Document:

Exhibit 10.1

                        SEPARATION AGREEMENT AND RELEASE
                        --------------------------------

     This Separation Agreement and Release (this "Agreement"), dated April 2,
2007, (the "Effective Date"), sets forth the mutual agreement of ENGlobal
Corporation, a Nevada corporation, for itself and its subsidiaries and
affiliates (collectively "ENGlobal"), and Michael L. Burrow ("Burrow"),
regarding Burrow's separation from employment with ENGlobal. Terms not otherwise
defined in this Agreement shall have the meanings ascribed to them in that
certain Key Executive Employment Agreement dated January 1, 2006 between
ENGlobal and Burrow (the "Employment Agreement").

                                    RECITALS:

     Burrow has been employed by and has served as an officer and a member of
the Board of Directors of ENGlobal since December 2001.

     On the Effective Date, Burrow resigned as President and Chief Executive
Officer, as a member of ENGlobal' s Board of Directors, and as an employee of
ENGlobal.

     The parties to this Agreement have decided to resolve any differences that
may exist in connection with Burrow's employment with ENGlobal, service on
ENGlobal's Board of Directors, and separation therefrom.

     The parties desire to keep the terms of this Agreement confidential, to be
knows only by the parties to this Agreement and their attorneys, except as
otherwise required by law.

     NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, including the recitals set forth above, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
agree as follows:

     1. Consideration from ENGlobal. If Burrow signs this Agreement, does not
revoke this Agreement, and complies fully with this Agreement, ENGlobal will
provide Burrow with the following valuable consideration, a portion of which is
expressly agreed to be in addition to anything to which Burrow is currently
entitled and not otherwise required by ENGlobal's policies, procedures, or
practices:

          (a) Severance Payments.

               (i) During the Initial Severance Benefit Period, ENGlobal will
pay Burrow severance benefits (subject to applicable tax and other withholdings)
in payroll period installments in accordance with ENGlobal's normal payroll
policies, in an amount equal to the monthly amount of Burrow's Annual Salary in
effect at the Effective Date. In addition, ENGlobal will (under the same cost
sharing arrangements as were in place prior to the Effective Date), continue to
include Burrow and his eligible dependents under the coverage of all group
health, medical and dental insurance policies, plans and programs maintained by
ENGlobal during the Initial Severance Benefit Period for ENGlobal's employees,
or management employees, generally.

<PAGE>

               (ii) ENGlobal hereby extends the Restricted Period, and ENGlobal
will pay Burrow severance benefits (subject to applicable tax and other
withholdings) during the Second Severance Benefit Period, in payroll period
installments in accordance with ENGlobal's normal payroll policies, in an amount
equal to the monthly amount of Burrow's Annual Salary in effect at the Effective
Date. In addition, ENGlobal will (under the same cost sharing arrangements as
were in place prior to the Effective Date), continue to include Burrow and his
eligible dependents under the coverage of all group health, medical and dental
insurance policies, plans and programs maintained by ENGlobal during the Second
Severance Benefit Period for ENGlobal's employees, or management employees,
generally.

          (b) Benefits and Expenses.

               (i) Burrow understands and agrees that balances or vested
balances Burrow has in any ENGlobal benefit plan will be available to Burrow
consistent with applicable law, regulations and the administrative provisions of
the various plan documents. Except as provided in Section 1(b)(ii), any options
to acquire shares of ENGlobal's common stock will expire or be exercisable in
accordance with the terms and provisions of the applicable agreement, plans and
plan documents. Burrow further understands that he will not receive any grants
of stock or options from ENGlobal in the future.

               (ii) On the Effective Date, ENGlobal and Alliance 2000, Ltd. will
enter into the Second Amended and Restated Alliance Stock Option Agreement
attached as Exhibit A.

               (iii) Burrow agrees that he will not conduct any market
transactions in ENGlobal stock (including purchasing or selling shares and
moving funds in or out of the ENGlobal 401(k) Plan) until ENGlobal files its
definitive proxy statement on Schedule 14A for year 2007. This restriction shall
not impede Burrow's ability to exercise his vested options to acquire shares of
ENGlobal common stock as permitted under the applicable option agreements.

               (iv) ENGlobal agrees to reimburse Burrow for all reasonable
business expenses incurred through March 31, 2007.

     2. Release.

          (a) Burrow hereby knowingly and voluntarily waives, relieves,
releases, acquits and forever discharges ENGlobal, and its predecessors, parent
and affiliated companies, successors and assigns, officers, directors, agents,
employees, shareholders, attorneys, accountants, employee benefit plans and
trustees, and any and all other related individuals and entities (collectively,
the "Releasees"), from any and all claims, debts, liabilities, demands,
obligations, liens, promises, acts, agreements, costs, expenses (including, but
not limited to, attorneys' fees), damages, actions and causes of action, of any
nature whatsoever, including, without limitation, any statutory, civil or
administrative claim, or any claim, arising out of facts, whether known or
unknown, suspected or unsuspected, fixed or contingent, apparent or not,
including, but not limited to, any claims based on, arising out of, related to
or connected with Burrow's employment with, or termination of employment from,
ENGlobal, including but not limited to, any claims arising from federal, state

