Exhibit 10.1

                                CREDIT AGREEMENT

                                 BY AND BETWEEN

                             COMERICA BANK ("Bank")

                                       AND

                              ENGLOBAL CORPORATION
                       ENGlobal Corporate Services, Inc.,
                                 Thermaire, Inc.
                           ENGlobal Engineering, Inc.
                      ENGlobal Construction Resources, Inc.
                             ENGlobal Systems, Inc.
                              RPM Engineering, Inc.
                           ENGlobal Technologies, Inc.
                          ENGlobal Constant Power, Inc.
                          Senftleber & Associates, L.P.
                          ENGlobal Design Group, Inc.,
                           (collectively, "Borrower")

                               Dated July 27, 2004


<PAGE>


                                      INDEX
                                                                           Page
                                                                           ----

   SECTION 1.  DEFINITIONS....................................................1
     1.1  Defined Terms.......................................................1
     1.2  Accounting Terms....................................................1
     1.3  Singular and Plural.................................................1
   SECTION 2.  TERMS, CONDITIONS AND PROCEDURES FOR BORROWING.................1
   SECTION 3.  REPRESENTATIONS AND WARRANTIES.................................2
     3.1  Authority...........................................................2
     3.2  Due Authorization...................................................2
     3.3  Title to Property...................................................2
     3.4  Encumbrances........................................................2
     3.5  Subsidiaries........................................................2
     3.6  Taxes...............................................................2
     3.7  No-Defaults.........................................................2
     3.8  Enforceability of Agreement and Loan Documents......................2
     3.9  Non-contravention...................................................3
     3.10  Actions, Suits, Litigation or Proceedings..........................3
     3.11  Compliance with Laws...............................................3
     3.12  Consents, Approvals and Filings....................................3
     3.13  Contracts, Agreements and Leases...................................3
     3.14  ERISA..............................................................3
     3.15  No Investment Company..............................................3
     3.16  No Margin Stock....................................................4
     3.17  Environmental Representations......................................4
     3.18  Accuracy of Information............................................5
     3.19  Reserved...........................................................5
     3.20  Intellectual Property..............................................5
   SECTION 4.  AFFIRMATIVE COVENANTS..........................................5
     4.1  Preservation of Existence...........................................5
     4.2  Keeping of Books....................................................5
     4.3  Reporting Requirements..............................................6
     4.4  Financial Covenants.................................................7
        (a)  Debt to Capitalization Ratio.....................................7
        (b)  Minimum Net Worth................................................7
        (c)  Maximum Leverage Ratio...........................................7
        (d)  Asset Coverage Ratio.............................................8
     4.5  Inspections.........................................................8
     4.6  Further Assurances; Financing Statements............................8
     4.7  Compliance with Leases..............................................8
     4.8  Indemnification.....................................................8
     4.9  Governmental and Other Approvals....................................9
     4.10  Insurance..........................................................9
     4.11  Compliance with ERISA..............................................9
     4.12  Environmental Covenants............................................9
     4.13  Reserved..........................................................10
     4.14  Reserved..........................................................10
     4.15  Registration of Intellectual Property Rights......................10
     4.16  Intellectual Property.............................................11
   SECTION 5.  NEGATIVE COVENANTS............................................11
     5.1  Capital Structure, Business Objects or Purpose.....................11
     5.2  Dispositions.......................................................11
     5.3  Guaranties.........................................................11
     5.4  Debt...............................................................11
     5.5  Encumbrances.......................................................12

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     5.6  Merger; Acquisitions...............................................11
     5.7  Dividends..........................................................12
     5.8  Investments........................................................12
     5.9  Transactions with Affiliates.......................................12
     5.10  Defaults on Other Obligations.....................................12
     5.11  Prepayment of Debt................................................12
     5.12  Pension Plans.....................................................12
     5.13  Subordinate Indebtedness..........................................12
     5.14  No Further Negative Pledges.......................................12
     5.15  Accounts Receivable...............................................13
     5.16  No License Restrictions...........................................13
     5.17  Acquire Fixed Assets..............................................13
     5.18  Reserved..........................................................13
   SECTION 6.  EVENTS OF DEFAULT.............................................13
     6.1  Events of Default..................................................13
     6.2  Remedies Upon Event of Default.....................................14
     6.3  Setoff.............................................................15
     6.4  Waiver of Certain Laws.............................................15
     6.5  Waiver of Defaults.................................................15
     6.6  Receiver...........................................................15
     6.7  Discretionary Credit and Credit Payable Upon Demand................16
     6.8  Application of Proceeds of Collateral..............................16
   SECTION 7.  MISCELLANEOUS.................................................16
     7.1  Accounting Principles..............................................16
     7.2  Taxes and Fees.....................................................16
     7.3  Governing Law......................................................16
     7.4  Audits of Collateral; Fees.........................................16
     7.5  Costs and Expenses.................................................17
     7.6  Notices............................................................17
     7.7  Further Action.....................................................17
     7.8  Successors and Assigns; Participation..............................17
     7.9  Indulgence.........................................................17
     7.10  Amendment and Waiver..............................................18
     7.11  Severability......................................................18
     7.12  Headings and Construction of Terms................................18
     7.13  Independence of Covenants.........................................18
     7.14  Reliance on and Survival of Various Provisions....................18
     7.15  Effective Upon Execution..........................................18
     7.16  Complete Agreement; Conflicts.....................................18
     7.17  Exhibits and Addenda..............................................18
     7.18  Separate Loans....................................................19
     7.19  WAIVER OF JURY TRIAL..............................................19
     7.20  ORAL AGREEMENTS INEFFECTIVE.......................................19



ADDENDA:
         Defined Terms Addendum
         Loan Terms, Conditions and Procedures Addendum

EXHIBITS:
         Exhibit A - Description of Property
         Exhibit B - Form of Compliance Certificate
         Exhibit C - Form of Request for Advance

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<PAGE>


SCHEDULES:
         Schedule 3.5      Subsidiaries
         Schedule 3.14     Employee Benefit Plans
         Schedule 3.17     Environmental Disclosures
         Schedule 3.20     Intellectual Property
         Schedule 5.4      Debt
         Schedule 5.5      Liens



                                      iii
<PAGE>



                                CREDIT AGREEMENT
                                ----------------

     THIS CREDIT AGREEMENT (this "Agreement") is made and delivered effective as
of the 27th day of July 2004, by and between ENGlobal Corporation, a Nevada
corporation; ENGlobal Corporate Services, Inc., a Texas corporation; Thermaire,
Inc., a Texas corporation; ENGlobal Engineering, Inc., a Texas corporation;
ENGlobal Construction Resources, Inc., a Texas corporation; ENGlobal Systems,
Inc., a Texas corporation; RPM Engineering, Inc., a Louisiana corporation;
ENGlobal Technologies, Inc., a Texas corporation; ENGlobal Constant Power, Inc.,
a Texas corporation; Senftleber & Associates, L.P., a Texas limited partnership;
and ENGlobal Design Group, Inc., a Texas corporation (collectively, "Borrower"),
and COMERICA BANK ("Bank").

                                    RECITALS
                                    --------

     A. Borrower desires to obtain certain facilities from the Bank, and the
Bank is willing to provide such credit facilities to and in favor of Borrower.

     B. Such credit facilities are subject to the terms and conditions set forth
herein and in every other Loan Document.

     C. Such credit facilities and extensions of credit are made available to
Borrower by Bank subject to the terms and conditions set forth herein and in
every other Loan Document.

                                    AGREEMENT
                                    ---------

     NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, Borrower and Bank agree as follows:

                             SECTION 1. DEFINITIONS

     1.1 Defined Terms. The terms as used in this Agreement shall have the
meanings assigned to such terms in the Defined Terms Addendum.

     1.2 Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be determined and construed in accordance with GAAP.

     1.3 Singular and Plural. Where the context herein requires, the singular
number shall be deemed to include the plural, the masculine gender shall include
the feminine and neuter genders, and vice versa.

            SECTION 2. TERMS, CONDITIONS AND PROCEDURES FOR BORROWING

     Subject to the terms, conditions and procedures of this Agreement and each
other Loan Document including, but not limited to, the terms, conditions and
procedures set forth in the Defined Terms Addendum and Loan Terms, Conditions
and Procedures Addendum, Bank agrees to make credit available to the Borrower on
such dates and in such amounts as the Borrower shall request from time to time
or as may otherwise be agreed to by Borrower and Bank.

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                    SECTION 3. REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants, and such representations and warranties
shall be deemed to be continuing representations and warranties during the
entire life of this Agreement, and so long as Bank shall have any commitment or
obligation to make any Loans or issue any Letters of Credit hereunder, and so
long as any Indebtedness remains unpaid and outstanding under any Loan Document,
as follows:

     3.1 Authority. Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
is duly qualified and authorized to do business in each other jurisdiction in
which the character of its assets or the nature of its business makes such
qualification necessary.

     3.2 Due Authorization. Each Loan Party has all requisite power and
authority to execute, deliver and perform its obligations under each Loan
Document to which it is a party or is otherwise bound, all of which have been
duly authorized by all necessary action, and are not in contravention of law or
the terms of any Loan Party's organizational or other governing documents.

     3.3 Title to Property. Each Loan Party has good title to all property and
assets purported to be owned by it, including those assets identified on the
Financial Statements most recently delivered by Borrower to Bank.

     3.4 Encumbrances. There are no security interests or other Liens or
encumbrances on, and no financing statements on file with respect to, any of the
property or assets of any Loan Party, except for Permitted Encumbrances.

     3.5 Subsidiaries. Borrower has no Subsidiaries, except as set forth in
Schedule 3.5 which Schedule sets forth the percentage of ownership of Borrower
in each such Subsidiary as of the date of this Agreement.

     3.6 Taxes. Each Loan Party has filed, on or before their respective due
dates, all federal, state, local and foreign tax returns which are required to
be filed, or has obtained extensions for filing such tax returns, and is not
delinquent in filing such returns in accordance with such extensions, and has
paid all taxes which have become due pursuant to those returns or pursuant to
any assessments received by any such party, as the case may be, to the extent
such taxes have become due, except to the extent such tax payments are being
actively and diligently contested in good faith by appropriate proceedings, and
if requested by Bank, have been bonded or reserved in an amount and manner
satisfactory to Bank.

     3.7 No-Defaults. There exists no default (or event which, with the giving
of notice or passage of time, or both, would result in a default) under the
provisions of any instrument or agreement evidencing, governing, securing or
otherwise relating to any Debt of any Loan Party or pertaining to any of the
Permitted Encumbrances.

     3.8 Enforceability of Agreement and Loan Documents. Each Loan Document has
been duly executed and delivered by duly authorized officer(s) or other
representative(s) of each Loan Party, and constitutes the valid and binding
obligations of each Loan Party, enforceable in accordance with their respective

                                       2

<PAGE>


terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally at the time in effect.

     3.9 Non-contravention. The execution, delivery and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party or otherwise
bound, are not in contravention of the terms of any indenture, agreement or
undertaking to which any such Loan Party is a party or by which it is bound,
except to the extent that such terms have been waived or that failure to comply
with any such terms would not have a Material Adverse Effect.

     3.10 Actions, Suits, Litigation or Proceedings. There are no actions,
suits, litigation or proceedings, at law or in equity, and no proceedings before
any arbitrator or by or before any Governmental Authority, pending, or, to the
best knowledge of Borrower, threatened against or affecting any Loan Party,
which, if adversely determined, could materially impair the right of any Loan
Party to carry on its business substantially as now conducted or could have a
Material Adverse Effect. No Loan Party is under investigation by, or is
operating under any restrictions imposed by, any Governmental Authority.

     3.11 Compliance with Laws. Each Loan Party has complied with all
Governmental Requirements, including, without limitation, Environmental Laws, to
the extent that failure to so comply could have a Material Adverse Effect.

     3.12 Consents, Approvals and Filings. Except as have been previously
obtained or as otherwise expressly provided in this Agreement, no authorization,
consent, approval, license, qualification or formal exemption from, nor any
filing, declaration or registration with, any Governmental Authority and no
material authorization, consent or approval from any other Person, is required
in connection with the execution, delivery and performance by each Loan Party of
any Loan Document to which it is a party. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations which have previously been obtained or made, as the case may be,
are in full force and effect and are not the subject of any attack, or to the
knowledge of Borrower, any threatened attack, in any material respect, by
appeal, direct proceeding or otherwise.

     3.13 Contracts, Agreements and Leases. To Borrower's knowledge, no Loan
Party is in default (beyond any applicable period of grace or cure) in complying
with any provision of any material contract, agreement, indenture, lease or
instrument to which it is a party or by which it or any of its properties or
assets are bound, where such default would have a Material Adverse Effect. To
Borrower's knowledge, each material contract, commitment, undertaking,
agreement, indenture and instrument is in full force and effect and is valid and
legally binding.

     3.14 ERISA. Except as shown on Schedule 3.14, no Loan Party maintains or
contributes to any employee benefit plan subject to Title IV of ERISA.
Furthermore, no Loan Party has incurred any accumulated funding deficiency
within the meaning of ERISA or incurred any liability to the PBGC in connection
with any employee benefit plan established or maintained by such Loan Party, and
no reportable event or prohibited transaction, as defined in ERISA, has occurred
with respect to such plans.

