8-K

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 8-K
                                 CURRENT REPORT
     Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 29, 2009


                              ENGLOBAL CORPORATION
                              --------------------
             (Exact name of registrant as specified in its chapter)

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

654 N. Sam Houston Parkway E., Suite 400, Houston, Texas     77060-5914
- --------------------------------------------------------  ----------------
       (Address of principal executive offices)              (Zip Code)


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


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


Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_|  Written communications pursuant to Rule 425 under the Securities Act
          (17 CFR 230.425)

     |_|  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
          CFR 240.14a-12)

     |_|  Pre-commencement communications pursuant to Rule 14d-2(b) under the
          Exchange Act (17 CFR 240.14d-2(b))

     |_|  Pre-commencement communications pursuant to Rule 13e-4(c) under the
          Exchange Act (17 CFR 240.13e-4(c))




Item 1.01.        Entry into a Material Definitive Agreement.

On January 7, 2010, the Company issued a press release announcing that it had
entered into a new $25 million credit facility with Wells Fargo Bank, NA,
replacing the $50 million credit agreement with Comerica Bank that was due to
expire in August 2010. The new facility matures in April 2012 and can be used
for the Company's working capital requirements. Availability under the Wells
Fargo Credit Facility at December 31, 2009, totaled approximately $18.4 million,
which is $25.0 million less $6.0 million drawn down and $600,000 in letters of
credit. Copies of the new credit agreement and the press release are attached to
this filing as Exhibits 10.1 through 10.4 and 99.1, respectively, and are
incorporated herein by reference.

Item 1.02.        Termination of a Material Definitive Agreement.

On December 31, 2009, in connection with the execution of the $25 million Credit
Facility, as discussed in Item 1.01 above, the Company terminated its $50
million revolving credit facility governed by the Credit Agreement datedas of
August 8, 2007, among the Company, Comerica Bank and various lenders.

Item 9.01.        Financial Statements and Exhibits.

     (c) Exhibits.

Number    Exhibit
- ------    -------

10.1      Credit Agreement by and between Wells Fargo Bank and ENGlobal
          Corporation and its subsidiaries dated December 29, 2009.

10.2      Security Agreement by and between Wells Fargo Bank and ENGlobal
          Corporation and its subsidiaries dated December 29, 2009.

10.3      Security Interest Agreement and Acknowledgement by and between Wells
          Fargo Bank and ENGlobal Corporation and its subsidiaries dated
          December 29, 2009.

10.4      Letter of Termination by and between Comerica Bank and ENGlobal
          Corporation and its subsidiaries dated December 30, 2009.

99.1      Press Release, dated January 7, 2010, of ENGlobal Corporation


                                   SIGNATURES

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

                                          ENGlobal Corporation


Date:  January 11, 2010                   /s/ Natalie S. Hairston
       ---------------------------        --------------------------------------
                                          Natalie S. Hairston, Vice President
                                          - Investor Relations, Chief Governance
                                          Officer and Corporate Secretary

EX-10.1

Exhibit 10.1


CREDIT AGREEMENT


THIS CREDIT AGREEMENT (this "Agreement") is entered into as of December 29,
2009, by and between ENGlobal Corporation, a Nevada corporation ("Borrower"),
and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").



RECITALS



Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.



NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:



ARTICLE I

CREDIT TERMS



SECTION 1.1. LINE OF CREDIT.



(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and including
April 30, 2012, not to exceed at any time the aggregate principal amount of
Twenty Five Million Dollars ($25,000,000.00) ("Line of Credit"), the proceeds of
which shall be used for Borrower's working capital requirements. Borrower's
obligation to repay advances under the Line of Credit shall be evidenced by a
promissory note dated as of December 29, 2009 ("Line of Credit Note"), all terms
of which are incorporated herein by this reference.



(b) Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate
to issue Standby letters of credit for the account of Borrower (each, a "Letter
of Credit" and collectively, "Letters of Credit"); provided however, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed Two Million Dollars ($2,000,000.00). The form and substance of each
Letter of Credit shall be subject to approval by Bank, in its sole discretion.
No Letter of Credit shall have an expiration date beyond the maturity date of
the Line of Credit. The undrawn amount of all Letters of Credit shall be
reserved under the Line of Credit and shall not be available for borrowings
thereunder. Each Letter of Credit shall be subject to the additional terms and
conditions of the Letter of Credit agreements, applications and any related
documents required by Bank in connection with the issuance thereof. Each drawing
paid under a Letter of Credit shall be deemed an advance under the Line of
Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this Agreement applicable to such advances; provided however, that
if advances under the Line of Credit are not available, for any reason, at the
time any drawing is paid, then Borrower shall immediately pay to Bank the full
amount drawn, together with interest thereon from the date such drawing is paid
to the date such amount is fully repaid by Borrower, at the rate of interest
applicable to advances under the Line of Credit. In such event Borrower agrees
that Bank, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such drawing.



(c) Borrowing and Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note;



provided however, that the total outstanding borrowings under the Line of Credit
shall not at any time exceed the maximum principal amount available thereunder,
as set forth above.



SECTION 1.2. INTEREST/FEES.



(a) Interest. The outstanding principal balance of each credit subject hereto
shall bear interest, and the amount of each drawing paid under any Letter of
Credit shall bear interest from the date such drawing is paid to the date such
amount is fully repaid by Borrower, at the rate of interest set forth in each
promissory note or other instrument or document executed in connection
therewith.



(b) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed, unless such calculation would result in a
usurious rate, in which case interest shall be computed on the basis of a
365/366-day year, as the case may be, actual days elapsed. Interest shall be
payable at the times and place set forth in each promissory note or other
instrument or document required hereby.