                                       2
<PAGE>

or local laws which prohibit discrimination on the basis of race, national
origin, religion, age, sex, marital status, pregnancy, disability, perceived
disability, ancestry, sexual orientation, family or personal leave, or any other
form of discrimination, or from any common law claims of any kind, including,
but not limited to, contract, tort, or property rights, including, but not
limited to, breach of contract, breach of the implied covenant of good faith and
fair dealing, tortious interference with contract or current or prospective
economic advantage, fraud, deceit, breach of privacy, misrepresentation,
defamation, wrongful termination, tortious infliction of emotional distress,
loss of consortium and breach of fiduciary duty, violation of public policy and
any other common law claim of any kind whatsoever, and claims for severance pay,
sick leave, family leave, vacation, life insurance, bonuses, health insurance,
disability or medical insurance or any other fringe benefit or compensation, or
from any and all rights or claims arising under the Civil Rights Act of 1964, as
amended, 42 U.S.C. ss.ss. 2000e, et seq.; the Americans with Disabilities Act,
42 U.S.C. ss.ss. 12101, et seq.; the Age Discrimination in Employment Act, as
amended, 29 U.S.C. ss.ss. 621 et seq.; the Older Workers Benefit Protection Act;
the Sarbanes-Oxley Act of 2002, including the whistleblower provisions thereof;
the Texas Commission on Human Rights Act, Tex. Labor Code ss.ss. 21.001, et seq.
(prohibiting discrimination based upon age, race, sex, religion, national origin
or disability); the Family & Medical Leave Act; the Employee Retirement Income
Security Act of 1974; and the Worker Adjustment Retraining and Notification Act.
Claims which cannot be waived by law are excluded from the release provisions of
this Section 2; however, Burrow does waive his right to any monetary recovery
should any agency pursue claims against any Releasee on Burrow's behalf.

          (b) Burrow understands and agrees, in compliance with any statute or
ordinance which requires a specific release of unknown claims or benefits, that
this Agreement includes a release of unknown claims, and Burrow hereby expressly
waives and relinquishes any and all claims, rights or benefits that Burrow may
have which are unknown to Burrow at the time of the execution of this Agreement.
Burrow understands and agrees that if, hereafter, Burrow discovers facts
different from or in addition to those which Burrow now knows or believes to be
true, that the waivers and releases of this Agreement shall be and remain
effective in all respects notwithstanding such different or additional facts or
the discovery of such fact.

          (c) If Burrow is at least 40 years old, Burrow agrees and expressly
acknowledges that this Agreement includes a waiver and release of all claims
which Burrow has or may have under the Age Discrimination in Employment Act of
1967, as amended, 29 U.S.C. ss.ss. 621, et seq. ("ADEA"), the Older Workers
Benefit Protection Act, as amended, or any equivalent or comparable provision of
federal, state or local law, including, without limitation, the Texas Commission
on Human Rights Act. The following terms and conditions apply to and are part of
the waiver and release of ADEA claims under this Agreement by Burrow:

               (i) The waiver and release of claims under ADEA contained in this
Agreement do not cover rights or claims that may arise after the date on which
Burrow signs this Agreement.

               (ii) This Agreement involves consideration in addition to
anything of value to which Burrow is already entitled.

                                       3
<PAGE>

               (iii) Burrow is advised to consult an attorney before signing
this Agreement. If Burrow executes this Agreement prior to the expiration of the
period specified in Section 2(c)(iv), Burrow does so voluntarily and after
having had the opportunity to consult with an attorney.

               (iv) Burrow is granted 21 days after Burrow is presented with
this Agreement to consider this Agreement.

               (v) Burrow will have the right to revoke the waiver and release
of claims under the ADEA within seven days of signing this Agreement. This
Section 2(c) shall not become effective or enforceable until the revocation
period has expired, and Burrow understands and agrees that no consideration
shall be paid to Burrow pursuant to this Agreement until the revocation period
has expired without the waiver and release of claims under ADEA having been
revoked.

     3. Non-Admission of Liability. The parties are entering into this Agreement
to, among other things, resolve any claims or differences that may exist between
them. By entering into this Agreement, neither Burrow nor ENGlobal admit any
liability or wrongdoing.

     4. Company Documents, Information or Property. Burrow agrees that he will
promptly, and in any event no later than 5:00 p.m. on May 18th, 2007, return to
ENGlobal any and all electronic and/or paper documents relating to ENGlobal or
its business operations (and any and all copies thereof, whether in paper form
or electronic form), computer equipment, badges, credit cards and any other
ENGlobal property in Burrow's possession or control. Burrow agrees that he will
not take any such documents or property from the control or premises of ENGlobal
and that if, at any time after his separation from ENGlobal, Burrow should come
into possession of any such documents or property, Burrow will return such
documents or property to ENGlobal immediately.

     5. Employment Agreement and Other Agreements. Burrow agrees that, except as
otherwise provided in this Agreement, the provisions of Sections 4, 5.5, 7 and 8
of the Employment Agreement and the stock option agreements that Burrow
previously entered into with ENGlobal remain in full force and effect.