     3.15 No Investment Company. No Loan Party is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, nor is any Loan
Party "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

                                       3

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     3.16 No Margin Stock. No Loan Party is engaged principally, or as one of
its important activities, directly or indirectly, in the business of extending
credit for the purpose of purchasing or carrying margin stock, and none of the
proceeds of any of the Loans will be used, directly or indirectly, to purchase
or carry any margin stock or made available by any Loan Party in any manner to
any other Person to enable or assist such Person in purchasing or carrying
margin stock, or otherwise used or made available for any other purpose which
might violate the provisions of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System. Terms for which meanings are provided
in Regulation U of said Board of Governors or any regulations substituted
therefor, as are from time to time in effect, are used in this Section with such
meanings, and these representations and warranties shall be immediately
effective.

     3.17 Environmental Representations.

          (a) No Loan Party has received any notice of any violation of any
     Environmental Law(s); and no Loan Party is a party to any litigation or
     administrative proceeding, nor, so far as is known by Borrower, is any
     litigation or administrative proceeding threatened against any Loan Party
     which, in any case, (i) asserts or alleges that any Loan Party violated any
     Environmental Law(s), (ii) asserts or alleges that any Loan Party is
     required to clean up, remove or take any other remedial or response action
     due to the disposal, depositing, discharge, leaking or other release of any
     Hazardous Materials, or (iii) asserts or alleges that any Loan Party is
     required to pay all or a portion of any past, present or future clean-up,
     removal or other remedial or response action which arises out of or is
     related to the disposal, depositing, discharge, leaking or other release of
     any Hazardous Materials by any Loan Party, and which, either singularly or
     in the aggregate, could have a Material Adverse Effect.

          (b) To Borrower's knowledge, there are no conditions existing
     currently which could subject any Loan Party to damages, penalties,
     injunctive relief or clean-up costs under any applicable Environmental
     Law(s), or which require, or are likely to require, clean-up, removal,
     remedial action or other response pursuant to any applicable Environmental
     Law(s) by any Loan Party, and which, in any case, either singularly or in
     aggregate, could have a Material Adverse Effect.

          (c) No Loan Party is subject to any judgment, decree, order or
     citation related to or arising out of any applicable Environmental Law(s),
     which, either singularly or in the aggregate, could have a Material Adverse
     Effect; and, to Borrower's knowledge, no Loan Party has been named or
     listed as a potentially responsible party by any Governmental Authority in
     any matter arising under any applicable Environmental Law(s), except as
     disclosed in Schedule 3.17, and, in the event that any such matters are
     disclosed in said Schedule 3.17 they will not, either singularly or in the
     aggregate, have a Material Adverse Effect.

          (d) Each Loan Party has all permits, licenses and approvals required
     under applicable Environmental Laws, where the failure to so obtain or
     maintain any such permits, licenses or approvals could have a Material
     Adverse Effect.

                                       4

<PAGE>


     3.18 Accuracy of Information. The Financial Statements previously furnished
to Bank have been prepared in accordance with GAAP and fairly present the
financial condition of Borrower and, as applicable, the consolidated financial
condition of Borrower and such other Person(s) as such Financial Statements
purport to present, and the results of their respective operations as of the
dates and for the periods covered thereby; and since the date(s) of said
Financial Statements, there has been no material adverse change in the financial
condition of Borrower or any other Person covered by such Financial Statements.
No Loan Party, nor any such other Person has any material contingent
obligations, liabilities for taxes, long-term leases or long-term commitments
not disclosed by, or reserved against in, such Financial Statements. Each Loan
Party is solvent, able to pay its respective debts as they mature, has capital
sufficient to carry on its business and has assets the fair market value of
which exceed its liabilities, and no Loan Party will be rendered insolvent,
under-capitalized or unable to pay debts generally as they become due by the
execution or performance of any Loan Document to which it is a party or by which
it is otherwise bound.

     3.19 Reserved.

     3.20 Intellectual Property . Borrower and each Loan Party own or have
rights to use all Intellectual Property necessary to continue to conduct their
respective businesses as now or heretofore conducted or proposed to be
conducted, and each patent, trademark, copyright and license held by Borrower or
such other Loan Party is listed, together with application or registration,
numbers, as applicable, on Schedule 3.20. Neither the Borrower nor any such
other Loan Party is a party to any license or other agreement that restricts
such Person from granting Bank a Lien upon any of such Person's rights under
license or agreement. Borrower and each Loan Party conduct their respective
businesses and affairs without infringement upon or interference with any
Intellectual Property of any other Person.

                        SECTION 4. AFFIRMATIVE COVENANTS

     Borrower covenants and agrees that, so long as Bank is committed to make
any Loan or issue any Letter of Credit under this Agreement, and until all
instruments and agreements evidencing any Loan which is payable on demand or
which conditions advances upon the Bank's discretion are fully discharged and
terminated, and thereafter, so long as any Indebtedness remains outstanding, it
will, and, as applicable, it will cause each Loan Party within its control or
under common control to:

     4.1 Preservation of Existence. Preserve and maintain its existence and
preserve and maintain such of its rights, licenses, and privileges as are
material to the business and operations conducted by it; qualify and remain
qualified to do business in each jurisdiction in which such qualification is
material to its business and operations or ownership of its properties, continue
to conduct and operate its business substantially as conducted and operated
during the present and preceding calendar year; at all times maintain, preserve
and protect all of its franchises and trade names and preserve all the remainder
of its property and keep the same in good repair, working order and condition;
and from time to time make, or cause to be made, all needed and proper repairs,
renewals, replacements, betterments and improvements thereto.

     4.2 Keeping of Books. Keep proper books of record and account in which full
and correct entries shall be made of all of its financial transactions and its
assets and businesses so as to permit the presentation of financial statements
(including, without limitation, those Financial Statements to be delivered to

                                       5

<PAGE>


Bank pursuant Section 4.3 hereof) prepared in accordance with GAAP; and permit
Bank, or its representatives, at reasonable times and intervals, at Borrower's
cost and expense, to visit any office of any Loan Party, discuss its financial
matters with its officers, employees and independent certified public
accountants, and by this provision, Borrower authorizes such officers, employees
and accountants to discuss the finances and affairs of any Loan Party and to
examine any of its books and other corporate records.

     4.3 Reporting Requirements. Furnish to Bank, or cause to be furnished to
Bank, the following:

          (a) as soon as available, and in any event within three (3) Business
     Days after becoming aware of the occurrence or existence of each Default or
     Event of Default hereunder or any material adverse change in the financial
     condition of any Loan Party, a written statement of the chief financial
     officer of Borrower (or in his or her absence, a responsible senior officer
     of Borrower), setting forth details of such Default, Event of Default or
     change, and the action which Borrower has taken, or has caused to be taken,
     or proposes to take, or to cause to be taken, with respect thereto;

          (b) as soon as available, and in any event within one hundred (100)
     days after and as of the end of each fiscal year of Borrower, audited
     Financial Statements of Borrower, and such other of the Loan Parties as may
     be required by the Bank, consolidated, as applicable, including a balance
     sheet, income statement, statement of profit and loss, and statement of
     cash flows, for and as of such fiscal year then ending, with comparative
     numbers for the preceding fiscal year, and such other comments and
     financial details as are usually included in similar reports. Such audited
     Financial Statements shall be prepared in accordance with GAAP by
     independent certified public accountants of recognized standing selected by
     Borrower and approved by Bank and shall contain unqualified opinions as to
     the fairness of the statements therein contained.

          (c) as soon as available, and in any event within thirty (30) days
     after and as of the end of each calendar month, including the last such
     reporting period of each of Borrower's fiscal years, Financial Statements
     of Borrower and such of the other Loan Parties as may be required by the
     Bank, consolidated, as applicable, for and as of such reporting period,
     including a balance sheet, income statement, statement of profit and loss,
     and statement of cash flows for and as of such reporting period then ending
     and for and as of that portion of the fiscal year then ending, with
     comparative numbers for the same period of the preceding fiscal year, in
     each case, certified by the chief financial officer of Borrower and, as
     applicable, each other Loan Party as to consistency with prior financial
     reports and accounting periods, accuracy and fairness of presentation;

          (d) as soon as available, and in any event within thirty (30) days
     after and as of the end of each calendar month, agings and reports of
     accounts receivable of Borrower and such of the other Loan Parties as may
     be required by the Bank, in form and detail satisfactory to Bank;

          (e) as soon as available, and in any event within thirty (30) days
     after and as of the end of each calendar month, agings and reports of
     accounts payable of Borrower and such of the other Loan Parties as may be
     required by the Bank, in form and detail satisfactory to Bank;

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<PAGE>


          (f) simultaneously with the Financial Statements to be delivered to
     Bank pursuant to Sections (b) and (c) above, a Compliance Certificate dated
     as of the end of such month or year, as the case may be;

          (g) promptly upon receipt thereof, copies of all management letters
     and other substantive reports submitted to any Loan Party by independent
     certified public accountants in connection with any annual audit of any
     such party;

          (h) promptly after filing the same, a copy of Borrower's annual
     federal income tax return; and

          (i) promptly, and in form and detail satisfactory to Bank, such other
     information as Bank may request from time to time.

     4.4 Financial Covenants. On a consolidated basis, Borrower will maintain
all financial covenants set forth below.

          (a) Debt to Capitalization Ratio. Maintain as of the last day of each
     calendar month during the term of this Agreement a ratio of (a) Funded Debt
     to (b) the sum of (i) Debt plus (ii) Net Worth of not more than 0.40 to 1.

          (b) Minimum Net Worth. Maintain as of the last day of each calendar
     quarter during the term of this Agreement a minimum Net Worth of not less
     than the sum of (i) $18,175,000 plus (ii) 75% of Net Income earned in each
     fiscal quarter beginning with the quarter ending June 30, 2004 (without
     deduction for losses) plus (iii) 100% of the net proceeds of any offering,
     sale or other transfer of any capital stock or equity securities of any
     kind of the Borrower after the date hereof; provided for purposes of this
     covenant adjustments may be made for any non-recurring transaction costs
     incurred by Borrower.

          (c) Maximum Leverage Ratio. Maintain as of the last day of each
     calendar month during the term of this Agreement a ratio of Funded Debt to
     Adjusted EBITDA for the twelve (12) months ending on each date occurring
     during the term of this Agreement no greater than 3.00 to 1; provided that,
     for purposes of this covenant and subject to Bank approval, Adjusted EBITDA
     shall have added back the trailing 12-month EBITDA of new acquisitions
     exceeding a gross purchase price of $2,500,000.

          (d) Asset Coverage Ratio. Maintain at all times during the term of
     this Agreement a ratio of (a) the outstanding balance of the Revolving
     Loans to (b) the sum, as of the last day of each calendar month, of (i)
     outstanding billed accounts receivable and (ii) unbilled accounts
     receivable of not more than 1.00 to 1.00.

     4.5 Inspections. Permit Bank, through its authorized attorneys, accountants
and representatives, at Borrower's cost and expense, to examine each Loan
Party's books, accounts, records, ledgers, assets and properties of every kind
and description, wherever located, at all reasonable times during normal
business hours, upon oral or written request of Bank.

     4.6 Further Assurances; Financing Statements. Furnish Bank, at Borrower's
expense, upon Bank's request and in form satisfactory to Bank (and execute and
deliver or cause to be executed and delivered), such additional pledges,
assignments, mortgages, lien instruments or other security instruments,

                                       7

<PAGE>


consents, acknowledgments, subordinations and financing statements covering any
or all of the Collateral pledged, assigned, mortgaged or encumbered pursuant to
any Loan Document, of every nature and description, whether now owned or
hereafter acquired by Borrower or any other Person providing such Collateral,
together with such other documents or instruments as Bank may require to
effectuate more fully the purposes of any Loan Document.

     4.7 Compliance with Leases. Comply with all terms and conditions of any
leases covering any premises or property (real or personal) wherein any of the
Collateral is or may be located, or covering any of the other material personal
or real property now or hereafter owned, leased or otherwise used by any Loan
Party in the conduct of its business, and any Governmental Requirement, except
where the failure to so comply could not cause a Material Adverse Effect.

     4.8 Indemnification. Indemnify, defend and save Bank harmless from any and
all claims, losses, costs, damages, liabilities, obligations and expenses,
including, without limitation, reasonable attorneys' fees (whether inside or
outside counsel is used), incurred by Bank by reason of any Default or Event of
Default, in defending or protecting the Liens which secure or purport to secure
all or any portion of the Indebtedness, whether existing under any Loan Document
or otherwise or the priority thereof, or in enforcing the obligations of
Borrower or any other Person under or pursuant to any Loan Document, or in the
prosecution or defense of any action or proceeding concerning any matter growing
out of or connected with the Collateral or any Loan Document, INCLUDING ANY
CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES RESULTING
FROM BANK'S OWN NEGLIGENCE, except and to the extent but only to the extent
caused by, or resulting from, Bank's gross negligence or willful misconduct.

     4.9 Governmental and Other Approvals. Apply for, obtain and/or maintain in
effect, as applicable, all authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations (whether
with any court, governmental agency, regulatory authority, securities exchange
or otherwise) which are necessary in connection with the execution, delivery
and/or performance by any Loan Party of any Loan Document to which it is a
party.

     4.10 Insurance. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature (including, without
limitation, loss of rent and/or business interruption insurance and boiler and
machinery insurance), and in the event of acquisition of additional property,
real or personal, or of the incurrence of additional risks of any nature,
increase such insurance coverage in such manner and to such extent as prudent
business judgment and present practice would dictate; and in the case of all
policies covering property subject to any Loan Document or property in which the
Bank shall have a Lien of any kind whatsoever, other than those policies
protecting against casualty liabilities to strangers, all such insurance
policies shall provide that the loss payable thereunder shall be payable to
Borrower (or other Person providing Collateral) and Bank, with mortgagee's
clauses in favor of and satisfactory to Bank for all such policies, and such
policies shall also provide that they may not be canceled or changed without
thirty (30) days' prior written notice to Bank. Upon the request of Bank, all of
said policies, or copies thereof, including all endorsements thereon and those
required hereunder, shall be deposited with Bank.