(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to thirty
hundredths of one percent (.30%) per annum (computed on the basis of a 360-day
year, actual days elapsed) on the average daily unused amount of the Line of
Credit, which fee shall be calculated on a quarterly basis by Bank and shall be
due and payable by Borrower in arrears within ten (10) days after each billing
is sent by Bank.



(d) Letter of Credit Fees. Borrower shall pay to Bank fees upon the issuance of
each Letter of Credit, upon the payment or negotiation of each drawing under any
Letter of Credit and upon the occurrence of any other activity with respect to
any Letter of Credit (including without limitation, the transfer, amendment or
cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.



SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all
principal, interest and fees due under each credit subject hereto by charging
Borrower's deposit account number 4122005671 with Bank, or any other deposit
account maintained by Borrower with Bank, for the full amount thereof. Should
there be insufficient funds in any such deposit account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.



SECTION 1.4. COLLATERAL.



As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower hereby grants to Bank security interests of first
priority in all Borrower's accounts receivable and other rights to payment,
general intangibles, inventory and equipment.



All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by Bank
in connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.



SECTION 1.5. GUARANTIES. The payment and performance of all indebtedness and
other obligations of Borrower to Bank shall be guaranteed jointly and severally
by ENGlobal Land, Inc., a Colorado corporation, ENGlobal Technical Services,
Inc. a Texas corporation, ENGlobal Construction Resources, Inc. a Texas
corporation, ENGlobal Automation Group, Inc. a Texas corporation, ENGlobal
Corporate Services, Inc. a Texas corporation, ENGlobal Engineering, Inc. a Texas
corporation, and ENGlobal Systems, Inc, a Texas corporation, as evidenced by and
subject to the terms of guaranties in form and substance satisfactory to Bank.



ARTICLE II

REPRESENTATIONS AND WARRANTIES



Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.



SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of Nevada, and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on Borrower.



SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.



SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower
of each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws or result in any breach of or default under any contract, obligation,
indenture or other instrument to which Borrower is a party or by which Borrower
may be bound.



SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.



SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement
of Borrower dated _______________, and all interim financial statements
delivered to Bank since said date, true copies of which have been delivered by
Borrower to Bank prior to the date hereof, (a) are complete and correct and
present fairly the financial condition of Borrower, (b) disclose all liabilities
of Borrower that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) have been prepared in accordance with generally
accepted accounting principles consistently applied. Since the dates of such
financial statements there has been no material adverse change in the financial
condition of Borrower, nor has Borrower mortgaged,



pledged, granted a security interest in or otherwise encumbered any of its
assets or properties except in favor of Bank or as otherwise permitted by Bank
in writing.



SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.



SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this Agreement to any other obligation of Borrower.



SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.



SECTION 2.9. ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.



SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.



SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.



ARTICLE III

CONDITIONS



SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank
to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:



(a) Approval of Bank Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank's counsel.



(b) Documentation. Bank shall have received, in form and substance satisfactory
to Bank, each of the following, duly executed:



(i) This Agreement and each promissory note or other instrument or document
required hereby.

(ii) Billing Invoice.

(iii) Certificate of Incumbency (8).

(iv) Corporate Resolution: Continuing Guaranty (7).

(v) Corporate Resolution: Borrowing.

(vi) Disbursement Order.

(vii) UCC Financing Statement/Exhibit A.


(viii) Continuing Security Agreement: Rights to Payment & Inventory.


(ix) Continuing Security Agreement: Equipment.


(x) Continuing Guaranty from each Guarantor listed in Section 1.5 hereof.


(xi) Agreement and Acknowledgment of Security Interest.




(xi) Such other documents as Bank may require under any other Section of this
Agreement.



(c) Financial Condition. There shall have been no material adverse change, as
determined by Bank, in the financial condition or business of Borrower or any
guarantor hereunder, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.



(d) Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage on all Borrower's property, in form, substance, amounts, covering risks
and issued by companies satisfactory to Bank, and where required by Bank, with
loss payable endorsements in favor of Bank.



SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank's satisfaction of each of the following conditions:



(a) Compliance. The representations and warranties contained herein and in each
of the other Loan Documents shall be true on and as of the date of the signing
of this Agreement and on the date of each extension of credit by Bank pursuant
hereto, with the same effect as though such representations and warranties had
been made on and as of each such date, and on each such date, no Event of
Default as defined herein, and no condition, event or act which with the giving
of notice or the passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.



(b) Documentation. Bank shall have received all additional documents which may
be required in connection with such extension of credit.



(c) Additional Letter of Credit Documentation. Prior to the issuance of each
Letter of Credit, Bank shall have received a Letter of Credit Agreement,
properly completed and duly executed by Borrower.



ARTICLE IV

AFFIRMATIVE COVENANTS



Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:



SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein.



SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same, and to inspect
the properties of Borrower.



SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form
and detail satisfactory to Bank:



(a) not later than 90 days after and as of the end of each fiscal year form 10K
as filed with S.E.C.



(b) not later than 45 days after and as of the end of each quarter form 10Q as
filed with S.E.C.



(c) Borrower will provide on a quarterly basis a certificate of compliance
signed by Senior Financial Officer showing compliance with all financial
covenants. Within 30 days of the end of each fiscal year end a financial
projection for at least the next fiscal year consisting of income statement,
balance sheet, and cash flow statement broken down by quarter.



(d) from time to time such other information as Bank may reasonably request.



SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.



SECTION 4.5. INSURANCE. Maintain and keep in force, for each business in which
Borrower is engaged, insurance of the types and in amounts customarily carried
in similar lines of business, including but not limited to fire, extended
coverage, public liability, flood, property damage and workers' compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank's request schedules setting
forth all insurance then in effect.



SECTION 4.6. FACILITIES. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals



and replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.



SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.



SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of
$150,000.00.



SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices (except to the extent modified by the
definitions herein).