     6. Cooperation. Burrow agrees that he will give ENGlobal his full
cooperation in connection with any claims, lawsuits, or proceedings that relate
in any manner to Burrow's conduct or duties at ENGlobal or that are based on
facts about which Burrow obtained personal knowledge while employed at ENGlobal.
In return, ENGlobal agrees to reimburse Burrow for his direct and reasonable
out-of-pocket expenses (including reasonable attorneys' fees) incurred with
respect to rendering such cooperation. Burrow further agrees that he will not
voluntarily become a party to, or directly or indirectly aid or encourage any
other party in connection with, any lawsuit, claim, demand, or adversarial or
investigatory proceeding of any kind involving ENGlobal or any of the Releasees
that relates in any material way to his employment with ENGlobal or that is
based on facts about which Burrow obtained personal knowledge while employed
with ENGlobal. Burrow's compliance with a subpoena or other legally compulsive
process will not be a violation of this provision.

                                       4
<PAGE>

     7. Confidentiality. Burrow agrees that, except as may be required by law,
court order, regulation, or to enforce this Agreement, he will keep the terms,
amount and fact of this Agreement completely confidential. The confidentiality
of the terms and conditions contained in this Agreement are part of the
consideration inducing ENGlobal to enter into this Agreement. If Burrow or his
spouse, attorneys, or accountants breach the promises contained in this Section,
ENGlobal shall withhold payment of any sums due under this Agreement, Burrow
shall return all monies already paid pursuant to this Agreement, and Burrow
shall be liable for any additional damages, including any attorneys' fees and
costs incurred. Any such action permitted to ENGlobal by the foregoing, however,
will not affect or impair any of Burrow's obligations or promises made pursuant
to this Agreement including without limitation, the release of claims in Section
2. Notwithstanding the foregoing, Burrow may disclose pertinent information
concerning this Agreement to Burrow's attorneys, tax advisors and financial
planners, and Burrow's spouse and other close family members provided they have
previously been informed of and have agreed to be bound by this confidentiality
clause. Burrow understands and agrees that a breach of this confidentiality
clause by any of the above named individuals will be deemed a breach of this
Agreement by Burrow.

     8. Non-Disparagement. Burrow agrees that, except as may be required by law
or court order, Burrow will not, directly or indirectly, make any statement,
oral or written, or perform any act or omission which is or could be detrimental
in any material respect to the reputation or goodwill of ENGlobal or any
Releasee. If Burrow breaches the promises contained in this Section, ENGlobal
shall withhold payment of any sums due under this Agreement, Burrow shall return
all monies already paid pursuant to this Agreement, and Burrow shall be liable
for any additional damages, including any attorneys' fees and costs incurred.
Any such action permitted to ENGlobal by the foregoing, however, will not affect
or impair any of Burrow's obligations or promises made pursuant to this
Agreement including without limitation, the release of claims in Section 2.
Further, ENGlobal agrees that except as may be required by law or court order,
ENGlobal will not, directly or indirectly, make any statement, oral or written,
or perform any act or omission which is or could be detrimental in any material
respect to the reputation or goodwill of Burrow.

     9. No Re-Employment. As part of the consideration inducing ENGlobal to
enter into this Agreement, Burrow agrees never to reapply for employment with
ENGlobal, its parents and subsidiaries, and understands that if he does, such
application will be rejected pursuant to this Agreement.

     10. Nature of Settlement. The parties agree to be responsible for their own
federal income tax obligations, if any. Burrow further agrees to indemnify
ENGlobal from and against any damages and penalties associated with any of
Burrow's income tax obligations arising from this settlement.

     11. Dispute Resolution. With the exception of claims for injunctive relief,
each of the parties consents to attempt to resolve any dispute among them by
mediation. If the parties are unable to resolve their claims in mediation, then
the parties consent to submit any and all claims or controversies arising in
connection with this Agreement to binding arbitration and agree that such
arbitration shall be in accordance with the then current Commercial Arbitration
Procedures of the American Arbitration Association before an arbitrator who is
licensed to practice law.

                                       5
<PAGE>

However, the arbitration need not be conducted under the auspices of the
American Arbitration Association. The cost of mediation will be shared equally
between the parties. The prevailing party in arbitration, if arbitration is
necessary, may be awarded attorneys' fees by the arbitrator; provided that no
person shall be considered to be a prevailing party if it recovers less in such
proceeding than the highest written offer of settlement from the party from
which it seeks to recover. Except as required by law, all mediation and
arbitration proceedings shall be kept strictly confidential by the parties.

     12. Applicable Law and Venue. This Agreement shall be interpreted in all
respects by the laws of the State of Texas without giving effect to any choice
or conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas, and the venue for the resolution of any disputes
(location of any lawsuit) shall be solely in the state and federal courts of
Harris County, Texas.

     13. Severability. If any provision of this Agreement is held by final
judgment to be invalid, illegal or unenforceable, such invalid, illegal or
unenforceable provision shall be severed from the remainder of this Agreement,
and the remainder of this Agreement shall be enforced. In addition, the invalid,
illegal or unenforceable provision shall be deemed to be automatically modified,
and, as so modified, to be included in this Agreement, such modification being
made to the minimum extent necessary to render the provision valid, legal and
enforceable. Notwithstanding the foregoing, however, if the severed or modified
provision concerns all or a portion of the essential consideration to be
delivered under this Agreement by one party to the other, the remaining
provisions of this Agreement shall also be modified to the extent necessary to
equitably adjust the parties' respective rights and obligations hereunder.