                                       8

<PAGE>


     4.11 Compliance with ERISA. In the event that any Loan Party or any of its
Subsidiaries maintain(s) or establish(es) a Pension Plan subject to ERISA, (a)
comply in all material respects with all requirements imposed by ERISA as
presently in effect or hereafter promulgated, including, but not limited to, the
minimum funding requirements thereof; (b) promptly notify Bank upon the
occurrence of a "reportable event" or "prohibited transaction" within the
meaning of ERISA, or that the PBGC or any Loan Party has instituted or will
institute proceedings to terminate any Pension Plan, together with a copy of any
proposed notice of such event which may be required to be filed with the PBGC;
and (c) furnish to Bank (or cause the plan administrator to furnish Bank) a copy
of the annual return (including all schedules and attachments) for each Pension
Plan covered by ERISA, and filed with the Internal Revenue Service by any Loan
Party not later than thirty (30) days after such report has been so filed.

     4.12 Environmental Covenants.

          (a) Comply with all applicable Environmental Laws, and maintain all
     permits, licenses and approvals required under applicable Environmental
     Laws, where the failure to do so could have a Material Adverse Effect.

          (b) Promptly notify Bank, in writing, as soon as Borrower becomes
     aware of any condition or circumstance which makes any of the environmental
     representations or warranties set forth in this Agreement incomplete,
     incorrect or inaccurate in any material respect as of any date; and
     promptly provide to Bank, immediately upon receipt thereof, copies of any
     material correspondence, notice, pleading, citation, indictment, complaint,
     order, decree, or other document from any source asserting or alleging a
     violation of any Environmental Laws by any Loan Party, or of any
     circumstance or condition which requires or may require, a financial
     contribution by any Loan Party, or a clean-up, removal, remedial action or
     other response by or on behalf of any Loan Party, under applicable
     Environmental Law(s), or which seeks damages or civil, criminal or punitive
     penalties from any Loan Party or any violation or alleged violation of
     Environmental Law(s).

          (c) Borrower hereby agrees to indemnify, defend and hold Bank, and any
     of Bank's past, present and future officers, directors, shareholders,
     employees, representatives and consultants, harmless from any and all
     claims, losses, damages, suits, penalties, costs, liabilities, obligations
     and expenses (including, without limitation, reasonable legal expenses and
     attorneys' fees, whether inside or outside counsel is used) incurred or
     arising out of any claim, loss or damage of any property, injuries to or
     death of any persons, contamination of or adverse effects on the
     environment, or other violation of any applicable Environmental Law(s), in
     any case, caused by any Loan Party or in any way related to any property
     owned or operated by any Loan Party or due to any acts of any Loan Party or
     any of its officers, directors, shareholders, employees, consultants and/or
     representatives INCLUDING ANY CLAIMS, LOSSES, DAMAGES, SUITS, PENALTIES,
     COSTS, LIABILITIES, OBLIGATIONS OR EXPENSES, RESULTING FROM BANK'S OWN
     NEGLIGENCE; provided however, that the foregoing indemnification shall not
     be applicable, and Borrower shall not be liable for any such claims,
     losses, damages, suits, penalties, costs, liabilities, obligations or
     expenses, to the extent (but only to the extent) the same arise or result
     from any gross negligence or willful misconduct of Bank or any of its
     agents or employees.

                                       9

<PAGE>


     4.13 Reserved.

     4.14 Reserved.

     4.15 Registration of Intellectual Property Rights. Borrower and each other
Loan Party shall register or cause to be registered (to the extent not already
registered) with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, those Intellectual Property rights
listed in Schedule 3.20 to this Agreement or in any security agreement now or
hereafter securing or purporting to secure any of the Indebtedness within thirty
(30) days of the date of such agreement. Borrower and each other Loan Party
shall register or cause to be registered with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, those
additional Intellectual Property rights developed or acquired by Borrower or
such other Loan Party from time to time prior to the sale or licensing of such
product to any third party including, without limitation, revisions or additions
to the Intellectual Property rights listed in Schedule 3.20 to this Agreement or
in any agreement now or hereafter securing or purporting to secure any of the
Indebtedness.

          (a) Borrower and each other Loan Party shall execute and deliver such
     additional instruments and documents from time to time as Bank shall
     request to perfect the Bank's Liens upon the Intellectual Property now or
     hereafter securing or purporting to secure any of the Indebtedness.

          (b) Borrower and each other Loan Party shall (i) protect, defend and
     maintain the validity and enforceability of all trademarks, patents and
     copyrights and other Intellectual Property now or hereafter securing or
     purporting to secure any of the Indebtedness, (ii) use commercially
     reasonable efforts to detect infringements of the same and promptly advise
     Bank in writing of material infringements detected and (iii) not allow any
     of the same to be abandoned, forfeited or dedicated to the public.

          (c) Bank shall have the right, but not the obligation, to take, at
     Borrower's sole expense, any actions that Borrower is required under this
     Section to take but which Borrower fails to take.

     4.16 Intellectual Property. Borrower and each Loan Party will conduct their
respective businesses and affairs without infringement of or interference with
any Intellectual Property of any other Person.

                          SECTION 5. NEGATIVE COVENANTS

     Borrower covenants and agrees that, so long as Bank is committed to make
any Loan or issue any Letter of Credit under this Agreement and until all
instruments and agreements evidencing any Loan which is payable on demand or
which conditions advances upon the Bank's discretion are fully discharged and
terminated, and thereafter, so long as any Indebtedness remains outstanding, it
will not, and it will not allow any Loan Party within its control or under
common control to, without the prior written consent of the Bank:

     5.1 Capital Structure, Business Objects or Purpose. Except as permitted in
Sections 5.6 and 5.7 hereof, purchase, acquire or redeem any of its equity
ownership interests, or enter into any reorganization or recapitalization or

                                       10

<PAGE>


reclassify its equity ownership interests, or make any material change in its
capital structure or general business objects or purpose.

     5.2 Dispositions. Sell, lease, transfer, relocate or dispose of all,
substantially all, or any material part of its assets (whether in a single
transaction or in a series of transactions).

     5.3 Guaranties. Guarantee, endorse, or otherwise become secondarily liable
for or upon the obligations or Debt of others (whether directly or indirectly)
except:

          (a) guaranties in favor of and satisfactory to Bank;

          (b) endorsements for deposit or collection in the ordinary course of
     business; or

          (c) guaranties of the Debt or other obligation of another Borrower, to
     the extent such Debt or other obligation is permitted under the terms of
     this Agreement.

     5.4 Debt. Become or remain obligated for any Debt, except:

          (a) Indebtedness and other Debt from time to time outstanding and
     owing to Bank;

          (b) current unsecured trade, utility or non-extraordinary accounts
     payable arising in the ordinary course of business;

          (c) Debt subordinated to the prior payment in full of the Indebtedness
     upon terms and conditions approved in writing by Bank; and

          (d) Debt (including, without limitation, Capitalized Lease
     Obligations) outstanding as of the date hereof more particularly described
     in Schedule 5.4 attached hereto.

     5.5 Encumbrances. Create, incur, assume or suffer to exist any Lien upon,
or create, suffer or permit to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, except for Permitted
Encumbrances.

     5.6 Merger; Acquisitions. Change its name, enter into any merger or
consolidation (whether or not the surviving entity thereunder), or purchase or
otherwise acquire or become obligated for the purchase of all or substantially
all of the assets or business interests of any Person or any shares of stock or
other ownership interests of any Person or in any other manner effectuate or
attempt to effectuate an expansion of present business by acquisition; provided,
however, that Borrower may acquire like-kind businesses subject to the following
limitations:

          (a) Borrower may not expend more than $2,500,000, regardless of the
     form of consideration paid, on any single acquisition without express
     written approval from Bank;

          (b) Borrower may not expend more than $10,000,000 in cash, when
     considering the aggregate of all such acquisitions, from the date hereof
     until the Revolving Credit Maturity Date; and

                                       11

<PAGE>


          (c) Borrower may not expend more than $20,000,000 in any form of
     consideration, when considering the aggregate of all such acquisitions,
     from the date hereof until the Revolving Credit Maturity Date.

     5.7 Dividends. Declare or pay dividends on, or make any other distribution
(whether by reduction of capital or otherwise) in respect of any shares of its
capital stock or other ownership interests, except (a) dividends payable by a
Subsidiary of Borrower to Borrower or by the Subsidiary of another Loan Party to
such other Loan Party; (b) dividends payable solely in stock; and (c) the
redemption, repurchase or acquisition of any shares of its capital stock payable
upon an employee's termination pursuant to its employee stock option,
repurchase, or similar plan; provided, however, that after giving effect to such
redemption, repurchase or acquisition, Borrower or such other Loan Party, as
applicable, shall be in full compliance with the terms of this Agreement.

     5.8 Investments. Except as permitted in Sections 5.6 and 5.7 hereof, make
or allow to remain outstanding any investment (whether such investment shall be
of the character of investment in shares of stock, evidences of indebtedness or
other securities or otherwise) in, or any loans, advances or extensions of
credit to, any Person, other than:

          (a) Borrower's current ownership interests in those Subsidiaries of
     Borrower identified on Schedule 3.5 attached hereto; and

          (b) any investment in direct obligations of the United States of
     America or any agency thereof, or in certificates of deposit issued by
     Bank, maintained consistent with Borrower's or such Subsidiary's business
     practices prior to the date hereof; provided, that no such investment shall
     mature more than ninety (90) days after the date when made or the issuance
     thereof.

     5.9 Transactions with Affiliates. Enter into any transaction with any of
their stockholders, officers, employees, partners or any of their Affiliates,
except subject to the terms hereof, transactions in the ordinary course of
business and on terms not less favorable than would be usual and customary in
similar transactions between Persons dealing at arm's length.

     5.10 Defaults on Other Obligations. Fail to perform, observe or comply duly
with any covenant, agreement or other obligation to be performed, observed or
complied with by any Loan Party, subject to any grace periods provided therein,
which failure could have a Material Adverse Effect.

     5.11 Prepayment of Debt. Prepay any Debt (or take any actions which impose
an obligation to prepay), except, subject to the terms hereof or thereof,
Indebtedness.

     5.12 Pension Plans. Except in compliance with this Agreement, enter into,
maintain, or make contribution to, directly or indirectly, any Pension Plan that
is subject to ERISA.

     5.13 Subordinate Indebtedness. Subordinate any indebtedness due to it from
any Person to indebtedness of other creditors of such Person.

     5.14 No Further Negative Pledges. Enter into or become subject to any
agreement (other than this Agreement or the Loan Documents) (a) prohibiting the
guaranteeing by any Loan Party of any obligations, (b) prohibiting the creation

                                       12

<PAGE>


or assumption of any Lien upon the properties or assets of any Loan Party,
whether now owned or hereafter acquired or (c) requiring an obligation to become
secured (or further secured) if another obligation is secured or further
secured.

     5.15 Accounts Receivable. Sell or assign any Account, account receivable,
note or trade acceptance, except to the Bank.

     5.16 No License Restrictions. Permit any restriction in any license or
other agreement that restricts Borrower or any other Loan Party from granting a
Lien to Bank upon any of Borrower's or such other Loan Party's rights under such
license or agreement.

     5.17 Acquire Fixed Assets. Acquire or expend for, or commit to acquire or
expend for, fixed assets by lease (including any Capitalized Lease Obligations),
purchase or otherwise in an aggregate amount that exceeds $1,000,000 in any
fiscal year.

     5.18 Reserved.

                          SECTION 6. EVENTS OF DEFAULT

     6.1 Events of Default. The occurrence or existence of any of the following
conditions or events shall constitute an "Event of Default" hereunder:

          (a) upon non-payment of any principal, interest or other sums due
     under the terms of this Agreement or under any Note(s), or under any other
     instrument or evidence of Indebtedness, whether under this Agreement, any
     Note(s), or otherwise, in any case, when due in accordance with the terms
     hereof or thereof; or if any Guarantor shall fail to pay, when due, any
     indebtedness, obligation or liability whatsoever of any such Guarantor to
     Bank;

          (b) default in the observance or performance of any of the other
     conditions, covenants or agreements of Borrower set forth in this
     Agreement;

          (c) any representation or warranty made by any Loan Party in any Loan
     Document shall be untrue or incorrect in any material respect;

          (d) any default or event of default, as the case may be, in the
     observance or performance of any of the conditions, covenants or agreements
     of any Loan Party set forth in any Loan Document and continuation thereof
     beyond any applicable period of grace or cure provided with respect
     thereto;

          (e) any default by any Loan Party, in the payment of any Debt (other
     than Debt owing to Bank), or in the observance or performance of any
     conditions, covenants or agreements related or given with respect thereto
     and, in each such case, continuation thereof beyond any applicable grace or
     cure period;

          (f) the rendering of one or more judgments or decrees for the payment
     of money, against any Loan Party, and such judgment(s) or decree(s) shall
     remain unvacated, unbonded or unstayed, by appeal or otherwise, for a
     period of sixty (60) consecutive days after the date of entry;

                                       13

<PAGE>


          (g) the failure by any Loan Party, to meet the minimum funding
     requirements under ERISA with respect to any Pension Plan established or
     maintained by it; the occurrence of any "reportable event", as defined in
     ERISA, which could constitute grounds for termination by the PBGC of any
     Pension Plan or for the appointment by the appropriate United States
     District Court of a trustee to administer such Pension Plan, and such
     reportable event is not corrected and such determination is not revoked
     within thirty (30) days after notice thereof has been given to the plan
     administrator or any Loan Party, as the case may be; or the institution of
     any proceedings by the PBGC to terminate any such Pension Plan or to
     appoint a trustee by the appropriate United States District Court to
     administer any such Pension Plan;

          (h) if any Loan Party, becomes insolvent or generally fails to pay, or
     admits in writing its inability to pay, its debts as they mature, or
     applies for, consents to, or acquiesces in the appointment of a trustee,
     receiver, liquidator, conservator or other custodian for any Loan Party, or
     a substantial part of its property, or makes a general assignment for the
     benefit of creditors; or in the absence of such application, consent or
     acquiescence, a trustee, receiver, liquidator, conservator or other
     custodian is appointed for any Loan Party, or for a substantial part of its
     property, and the same is not discharged within thirty (30) days; or any
     bankruptcy, reorganization, debt arrangement, or other proceedings under
     any bankruptcy or insolvency law, or any dissolution or liquidation
     proceeding, is instituted by or against any Loan Party, and, if instituted
     against any Loan Party, the same is consented to or acquiesced in by any
     such Loan Party or otherwise remains undismissed for thirty (30) days; or
     any warrant of attachment is issued against any substantial part of the
     property of any Loan Party, which is not released within thirty (30) days
     of service thereof; or

          (i) if any Loan Document shall be terminated, revoked, or otherwise
     rendered void or unenforceable, in any case, without Bank's prior written
     consent.