(a) Total Liabilities divided by Tangible Net Worth not greater than 2.25 to 1.0
at each quarter end, with "Total Liabilities" defined as the aggregate of
current liabilities and non-current liabilities, and with "Tangible Net Worth"
defined as the aggregate of total stockholders' equity less any intangible
assets and less any loans or advances to, or investments in, any related
entities or individuals.



(b) Fixed Charge Coverage Ratio not less than 1.75 to 1.0 as of each quarter
end, determined on a rolling 4-quarter basis, with "Fixed Charge Coverage Ratio"
defined as (EBITDA minus cash taxes, divided by interest expense, plus the
current maturity of long term debt, where EBITDA is net income, plus interest
expense, plus income taxes, plus depreciation and amortization, plus 123R Stock
compensation expense). EBITDA will exclude any non-cash charges related to the
Southern Louisiana Ethanol lawsuit. Current maturity of long term debt includes
both the current portion of long term debt and short term loans (loan with
tenors of 12 months or less, not including revolver.



(c) Asset Coverage Ratio not less than 2.00 to 1.00 measured on a quarterly
basis with "Asset Coverage Ratio" defined as accounts receivable divided by
revolver balance.



SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5) days
after the occurrence of each such event or matter) give written notice to Bank
in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's property.



ARTICLE V

NEGATIVE COVENANTS



Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or



unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower will not without Bank's prior written consent:



SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.



SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in fixed
assets in any fiscal year in excess of an aggregate of $3,500,000.00.



SECTION 5.3. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, and (b) any
other liabilities of Borrower existing as of, and disclosed to Bank prior to,
the date hereof.



SECTION 5.4. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets or equity of any other entity in excess of
$10,000,000.00 cash consideration per year; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.



SECTION 5.5. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity, except (a) any of
the foregoing in favor of Bank and (b) surety bonds up to $30,000,000.00
outstanding at any time.



SECTION 5.6. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity, except (a) loans to wholly-owned
subsidiaries of Borrower for working capital purposes, and (b) any of the
foregoing existing as of, and disclosed to Bank prior to, the date hereof.



SECTION 5.7 DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase not to exceed the
amount of $2,500,000.00 per year or otherwise acquire any shares of any class of
Borrower's stock now or hereafter outstanding.



SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's assets now
owned or hereafter acquired, except (a) liens for taxes being contested in good
faith and not to exceed at any time $500,000 in the aggregate, and (b) any of
the foregoing in favor of Bank or that is existing as of, and disclosed to Bank
in writing prior to, the date hereof.



ARTICLE VI

EVENTS OF DEFAULT



SECTION 6.1. The occurrence of any of the following shall constitute an "Event
of Default" under this Agreement:



(a) Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents.



(b) Any financial statement or certificate furnished to Bank in connection with,
or any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.



(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an "Event of Default" in this
section 6.1), and with respect to any such default that by its nature can be
cured, such default shall continue for a period of thirty (30) days from its
occurrence.



(d) Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract, instrument or document (other
than any of the Loan Documents) pursuant to which Borrower, any guarantor
hereunder or any general partner or joint venturer in Borrower if a partnership
or joint venture (with each such guarantor, general partner and/or joint
venturer referred to herein as a "Third Party Obligor") has incurred any debt or
other liability in excess of $250,000 to any person or entity, including Bank,
and with respect to any such default that by its nature can be cured, such
default shall continue for a period of thirty (30) days from its occurrence.



(e) Borrower or any Third Party Obligor shall become insolvent, or shall suffer
or consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or Borrower or any Third Party
Obligor shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition; or Borrower or any Third Party
Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any Third Party Obligor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.



(f) (i) The filing of a notice of judgment lien against Borrower or any Third
Party Obligor; or the recording of any abstract of judgment against Borrower or
any Third Party Obligor in any county in which Borrower or such Third Party
Obligor has an interest in real property, in either case in excess of $250,000,
and the failure of Borrower to remove such lien or abstract within thirty (30)
days; or (ii) the service of a notice of levy and/or of a writ of attachment or
execution, or other like process, against the assets of Borrower or any Third
Party Obligor in either case in excess of $250,000, and the failure of Borrower
to remove such levy or writ within thirty (30)



days; or the entry of a judgment against Borrower or any Third Party Obligor in
excess of $250,000, and the failure of Borrower to satisfy such judgment within
thirty (30) days; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or any Third Party Obligor and the failure of Borrower to
terminate such filing within thirty (30) days.



(g) There shall exist or occur any event or condition that Bank in good faith
believes impairs, or is substantially to impair, the prospect of payment or
performance by Borrower, any Third Party Obligor, or the general partner of
either if such entity is a partnership, of its obligations under any of the Loan
Documents, and with respect to any such event or condition that by its nature
can be remedied cured, such event or condition shall continue for a period of
thirty (30) days from its occurrence.



(h) The death or incapacity of Borrower or any Third Party Obligor if an
individual. The dissolution or liquidation of Borrower or any Third Party
Obligor if a corporation, partnership, joint venture or other type of entity; or
Borrower or any such Third Party Obligor, or any of its directors, stockholders
or members, shall take action seeking to effect the dissolution or liquidation
of Borrower or such Third Party Obligor.



(i) Any change in control of Borrower or any entity or combination of entities
that directly or indirectly control Borrower, with "control" defined as
ownership of an aggregate of forty-nine percent (49%) or more of the common
stock, members' equity or other ownership interest (other than a limited
partnership interest).



SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
principal and accrued and unpaid interest outstanding under each of the Loan
Documents, any term thereof to the contrary notwithstanding, shall at Bank's
option and without notice become immediately due and payable without
presentment, demand, or any notices of any kind, including without limitation
notice of nonperformance, notice of protest, protest, notice of dishonor, notice
of intention to accelerate or notice of acceleration, all of which are hereby
expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit subject
hereto and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of an
Event of Default, are cumulative and not exclusive, and shall be in addition to
any other rights, powers or remedies provided by law or equity.