     14. Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement and each party has had the opportunity to review
this Agreement with its own attorney. Accordingly, if an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Whenever used in this Agreement, the singular
number will include the plural, and the plural number will include the singular,
and pronouns in the masculine, feminine, or neuter gender will include each
other gender. Headings are used for convenience only, and are not to be given
substantive effect. All references to section numbers and exhibits in this
Agreement are references to sections and exhibits in this Agreement, unless
otherwise specifically indicated. All exhibits and schedules are incorporated in
this Agreement as if set forth herein in full. Recitals are part of this
Agreement and shall be considered in its interpretation.

     15. Counterparts. This Agreement may be executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes.

     16. No Other Consideration. Burrow affirms that the terms stated in this
Agreement constitute the only consideration for signing this Agreement, that no
other promises or agreements of any kind have been made by any person or entity
to cause him to execute this Agreement, and that he fully understands the
meaning and intent of this Agreement, including, but not limited to, its final

                                       6
<PAGE>

and binding effect. Burrow agrees that, except as expressly set forth in this
Agreement, he is not entitled to receive from ENGlobal the payment or
distribution of any amounts of pay, benefits, cash, stock, stock options or
other type of property.

     17. Entire Agreement. This Agreement contains the entire understanding
between the parties concerning the subject matter contained in this Agreement
and supersedes any prior employment or similar agreements between the parties,
with the exception of those provisions of Burrow's Employment Agreement set
forth in Section 5 that are intended to survive the termination of employment,
which continue to be binding in accordance with their terms.

     18. Sufficient Consideration. Burrow acknowledges that the consideration
recited in this Agreement is adequate to make it final and binding, and is in
addition to payments or benefits to which Burrow would otherwise be entitled as
a former employee of ENGlobal.

     19. Modification of Agreement. This Agreement may not be modified by any
subsequent agreement unless the modifying agreement is in writing and is signed
by all the parties.

     20. Revocation Period. Burrow has been advised, both orally and by this
writing, of his right to consult with an attorney before entering this
Agreement. Burrow shall have a period of 21 days from the date of delivery of
this Agreement to consider the Agreement; Burrow understands and acknowledges
that any changes made to the Agreement, whether material or immaterial, will not
re-start this 21-day period. Burrow shall have seven days following his
execution of this Agreement during which he may revoke the Agreement by
providing ENGlobal written notice of his revocation. If this Agreement is not
revoked by Burrow during said seven-day period, it shall be deemed accepted. The
Agreement shall not be effective or enforceable until the revocation period has
expired.

BURROW HAS CAREFULLY READ THE FOREGOING AGREEMENT AND HE UNDERSTANDS THE
CONTENTS THEREOF AND HE EXECUTES THE AGREEMENT AS HIS OWN FREE ACT AND DEED.

                                   * * * * * *

                                        7
<PAGE>

     DELIVERED TO BURROW THE 30th DAY OF MARCH, 2007.

/s/ Michael L. Burrow                        Date: April 2, 2007
---------------------                        -------------------
Michael L. Burrow

ENGLOBAL CORPORATION

By: /s/ William A. Coskey                    Date: April 2, 2007
-------------------------                    -------------------
Name: William A. Coskey
Title: Chairman

                                        8
<PAGE>

                                    EXHIBIT A
                                    ---------

           SECOND AMENDED AND RESTATED ALLIANCE STOCK OPTION AGREEMENTExhibit 10.2

                           SECOND AMENDED AND RESTATED
                         ALLIANCE STOCK OPTION AGREEMENT

                                    PART I

Optionee:                           Michael L. Burrow

Grant Date:                         December 21, 2001

Extension Date:                     December 20, 2006

Vesting:                            The option granted hereunder shall vest only
                                    upon the consummation of a "Company Sale
                                    Event" as defined herein.

Aggregate Number of Option Shares:  300,000

Exercise Price per Share            12/21/06 to 12/20/07               $1.56
                                    12/21/07 to 12/20/08               $1.95
                                    12/21/08 to 12/21/09               $2.44
                                    12/21/09 to 12/20/10               $3.05
                                    12/21/10 to 12/20/11               $3.81

Lapse Date                          Any options not exercised on or prior to
                                    December 20, 2011 (the "Expiration Date")
                                    shall lapse and be of no further force and
                                    effect.

     Part II of this Agreement is attached  hereto and  incorporated  herein for
all purposes. EXECUTED to be effective as of the Grant Date set forth above.

ENGLOBAL CORPORATION                     ALLIANCE 2000, LTD.

By: /s/ William A. Coskey                BHC Management Corporation
------------------------------           General Partner
    William A. Coskey, Chairman

                                         By: /s/ William A. Coskey
                                             -------------------------
                                             William A. Coskey, President

                                         OPTIONEE

                                         Signature: /s/ Michael L. Burrow
                                                    --------------------------
                                                    Michael L. Burrow
                                                    7955 Shire Lane
                                                    Beaumont, TX 77706
                                                    SS#: ###-##-####

<PAGE>

                           SECOND AMENDED AND RESTATED
                         ALLIANCE STOCK OPTION AGREEMENT

                                     PART I

Optionee:                            Michael L. Burrow

Grant Date:                          July 29, 2005

Extension Date:                      December 20, 2006

Vesting:                             The option granted hereunder shall vest
                                     only upon the consummation of a "Company
                                     Sale Event" as defined herein.