     6.2 Remedies Upon Event of Default. Upon the occurrence and at any time
during the existence or continuance of any Event of Default, but without
impairing or otherwise limiting the Bank's right to demand payment of all or any
portion of the Indebtedness which is payable on demand, at Bank's option, Bank
may give notice to Borrower declaring all or any portion of the Indebtedness
remaining unpaid and outstanding, whether under the Notes or otherwise, to be
due and payable in full without presentation, demand, protest, notice of
dishonor, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby expressly waived, whereupon all such
Indebtedness shall immediately become due and payable. Furthermore, upon the
occurrence of a Default or Event of Default and at any time during the existence
or continuance of any Default or Event of Default, but without impairing or
otherwise limiting the right of Bank, if reserved under any Loan Document, to
make or withhold financial accommodations at its discretion, to the extent not
yet disbursed, any commitment by Bank to make any further loans to Borrower or
issue any further Letters of Credit for Borrower's account under this Agreement

                                       14

<PAGE>


shall automatically terminate; provided, should such Default or Event of Default
be cured to Bank's satisfaction, Bank may, but shall be under no obligation to,
reinstate any such commitment by written notice to Borrower. Notwithstanding the
foregoing, in the case of an Event of Default under Section 6.1(i), and
notwithstanding the lack of any notice, demand or declaration by Bank, the
entire Indebtedness remaining unpaid and outstanding shall become automatically
due and payable in full, and any commitment by Bank to make any further loans to
Borrower or issue any further Letters of Credit for Borrower's account shall be
automatically and immediately terminated, without any requirement of notice or
demand by Bank upon Borrower, each of which are hereby expressly waived by
Borrower. The foregoing rights and remedies are in addition to any other rights,
remedies and privileges Bank may otherwise have or which may be available to it,
whether under this Agreement, any other Loan Document, by law, or otherwise.

     6.3 Setoff. In addition to any other rights or remedies of Bank under any
Loan Document, by law or otherwise, upon the occurrence and during the
continuance or existence of any Event of Default, Bank may, at any time and from
time to time, without notice to Borrower (any requirements for such notice being
expressly waived by Borrower), setoff and apply against any or all of the
Indebtedness (whether or not then due), any or all deposits (general or special,
time or demand, provisional or final) at any time held by Borrower and other
indebtedness at any time owing by Bank to or for the credit or for the account
of Borrower, and any property of Borrower, from time to time in possession or
control of Bank, irrespective of whether or not Bank shall have made any demand
hereunder or for payment of the Indebtedness and although such obligations may
be contingent or unmatured, and regardless of whether any Collateral then held
by Bank is adequate to cover the Indebtedness. The rights of Bank under this
Section are in addition to any other rights and remedies (including, without
limitation, other rights of setoff) which Bank may otherwise have. Borrower
hereby grants Bank a Lien on and security interest in all such deposits,
indebtedness and other property as additional collateral for the payment and
performance of the Indebtedness.

     6.4 Waiver of Certain Laws. To the extent permitted by applicable law,
Borrower hereby agrees to waive, and does hereby absolutely and irrevocably
waive and relinquish, the benefit and advantage of any valuation, stay,
appraisement, extension or redemption laws now existing or which may hereafter
exist, which, but for this provision, might be applicable to any sale made under
the judgment, order or decree of any court, on any claim for interest on the
Notes, or to any security interest or other Lien contemplated by or granted
under or in connection with this Agreement or the Indebtedness.

     6.5 Waiver of Defaults. No Default or Event of Default shall be waived by
Bank except in a written instrument specifying the scope and terms of such
waiver and signed by an authorized officer of Bank, and such waiver and shall be
effective only for the specific time(s) and purpose(s) given. No single or
partial exercise of any right, power or privilege hereunder, nor any delay in
the exercise thereof, shall preclude other or further exercise of Bank's rights.
No waiver of any Default or Event of Default shall extend to any other or
further Default or Event of Default. No forbearance on the part of Bank in
enforcing any of Bank's rights or remedies under any Loan Document shall
constitute a waiver of any of its rights or remedies. Borrower expressly agrees
that this Section may not be waived or modified by Bank by course of
performance, estoppel or otherwise.

     6.6 Receiver. Bank, in any action or suit to foreclose upon any of the
Collateral, shall be entitled, without notice or consent, and completely without
regard to the adequacy of any security for the Indebtedness, to the appointment
of a receiver of the business and premises in question, and of the rents and
profits derived therefrom. This appointment shall be in addition to any other
rights, relief or remedies afforded Bank. Such receiver, in addition to any
other rights to which he shall be entitled, shall be authorized to sell,
foreclose or complete foreclosure on Collateral for the benefit of Bank,
pursuant to provisions of applicable law.

                                       15

<PAGE>


     6.7 Discretionary Credit and Credit Payable Upon Demand. To the extent that
any of the Indebtedness shall, at anytime, be payable upon demand, nothing
contained in this Agreement, or any other Loan Document, shall be construed to
prevent Bank from making demand, without notice and with or without reason, for
immediate payment of all or any part of such Indebtedness at any time or times,
whether or not a Default or Event of Default has occurred or exists. In the
event that such demand is made upon any portion of the Indebtedness, the Bank,
at its election, may terminate any commitment by Bank to make any further loans
to Borrower or issue any further Letters of Credit for Borrower's account under
this Agreement or otherwise. Furthermore, to the extent any Loan Document
authorizes the Bank, at its discretion, to make or to decline to make financial
accommodations to the Borrower, nothing contained in this Agreement or any other
Loan Document shall be construed to limit or impair such discretion or to commit
or otherwise obligate the Bank to make any such financial accommodation.

     6.8 Application of Proceeds of Collateral. Notwithstanding anything to the
contrary set forth in any Loan Document, after an Event of Default, the proceeds
of any of the Collateral, together with any offsets, voluntary payments, and any
other sums received or collected in respect of the Indebtedness, may be applied
in such order and manner as determined by Bank in its sole and absolute
discretion.

                            SECTION 7. MISCELLANEOUS

     7.1 Accounting Principles. Except to the extent expressly stated to the
contrary herein, where the character or amount of any asset or liability or item
of income or expense is required to be determined, or any consolidation or other
accounting computation is required to be made for purposes of this Agreement, it
shall be done in accordance with GAAP, and all accounting terms not specifically
defined in this Agreement shall be construed in accordance with GAAP.

     7.2 Taxes and Fees. Unless otherwise prohibited by applicable law, should
any tax (other than a tax based upon the net income of Bank) or recording or
filing fee become payable in respect of any Loan Document, any of the
Collateral, any of the Indebtedness or any amendment, modification or supplement
hereof or thereof, Borrower agrees to pay such taxes (or reimburse Bank therefor
upon demand for reimbursement), together with any interest or penalties thereon,
and agrees to hold Bank harmless with respect thereto.

     7.3 Governing Law. Each Loan Document shall be deemed to have been
delivered in the State of Texas, and shall be governed by and construed and
enforced in accordance with the laws of the State of Texas, except to the extent
that the Uniform Commercial Code, other personal property law or real property
law of another jurisdiction where Collateral is located is applicable, and
except to the extent expressed to the contrary in any Loan Document. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

     7.4 Audits of Collateral; Fees. Bank shall have the right from time to time
to audit Accounts and Inventory pledged by any Loan Party and other Collateral,
provided that such audits will be conducted no more than one (1) time in any
fiscal year unless an Event of Default has occurred. Borrower agrees to

                                       16

<PAGE>


reimburse Bank, on demand, for customary and reasonable fees and costs incurred
by Bank for such audits and for each appraisal of Collateral and financial
analysis and examination of Borrower or any other Loan Party performed from time
to time.

     7.5 Costs and Expenses. Borrower shall pay Bank, on demand, all costs and
expenses, including, without limitation, reasonable attorneys' fees and legal
expenses (whether inside or outside counsel is used), incurred by Bank in
perfecting, revising, protecting or enforcing any of its rights or remedies
against any Loan Party or any Collateral, or otherwise incurred by Bank in
connection with any Default or Event of Default or the enforcement of the Loan
Documents or the Indebtedness. Following Bank's demand upon Borrower for the
payment of any such costs and expenses, and until the same are paid in full, the
unpaid amount of such costs and expenses shall constitute Indebtedness and shall
bear interest at the Default Rate.

     7.6 Notices. All notices and other communications provided for in any Loan
Document (unless otherwise expressly stipulated therein) or contemplated
thereby, given thereunder or required by law to be given, shall be in writing
(unless expressly provided to the contrary). If personally delivered, such
notices shall be effective when delivered, and in the case of mailing or
delivery by overnight courier, such notices shall be effective when placed in an
envelope and deposited at a post office or official depository under the
exclusive care and custody of the United States Postal Service or delivered to
an overnight courier, postage prepaid, in each case addressed to the parties as
set forth on the signature page of this Agreement, or to such other address as a
party shall have designated to the other in writing in accordance with this
Section. In the case of mailing, the mailing shall be by certified or first
class mail. The giving of at least five (5) days' notice before Bank shall take
any action described in any notice shall conclusively be deemed reasonable for
all purposes; provided, that this shall not be deemed to require Bank to give
such five (5) days' notice, or any notice, if not specifically required to do so
in this Agreement.

     7.7 Further Action. Borrower, from time to time, upon written request of
Bank, will promptly make, execute, acknowledge and deliver, or cause to be made,
executed, acknowledged and delivered, all such further and additional
instruments, and promptly take all such further action as may be reasonably
required to carry out the intent and purpose of the Loan Documents, and to
provide for the Loans thereunder and payment of the Notes, according to the
intent and purpose therein expressed.

     7.8 Successors and Assigns; Participation. This Agreement shall be binding
upon and shall inure to the benefit of Borrower and Bank and their respective
successors and assigns. The foregoing shall not authorize any assignment or
transfer by Borrower, of any of its respective rights, duties or obligations
hereunder, such assignments or transfers being expressly prohibited. Bank,
however, may freely assign, whether by assignment, participation or otherwise,
its rights and obligations hereunder, and is hereby authorized to disclose to
any such assignee or participant (or proposed assignee or participant) any
financial or other information in its knowledge or possession regarding any Loan
Party or the Indebtedness.

     7.9 Indulgence. No delay or failure of Bank in exercising any right, power
or privilege hereunder or under any of the Loan Documents shall affect such
right, power or privilege, nor shall any single or partial exercise thereof
preclude any further exercise thereof, nor the exercise of any other right,
power or privilege available to Bank. The rights and remedies of Bank hereunder
are cumulative and are not exclusive of any rights or remedies of Bank.

                                       17

<PAGE>


     7.10 Amendment and Waiver. No amendment or waiver of any provision of any
Loan Document, nor consent to any departure by any Loan Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Bank, and then such waiver or consent shall be effective only in the specific
instance(s) and for the specific time(s) and purpose(s) for which given.

     7.11 Severability. In case any one or more of the obligations of any Loan
Party under any Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of such Loan Party shall not in any way be affected or impaired
thereby, and such invalidity, illegally or unenforceability in one jurisdiction
shall not affect the validity, legality or enforceability of the obligations of
such Loan Party under any Loan Document in any other jurisdiction.

     7.12 Headings and Construction of Terms. The headings of the various
sub-Sections hereof are for convenience of reference only and shall in no way
modify or affect any of the terms or provisions hereof. Where the context herein
requires, the singular number shall include the plural, and any gender shall
include any other gender.

     7.13 Independence of Covenants. Each covenant hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of any Default or Event of Default.

     7.14 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of any Loan Party made in any Loan
Document, or in any certificate, report, financial statement or other document
furnished by or on behalf of any Loan Party in connection with any Loan
Document, shall be deemed to have been relied upon by Bank, notwithstanding any
investigation heretofore or hereafter made by Bank or on Bank's behalf, and
those covenants and agreements of Borrower set forth in Sections 4.8 and 4.12
hereof (together with any other indemnities of Borrower contained elsewhere in
any Loan Document) shall survive the termination of this Agreement and the
repayment in full of the Indebtedness.