ARTICLE VII

MISCELLANEOUS



SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.



SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:



BORROWER: ENGlobal Corporation

654 North Sam Houston Parkway E, Suite 400

Houston, Texas 77060-5914



BANK: WELLS FARGO BANK, NATIONAL ASSOCIATION

21 Waterway Avenue, 6th Floor

The Woodlands, Texas 77380-2629



or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.



SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel to the extent
permissible), expended or incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents
Bank's continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights
and/or the collection of any amounts which become due to Bank under any of the
Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.



SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank's prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank's rights and benefits under each of the Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any credit subject hereto, Borrower or its
business, any guarantor hereunder or the business of such guarantor, or any
collateral required hereunder.



SECTION 7.5. AMENDMENT. This Agreement may be amended or modified only in
writing signed by each party hereto.



SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party



beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which it
is not a party.



SECTION 7.7. TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.



SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.



SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.



SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.



SECTION 7.11. SAVINGS CLAUSE. It is the intention of the parties to comply
strictly with applicable usury laws. Accordingly, notwithstanding any provision
to the contrary in the Loan Documents, in no event shall any of the Loan
Documents require the payment or permit the payment, taking, reserving,
receiving, collection or charging of any sums constituting interest under
applicable laws that exceed the maximum amount permitted by such laws, as the
same may be amended or modified from time to time (the "Maximum Rate"). If any
such excess interest is called for, contracted for, charged, taken, reserved or
received in connection with any of the Loan Documents, or in any communication
by Bank or any other person to Borrower or any other person, or in the event
that all or part of the principal or interest hereof or thereof shall be prepaid
or accelerated, so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for, charged, taken,
reserved or received on the amount of principal actually outstanding from time
to time under the Loan Documents shall exceed the Maximum Rate, then in such
event it is agreed that: (a) the provisions of this paragraph shall govern and
control; (b) neither Borrower nor any other person or entity now or hereafter
liable for the payment of any of the Loan Documents shall be obligated to pay
the amount of such interest to the extent it is in excess of the Maximum Rate;
(c) any such excess interest which is or has been received by Bank,
notwithstanding this paragraph, shall be credited against the then unpaid
principal balance hereof or thereof, or if any of the Loan Documents has been or
would be paid in full by such credit, refunded to Borrower; and (d) the
provisions of each of the Loan Documents, and any other communication to
Borrower, shall immediately be deemed reformed and such excess interest reduced,
without the necessity of executing any other document, to the Maximum Rate. The
right to accelerate the maturity of the Loan Documents does not include the
right to accelerate, collect or charge unearned interest, but only such interest
that has otherwise accrued as of the date of acceleration. Without limiting the
foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved or received in connection with any of the Loan Documents which
are made for the purpose of determining whether such rate exceeds the Maximum
Rate shall be made to the extent permitted by applicable laws by amortizing,
prorating, allocating and spreading during the period of the full term of such
Loan Documents, including all prior and subsequent renewals and extensions
hereof or thereof, all interest at any time contracted for, charged, taken,
reserved or received by Bank. The terms of this paragraph shall be deemed to be
incorporated into each of the other Loan Documents.



To the extent that either Chapter 303 or 306, or both, of the Texas Finance Code
apply in determining the Maximum Rate, Bank hereby elects to determine the
applicable rate ceiling by using the weekly ceiling from time to time in effect,
subject to Bank's right subsequently to change such method in accordance with
applicable law, as the same may be amended or modified from time to time.



SECTION 7.12. RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence
of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and
from time to time, without notice, which is hereby expressly waived by Borrower,
and whether or not Bank shall have declared any credit subject hereto to be due
and payable in accordance with the terms hereof, to set off against, and to
appropriate and apply to the payment of, Borrower's obligations and liabilities
under the Loan Documents (whether matured or unmatured, fixed or contingent,
liquidated or unliquidated), any and all amounts owing by Bank to Borrower
(whether payable in U.S. dollars or any other currency, whether matured or
unmatured, and in the case of deposits, whether general or special (except trust
and escrow accounts), time or demand and however evidenced), and (b) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such obligations and liabilities and to return as unpaid for insufficient
funds any and all checks and other items drawn against any deposits so held as
Bank, in its sole discretion, may elect. Borrower hereby grants to Bank a
security interest in all deposits and accounts maintained with Bank and with any
other financial institution to secure the payment of all obligations and
liabilities of Borrower to Bank under the Loan Documents.



SECTION 7.13. BUSINESS PURPOSE. Borrower represents and warrants that each
credit subject hereto is for a business, commercial, investment, agricultural or
other similar purpose and not primarily for a personal, family or household use.



SECTION 7.14. ARBITRATION.



(a) Arbitration. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise in any way arising out of or
relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.



(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in Texas selected by the American Arbitration Association ("AAA"); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the "Rules"). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be



deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. ss.91 or any similar applicable state law.



(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.



(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Texas with a minimum of ten years experience
in the substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any pre-hearing
motions which are similar to motions to dismiss for failure to state a claim or
motions for summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of Texas and may grant any remedy or relief
that a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.



(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.



(f) Class Proceedings and Consolidations. No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.



(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.



(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.



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



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.