Aggregate Number of Option Shares:   65,000

Exercise Price per Share             12/21/06 to 12/20/07              $1.56
                                     12/21/07 to 12/20/08              $1.95
                                     12/21/08 to 12/21/09              $2.44
                                     12/21/09 to 12/20/10              $3.05
                                     12/21/10 to 12/20/11              $3.81

Lapse Date                           Any options not exercised on or prior to
                                     December 20, 2011 (the "Expiration Date")
                                     shall lapse and be of no further force and
                                     effect.

     Part II of this Agreement is attached hereto and incorporated herein for
all purposes. EXECUTED to be effective as of the Grant Date set forth above.

ENGLOBAL CORPORATION                      ALLIANCE 2000, LTD.

By: /s/ William A. Coskey                 BHC Management Corporation
   -------------------------------        General Partner
    William A. Coskey, Chairman

                                          By: /s/ William A. Coskey
                                              -------------------------
                                              William A. Coskey, President

                                          OPTIONEE

                                          Signature: /s/ Michael L. Burrow
                                                     -------------------------
                                                     Michael L. Burrow
                                                     7955 Shire Lane
                                                     Beaumont, TX 77706
                                                     SS#: ###-##-####

<PAGE>

                                     PART II

     This Amended and Restated Stock Option Agreement (this "Agreement") is made
and entered into by and between Alliance 2000, Ltd., a Texas limited partnership
(the "Alliance"), ENGlobal Corporation, formerly known as Industrial Data
Systems Corporation (the "Company" or "ENGlobal") and the optionee named on Part
I (the "Optionee"), as of the date set forth on Part I (the "Grant Date"). This
Agreement is entered into pursuant to that certain Option Pool Agreement by and
between ENGlobal (including its subsidiaries) and Alliance dated to be effective
December 21, 2001, together with an amendment and restatement of the Option Pool
Agreement dated to be effective December 20, 2006.

                                    RECITALS:

     Alliance and the Company entered into an Option Pool Agreement on December
21, 2001 in order to provide an incentive for key employees of the Company and
of its subsidiaries to remain in the service of the Company or its subsidiaries,
to extend to them the opportunity to acquire a proprietary interest in the
Company so that they would apply their best efforts for the benefit of the
Company and its subsidiaries, and would aid the Company in attracting able
persons to enter the service of the Company and its subsidiaries.

     To accomplish these purposes, Alliance agreed, in accordance with the terms
of an Agreement and Plan of Merger dated July 31, 2001, to give certain current
and future employees of ENGlobal options to acquire up to 2,600,000 shares of
the common stock, par value, $.001 per share (the "Common Stock"), of ENGlobal
held by Alliance in accordance with the terms of the Option Pool Agreement.

     On December 20, 2006, Alliance, the Company, and Optionee amended and
restated the terms of the unexpired options granted under the Option Pool
Agreement to extend the expiration date to December 20, 2011.

     In consideration of the execution and delivery by Optionee of a Separation
Agreement and Full & Final Release of Claims, and for other good and valuable
consideration, Alliance, the Company and Optionee wish to amend certain terms of
this Agreement.

     NOW, THEREFORE, parties agree as follows:

     1. Grant of the Option. Alliance hereby extends the term of the option
granted to Optionee under the Option Pool Agreement (the "Option") to purchase
from Alliance the aggregate number of shares set forth on Part 1 (such number
being subject to adjustment as provided below and as provided in Section 8) of
common stock, $0.001 par value per share, of the Company (the "Shares") on the
terms and conditions set forth in this Agreement. The Option may be exercised in
whole or in part, subject to the terms and conditions of this Agreement. The
Option is not intended to qualify as an "incentive stock option" under Section
422 of the Code.

     2. Exercise Price. The price at which the Optionee shall be entitled to
purchase the Shares shall be dependent on the date of exercise, as set forth on
Part I subject to adjustment as provided in Section 8.

<PAGE>

     3. Vesting and Term of the Option.

          (a) General. The Option shall vest and be exercisable in the hands of
the Optionee only upon the consummation of a Company Sale Event. A "Company Sale
Event" is (i) a sale of substantially all of the assets of the company to a
person or entity that is not an affiliate of the Company, (ii) any sale in a
single transaction or in a series of related and substantially similar
contemporaneous transactions of the issued and outstanding securities of the
Company representing 50% or more of the total number of shares of the Company
then outstanding to any person or entity that is not an affiliate of the selling
shareholders, or (iii) any merger, consolidation or reorganization of the
Company with or into one or more entities that are not Affiliates of the
Company, as a result of which less than 50% of the outstanding voting
securities, partnership interests or membership interests of the surviving or
resulting entity are owned by the holders of the Company's securities (or their
Affiliates) immediately prior to such merger, consolidation or reorganization.
Notwithstanding anything to the contrary provided herein, the issuance of
securities by the Company in an acquisition by the Company or by any of its
subsidiaries of another business shall not constitute a Company Sale Event.
Options which shall have vested shall be referred to as "Vested Options".

          (b) Expiration. Notwithstanding any other provision contained herein
to the contrary, the unexercised portion of the Option, if any, will
automatically and without notice terminate on December 21, 2011 (the "Expiration
Date").