     7.15 Effective Upon Execution. This Agreement shall become effective upon
the execution hereof by Bank and Borrower, and shall remain effective until the
Indebtedness under this Agreement and each of the Notes and the related Loan
Documents shall have been repaid and discharged in full and no commitment to
extend any credit hereunder (whether optional or obligatory) remains
outstanding.

     7.16 Complete Agreement; Conflicts. The Loan Documents contain the entire
agreement of the parties thereto, and none of the parties shall be bound by
anything not expressed in writing. In the event that and to the extent that any
of the terms, conditions or provisions of any of the other Loan Documents are
inconsistent with or in conflict with any of the terms, conditions or provisions
of this Agreement, the applicable terms, conditions and provisions of this
Agreement shall govern and control.

     7.17 Exhibits and Addenda. The following Addenda, Exhibits and Schedules
are attached to this Agreement and are incorporated into this Agreement by this
reference and made a part hereof for all purposes:

                                       18

<PAGE>


         Addenda:
         --------
         Defined Terms Addendum
         Loan Terms, Conditions and Procedures Addendum

         Exhibits:
         ---------
         Exhibit A - Description of Property
         Exhibit B - Form of Compliance Certificate
         Exhibit C - Form of Request for Advance

         Schedules:
         ----------
         Schedule 3.5      Subsidiaries
         Schedule 3.14     Employee Benefit Plans
         Schedule 3.17     Environmental Disclosures
         Schedule 3.20     Intellectual Property
         Schedule 5.4      Debt
         Schedule 5.5      Liens

     7.18 Separate Loans. Notwithstanding anything to the contrary contained in
this Agreement or any other Loan Document, to the extent the loan agreement or
promissory note which evidences a specified portion of the Indebtedness (herein
referred to as a "Separate Loan"), or any security agreement, mortgage, deed of
trust or other document which specifically secures such Separate Loan
(collectively referred to as the "Separate Loan Documents"), expressly
stipulates that the Separate Loan shall only be secured by specifically
identified collateral or that the collateral described in the Separate Loan
Documents shall not secure any Indebtedness other than the Separate Loan, the
applicable provisions of the Separate Loan Documents shall control. Furthermore,
to the extent any Separate Loan Document expressly stipulates that a default or
event of default under the Loan Documents shall not, unless otherwise expressly
stipulated in a Separate Loan Document, constitute a default or event of default
with respect to the Separate Loan, the applicable provisions of the Separate
Loan Documents shall control.

     7.19 WAIVER OF JURY TRIAL. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF ANY LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THE
LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTION OF EITHER OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY
A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.

     7.20 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER "LOAN
AGREEMENTS" (AS DEFINED IN SECTION 26.02(A)(2) OF THE TEXAS BUSINESS & COMMERCE
CODE, AS AMENDED) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THIS

                                       19

<PAGE>


AGREEMENT AND THE OTHER WRITTEN LOAN AGREEMENTS MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]



                                       20
<PAGE>


     WITNESS the due execution hereof as of the day and year first above
written.


                               ORROWER:

Address for notice             ENGLOBAL CORPORATION,
for each Borrower:             a Nevada corporation

3155 Executive Blvd.
Suite 222                      By:      /s/ R.W. Raiford
Beaumont, TX 77705                ----------------------------------------------
                                        R.W. Raiford
                                        Chief Financial Officer and Treasurer


                               ENGLOBAL CORPORATE SERVICES, INC., a Texas
                                   corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               THERMAIRE, INC., a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               ENGLOBAL ENGINEERING, INC.,
                               a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               ENGLOBAL CONSTRUCTION
                               RESOURCES, INC., a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer

                                       21
<PAGE>



                               ENGLOBAL SYSTEMS, INC.,
                               a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               RPM ENGINEERING, INC.,
                               a Louisiana corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               ENGLOBAL TECHNOLOGIES, INC.,
                               a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               ENGLOBAL CONSTANT POWER, INC.,
                               a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               SENFTLEBER & ASSOCIATES, L.P.,
                               a Texas limited partnership

                               By:      ENGlobal Design Group, Inc.,
                                        a Texas corporation, its general partner


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford
                                        Chief Financial Officer and Treasurer

                                       22
<PAGE>



                               ENGLOBAL DESIGN GROUP, INC.,
                               a Texas corporation


                               By:      /s/ R.W. Raiford
                                  ----------------------------------------------
                                        R.W. Raiford,
                                        Chief Financial Officer and Treasurer


                               BANK:

Address for notice             COMERICA BANK,
for Bank:

P.O. Box 650282                By:      /s/ James R. McNutt
Dallas, TX 75265-0282              ---------------------------------------------
Attn: Commercial Lending Services       James R. McNutt, Senior Vice President
Mailcode 6583

                                       23
<PAGE>


                             DEFINED TERMS ADDENDUM
                             ----------------------

     As used in the Agreement, the following terms shall have the following
meanings:

     "Accounts," "Chattel Paper," and "General Intangibles" shall have the
respective meanings assigned to them in the UCC on the date of this Agreement.

     "Adjusted EBITDA" shall mean, for Borrower, Borrower's EBITDA plus
non-recurring transaction costs.

     "Affiliate" shall mean, when used with respect to any Person, any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

     "Affiliate Receivables" shall mean, as of any time of determination, any
amounts in respect of loans or advances owing to Borrower or another Loan Party
from any of its Subsidiaries or Affiliates at such time.

     "Agreement" shall mean this Credit Agreement, including the Defined Terms
Addendum and the Loan Terms, Conditions and Procedures Addendum, together with
all exhibits and schedules, as it may be amended from time to time.

     "Applicable Interest Rate" shall mean, with respect to the Indebtedness
from time to time outstanding under any Note the rate or rates provided in the
following table.

     ------------------------------ ---------------------------- ---------------
     Funded Debt to EBITDA          Eurodollar Margin            Base Rate
     ------------------------------ ---------------------------- ---------------
     Greater than 2.50x             200 bps                      Prime
     ------------------------------ ---------------------------- ---------------
     Less  than or  equal to 2.50x  175 bps                      Prime
     but greater  than or equal to
     2.00x
     ------------------------------ ---------------------------- ---------------
     Less than 2.00x                150 bps                      Prime
     ------------------------------ ---------------------------- ---------------

     "Business Day" shall mean any day, other than a Saturday, Sunday or
holiday, on which the Bank is open to carry on all or substantially all of its
normal commercial lending business in Dallas, Texas.

     "Capitalized Lease Obligation" shall mean any Debt represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

     "Collateral" shall mean all property, assets and rights in which a Lien or
other encumbrance in favor of or for the benefit of Bank is or has been granted

                                     DTA-1

<PAGE>


or arises or has arisen, or may hereafter be granted or arise, under or in
connection with any Loan Document, or otherwise, to secure the payment or
performance of the Indebtedness.

     "Compliance Certificate" shall mean a certificate to be furnished by
Borrower to Bank, in the form of Exhibit B, certified by the chief financial
officer of Borrower (or in such officer's absence, another responsible officer
of Borrower) pursuant to Section 4.3 of this Agreement, certifying that, as of
the date thereof, no Default or Event of Default shall have occurred and be
continuing, or if any Default or Event of Default shall have occurred and be
continuing, specifying in detail the nature and period of existence thereof and
any action taken or proposed to be taken by Borrower with respect thereto, and
also certifying as to whether Borrower is in compliance with the financial
covenants contained in Section 4.4 of this Agreement (which certificate shall
set forth, in reasonable detail, the calculations and the resultant ratios and
financial tests determined thereunder).

     "Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more persons of
the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to "consolidated" financial statements or data of the Borrower
includes consolidation with its Subsidiaries in accordance with GAAP.

     "Debt" shall mean, as of any applicable date of determination thereof, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP. In the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness.

     "Default" shall mean, any condition or event which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.

     "Default Rate" shall mean, at any time of determination thereof with
respect to the applicable portion of the Indebtedness, a per annum rate of
interest equal to the sum of the contractual rate of interest which would apply
to such Indebtedness if the Default Rate was not then in effect plus two percent
(2%).

     "Disbursement Date" shall mean the date upon which Bank makes a Loan under
this Agreement.

     "EBITDA" shall mean, with respect to any Person, and as to any applicable
period of determination, the Net Income of such Person for such period before
deduction for interest expense (determined in accordance with GAAP), income
taxes paid in cash (and other taxes of such Person determined by reference to
the income or profits of such Person) and the amount of depreciation and
amortization expense of such Person.

     "Environmental Law(s)" shall mean all laws, codes, ordinances, rules,
regulations, orders, decrees and directives issued by any federal, state, local,
foreign or other governmental or quasi governmental authority or body (or any
agency, instrumentality or political subdivision thereof) pertaining to
Hazardous Materials or otherwise intended to regulate or improve health, safety
or the environment, including, without limitation, any hazardous materials or
wastes, toxic substances, flammable, explosive or radioactive materials,

                                     DTA-2

<PAGE>


asbestos, and/or other similar materials; any so-called "superfund" or
"superlien" law, pertaining to Hazardous Materials on or about any of the
Collateral, or any other property at any time owned, leased or otherwise used by
any Loan Party, or any portion thereof, including, without limitation, those
relating to soil, surface, subsurface ground water conditions and the condition
of the ambient air; and any other federal, state, foreign or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any hazardous, toxic,
radioactive, flammable or dangerous waste, substance or material, as now or at
anytime hereafter in effect.

     "Equipment" shall have the meaning assigned to such term in the UCC on the
date of this Agreement together with all of the following to the extent, if any,
the same are not included within such definition: all machinery, equipment,
furniture, furnishings, fixtures, and other tangible personal property (except
Inventory) including, without limitation, data processing hardware and software,
motor vehicles, aircraft, dies, tools, jigs, and office equipment, as well as
all of such types of property that are leased and all rights and interests with
respect thereto under such leases to the extent that any such lease does not
prohibit or require a consent to the creation of a Lien in favor of the Bank
(including, without limitation, options to purchase) together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto wherever any of the
foregoing is located to the extent that any of the foregoing are now owned or
hereafter acquired by the Borrower and to the extent that any other Loan Party
now or hereafter grants or purports to grant a Lien upon all or any of the
foregoing as security for all or any portion of the Indebtedness.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.

     "Event of Default" shall mean any of those conditions or events listed in
Section 6.1 of this Agreement.

     "Financial Statements" shall mean all balance sheets, income statements,
statements of profit and loss, surplus reconciliation statements, statements of
cash flow and other financial data, statements and reports (whether of Borrower,
any of its Subsidiaries, any Guarantor, or any other Loan Party or otherwise)
which are required to, have been, or may from time to time hereafter, be
furnished to Bank, for the purposes of, or in connection with, this Agreement,
the transactions contemplated hereby or any of the Indebtedness.

     "Funded Debt" shall mean for Borrower, as of any date, the total
outstanding principal balance of Debt which should be classified as "funded
indebtedness" or "long term indebtedness" on the Borrower's balance sheet as of
such date in accordance with GAAP and including the outstanding amount of
Revolving Loans and the Letter of Credit Liabilities.

     "GAAP" shall mean generally accepted accounting principles consistently
applied.

     "Good Faith" or "good faith" shall have the meaning ascribed to the term
"good faith" in Article 1.201(19) of the UCC on the date of this Agreement.


                                     DTA-3

<PAGE>


     "Governmental Authority" shall mean the United States, each state, each
county, each city, and each other political subdivision in which all or any
portion of the Collateral is located, and each other political subdivision,
agency, or instrumentality exercising jurisdiction over Bank, any Loan Party or
any Collateral.

     "Governmental Requirements" shall mean all laws, ordinances, rules, and
regulations of any Governmental Authority applicable to any Loan Party, any of
the Indebtedness or any Collateral.

     "Guarantor(s)" shall mean, as the context dictates, any Person(s) (other
than the Borrower) who shall, at any time, guarantee or otherwise be or become
obligated for the repayment of all or any part of the Indebtedness.

     "Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in, or for purposes of,
any Environmental Law(s).

     "Indebtedness" shall mean all loans, advances, indebtedness, obligations
and liabilities of any Loan Party to Bank under any Loan Document, together with
all other indebtedness, obligations and liabilities whatsoever of Borrower to
Bank, whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising, voluntary or involuntary, known or unknown, or
originally payable to Bank or to a third party and subsequently acquired by Bank
including, without limitation, any: late charges; loan fees or charges;
overdraft indebtedness; costs incurred by Bank in establishing, determining,
continuing or defending the validity or priority of any Lien or in pursuing any
of its rights or remedies under any Loan Document or in connection with any
proceeding involving Bank as a result of any financial accommodation to
Borrower; debts, obligations and liabilities for which Borrower would otherwise
be liable to the Bank were it not for the invalidity or enforceability of them
by reason of any bankruptcy, insolvency or other law or for any other reason;
and reasonable costs and expenses of attorneys and paralegals, whether any suit
or other action is instituted, and to court costs if suit or action is
instituted, and whether any such fees, costs or expenses are incurred at the
trial court level or on appeal, in bankruptcy, in administrative proceedings, in
probate proceedings or otherwise; provided, however, that the term Indebtedness
shall not include any consumer loan to the extent treatment of such loan as part
of the Indebtedness would violate any Governmental Requirement.