WELLS FARGO BANK,

ENGlobal Corporation NATIONAL ASSOCIATION



By: /s/ R. W. Raiford                      By: /s/ David Jones
- ---------------------                      -------------------
R. W. Raiford, Chief Financial Officer     David Jones, Relationship Manager

EX-10.2

Exhibit 10.2


SECURITY AGREEMENT
WELLS FARGO EQUIPMENT

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
ENGlobal Corporation, or any of them ("Debtor"), hereby grants and transfers to
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest in all
goods, tools, machinery, furnishings, furniture and other equipment, now or at
any time hereafter, and prior to the termination hereof, owned or acquired by
Debtor, wherever located, whether in the possession of Debtor or any other
person and whether located on Debtor's property or elsewhere, and all
improvements, replacements, accessions and additions thereto and embedded
software included therein (collectively called "Collateral"), together with
whatever is receivable or received when any of the Collateral or proceeds
thereof are sold, leased, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, including without limitation, (a)
all accounts, contract rights, chattel paper (whether electronic or tangible),
instruments, promissory notes, documents, general intangibles, payment
intangibles and other rights to payment of every kind now or at any time
hereafter arising from any such sale, lease, collection, exchange or other
disposition of any of the foregoing, (b) all rights to payment, including
returned premiums, with respect to any insurance relating to any of the
foregoing, and (c) all rights to payment with respect to any claim or cause of
action affecting or relating to any of the foregoing (hereinafter called
"Proceeds").

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including under any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other
similar transaction or arrangement, and whether Debtor may be liable
individually or jointly, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.

4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any
money received by Bank in respect of the Collateral may be deposited, at Bank's
option, into a non-interest bearing account over which Debtor shall have no
control, and the same shall, for all purposes, be deemed Collateral hereunder.

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor's legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor's organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds; (c) Debtor has the
exclusive right to grant a security interest in the Collateral and Proceeds; (d)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except the lien created hereby or as otherwise agreed to by Bank, or
heretofore disclosed by Debtor to Bank, in writing; (e) all statements contained
herein are true and complete in all material respects; (f) no financing
statement covering any of the Collateral or Proceeds, and naming any secured
party other than Bank, is on file in any public office; and (g) Debtor is not in
the business of selling goods of the kind included within the Collateral subject
to this Agreement, and Debtor acknowledges that no sale or other disposition of
any Collateral, including without limitation, any Collateral which Debtor may
deem to be surplus, has been or shall be consented to or acquiesced in by Bank,
except as specifically set forth in writing by Bank.

6. COVENANTS OF DEBTOR.

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6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank deems
necessary to create, perfect and continue the security interests contemplated
hereby; (e) not to change its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Debtor keeps any Collateral or Debtor's records
concerning the Collateral and Proceeds without giving Bank prior written notice
of the address to which Debtor is moving same; and (g) to cooperate with Bank in
perfecting all security interests granted herein and in obtaining such
agreements from third parties as Bank deems necessary, proper or convenient in
connection with the preservation, perfection or enforcement of any of its rights
hereunder.

6.2 Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (a) that Bank is authorized to file financing statements
in the name of Debtor to perfect Bank's security interest in Collateral and
Proceeds; (b) to insure the Collateral with Bank named as loss payee, in form,
substance and amounts, under agreements, against risks and liabilities, and with
insurance companies satisfactory to Bank; (c) to operate the Collateral in
accordance with all applicable statutes, rules and regulations relating to the
use and control thereof, and not to use the Collateral for any unlawful purpose
or in any way that would void any insurance required to be carried in connection
therewith; (d) not to permit any security interest in or lien on the Collateral
or Proceeds, including without limitation, liens arising from repairs to or
storage of the Collateral, except in favor of Bank; (e) to pay when due all
license fees, registration fees and other charges in connection with any
Collateral; (f) not to remove the Collateral from Debtor's premises except in
the ordinary course of Debtor's business; (g) not to sell, hypothecate or
otherwise dispose of, nor permit the transfer by operation of law of, any of the
Collateral or Proceeds or any interest therein; (h) not to rent, lease or
charter the Collateral; (i) to permit Bank to inspect the Collateral at any
time; (j) to keep, in accordance with generally accepted accounting principles,
complete and accurate records regarding all Collateral and Proceeds, and to
permit Bank to inspect the same and make copies thereof at any reasonable time;
(k) if requested by Bank, to receive and use reasonable diligence to collect
Proceeds, in trust and as the property of Bank, and to immediately endorse as
appropriate and deliver such Proceeds to Bank daily in the exact form in which
they are received together with a collection report in form satisfactory to
Bank; (l) not to commingle Proceeds or collections thereunder with other
property; (m) to give only normal allowances and credits and to advise Bank
thereof immediately in writing if they affect any Collateral or Proceeds in any
material respect; (n) in the event Bank elects to receive payments of Proceeds
hereunder, to pay all expenses incurred by Bank in connection therewith,
including expenses of accounting, correspondence, collection efforts, reporting
to account or contract debtors, filing, recording, record keeping and expenses
incidental thereto; and (o) to provide any service and do any other acts which
may be necessary to maintain, preserve and protect all Collateral and, as
appropriate and applicable, to keep the Collateral in good and saleable
condition and repair, to deal with the Collateral in accordance with the
standards and practices adhered to generally by owners of like property, and to
keep all Collateral and Proceeds free and clear of all defenses, rights of
offset and counterclaims.

7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of this Agreement and may be exercised from time to time by
Bank's officers and employees, or any of them, whether or not Debtor is in
default: (a) to perform any obligation of Debtor hereunder in Debtor's name or
otherwise; (b) to give notice to account debtors or others of Bank's rights in
the Collateral and Proceeds, to enforce or forebear from enforcing the same and
make extension or modification agreements with respect thereto; (c) to release
persons liable on Proceeds and to give receipts and acquittances and compromise
disputes in connection therewith; (d) to release or substitute security; (e) to
resort to security in any order; (f) to prepare, execute, file, record or
deliver notes, assignments, schedules, designation statements, financing
statements, continuation statements, termination statements, statements of
assignment, applications for registration or like papers to perfect, preserve or
release Bank's interest in the Collateral and Proceeds; (g) to receive, open and
read mail addressed to Debtor; (h) to take cash, instruments for the payment of
money and other property to which Bank is entitled; (i) to verify facts
concerning the Collateral and Proceeds by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (j) to endorse, collect,
deliver and receive payment under instruments for the payment of money
constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and receive payment
of and endorse any instrument in payment of loss or returned premiums or any
other

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insurance refund or return, and to apply such amounts received by Bank, at
Bank's sole option, toward repayment of the Indebtedness or replacement of the
Collateral; (l) to exercise all rights, powers and remedies which Debtor would
have, but for this Agreement, with respect to all Collateral and Proceeds
subject hereto; (m) to enter onto Debtor's premises in inspecting the
Collateral; and (n) to do all acts and things and execute all documents in the
name of Debtor or otherwise, deemed by Bank as necessary, proper and convenient
in connection with the preservation, perfection or enforcement of its rights
hereunder.