     4. Method of Exercising Option. The Optionee may exercise any Vested Option
concurrently with the consummation of a Company Sale Event. The Company shall
give Optionee at least 30 days notice of the contemplated consummation of a
Company Sale Event. Optionee may exercise this Option within 20 days of the
receipt of such notice as to some or all of the Option Shares by delivery to the
Company and to Alliance of a written notice in the form attached as Exhibit A
(the "Exercise Notice"), which Exercise Notice shall be effective, subject to
the requirements of this Agreement, on the later of the date received by both of
the Company and Alliance. The Exercise Notice shall state the Optionee's
election to exercise the Option, the number of Options in respect of which an
election to exercise has been made, the method of payment elected (see Section
5), the exact name or names in which the Shares then being purchased will be
registered and the social security number of the Optionee. The Exercise Notice
must be signed by the Optionee and must be accompanied by payment of the
aggregate Exercise Price of the Shares then being purchased, determined in
accordance with Part I. All Shares delivered by Alliance upon exercise of the
Options as provided in this Agreement shall be fully paid and nonassessable upon
delivery. Unless the Shares issued upon the exercise of the Options are then the
subject of a registration statement effective under the Securities Act of 1933,
as amended ("Securities Act") (and, if required, there is available for delivery
a prospectus meeting the requirements of Section 10(a)(3) of the Securities
Act), the delivery of the Exercise Notice shall be deemed to be the making by
the person delivering such Exercise Notice of the representations,
acknowledgments and agreements which would be contained in the Investment Letter
referred to in Section 9.

     5. Method of Payment for Options. If the Company Sale Event results in a
cash payment to the Company's stockholders, Optionee may elect to have the cash
payment due to Alliance from Optionee upon exercise of the options deducted from

<PAGE>

the consideration Optionee could otherwise receive on the consummation of the
Company Sale Event if the stock were held by Optionee, and the amount deducted
shall be deemed paid by Optionee to Alliance as the Exercise Price. Otherwise,
unless permitted by Alliance, the full Exercise Price for the Shares purchased
upon the exercise of the Vested Options (i.e. the number of Shares being
purchased multiplied by the Exercise Price per Share) must be made in cash,
unless Alliance and the Company approve an exercise in assets other than cash.
which approval may be granted or withheld in the sole discretion of the Company
and Alliance. Alliance will accept payment by cashier's check, personal check,
provided that if such personal check is returned for insufficient funds, payment
for the Shares and for any applicable taxes required to be withheld by the
Company shall be deemed not to have occurred. In addition, the Option shall not
be deemed to be exercised until the Optionee has provided payment to the Company
for withholding taxes, if any, which may be due with respect to such exercise.

     6. Delivery of Shares. No Shares and no consideration received on a Company
Sale Event shall be delivered to the Optionee upon exercise of the Option until
(1) the Exercise Price for such Shares being purchased is paid in full in the
manner provided in this Agreement by deduction or otherwise as provided in
Section 5; (ii) all the applicable taxes required to be withheld have been paid
or withheld in full; and (iii) if required by the Board of Directors, the
Optionee has delivered to the Company and Alliance an Investment Letter in form
and content satisfactory to the Company as provided in Section 10.

          (a) This Option shall not be transferable by the Optionee, unless
Alliance and the Company approve the transfer of this Option, which approval may
be granted or withheld in the sole discretion of the Company and Alliance.

          (b) If Optionee attempts or purports to transfer, assign, pledge or
hypothecate this Option, or any rights and privileges in connection herewith, in
any way, whether by operation of law or otherwise, this Agreement and the Option
granted hereunder will automatically terminate and the Option will thereafter be
null and void.

     7. Adjustments. If there is any change in the capital structure of the
Company through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares or similar event (a
"Restructuring"), the rights of the Optionee shall be adjusted accordingly,
i.e., the number of Shares exercisable hereunder shall be increased
proportionately, and the price (including Exercise Price) for each Share shall
be reduced proportionately, without changing the aggregate purchase price or
value as to which outstanding Options remain exercisable or subject to
restrictions. Nothing in this Agreement shall affect in any way the right or
power of the Company to make or authorize any Restructuring.

     8. Securities Act. Alliance will not be required to deliver any Shares
pursuant to the exercise of all or any part of the Option if, in the reasonable
opinion of counsel for Alliance, such delivery would violate the Securities Act
or any other applicable federal or state securities laws or regulations.
Alliance or the Company may require that the Optionee, prior to the transfer of
any such Shares pursuant to exercise of the Option, sign and deliver to the
Company a written statement (an "Investment Letter") stating that (a) the
Optionee is purchasing the Shares for his own account and other than the Company

<PAGE>

Sale Event, is not purchasing the Shares with a view to, or for sale in
connection with, any distribution thereof; he has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof and he does not currently have any reason
to anticipate a change in the foregoing: (b) the Optionee understands that the
Shares have not been registered under the Securities Act or any applicable state
securities laws or regulations and, therefore, cannot be offered or resold
unless the Shares are so registered or an applicable exemption from registration
is available; and (c) the Optionee agrees that the certificates representing the
Shares may bear a legend to the effect set forth in clause (b) above. The
Investment Letter must be in form and substance acceptable to the Company in its
reasonable discretion.