     "Intellectual Property" shall mean:

          (a) copyright rights, copyright applications, copyright registrations
          and like protections in work or authorship and derivative work
          thereof, whether published or unpublished and whether or not the same
          also constitutes a trade secret (collectively, the "Copyrights");

          (b) trade secrets and any and all intellectual property rights in
          computer software and computer software products;

          (c) design rights;

                                     DTA-4

<PAGE>


          (d) patents, patent applications and like protections including
          without limitation improvements, divisions, continuations, renewals,
          reissues, extensions and continuations-in-part of the same;

          (e) trademark and servicemark rights, whether registered or not,
          applications to register and registrations of the same and like
          protections, and the entire goodwill of the business connected with
          and symbolized by such trademarks or servicemarks (collectively, the
          "Trademarks");

          (f) rights to the proceeds (excluding attorneys' and other
          professional and expert fees and expenses) arising from any and all
          claims or damages by way of past, present and future infringement of
          any of the rights included above, with the right, but not the
          obligation, to sue on behalf of and collect such damages for said use
          or infringement of the intellectual property rights identified above;

          (g) licenses and other rights to use any of the Copyrights, Patents or
          Trademarks, and all license fees and royalties arising from such use
          to the extent permitted by any such license or right;

          (h) amendments, renewals and extensions of any of the Copyrights,
          Trademarks or Patents; and

          (i) proceeds and products of the foregoing, including without
          limitation all payments under insurance or any indemnity or warranty
          payable in respect of any of the foregoing.

     "Inventory" shall have the meaning assigned to such term in the UCC on the
date of this Agreement together with all goods, merchandise and other personal
property of Borrower and each other Loan Party which shall pledge or purport to
pledge the same as security for any of the Indebtedness, now owned or hereafter
produced, manufactured or acquired by any such Person, which are held for sale
or lease or are furnished under a contract of service or are raw materials,
work-in-process or materials used or consumed or to be used or consumed in any
such Person's business, and any other Inventory of any such Person, as
determined in accordance with GAAP.

     "Letter of Credit" shall mean a letter of credit issued by the Bank for the
account of and/or upon the application of any Loan Party in accordance with this
Agreement, as such Letter of Credit may be amended, supplemented, extended or
confirmed from time to time.

     "Letter of Credit Liabilities" shall mean, at any time and in respect of
all Letters of Credit, the sum of (a) the aggregate amount available to be drawn
under all such Letters of Credit plus (b) the aggregate unpaid amount of all
Reimbursement Obligations then due and payable in respect of previous drawings
under such Letters of Credit.

     "Lien" shall mean any valid and enforceable interest in any property,
whether real, personal or mixed, securing an indebtedness, obligation or
liability owed to or claimed by any Person other than the owner of such
property, whether such indebtedness is based on the common law or any statute or
contract and including, but not limited to, a security interest, pledge,
mortgage, assignment, conditional sale, trust receipt, lease, consignment or
bailment for security purposes.

                                     DTA-5

<PAGE>


     "Loan Documents" shall mean collectively, this Agreement, the Notes, any
reimbursement agreement or other documentation executed in connection with any
Letter of Credit, and any other documents, instruments or agreements evidencing,
governing, securing, guaranteeing or otherwise relating to or executed pursuant
to or in connection with any of the Indebtedness or any Loan Document (whether
executed and delivered prior to, concurrently with or subsequent to this
Agreement), as such documents may have been or may hereafter be amended from
time to time.

     "Loan Party" shall mean Borrower, each of its Subsidiaries (whether or not
a party to any Loan Document) and each other Person who or which shall be liable
for the payment or performance of all or any portion of the Indebtedness or who
or which shall own any property that is subject to (or purported to be subject
to) a Lien which secured all or any portion of the Indebtedness.

     "Loans" shall mean, collectively, the Revolving Loans, and "Loan" shall
mean any of them.

     "Material Adverse Effect" shall mean any act, event, condition or
circumstance which could materially and adversely affect the business,
operations, condition (financial or otherwise), performance or assets of any
Loan Party, taken as a whole; the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party or by which it is
bound; or the enforceability of any Loan Document.

     "Maximum Legal Rate" shall mean the maximum rate of nonusurious interest
per annum permitted to be paid by Borrower or, if applicable, another Loan Party
or received by Bank with respect to the applicable portion of the Indebtedness
from time to time under applicable state or federal law as now or as may be
hereafter in effect, including, as to Chapter 1 D of Title 79 Vernon's Texas
Civil Statutes (and as the same may be incorporated by reference in other Texas
statutes), but otherwise without limitation, that rate based upon the "weekly
ceiling rate" (as defined in ss.303 of the Texas Finance Code).

     "Net Income" shall mean the net income (or loss) of a Person for any
applicable period of determination, determined in accordance with GAAP, but
excluding, in any event:

          (a) any gains or losses on the sale or other disposition, not in the
          ordinary course of business, of investments or fixed or capital
          assets, and any taxes on the excluded gains and any tax deductions or
          credits on account of any excluded losses; and

          (b) in the case of Borrower, net earnings of any Person in which
          Borrower has an ownership interest, unless such net earnings shall
          have actually been received by Borrower in the form of cash
          distributions.

     "Net Worth" shall mean, with respect to any Person, and as to any
applicable date of determination, the excess of (a) the net book value of all
assets of such Person (excluding Affiliate Receivables) after all appropriate
deductions in accordance with GAAP (including, without limitation, reserves for
doubtful receivables, obsolescence, depreciation and amortization), over (b) all
Debt of such Person at such time.

                                     DTA-6

<PAGE>


     "Notes" shall mean the Revolving Credit Note.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any Person
succeeding to the present powers and functions of the Pension Benefit Guaranty
Corporation.

     "Pension Plan(s)" shall mean any and all employee benefit pension plans of
Borrower and/or any of its Subsidiaries in effect from time to time, as such
term is defined in ERISA.

     "Permitted Encumbrances" shall mean:

          (a) Liens in favor of the Bank;

          (b) Liens for taxes, assessments or other governmental charges which
          are not yet due and payable, incurred in the ordinary course of
          business and for which no interest, late charge or penalty is
          attaching or which are being contested in good faith by appropriate
          proceedings and, if requested by Bank, bonded in an amount and manner
          satisfactory to Bank;

          (c) Liens, not delinquent, arising in the ordinary course of business
          and created by statute in connection with worker's compensation,
          unemployment insurance, social security and similar statutory
          obligations;

          (d) Liens of mechanics, materialmen, carriers, warehousemen or other
          like statutory or common law Liens securing obligations incurred in
          good faith in the ordinary course of business without violation of any
          Loan Document that are not yet due and payable;

          (e) encumbrances consisting of existing or future zoning restrictions,
          existing recorded rights-of-way, existing recorded easements, existing
          recorded private restrictions or existing or future public
          restrictions on the use of real property, none of which materially
          impairs the use of such property in the operation of the business for
          which it is used, and none of which is violated in any material
          respect by any existing or proposed structure or land use and none of
          which is prohibited by any other Loan Document; and

          (f) Liens existing as of the date hereof as more particularly
          described in Schedule 5.5 attached to this Agreement and Liens
          subsequently approved by Bank in writing.

     "Person" or "person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, association, trust, unincorporated
association, joint stock company, government, municipality, political
subdivision or agency, or other entity.

     "Property" shall mean that certain real property described or identified in
Exhibit A.

     "Reimbursement Obligations" shall mean, at any time and in respect of all
Letters of Credit, the aggregate obligations any Loan Party, then outstanding or
which may thereafter arise, to reimburse the Bank for any amount paid or
incurred by the Bank in respect of any and all drawings under such Letter of
Credit, together with any and all other Indebtedness, obligations and

                                     DTA-7

<PAGE>


liabilities of any Loan Party to Bank related to such Letter of Credit arising
under this Agreement, any Letter of Credit application or any other Loan
Document.

     "Request for Advance" shall mean an oral or written request or
authorization for an advance of Loan proceeds which if made in writing shall be
in the form annexed hereto as Exhibit C, or in such other form as is acceptable
to Bank.

     "Revolving Credit Maturity Date" shall mean July 26, 2007 or such earlier
date on which the entire unpaid principal amount of al Revolving Loans becomes
due and payable whether by the lapse of time, demand for payment, acceleration
or otherwise; provided, however, if any such date is not a Business Day, then
the Revolving Credit Maturity Date shall be the next succeeding Business Day.

     "Revolving Credit Maximum Amount" shall mean TWENTY-TWO MILLION DOLLARS
($22,000,000).

     "Revolving Credit Note" shall mean the Revolving Credit Note of even date
herewith in the original principal amount of $22,000,000 made by Borrower
payable to the order of the Bank, as the same may be renewed, extended,
modified, increased or restated from time to time.

     "Revolving Loan" shall mean an advance made, or to be made, under the
revolving credit loan facility to or for the credit of Borrower by the Bank
pursuant to the Loan Terms, Conditions and Procedures Addendum.

     "Subsidiary" shall mean as to any particular parent entity, any
corporation, partnership, limited liability company or other entity (whether now
existing or hereafter organized or acquired) in which more than fifty percent
(50%) of the outstanding equity ownership interests having voting rights as of
any applicable date of determination, shall be owned directly, or indirectly
through one or more Subsidiaries, by such parent entity.

     "Survey" shall mean a current certified survey of the Property satisfying
Bank's requirements.

     "Telephone Notice Authorization" shall mean an agreement in form
satisfactory to Bank authorizing telephonic and facsimile notices of borrowing
and establishing a codeword system of identification in connection therewith.

     "Title Insurance" shall mean a title insurance policy or policies in form
satisfactory to Bank, in an amount required by the Bank, insuring that the Bank
holds a valid first and prior Lien covering the Property and is subject only to
those exceptions and encumbrances which Bank may approve, issued by a title
company acceptable to the Bank; such title insurance policy shall, if required
by the Bank, include an adjustable mortgage loan endorsement, a revolving credit
endorsement and/or such other endorsements as Bank shall require.

     "UCC" shall mean the Uniform Commercial Code as adopted and in force in the
State of Texas, as amended.

                                     DTA-8
<PAGE>


                 LOAN TERMS, CONDITIONS AND PROCEDURES ADDENDUM
                 ----------------------------------------------


SECTION 1. REVOLVING CREDIT FACILITY

     1.1 Revolving Credit Commitment. Subject to the terms and conditions of the
Loan Documents, the Bank agrees to make Revolving Loans to Borrower at any time
and from time to time from the effective date hereof until (but not including)
the Revolving Credit Maturity Date. The aggregate principal amount of Revolving
Loans at any time outstanding plus the Letter of Credit Liabilities shall not
exceed the Revolving Credit Maximum Amount. All of such Revolving Loans shall be
evidenced by the Revolving Credit Note, under which advances, repayments and
re-advances may be made, subject to the terms and conditions of the Loan
Documents.

     1.2 Repayment of and Interest on the Revolving Credit Note. Each Revolving
Loan evidenced by the Revolving Credit Note from time to time outstanding
hereunder shall, from and after the date of such Revolving Loan, bear interest
at a per annum rate equal to the Applicable Interest Rate until the occurrence
of an Event of Default and thereafter at the Default Rate and shall be due and
payable in accordance with the terms of the Revolving Credit Note. All unpaid
principal, accrued and unpaid interest and other amounts owing under the
Revolving Credit Note shall be due and payable on the Revolving Credit Maturity
Note.

     1.3 Requests for Advances. Except as hereinafter provided, Borrower may
request a Revolving Loan by submitting to Bank a Request for Advance by an
authorized officer or other representative of Borrower, subject to the
following:

          (a) each such Request for Advance shall include, without limitation,
     the proposed amount of such Revolving Loan and the proposed Disbursement
     Date, which date must be a Business Day;

          (b) each such Request for Advance shall be communicated to Bank by
     11:00 a.m. (Houston, Texas time) on the proposed Disbursement Date;

          (c) a Request for Advance, once communicated to Bank, shall not be
     revocable by Borrower;

          (d) each Request for Advance, once communicated to Bank, shall
     constitute a representation, warranty and certification by Borrower as of
     the date thereof that:

               (i) both before and after the making of such Revolving Loan, the
          obligations set forth in the Loan Documents are and shall be valid,
          binding and enforceable obligations of each Loan Party, as applicable;

               (ii) all terms and conditions precedent to the making of such
          Revolving Loan have been satisfied, and shall remain satisfied through
          the date of such Revolving Loan;

               (iii) the making of such Revolving Loan will not cause the
          aggregate outstanding principal amount of all Revolving Loans plus the
          Letter of Credit Liabilities to exceed the Revolving Credit Maximum
          Amount;

                                    LTCPA-1

<PAGE>


               (iv) no Default or Event of Default shall have occurred or be in
          existence, and none will exist or arise upon the making of such
          Revolving Loan;

               (v) the representations and warranties contained in the Loan
          Documents are true and correct in all material respects and shall be
          true and correct in all material respects as of the making of such
          Revolving Loan;

               (vi) the Request for Advance will not violate the terms or
          conditions of any contract, indenture, agreement or other borrowing of
          any Loan Party; and

               (vii) after giving effect to the Request for Advance, Borrower
          will remain in compliance with the Asset Coverage Ratio in Section
          4.4(d) of the Agreement.