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Bank at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand and shall be secured by the Collateral and
Proceeds, subject to all terms and conditions of this Agreement.

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

10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the
right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Texas Business and Commerce
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.

While an Event of Default exists: (a) Debtor will deliver to Bank from time to
time, as requested by Bank, current lists of all Collateral and Proceeds; (b)
Debtor will not dispose of any Collateral or Proceeds except on terms approved
by Bank; (c) at Bank's request, Debtor will assemble and deliver all Collateral
and Proceeds, and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Debtor,
enter onto Debtor's premises and take possession of the Collateral. Debtor
further agrees that Bank shall have no obligation to process or prepare any
Collateral for sale or other disposition.

11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such

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order of application as Bank may from time to time elect. Upon the transfer of
all or any part of the Indebtedness, Bank may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Bank hereunder with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred Bank shall retain all
rights, powers, privileges and remedies herein given.

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

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

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

15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel to the extent permissible),
expended or incurred by Bank in connection with (a) the perfection and
preservation of the Collateral or Bank's interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Debtor or in any way affecting any of the
Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto.

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

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

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18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

Debtor warrants that Debtor is an organization registered under the laws of
Nevada. Debtor warrants that its chief executive office (or principal residence,
if applicable) is located at the following address: 654 N Sam Houston Parkway E,
Suite 400, Houston, TX 77060

Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: "See Exhibit A attached hereto
and incorporated herein by this reference".

IN WITNESS WHEREOF, this Agreement has been duly executed as of December 31,
2009.


ENGlobal Corporation
By:

/s/ R.W. Raiford, Chief Financial Officer
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CONTINUING SECURITY AGREEMENT
WELLS FARGO RIGHTS TO PAYMENT AND INVENTORY

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
ENGlobal Corporation, or any of them ("Debtor"), hereby grants and transfers to
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest in all
accounts, deposit accounts, chattel paper (whether electronic or tangible),
instruments, promissory notes, documents, general intangibles, payment
intangibles, software, letter of credit rights, health-care insurance
receivables and other rights to payment (collectively called "Rights to
Payments"), now existing or at any time hereafter, and prior to the termination
hereof, arising (whether they arise from the sale, lease or other disposition of
inventory or from performance of contracts for service, manufacture,
construction, repair or otherwise or from any other source whatsoever),
including all securities, guaranties, warranties, indemnity agreements,
insurance policies, supporting obligations and other agreements pertaining to
the same or the property described therein, and in all goods returned by or
repossessed from Debtor's customers, together with a security interest in all
inventory, goods held for sale or lease or to be furnished under contracts for
service, goods so leased or furnished, raw materials, component parts and
embedded software, work in process or materials used or consumed in Debtor's
business and all warehouse receipts, bills of lading and other documents
evidencing goods owned or acquired by Debtor, and all goods covered thereby, now
or at any time hereafter, and prior to the termination hereof, owned or acquired
by Debtor, wherever located, and all products thereof (collectively called
"Inventory"), whether in the possession of Debtor, warehousemen, bailees or any
other person, or in process of delivery and whether located at Debtor's places
of business or elsewhere (with all Rights to Payment and Inventory referred to
herein collectively as the "Collateral"), together with whatever is receivable
or received when any of the Collateral or proceeds thereof are sold, leased,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, including without limitation, all rights to payment,
including returned premiums, with respect to any insurance relating to any of
the foregoing, and all rights to payment with respect to any claim or cause of
action affecting or relating to any of the foregoing (hereinafter called
"Proceeds").

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including under any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other
similar transaction or arrangement, and whether Debtor may be liable
individually or jointly, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.

4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any
money received by Bank in respect of the Collateral may be deposited, at Bank's
option, into a non-interest bearing account over which Debtor shall have no
control, and the same shall, for all purposes, be deemed Collateral hereunder.

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor's legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor's organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds; (c) Debtor has the
exclusive right to grant a security interest in the Collateral and Proceeds; (d)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except

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the lien created hereby or as otherwise agreed to by Bank, or heretofore
disclosed by Debtor to Bank, in writing;

(e) all statements contained herein and, where applicable, in the Collateral are
true and complete in all material respects; (f) no financing statement covering
any of the Collateral or Proceeds, and naming any secured party other than Bank,
is on file in any public office; (g) all persons appearing to be obligated on
Rights to Payment and Proceeds have authority and capacity to contract and are
bound as they appear to be; (h) all property subject to chattel paper has been
properly registered and filed in compliance with law and to perfect the interest
of Debtor in such property; and (i) all Rights to Payment and Proceeds comply
with all applicable laws concerning form, content and manner of preparation and
execution, including where applicable Federal Reserve Regulation Z and any State
consumer credit laws.

6. COVENANTS OF DEBTOR.

6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank deems
necessary to create, perfect and continue the security interests contemplated
hereby; (e) not to change its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Debtor keeps any Collateral or Debtor's records
concerning the Collateral and Proceeds without giving Bank prior written notice
of the address to which Debtor is moving same; and (g) to cooperate with Bank in
perfecting all security interests granted herein and in obtaining such
agreements from third parties as Bank deems necessary, proper or convenient in
connection with the preservation, perfection or enforcement of any of its rights
hereunder.

