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Exhibit 10.15

AMENDMENT NUMBER NINE TO REVOLVING CREDIT AGREEMENT

 
This AMENDMENT NUMBER NINE TO REVOLVING CREDIT AGREEMENT (this “Amendment”),
dated as of December 5, 2007, is entered into among NATIONAL TECHNICAL SYSTEMS,
INC., a California corporation (“Parent”), NTS TECHNICAL SYSTEMS, a California
corporation, dba National Technical Systems (“NTS”), XXCAL, INC., a California
corporation (“XXCAL”), APPROVED ENGINEERING TEST LABORATORIES, INC., a
California corporation (“AETL”), ETCR, INC., a California corporation (“ETCR”),
ACTON ENVIRONMENTAL TESTING CORPORATION, a Massachusetts corporation (“Acton”),
PHASE SEVEN LABORATORIES, INC., a California corporation (“Phase Seven”), and
UNITED STATES TEST LABORATORY, L.L.C., a Kansas limited liability company
(“USTL”), and one or more Subsidiaries of Parent, whether now existing or
hereafter acquired or formed, which become party to the Agreement (as defined
below) by executing an Addendum in the form of Exhibit 1 of the Agreement (NTS,
XXCAL, AETL, ETCR, Acton, Phase Seven, USTL and such other Subsidiaries are
sometimes individually referred to herein as a “Subsidiary Borrower” and
collectively referred to herein as “Subsidiary Borrowers”, and Subsidiary
Borrowers and Parent are sometimes individually referred to herein as a
“Borrower” and collectively referred to herein as “Borrowers”), the financial
institutions from time to time parties hereto as Lenders, whether by execution
hereof or an Assignment and Acceptance in accordance with Section 11.5(c) of the
Agreement, and Comerica Bank, in its capacity as contractual representative for
itself and the other Lenders (“Agent”), with reference to the following facts:

A.            Borrowers (other than USTL), Agent and Lenders are parties to that
certain Revolving Credit Agreement, dated as of November 21, 2001, as amended by
that certain Amendment Number One to Revolving Credit Agreement, dated as of
July 17, 2002, that certain Amendment Number Two to Revolving Credit Agreement,
dated as of November 25, 2002, that certain Amendment Number Three to Revolving
Credit Agreement, dated as of July 21, 2003, that certain Amendment Number Four
to Revolving Credit Agreement, dated as of July 30, 2004, that certain Amendment
Number Five to Revolving Credit Agreement, dated as of July 1, 2005, that
certain Amendment Number Six to Revolving Credit Agreement, dated as of March
29, 2006, that certain Amendment Number Seven to Revolving Credit Agreement,
dated as of September 21, 2006, and that certain Amendment Number Eight to
Revolving Credit Agreement, dated as of September 26, 2007 (as so amended, the
“Agreement”);

B.            Borrowers (other than USTL) and Agent, in its capacity as Agent
for the Lenders, entered into that certain Security Agreement, dated as of
November 21, 2001 (the “Security Agreement”);

C.            Concurrent herewith, USTL is executing and delivering an Addendum
to Revolving Credit Agreement and an Addendum to Security Agreement in order to
become a Borrower under the Agreement and the Security Agreement; and

D.            Borrowers, Agent and Lenders desire to further amend the Agreement
in accordance with the terms of this Amendment.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby
agree

 
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as follows:

1.             Defined Terms. All initially capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Agreement.

2.             Consent. Borrowers have informed Agent and Lenders that Parent
intends to purchase, directly or indirectly, one hundred percent (100%) of the
membership interests of USTL (the “Acquisition”). In connection with the
Acquisition, Parent and, if applicable, its designee will owe certain earnout
obligations to the sellers of USTL (the “Earnout”). Borrowers have therefore
requested that the Lenders consent to the Acquisition and the Earnout.
Notwithstanding any term or provision of the Agreement to the contrary, the
Lenders hereby consent to the Acquisition and the Earnout, and agree that the
Acquisition and the Earnout shall not cause an Event of Default. The consent set
forth herein shall be limited precisely as written and shall not be deemed to be
(i) an amendment, waiver, consent, or modification of any other term or
condition of the Agreement, or (ii) prejudice any right or remedy which the
Lenders may now or in the future have under or in connection with the Agreement.

3.             Amendments to the Agreement.

3.1           Borrowers. All references to “Borrowers” in the Agreement shall
include USTL.

3.2           Definitions.

(a)           The following definitions set forth in Section 1.1 of the
Agreement are hereby amended in their entirety as follows:

“Amendment Date” means the date when all of the conditions set forth in Section
4 of Amendment No. 9 have been fulfilled to satisfaction of Agent and counsel.

“Borrowing” means a borrowing of Revolving Loans from the Revolving Loan Lenders
pursuant to the terms and conditions hereof.

“Commitment” means a Lender’s Revolving Credit Commitment, Term Loan A
Commitment and/or Term Loan B Commitment, as the context requires.