     Bank may elect (but without any obligation to do so) to make a Revolving
Loan upon the telephonic or facsimile request of Borrower, provided that
Borrower has first executed and delivered to Bank a Telephone Notice
Authorization. If any such Revolving Loan based upon a telephonic or facsimile
request is made by Borrower, Bank may require Borrower to confirm said
telephonic or facsimile request in writing by delivering to Bank, on or before
11:00 a.m. (Houston, Texas time) on the next Business Day following the
Disbursement Date of such Revolving Loan, a duly executed written Request for
Advance, and all other provisions of this Section 1 shall be applicable with
respect to such Revolving Loan. In addition, Borrower may authorize the Bank to
automatically make Revolving Loans pursuant to such other written agreements as
may be entered into by Bank and Borrower.

     1.4 Prepayment. Borrower may prepay all or part of the outstanding balance
under the Revolving Credit Note at any time, without premium, penalty or
prejudice to the right of Borrower to reborrow under the terms of this
Agreement, subject to the terms and conditions of the Loan Documents.

     1.5 Revolving Credit Maximum Amount and Reduction of Indebtedness.
Notwithstanding anything contained in this Agreement to the contrary, the
aggregate principal amount of all Revolving Loans at any time outstanding plus
the Letter of Credit Liabilities shall not exceed the Revolving Credit Maximum
Amount. If said limitations are exceeded at anytime, Borrower shall immediately,
without demand by Bank, pay to Bank an amount not less than such excess, or, if
Bank, in its sole discretion, shall so agree, Borrower shall provide Bank cash
collateral in an amount not less than such excess, and Borrower hereby pledges
and grants to Bank a security interest in such cash collateral so provided to
Bank.

     1.6 Use of Proceeds of Revolving Loans. The proceeds of Revolving Loans
shall be used to refinance existing debt and for other working capital needs of
Borrower.

     1.7 Non-Application of Chapter 346 of Texas Finance Code. The provisions of
Chapter 346 of the Texas Finance Code are specifically declared by the parties
not to be applicable to any of the Loan Documents or the transactions
contemplated thereby.

     1.8 Unused Commitment Fee. Borrower shall pay to Bank an unused commitment
fee in an amount equal to the product of (a) 0.25% multiplied by (b) the
difference between (i) the Revolving Credit Maximum Amount and (ii) the
aggregate outstanding principal balance of all Revolving Loans and Letter of

                                    LTCPA-2

<PAGE>


Credit Liabilities. Such fee shall be computed on a daily basis and shall be
payable quarterly in arrears as of the end of each of Borrower's fiscal
quarters. Bank shall invoice Borrower for such fees, which invoice shall be due
and payable within fifteen (15) days after receipt.

     1.9 Letters of Credit.

          (a) Letters of Credit. Subject to the terms and conditions of this
     Agreement and the other Loan Documents, the Bank shall, upon request from
     Borrower from time to time prior to the Revolving Credit Maturity Date,
     issue one or more Letters of Credit. The Letter of Credit Liabilities shall
     not exceed $500,000; and the sum of (i) the outstanding principal balance
     of all Revolving Loans plus (ii) the Letter of Credit Liabilities shall not
     exceed the Revolving Credit Maximum Amount. Letters of Credit may be issued
     to finance working capital needs. Each Letter of Credit issued pursuant to
     this Agreement shall be in a minimum amount of $25,000. No Letter of Credit
     shall have a stated expiration date later than thirty (30) days prior to
     the Revolving Credit Maturity Date.

          (b) Additional Provisions. The following additional provisions shall
     apply to each Letter of Credit:

               (i) Borrower shall give the Bank written notice requesting each
          issuance of a Letter of Credit hereunder not less than three (3)
          Business Days prior to the requested issuance date and shall furnish
          such additional information regarding such transaction as Bank may
          request. The issuance by Bank of each Letter of Credit shall, in
          addition to the conditions precedent set forth elsewhere in this
          Agreement, be subject to the conditions precedent that (A) such Letter
          of Credit shall be in form and substance satisfactory to Bank, (B)
          Borrower shall have executed and delivered such applications and other
          instruments and agreements relating to such Letter of Credit as Bank
          shall have requested and are not inconsistent with the terms of this
          Agreement (C) each of the statements in Section 1.3(d)(i), (ii), (iv),
          (v) and (vi) of this Loan Terms, Conditions and Procedures Addendum
          are true as of the date of issuance of such Letter of Credit with
          respect to issuance of such Letter of Credit (as opposed to making a
          Revolving Loan), and the submission of an application for issuance of
          a Letter of Credit shall constitute a representation, warranty and
          certification of Borrower to that effect and (D) no Letter of Credit
          may be issued if after giving effect thereto, the sum of the aggregate
          outstanding principal balance of all Revolving Loans plus the Letter
          of Credit Liabilities would exceed the Revolving Credit Maximum
          Amount. With respect to the issuance or renewal of each Letter of
          Credit, Borrower shall pay to Bank such letter of credit fees and
          other expenses customarily charged by Bank in connection with the
          issuance or renewals of letters of credit.

               (ii) Borrower shall be irrevocably and unconditionally obligated
          forthwith to reimburse Bank for any amount paid by Bank upon any
          drawing under any Letter of Credit, without presentment, demand,
          protest or other formalities of any kind, all of which are hereby
          waived. Unless Borrower shall elect to otherwise satisfy such
          Reimbursement Obligation, such reimbursement shall, subject to

                                    LTCPA-3

<PAGE>


          satisfaction of any conditions provided herein for the making of
          Revolving Loans and to the Revolving Credit Maximum Amount,
          automatically be made by advancing to Borrower a Revolving Loan in the
          amount of such Reimbursement Obligation.

          (c) Indemnification; Release. Borrower hereby indemnifies and agrees
     to defend and hold harmless Bank and its officers, directors, employees,
     agents and representatives from and against any and all claims and damages,
     losses, liabilities, costs or expenses which any such indemnified party may
     incur (or which may be claimed against Bank or any such indemnified party
     by any person whatsoever), REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART
     BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, in connection with the
     execution and delivery of any Letter of Credit or transfer of or payment or
     failure to pay under any Letter of Credit; provided that Borrower shall not
     be required to indemnify any party seeking indemnification for any claims,
     damages, losses, liabilities, costs or expenses to the extent, but only to
     the extent, caused by (i) the willful misconduct or gross negligence of the
     party seeking indemnification, or (ii) by the failure by the party seeking
     indemnification to pay under any Letter of Credit after the presentation to
     it of a request required to be paid under applicable law.

SECTION 2. FUNDING LOANS, PAYMENTS, RECOVERIES AND COLLECTIONS

     2.1 Funding Loans. Subject to the satisfaction of all conditions precedent
to the making and funding of any Loan set forth in any Loan Document, including,
without limitation, those conditions precedent set forth in Section 5 of this
Addendum, Bank shall make the proceeds of any such Loan available to Borrower by
11:00 a.m. (Houston, Texas time) on the respective Disbursement Date of such
Loan, by depositing such proceeds into such account maintained by Borrower with
Bank as Borrower shall designate in writing or as otherwise agreed to in writing
by Borrower and Bank.

     2.2 Bank's Books and Records. The amount and date of each Loan hereunder,
the amount from time to time outstanding under each Note, the Applicable
Interest Rate in respect of each Loan, and the amount and date of any repayment
hereunder or under any of the Notes, shall be noted on Bank's books and records,
which shall be conclusive evidence thereof, absent manifest error; provided,
however, any failure by Bank to make any such notation, or any error in any such
notation, shall not relieve Borrower of its obligations to pay to Bank all
amounts owing to Bank under or pursuant to the Loan Documents, in each case,
when due in accordance with the terms hereof or thereof.

     2.3 Payments on Non-Business Day. In the event that any payment of any
principal, interest, fees or any other amounts payable by Borrower under or
pursuant to any Loan Document shall become due on any day which is not a
Business Day, such due date shall be extended to the next succeeding Business
Day, and, to the extent applicable, interest shall continue to accrue and be
payable at the Applicable Interest Rate(s) for and during any such extension.

     2.4 Payment Procedures. Unless otherwise expressly provided in a Loan
Document, all sums payable by Borrower to Bank under or pursuant to any Loan
Document, whether principal, interest, or otherwise, shall be paid, when due,
directly to Bank at the office of Bank identified on the signature page of this

                                    LTCPA-4

<PAGE>


Agreement, or at such other office of Bank as Bank may designate in writing to
Borrower from time to time, in immediately available United States funds, and
without setoff, deduction or counterclaim. Bank may, in its discretion, charge
any and all deposit or other accounts (including, without limitation, any
account evidenced by a certificate of deposit or time deposit) of Borrower
maintained with Bank for all or any part of any Indebtedness then due and
payable; provided, however, that such authorization shall not affect Borrower's
obligations to pay all Indebtedness, when due, whether or not any such account
balances maintained by Borrower with Bank are insufficient to pay any amounts
then due,

     2.5 Maximum Interest Rate. At no time shall any Applicable Interest Rate or
Default Rate under this Agreement or any Note, or otherwise in respect of any
Loan or any Indebtedness hereunder, exceed the Maximum Legal Rate, giving due
consideration to the execution of this Agreement and each Note. In the event
that any interest is charged or otherwise received by Bank in excess of the
Maximum Legal Rate, Borrower hereby acknowledges and agrees that any such excess
interest shall be the result of an accidental and bona fide error, and any such
excess shall be deemed to have been payments of principal, and not of interest,
and shall be applied, first, to reduce the principal Indebtedness then
outstanding, second, any remaining excess, if any, shall be applied to reduce
any other Indebtedness, and third, any remaining excess, if any, shall be
returned to Borrower. Notwithstanding the foregoing or anything to the contrary
contained in this Agreement or any other Loan Document, but subject to all
limitations contained in this paragraph, if at anytime any Applicable Interest
Rate or Default Rate or other rate of interest applicable to any portion of the
Indebtedness is computed on the basis of the Maximum Legal Rate, any subsequent
reduction in the Applicable Interest Rate, Default Rate or such other rate of
interest shall not reduce such interest rate thereafter payable below the
Maximum Legal Rate until the aggregate amount of interest accrued equals the
total amount of interest that would have accrued if interest had, at all times,
been computed solely on the basis of the Applicable Interest Rate, Default Rate
or such other interest rate. This paragraph shall control all agreements between
the Borrower and the Bank.

     2.6 Receipt of Payments by Bank. Any payment by Borrower of any of the
Indebtedness made by mail will be deemed tendered and received by Bank only upon
actual receipt thereof by Bank at the address designated for such payment,
whether or not Bank has authorized payment by mail or in any other manner, and
such payment shall not be deemed to have been made in a timely manner unless
actually received by Bank on or before the date due for such payment, time being
of the essence. Borrower expressly assumes all risks of loss or liability
resulting from non-delivery or delay of delivery of any item of payment
transmitted by mail or in any other manner. Acceptance by Bank of any payment in
an amount less than the amount then due shall be deemed an acceptance on account
only, and any failure to pay the entire amount then due shall constitute and
continue to be an Event of Default hereunder. Bank shall be entitled to exercise
any and all rights and remedies conferred upon and otherwise available to Bank
under any Loan Document upon the occurrence and during the continuance of any
such Event of Default. Prior to the occurrence of any Default, Borrower shall
have the right to direct the application of any and all payments made to Bank
hereunder to the Indebtedness evidenced by the respective Notes. Borrower waives
the right to direct the application of any and all payments received by Bank
hereunder at any time or times after the occurrence and during the continuance
of any Default. Borrower further agrees that after the occurrence and during the
continuance of any Default, or prior to the occurrence of any Default if
Borrower has failed to direct such application, Bank shall have the continuing

                                    LTCPA-5

<PAGE>


exclusive right to apply and to reapply any and all payments received by Bank at
any time or times, whether as voluntary payments, proceeds from any Collateral,
offsets, or otherwise, against the Indebtedness in such order and in such manner
as Bank may, in its sole discretion, deem advisable, notwithstanding any entry
by Bank upon any of its books and records. Borrower hereby expressly agrees
that, to the extent that Bank receives any payment or benefit of or otherwise
upon any of the Indebtedness, and such payment or benefit, or any part thereof,
is subsequently invalidated, declared to be fraudulent or preferential, set
aside, or required to be repaid to a trustee, receiver, or any other Person
under any bankruptcy act, state or federal law, common law, equitable cause or
otherwise, then to the extent of such payment or benefit, the Indebtedness, or
part thereof, intended to be satisfied shall be revived and continued in full
force and effect as if such payment or benefit had not been made or received by
Bank, and, further, any such repayment by Bank shall be added to and be deemed
to be additional Indebtedness.

     2.7 Security. Payment and performance of the Indebtedness shall be secured
by Liens on all of the assets and properties of Borrower and of such other Loan
Parties as Bank may require from time to time and shall be guaranteed by the
Guarantors.

SECTION 3. CONDITIONS PRECEDENT

     3.1 Conditions Precedent to First Loan or First Letter of Credit. The
obligation of the Bank to issue the first Letter of Credit or to make the first
Revolving Loan under or pursuant to this Agreement shall be subject to the
following conditions precedent:

          (a) Execution of this Agreement, Notes and other Loan Documents.
     Borrower shall have executed and delivered to Bank, or caused to have been
     executed and delivered to Bank, this Agreement, the Notes and all other
     Loan Documents, and this Agreement (including all addenda, schedules,
     exhibits, certificates, opinions, financial statements and other documents
     to be delivered pursuant hereto), such Notes, and all other Loan Documents,
     shall be in full force and effect and binding and enforceable obligations
     of Borrower and, to the extent that it is a party thereto or otherwise
     bound thereby, of each other Person who may be a party thereto or bound
     thereby.