6.2 Debtor agrees with regard to the Collateral and Proceeds, unless
Bank agrees otherwise in writing: (a) that Bank is authorized to file financing
statements in the name of Debtor to perfect Bank's security interest in
Collateral and Proceeds; (b) to insure Inventory and, where applicable, Rights
to Payment with Bank named as loss payee, in form, substance and amounts, under
agreements, against risks and liabilities, and with insurance companies
satisfactory to Bank; (c) not to use any Inventory for any unlawful purpose or
in any way that would void any insurance required to be carried in connection
therewith; (d) not to remove Inventory from Debtor's premises except in the
ordinary course of Debtor's business; (e) not to permit any security interest in
or lien on the Collateral or Proceeds, including without limitation, liens
arising from the storage of Inventory, except in favor of Bank; (f) not to sell,
hypothecate or otherwise dispose of, nor permit the transfer by operation of law
of, any of the Collateral or Proceeds or any interest therein, except sales of
Inventory to buyers in the ordinary course of Debtor's business; (g) to furnish
reports to Bank of all acquisitions, returns, sales and other dispositions of
the Inventory in such form and detail and at such times as Bank may require; (h)
to permit Bank to inspect the Collateral at any time; (i) to keep, in accordance
with generally accepted accounting principles, complete and accurate records
regarding all Collateral and Proceeds, and to permit Bank to inspect the same
and make copies thereof at any reasonable time; (j) if requested by Bank, to
receive and use reasonable diligence to collect Rights to Payment and Proceeds,
in trust and as the property of Bank, and to immediately endorse as appropriate
and deliver such Rights to Payment and Proceeds to Bank daily in the exact form
in which they are received together with a collection report in form
satisfactory to Bank; (k) not to commingle Rights to Payment, Proceeds or
collections thereunder with other property; (l) to give only normal allowances
and credits and to advise Bank thereof immediately in writing if they affect any
Rights to Payment or Proceeds in any material respect; (m) on demand, to deliver
to Bank returned property resulting from, or payment equal to, such allowances
or credits on any Rights to Payment or Proceeds or to execute such documents and
do such other things as Bank may reasonably request for the purpose of
perfecting, preserving and enforcing its security interest in such returned
property; (n) from time to time, when requested by Bank, to prepare and deliver
a schedule of all Collateral and Proceeds subject to this Agreement and to
assign in writing and deliver to Bank all accounts, contracts, leases and other
chattel paper, instruments, documents and other evidences thereof; (o) in the
event Bank elects to receive payments of Rights to Payment or Proceeds
hereunder, to pay all expenses incurred by Bank in connection therewith,
including expenses of accounting, correspondence, collection efforts, reporting
to account or contract debtors, filing, recording, record keeping and expenses
incidental thereto; and (p) to provide any service and do any other acts which
may be necessary to maintain, preserve and protect all Collateral and, as
appropriate and applicable, to keep all Collateral in good and saleable
condition in accordance with the standards and practices adhered to generally by
users and manufacturers of like property, and to keep all Collateral and
Proceeds free and clear of all defenses, rights of offset and counterclaims.

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

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Bank at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand and shall be secured by the Collateral and
Proceeds, subject to all terms and conditions of this Agreement.

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

10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the
right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Texas Business and Commerce
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any

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other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.

While an Event of Default exists: (a) Debtor will deliver to Bank from time to
time, as requested by Bank, current lists of all Collateral and Proceeds; (b)
Debtor will not dispose of any Collateral or Proceeds except on terms approved
by Bank; (c) at Bank's request, Debtor will assemble and deliver all Collateral
and Proceeds, and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Debtor,
enter onto Debtor's premises and take possession of the Collateral. With respect
to any sale by Bank of any Collateral subject to this Agreement, Debtor hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Debtor's trademarks, trade names, trade name rights and/or proprietary labels or
marks. Debtor further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.

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

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

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

14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or principal residence, if applicable) specified
below or to such other address as any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows: (a)
if personally delivered, upon delivery; (b) if sent by mail, upon the earlier

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of the date of receipt or 3 days after deposit in the U. S. mail, first class
and postage prepaid; and (c) if sent by telecopy, upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel to the extent permissible),
expended or incurred by Bank in connection with (a) the perfection and
preservation of the Collateral or Bank's interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Debtor or in any way affecting any of the
Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto.

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

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

18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. Debtor warrants that Debtor is
an organization registered under the laws of Nevada.

Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 654 N Sam Houston Parkway E,
Suite 400, Houston, TX 77060

Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: "See Exhibit A attached hereto
and incorporated herein by this reference".

IN WITNESS WHEREOF, this Agreement has been duly executed as of December 31,
2009.

ENGlobal Corporation

By:

/s/ R.W. Raiford, Chief Financial Officer
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EX-10.3

Exhibit 10.3


Recording Requested By,

And After Recording, Return To:

WELLS FARGO BANK,

 NATIONAL ASSOCIATION

1740 Broadway

Denver, Colorado 80203

Attn: Loan Documentation









AGREEMENT AND ACKNOWLEDGMENT OF SECURITY INTEREST



THIS AGREEMENT AND ACKNOWLEDGMENT OF SECURITY INTEREST (this "Agreement") is
entered into as of December 29, 2009, by and among WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank"), ENGlobal Corporation ("Debtor") and CLAY REAL ESTATE
DEVELOPMENT, L.P. ("Landlord").