     9. Notice. All notices required or permitted under this Agreement,
including an Exercise Notice, must be in writing and personally delivered or
sent by mail and shall be deemed to be delivered on the date on which actually
received by the Company properly addressed to the person who is to receive it.
An Exercise Notice shall be effective when actually received by the Company and
Alliance; in writing and in conformance with this Agreement. Until changed in
accordance herewith, the Company, Alliance and the Optionee specify their
respective addresses as set forth below:

        Company:            ENGlobal Corporation
                            654 N. Sam Houston Pkwy. E
                            Suite 400
                            Houston, Texas 77060-5914
                            Attention:  Corporate Secretary

        Alliance:           ALLIANCE 2000, LTD.
                            654 N. Sam Houston Pkwy. E
                            Suite 400
                            Houston, Texas 77060-5914
                            Attention:  General Partner

        Optionee:           As indicated on Part I

     10. Information Confidential. As partial consideration for the granting of
this Option, the Optionee agrees that he will keep confidential all information
and knowledge that he has relating to the Options granted hereunder; provided,
however, that such information may lie disclosed as required by law and may be
given in confidence to the Optionee's spouse, tax and financial advisors, or a
financial institution to the extent that such information is necessary to obtain
a loan.

     11. [INTENTIONALLY DELETED]

     12. No Obligation to Exercise. The Optionee shall have no obligation to
exercise any Option granted by this Agreement.

     13. Governing Law: Construction. This Agreement shall be governed by the
laws of the State of Texas without regard to choice of law and conflicts of law
principles which direct the application of the laws of a different state. Any
disputes relating to this Agreement shall be heard in the state and federal
courts of Harris County, Texas. Titles and headings are for ease of reference

<PAGE>

only and shall not be considered in construing this Agreement. Pronouns shall be
deemed to include the masculine, feminine, neuter, singular and plural as the
context may require. References to sections and exhibits are to Sections and
Exhibits of this Agreement unless otherwise indicated. All such Exhibits are
incorporated in this Agreement by reference and are a part hereof.

     14. Amendments. This Agreement may be amended only by a written agreement
executed by Alliance, the Company and the Optionee.

     15. Proprietary Information. In consideration of Alliance's grant of this
Option and in further consideration of the Company's agreement to provide
Optionee with confidential information of the Company, Optionee agrees to keep
confidential and not to use or to disclose to others at any time during the term
of this Agreement or after its termination, except as expressly consented to in
writing by the Company or required by law, any secrets or confidential
technology or proprietary information of the Company, including, without
limitation, any customer list, marketing plans or materials, or other trade
secrets of the Company, or any matter or thing ascertained by Optionee through
Optionee's affiliation with the Company, the use or disclosure of which matter
or thing might reasonably be construed to be contrary to the best interests of
the Company or to give any other party a competitive advantage to the Company.
Optionee further agrees that if Optionee's employment with the Company is
terminated for any reason, Optionee will neither take nor retain, without prior
written authorization from the Company, any documents pertaining to the Company.
Without limiting the generality or the foregoing, Optionee agrees that he will
not retain, use or disclose any papers, customer lists, marketing materials or
information, books, records, files, or other documents, copies thereof, or notes
or other materials derived therefrom, or other confidential information of any
kind belonging to the Company pertaining to the Company's business, sales,
financial condition, or products, and that he will delete all such information
from any electronic or other storage owned by Optionee or under Optionee's
control. Within five days of a written request from the Company, Optionee will
provide the Company with a signed affidavit verifying that all such confidential
information has been returned to the Company or destroyed, and has been deleted
from electronic or other storage. Without limiting other possible remedies to
the Company for the breach of this covenant, Optionee agrees that injunctive or
other equitable relief shall be available to enforce this covenant, such relief
to be without the necessity of posting a bond, cash, or otherwise. Optionee
further agrees that if any restriction contained in this Section is held by any
court to be unenforceable or unreasonable, a lesser restriction shall be
enforced in its place and remaining restrictions contained herein shall be
enforced independently of each other. Optionee's obligations under this Section
apply to all confidential information of the Company as well as to any and all
confidential information relating to the Company's subsidiaries and affiliates.

     16. Noncompetition.

          (a) Basis of Covenants. The Company's business involves providing
engineering, technical staffing, automation and control systems, field
inspection, and land management and regulatory services to the petroleum
refining petrochemical, pipeline, production, and process industries throughout
the United States and internationally. Optionee recognizes that the Company's
and Alliance's decision to enter into the original Alliance Stock Operation

<PAGE>

Agreement and to grant the Option herein granted is induced primarily because of
the covenants and assurances made by Optionee in this Agreement and the
extension of the termination date provided for in this Agreement is induced
primarily by Optionee's effective date of the Separation Agreement and Full and
Final Release of Claims signed on the date of this Agreement, and that
irrevocable harm and damage will be done to the Company and Alliance if Optionee
violates the obligation to maintain the confidentiality of proprietary
information, or competes with the Company. Optionee stipulates and agrees that
the consideration given by the Company and Alliance in granting this Option and
in granting Optionee access to the confidential information of the Company gives
rise to the Company's and Alliance's interest in the promises made by Optionee
in this paragraph; further, Optionee stipulates that the promises Optionee makes
in this paragraph are designed to enforce the promises made by Optionee,
including those set forth in paragraph 15. Optionee will continue to receive the
Company's proprietary information and will receive training of substantial value
as a result of his affiliation with the Company.