          (b) Authority Documents. Bank shall have received: (i) copies of
     resolutions of the board of directors, partners or members or managers, as
     applicable, of each Loan Party evidencing approval of the borrowing
     hereunder and the transactions contemplated by the Loan Documents, and
     authorizing the execution, delivery and performance by each Loan Party of
     each Loan Document to which it is a party or by which it is otherwise
     bound, which resolutions shall have been certified by a duly authorized
     officer, partner or other representative, as applicable, of each Loan Party
     as of the date of this Agreement as being complete, accurate and in full
     force and effect; (ii) incumbency certifications of a duly authorized
     officer, partner or other representative, as applicable, of each Loan
     Party, in each case, identifying those individuals who are authorized to
     execute the Loan Documents for and on behalf of such Person(s),
     respectively, and to otherwise act for and on behalf of such Person(s);
     (iii) certified copies of each of such Person(s)' articles of incorporation
     and bylaws, partnership agreement, certificate of limited partnership,
     articles of organization, regulations or operating agreement, as
     applicable, and all amendments thereto; and (iv) certificates of existence,
     good standing and authority to do business, as applicable, certified
     substantially contemporaneously with the date of this Agreement, from the

                                    LTCPA-6

<PAGE>


     state or other jurisdiction of each of such Person(s)' organization and
     from every other state or jurisdiction in which such Person is required,
     under applicable law, to be qualified to do business.

          (c) Collateral Documents. As security and support for the payment and
     performance of all Indebtedness of Borrower to Bank, all Indebtedness of
     Borrower to Bank, Borrower shall have furnished, executed and delivered to
     Bank, or shall have caused to have been furnished, executed and delivered
     to Bank, prior to or concurrently with the Disbursement Date for the
     initial Loan hereunder, in form satisfactory to Bank, the following
     documents, and Bank shall have received proof that appropriate security
     agreements, financing statements, mortgages, deeds of trust, collateral and
     other documents covering the Collateral shall have been executed and
     delivered by the appropriate Persons and recorded or filed in such
     jurisdictions and such other steps shall have been taken as necessary to
     perfect, subject only to Permitted Encumbrances, the Liens granted thereby:

               (i) a security agreement creating a Lien on all accounts
          receivable and Equipment of Borrower;

               (ii) a deed of trust or mortgage on each Property described on
          Exhibit A attached hereto;

               (iii) a guaranty executed by each Guarantor;

               (iv) financing statements required or requested by Bank to
          perfect all security interests to be conferred upon Bank under the
          Loan Documents and to accord Bank a perfected security position in the
          Collateral, subject only to Permitted Encumbrances;

               (v) such additional documents or certificates as may be required
          by Bank and/or required under the terms of any and every Loan
          Document; and

               (vi) such other documents or agreements of security and
          appropriate assurances of validity, perfection and priority of Lien as
          Bank may request.


          (d) Legal Opinion Letter. Borrower shall have furnished to Bank an
     opinion of Borrower's legal counsel, dated as of the date of this
     Agreement, and covering such matters as are required by Bank and which is
     otherwise satisfactory in form and substance to Bank.

          (e) Licenses, Permits, Approvals, Etc. To the extent necessary and
     applicable, Borrower shall have received any and all necessary
     authorizations, approvals and consents from all applicable Governmental
     Authorities in respect of the borrowing by Borrower of the Loans hereunder,
     the Loan Documents and the transactions contemplated by any Loan Document;
     and Bank shall have also received copies of each authorization, license,
     permit, consent, order or approval of, or registration, declaration or
     filing with, any Governmental Authority or any securities exchange or other
     Person obtained or made by Borrower or any other Person in connection with
     the transactions contemplated by the Loan Documents and which is material
     to the financial condition of Borrower or such other Person or the conduct
     of its business or the transactions contemplated hereby or the Collateral.

                                    LTCPA-7

<PAGE>


          (f) UCC Lien Search. Bank shall have received UCC, tax lien and
     judgment lien record and copy searches (and, if any collateral constitutes
     Intellectual Property, patent, copyright and trademark searches),
     disclosing no notice of any Liens or encumbrances filed against any of the
     Collateral, other than the Permitted Encumbrances.

          (g) Casualty Insurance. Borrower shall have furnished to Bank, or
     cause to have been furnished to Bank, in form and content and in amounts
     and with companies satisfactory to Bank, casualty insurance policies, with
     loss payable and mortgagee clauses in favor of Bank, relating to the assets
     and properties (including, but not limited to, the Collateral) of Borrower
     any applicable Loan Party.

          (h) Title Report. Borrower shall have furnished to Bank, or caused to
     have been furnished to Bank, a title report of the Property, showing the
     status of the title and the existence of any Liens.

          (i) Approval of Bank Counsel. All actions, proceedings, instruments
     and documents required to carry out the borrowings and transactions
     contemplated by this Agreement or any other Loan Document or incidental
     thereto, and all other related legal matters, shall have been satisfactory
     to and approved by legal counsel for Bank, and said counsel shall have been
     furnished with such certified copies of actions and proceedings and such
     other instruments and documents as they shall have requested.

          (j) Compliance with Certain Documents and Agreements. Each Loan Party
     shall have each performed and complied with all agreements and conditions
     contained in the Loan Documents applicable to it and which are then in
     effect.

          (k) Field Audit. Bank shall have received a field audit satisfactory
     in form and substance to Bank.

          (l) Other Documents and Instruments. Bank shall have received such
     other instruments and documents (not inconsistent with the terms hereof) as
     Bank may request in connection with the making of the Loans hereunder, and
     all such instruments and documents shall be satisfactory in form and
     substance to Bank.

     3.2 Conditions Precedent to Disbursement of All Loans and All Letters of
Credit. In addition to any other terms and conditions set forth in this
Agreement, including, without limitation, those set forth in Section 5.1 above,
the obligation of Bank to make any Loan or to issue any Letter of Credit under
this Agreement, including, without limitation, the initial Loan hereunder, shall
be further subject to the satisfaction of each of the following conditions
precedent on or before the Disbursement Date for such Loan:

          (a) Execution and Delivery of Note. Borrower shall have executed and
     delivered to Bank the applicable Note, with appropriate insertions, to
     evidence such Loan and the Indebtedness of Borrower in respect thereof.

          (b) Loan Documents Binding and Enforceable. All Loan Documents shall
     be in full force and effect and binding and enforceable obligations of each
     Loan Party.

          (c) Representations and Warranties. Each of the representations and
     warranties of each Loan Party under any Loan Document shall be true and
     correct in all material respects.

                                    LTCPA-8

<PAGE>


          (d) No Default or Material Adverse Change. No Default or Event of
     Default shall have occurred and be continuing; there shall have been no
     material adverse change in the condition (financial or otherwise),
     properties, business, or operations of any Loan Party since the date of the
     Financial Statements most recently delivered to Bank prior to the date of
     this Agreement; and no provision of law, any order of any Governmental
     Authority, or any regulation, rule or interpretation thereof, shall have
     had any material adverse effect on the validity or enforceability of any
     Loan Document.


                                    LTCPA-9
<PAGE>




                                   EXHIBIT "A"

                             Description of Property
                             -----------------------

<PAGE>






                                   EXHIBIT "B"

                         Form of Compliance Certificate
                         ------------------------------


     This Compliance Certificate (this "Certificate") is executed and delivered
to Comerica Bank ("Bank") by ENGlobal Corporation ("Borrower") this ___ day of
___________, 20___. All capitalized terms used but not defined herein shall have
the meanings given to such terms in that certain Credit Agreement dated as of
July ___, 2004 between Bank and Borrower (as renewed, extended, modified and
restated from time to time, the "Credit Agreement"). The undersigned hereby
certifies to Bank as follows:

          (1) The undersigned is the duly elected, qualified and acting
     ____________ of Borrower and, as such, is authorized to make and deliver
     this Certificate.

          (2) The undersigned has reviewed the provisions of the Credit
     Agreement and confirms that, as of the date hereof:

               (a) the representations and warranties contained in Section 3 of
          the Credit Agreement are true and correct in all material respects on
          and as of the date hereof with the same force and effect as though
          made on and as of the date hereof;

               (b) no Default or Event of Default has occurred and is continuing
          or is imminent, and Borrower has complied with all of the terms,
          covenants and conditions set forth in the Credit Agreement; and

               (c) attached hereto as Schedule A is a report prepared by the
          undersigned setting forth information and calculations that
          demonstrate compliance (or noncompliance) with each of the covenants
          set forth in Section 4.4 of the Credit Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]
                     ---------------------------------------



<PAGE>


     The foregoing certificate is given in the capacity of each of the
undersigned as an officer of Borrower, not in his/her individual capacity.

                              ENGLOBAL CORPORATION,
                              a Nevada corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              ENGLOBAL CORPORATE SERVICES, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              THERMAIRE, INC., a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              ENGLOBAL ENGINEERING, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------




<PAGE>



                              ENGLOBAL CONSTRUCTION
                              RESOURCES, INC., a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              ENGLOBAL SYSTEMS, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              RPM ENGINEERING, INC.,
                              a Louisiana corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              ENGLOBAL TECHNOLOGIES, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


<PAGE>


                              ENGLOBAL CONSTANT POWER, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              SENFTLEBER & ASSOCIATES, L.P.,
                              a Texas limited partnership

                              By:      ENGlobal Design Group, Inc.,
                                       a Texas corporation, its general partner


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                              ENGLOBAL DESIGN GROUP, INC.,
                              a Texas corporation


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------

<PAGE>


                                   SCHEDULE A
                                   ----------


--------------------------------------------------------------------------------
1. Debt to Capitalization Ratio.
--------------------------------------------------------------------------------
a. Funded Debt                                                  $
--------------------------------------------------------------------------------
b. Debt plus Net Worth                                          $
--------------------------------------------------------------------------------
c. Debt to Capitalization Ratio [(a) / (b)]:                      ____ to 1.00
--------------------------------------------------------------------------------
d. Section 4.4 presently requires the Debt                        0.40 to 1.00
    to Capitalization Ratio be not more than:

   Covenant Satisfied:

   Covenant Not Satisfied:

   Covenant Not Tested:
--------------------------------------------------------------------------------
2. Minimum Net Worth.
--------------------------------------------------------------------------------
a. Net Worth                                                    $
--------------------------------------------------------------------------------
b. Section 4.4 presently requires Minimum Net Worth of:         $

   Covenant Satisfied:

   Covenant Not Satisfied:

   Covenant Not Tested:
--------------------------------------------------------------------------------
3. Maximum Leverage Ratio.
--------------------------------------------------------------------------------
a. Funded Debt:                                                 $
--------------------------------------------------------------------------------
b. Adjusted EBITDA:                                             $
--------------------------------------------------------------------------------
c. Leverage Ratio [(a) / (b)]:                                    ____ to 1.00
--------------------------------------------------------------------------------
d. Section 4.4 presently requires the                             3.00 to 1.00
   Maximum Leverage Ratio be not more than:

   Covenant Satisfied:

   Covenant Not Satisfied:

   Covenant Not Tested:
--------------------------------------------------------------------------------
4. Asset Coverage Ratio.
--------------------------------------------------------------------------------
a. outstanding balance of all Revolving Loans:                  $
--------------------------------------------------------------------------------

<PAGE>


b. outstanding accounts receivable (billed and unbilled):       $
--------------------------------------------------------------------------------
c. Asset Coverage Ratio [(a) / (b)]:                               ____ to 1.00
--------------------------------------------------------------------------------
d. Section 4.4 presently requires the                               1.00 to 1.00
   Asset Coverage Ratio be not more than:

   Covenant Satisfied:

   Covenant Not Satisfied:

   Covenant Not Tested:
--------------------------------------------------------------------------------

<PAGE>


                                   EXHIBIT "C"

                           Form of Request for Advance


     The undersigned hereby requests COMERICA BANK ("Bank") to make a Revolving
Loan to the undersigned on the ___ day of ___________, 20___ in the amount of
____________________ Dollars ($_____________) under the Credit Agreement dated
as of July ___, 2004 by and between the undersigned and Bank (herein called the
"Credit Agreement").

     The undersigned represents, warrants and certifies that no Default or Event
of Default has occurred and is continuing under the Credit Agreement, and none
will exist upon the making of the Revolving Loan requested hereunder. The
undersigned further certifies that upon advancing the sum requested hereunder,
the aggregate principal amount outstanding under the Revolving Credit Note plus
the Letter of Credit Liabilities will not exceed the Revolving Credit Maximum
Amount.

     The undersigned hereby authorizes Bank to disburse the proceeds of the
Revolving Loan being requested by this Request for Advance by crediting the
account of the undersigned with Bank separately designated by the undersigned or
as the undersigned and Bank may otherwise agree.

     Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Credit Agreement.

     Dated this ___ day of ____________, 20___.


                                 ENGLOBAL CORPORATION,
                                 a Nevada corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 ENGLOBAL CORPORATE SERVICES, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 THERMAIRE, INC., a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------

<PAGE>


                                 ENGLOBAL ENGINEERING, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 ENGLOBAL CONSTRUCTION
                                 RESOURCES, INC., a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 ENGLOBAL SYSTEMS, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 RPM ENGINEERING, INC.,
                                 a Louisiana corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------




<PAGE>



                                 ENGLOBAL TECHNOLOGIES, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 ENGLOBAL CONSTANT POWER, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 SENFTLEBER & ASSOCIATES, L.P.,
                                 a Texas limited partnership

                                 By:  ENGlobal Design Group, Inc.,
                                      a Texas corporation, its general partner


                                          By:
                                             -----------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------


                                 ENGLOBAL DESIGN GROUP, INC.,
                                 a Texas corporation


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------