shall be reserved under
the Line of Credit and shall not be available for borrowings thereunder. Each
Letter of Credit shall be subject to the additional terms and conditions of the
Letter of Credit agreements, applications and any related documents required by
Bank in connection with the issuance thereof. Each drawing paid under a Letter
of Credit shall be deemed an advance under the Line of Credit and shall be
repaid by Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank for the
amount of any such drawing.
 
If Borrower should request that any Letter of Credit be issued for which the
expiry date of the Letter of Credit is later than the maturity date of the Line
of Credit, then on or before maturity of the Line of Credit, Borrower shall
deposit, or cause to be deposited into a Cash Collateral Account, cash, cash
equivalents and/or publicly traded/quoted marketable securities (acceptable to
Bank in its sole discretion) with an aggregate fair market value (determined by
Bank in its sole discretion) not at any time less than the amount of the Unpaid
and Undrawn Balance (as defined below), if any. If Borrower shall fail to
collateralize the Letters of Credit in this manner, then Bank may in its
discretion, at or after maturity of the Line, advance funds under the Line of
Credit in an amount approximately equal to the Unpaid and Undrawn Balance, and
deposit such funds into a Cash Collateral Account established by Bank, which
shall secure such Letters of Credit. "Unpaid and Undrawn Balance" means, at any
time, the entire amount that has not been paid by Bank under all the Letters of
Credit issued for Borrower's account, including, without limitation, the amount
of each draft on which Bank has not yet effected payment as well as the amount
undrawn under all such Letters of Credit.

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Each drawing paid under a Letter of Credit after maturity of the Line of Credit
shall be reimbursed to Bank by a draw under the Line of Credit or by a debit to
the Cash Collateral Account, unless Borrower immediately pays such amount to
Bank by other means. Bank is authorized to debit the Cash Collateral Account and
apply such funds to repay to Bank amounts drawn under Letters of Credit and any
related fees, if such amounts are not otherwise paid to Bank.
 
Bank shall release portions of the Cash Collateral to Borrower as Letters of
Credit expire and the Unpaid and Undrawn Balance diminishes, unless for any
reason any indebtedness to Bank remains unpaid or any potential liability of
Bank relating to Letters of Credit issued in connection with the Line of Credit
remains outstanding, in which case Bank may continue to hold such funds and the
Cash Collateral Account to secure such indebtedness and liabilities."
 
2.    Section 1.4 is hereby deleted in its entirety, and the following
substituted therefor:
 
“SECTION 1.4.    COLLATERAL.
 
As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower hereby grants to Bank security interests of first
priority in all Borrower's accounts receivable and other rights to payment,
general intangibles, inventory and equipment.
 
As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower shall cause ENGlobal U.S., Inc., ENGlobal Government
Services, Inc. and ENGlobal Emerging Markets, Inc. to grant to Bank security
interests of first priority in all accounts receivable and other rights to
payment, general intangibles, inventory and equipment.
 
All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by Bank
in connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.”
 
3.    Section 1.5. is hereby deleted in its entirety, and the following
substituted therefor:
 
“SECTION 1.5.    GUARANTIES. The payment and performance of all indebtedness and
other obligations of Borrower to Bank shall be guaranteed jointly and severally
by ENGlobal U.S., Inc. a Texas corporation, ENGlobal Government Services, Inc. a
Texas corporation and ENGlobal Emerging Markets, Inc. a Texas corporation, as
evidenced by and subject to the terms of guaranties in form and substance
satisfactory to Bank.”
 
4.    Section 4.3. is hereby deleted in its entirety, and the following
substituted therefor:
 
“SECTION 4.3.    FINANCIAL STATEMENTS. Provide to Bank all of the following, in
form and detail satisfactory to Bank:
 
(a)    not later than 90 days after and as of the end of each fiscal year form
10K as filed with S.E.C;
 
(b)    not later than 45 days after and as of the end of each fiscal quarter
form 10Q as filed with S.E.C.;
 
(c)    not later than 45 days after and as of the end of each fiscal quarter, a
consolidating financial statement of Borrower, prepared by Borrower, to include
balance sheet, income statement and cash flow statement;
 

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(d)    not later than 45 days after and as of the end of each fiscal quarter, a
financial statement of ENGlobal Emerging Markets, Inc., prepared by Borrower or
ENGlobal Emerging Markets, Inc, to include to include balance sheet, income
statement and cash flow statement;
 
(e)    not later than 30 days after and as of the end of each month, a borrowing
base certificate, an aged listing of accounts receivable and accounts payable,
and a reconciliation of accounts, and immediately upon each request from Bank, a
list of the names and addresses of all Borrower's account debtors;
 
(f)    Borrower will provide on a quarterly basis a certificate of compliance
signed by Senior Financial Officer showing compliance with all financial
covenants. Within 30 days of the end of each fiscal year end a financial
projection for at least the next fiscal year consisting of income statement,
balance sheet, and cash flow statement broken down by quarter;
    
(g)    from time to time such other information as Bank may reasonably request.”
 
5.    (a)    Borrower has notified Bank of the following breach of the terms of
the Credit Agreement:
 
Failure to maintain the Fixed Charge Coverage Ratio required by Section 4.9(c)
of the Credit Agreement for the period ending December 31, 2010.
 
Subject to the terms and conditions set forth herein, Bank has decided to waive
its default rights with respect to (A) the breach described in (i) above for the
period ending December 31, 2010. This waiver applies only to the specific
instances described above. This is not a waiver of any subsequent breach of the
same provisions of the Credit Agreement, nor is it a waiver of any breach of any
other provision of the Credit Agreement.
 
(b)    Borrower has notified the Bank of a reorganization of Borrower and its
subsidiaries, as more fully detailed in The letter dated March 7, 2011 sent to
the Bank (the Transaction). The Transaction may violate Section 5.4 and Section
6.1 of the Credit Agreement. Subject to the following conditions, Bank consents
to the Transaction.
 
•At the time of the Transaction, no Event of Default as defined in the Credit
Agreement, and no condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of Default, shall have
occurred and be continuing.
 
•Borrower shall do all acts and things and execute and deliver, or cause any of
its subsidiaries to execute and deliver, any additional documents, such as
guaranties, security agreements, and financing statements, deemed by Bank as
necessary, proper or convenient in connection with the preservation, perfection
or enforcement of its rights under the Loan Documents.
 
•Borrower shall provide documentation satisfactory to Bank, in its sole
discretion, evidencing the assumption by the surviving entities of all assets
and liabilities of the merged entities.
 
(c)    Except as expressly stated in this Amendment, Bank reserves all of the
rights, powers and remedies available to Bank under the Credit Agreement and any
other contracts or instruments signed by Borrower, including the right to cease
making advances to and the right to accelerate any indebtedness, if any
subsequent breaches of the same provisions or any other provisions of the Credit
Agreement should occur.
 
6.    In consideration of the changes set forth herein and as a condition to the
effectiveness hereof, immediately upon signing this Amendment Borrower shall pay
to Bank a non-refundable fee of $15,000.00. If Bank has not received payment in
full of said fee upon signing of this Amendment, this waiver shall immediately
terminate without further notice and Bank may exercise any and all rights,
powers and remedies available under the Credit Agreement and any other contracts
or instruments signed by Borrower.
 
    

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7.    Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.
 
8.    Borrower hereby remakes all representations and warranties contained in
the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
 
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.
 
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the day and year first written above.
 
ENGLOBAL CORPORATION
By: /s/ R.W. Raiford     
R.W. Raiford, Chief Financial Officer
 
 
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ David Jones
David Jones, Senior Relationship Manager
 
 

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