WHEREAS, Bank has extended, or has agreed to extend, credit to Debtor on the
condition, among others, that such credit be secured by a security interest in
certain assets of Debtor (the "Collateral") described in the Security Agreement
attached hereto as Exhibit A and incorporated herein by this reference (the
"Security Agreement"), and all or a portion of the Collateral is now or may
hereafter be located on that certain real property owned by Landlord in
Jefferson County, Texas, as more particularly described on Exhibit B attached
hereto and incorporated herein by this reference (the "Property"); and



WHEREAS, in extending or continuing to extend such credit to Debtor, Bank is
relying on the acknowledgments, representations and agreements relating to the
Collateral set forth herein.



NOW, THEREFORE, Landlord, Debtor and Bank hereby acknowledge, represent and
agree as follows:



1. Landlord's Acknowledgment. Landlord acknowledges that the security interest
of Bank in the Collateral is senior and superior to any claim or right in all or
any portion thereof which Landlord now has or may at any time hereafter acquire.
Landlord confirms that Landlord has not received notice from any person or
entity other than Bank of any claim of right, title or interest in or to any of
the Collateral.



2. Notice and License. Landlord agrees to deliver to Bank, at the same time as
delivery to Debtor, a copy of any notice given by Landlord to Debtor regarding
any breach of, or limitation or termination of, any lease or other agreement
between Debtor and Landlord relating to Debtor's use and possession of the
Property. Subject to the terms and conditions of this Agreement, Landlord and,
where applicable, Debtor agree that notwithstanding any failure by Debtor to
perform under, or the termination of, any lease or other agreement between
Debtor and Landlord relating to Debtor's use and possession of the Property: (a)
Landlord will not dispose of the Collateral nor assert any right or interest
therein unless it has first notified Bank in writing and has given Bank a
reasonable opportunity to exercise Bank's rights in and to the Collateral; and
(b) Bank is hereby granted the right and license to enter upon the Property and
to possess and use the Property to take possession of the Collateral and to
exercise Bank's rights, powers and remedies with respect to the Collateral,
including without limitation completing any work in process, removing any or all
of the Collateral from the Property, and sorting, assembling, selling (including
by auction sale held on the Property) and otherwise disposing of the Collateral
in accordance with the terms and conditions of the Security Agreement, this
Agreement and applicable law.



3. Conditions. The rights and licenses granted to Bank herein are conditioned
upon Bank's agreement to, and Bank hereby agrees to: (a) pay rent to Landlord at
the times and at the daily rate paid

                                        1




by Debtor for the period commencing on the day Bank enters into possession of
the Property and ending on the day Bank relinquishes possession thereof; and (b)
reimburse Landlord for any damage to the Property, other than diminution in
value thereof, actually caused by Bank's activities on the Property during its
possession thereof.



4. Indemnity. Debtor agrees to indemnify and hold Landlord and Bank, and their
respective partners, officers, directors, successors and assigns, harmless from
and against any and all claims, actions, damages, costs, expenses (including
reasonable attorneys' fees, to include Bank's outside counsel fees and all
allocated costs of Bank's in-house counsel to the extent permissible) and/or
liability arising from or in any manner relating to Landlord's compliance with
this Agreement and/or Bank's exercise of any of its rights hereunder. Debtor
hereby irrevocably authorizes Landlord to comply with any instructions or
directions which Bank may give to Landlord pursuant hereto and/or in connection
with Bank's exercise of its rights, powers and remedies with respect to the
Collateral.



5. No Waiver; Amendments. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy hereunder or under the Security Agreement
shall affect such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or otherwise affect
the further exercise thereof or the exercise of any other right, power or
remedy. The rights, powers and remedies of Bank hereunder are cumulative and not
exclusive. Any waiver, permit, consent or approval of any kind by Bank of any
breach of or default under this Agreement, or any such waiver of any provisions
or conditions hereof, must be in writing and shall be effective only to the
extent set forth in such writing. This Agreement may be amended or modified only
in writing signed by all parties hereto.



6. Notices. All notices, requests and demands required hereunder must be in
writing, addressed to each party at the address specified below or to such other
address as any party may designate by written notice to each other party, and
shall be deemed to have been given or made as follows: (a) if personally
delivered, upon delivery; (b) if sent by mail, upon the earlier of the date of
receipt or three (3) days after deposit in the U.S. mail, first class and
postage prepaid; and (c) if sent by telecopy, upon receipt.



7. Governing Law; Successors, Assigns. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties.

                                        2



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.



BANK: LANDLORD:



CLAY REAL ESTATE DEVELOPMENT, L.P.



By:

Name:

Title:

Address:



WELLS FARGO BANK,
NATIONAL ASSOCIATION



By: /s/ David Jones

Name: David Jones

Title: Relationship Manager

Address: 21 Waterway Avenue, Suite 600
         The Woodlands, TX 77380-2629



DEBTOR:



ENGlobal Corporation



By: /s/ Robert Raiford

Name: R. W. Raiford

Title: Chief Financial Officer

Address: 654 N Sam Houston Parkway, Suite 400
         Houston, TX 77060-5914



OBTAIN NOTARY ACKNOWLEDGMENTS



                                        3



EXHIBIT B

TO

AGREEMENT AND ACKNOWLEDGMENT OF SECURITY INTEREST





Legal Description of Property:




















                                        4

EX-10.4

Exhibit 10.4




                                                               December 31, 2009



COMERICA BANK
One Shell Plaza
910 Louisiana Street, 4th Floor
Houston, TX 77002

ATTENTION:    James R. McNutt
              SVP Middle Market Financial Services

REFERENCE:    Termination Request

Dear Mr. McNutt:

ENGlobal requests termination of the certain Credit Agreement, dated August 8,
2007 as of December 30, 2009. All loan balances have been paid and interest
deducted from our account.

ENGlobal also wishes to thank you and the Comerica team for their service and
support during our relationship.



ENGLOBAL CORPORATION


By: /s/ R. W. Raiford
    ---------------------
    R. W. Raiford, CFO