          (b) Noncompetition Covenant. Optionee agrees that for as long as
Optionee has rights to acquire Shares under this Agreement, Optionee shall not,
directly or indirectly, as an employee, employer, contractor, consultant, agent,
principal, shareholder, corporate officer, director, or in any other individual
or representative capacity, engage or participate in any business or practice
that is in competition in any manner whatsoever with the business of the
Company.

          (c) Non-Interference Covenant. Optionee covenants and agrees that, for
a period of one year subsequent to the termination, for whatever reason, of his
employment with the Company, that Optionee shall not recruit, hire or attempt to
recruit or hire, directly or by assisting others, any other employees of the
Company, nor shall Optionee contact or communicate with any other employees of
the Company for the purpose of inducing other employees to terminate their
employment with the Company. For purposes of this covenant, "other employees"
means employees who are actively employed by the Company at the time of the
attempted recruiting or hiring.

          (d) Remedies.

               (i) This covenant shall be construed as an agreement ancillary to
the other provisions of this Agreement and the existence of any claim or cause
of action of Optionee against the Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company
or Alliance of this covenant. Without limiting other possible remedies to the
Company or Alliance for breach of this covenant, Optionee agrees that injunctive
or other equitable relief will be available to enforce the covenants of this
provision, such relief to be without the necessity of posting a bond, cash, or
otherwise.

               (ii) If Optionee violates any of the covenants of this paragraph
16, the term of the restriction violated shall be extended by the amount of time
that Optionee was in violation.

               (iii) The Company, Alliance and Optionee further agree that if
any restriction contained in this paragraph 16 is held by any appropriate forum
to be unenforceable or unreasonable, a lesser restriction will be enforced in
its place and remaining restrictions contained herein will be enforced

<PAGE>

independently of each other. Optionee agrees to pay any attorneys fees and
expenses incurred by the Company or Alliance if the Company or Alliance chooses,
in their sole discretion, to enforce any provision hereunder.

               (iv) If Optionee violates paragraph 15 or 16 of this Agreement at
a time that he holds Options, the Options shall be immediately cancelled and
shall have no further force and effect. In addition, if Optionee violates
paragraph 15 or 16 of this Agreement following his exercise of Options, he shall
forfeit to the Company an amount equal to the difference between the fair market
value on the date of exercise for the Option exercised and the Exercise Price.
This amount shall be paid to the Company in addition to payment of all other
damages that the Company and Alliance has suffered as a result of Optionee's
breach and in addition to all other relief to which the Company is entitled
under this Agreement and under applicable law.

     17. No Rights as a Shareholder. Optionee shall not by virtue of this
Agreement, have any rights as a shareholder until the date of the issuance to
the Optionee of Shares pursuant to a valid Exercise Notice.

     18. Severability. If any provision of this Agreement is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Agreement, and the remainder of this Agreement shall
be enforced. In addition, the invalid, illegal or unenforceable provision shall
be deemed to be automatically modified, and, as so modified, to be included in
this Agreement, such modification being made to the minimum extent necessary to
render the provision valid, legal and enforceable. Notwithstanding the
foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Agreement by
one party to the other, the remaining, provisions of this Agreement shall also
be modified to the extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.

     19. Entire Agreement. Except as provided below, this Agreement, including
the exhibits and schedules attached hereto, if any, contains the entire
agreement of the parties with respect to the subject matters hereto, and
supersedes all prior agreements between them, whether oral or written, of any
nature whatsoever with respect to the subject matter hereof. However, this
Agreement does not supersede any agreements between Optionee and the Company for
options granted under the Company's Incentive Stock Option Plan, or the
Company's rights under any agreement between Optionee and the Company that
protects the Company's proprietary information or intellectual property; rather
all such rights of the Company under any such agreements shall be in addition to
the rights granted herein.

<PAGE>

                           EXHIBIT A - EXERCISE NOTICE

     Notice is hereby given to the Company of Optionee's election to exercise
Options as follows:

Name of Optionee (please print):_______________________________

Optionee's Social Security Number:_____________________________

A.  Number of Shares to be purchased:
B.  Exercise Price per Share:                               $
C.  Method of payment (Check One):                          Cash:

                                                            Other- as authorized
                                                            By Alliance:

D.  Exercise Price tendered herewith: (A x B)               $
E.  Market Price per Share on date of Exercise:             $
F.  Difference Between Market Price and Exercise Price      $
    (E - B):
G.  Total Difference (F x A):                               $
H.  Withholding Tax Rate:                                   ______%
I   Amount of Tax Withholding tendered herewith (G x H):    $
J.  Total Amount Due on Exercise (D + I):                   $

*Upon exercise of Options, the Company may collect withholding tax on the
difference between the market value of the Shares on the day of the exercise
less the exercise price (the "difference"). This difference Will be included on
a Form W2 issued to the Optionee following the end of the year.

Exact name(s) for Share certificate(s):

Date:________________________

                                            __________________________________
                                            Signature of Optionee

           PLEASE COMPLETE AND SIGN THIS NOTICE AND RETURN IT TO BOTH:

ENGlobal Corporation                     Alliance 2000, Ltd.
654 N. Sam Houston Pkwy. E               654 N. Sam Houston Pkwy. E
Suite 400                                Suite 400
Houston, Texas 77060-5914                Houston, Texas 77060-5914
ATTN:  Corporate Secretary               Attention:  General Partner

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