“COF Lending Rate” means the sum of the COF (as of the date on which the Fixed
Rate Portion of the Term Loans A has been converted to the COF Lending Rate
Loans pursuant to Borrowers’ exercise of their option under Section 2.4(a)(ii))
plus two and one-quarter percentage points (225 basis points).

“COF Lending Rate Loans” means the Fixed Rate Portion of the Term Loans A if the
Borrowers have elected to convert such Loans to bear interest at the COF Lending
Rate pursuant to Section 2.4(a)(ii).

“Excluded Subsidiaries” means, all Subsidiaries of Borrowers that: (i) are not
organized under the laws of any state or any territory of the United States of
America, or any province or any territory of Canada, or (ii) are not wholly
owned

 
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by any Borrower or any Subsidiary, including but not limited to XXCAL, Limited,
a corporation organized under the laws of the United Kingdom, XXCAL, Japan K.K,
a corporation organized under the laws of Japan, National Quality Assurance,
Inc., a Massachusetts corporation, NQA Laboratory Services, Inc., a
Massachusetts corporation, NQA-USA, a Massachusetts corporation, NQA Training
and Development, Inc., a Massachusetts corporation, and National Technical
Systems Certifications Services, a Delaware corporation.

“Fees” means the Facility Fee, the Late Payment Fee, the Letter of Credit Fees
and the Audit Fees.

“Interest Payment Date” means:

(i)            with respect to each Prime Lending Rate Portion, the last day of
each and every quarter commencing the last such day after the making of such
Loan, and the Revolving Loans Maturity Date (in the case of the Revolving
Loans), the Term Loans A Maturity Date (in the case of the Term Loans A), and
the Term Loans B Maturity Date (in the case of the Term Loans B).

(ii)            with respect to each LIBOR Lending Rate Portion, the earlier of:
(1) the last day of the Interest Period with respect thereto, or (2) if the
Interest Period has a duration of more than three months, every LIBOR Business
Day that occurs during such Interest Period every three months from the first
day of such Interest Period; and

(iii)           with respect to the COF Lending Rate Loans, the last day of each
and every quarter, and the Term Loans A Maturity Date.

“Letter of Credit Sublimit” means Five Hundred Thousand Dollars ($500,000).

“LIBOR Lending Rate Margin” means (a) with respect to all Revolving Loans, two
percentage points (200 basis points), and (b) with respect to the Term Loans A
and the Term Loans B, two and one-quarter percentage points (225 basis points).

“Loans” means the Revolving Loans, the Term Loans A and the Term Loans B (each,
a “Loan”).

“Notes” means, collectively, the Revolving Notes, the Term A Notes and the Term
B Notes (each, a “Note”).

“Prepayment Amount” means:

(i)             If the Prepaid Principal Amount exceeds $750,000, then the
Prepayment Amount is the sum of: (x) the Prepaid Principal Amount; (y) interest
accruing on the Prepaid Principal Amount up to, but not including, the
Prepayment Date; (z) $500; plus the present value, discounted at the

 
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Reinvestment Rates of the positive amount by which (A) the interest the Term
Loan A Lenders would have earned had the Prepaid Principal Amount not been paid
prior to the Term Loans A Maturity Date at the COF Lending Rate, exceeds (B) the
interest the Term Loan A Lenders would earn by reinvesting the Prepaid Principal
Amount at the Reinvestment Rates.

(ii)            If the Prepaid Principal Amount is $750,000 or less, then the
Prepayment Amount is the sum of: (x) the Prepaid Principal Amount; (y) interest
accruing on the Prepaid Principal Amount up to, but not including, the
Prepayment Date; plus (z) an amount equal to two percent (2%) of the Prepaid
Principal Amount.

“Revolving Loans Maturity Date” means December 1, 2012.

“Total Commitment Percentage” means, with respect to any Lender, the percentage
equal to sum of such Lender’s Revolving Loan Commitment, Term Loan A Commitment
and Term Loan B Commitment, divided by the Total Credit.

“Total Credit” means $38,150,000.

“Interest Period” means, with respect to each LIBOR Lending Rate Portion, the
period commencing on the date of such LIBOR Lending Rate Portion and ending on
the numerically corresponding day one (1), two (2), three (3), four (4), five
(5), six (6) or twelve (12) months thereafter as Parent or any Borrower may
elect pursuant to the applicable Notice of Borrowing or Notice of Conversion or
Continuation; provided, however, that:

(i)             any Interest Period which would otherwise end on a day which is
not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business
Day unless such LIBOR Business Day falls in another calendar month in which case
such Interest Period shall end on the immediately preceding LIBOR Business Day;

(ii)            any Interest Period which begins on the last LIBOR Business Day
of the calendar month (or on a day for which there is no numerically
corres­ponding day in the calendar month at the end of such Interest Period)
shall end on the last LIBOR Business Day of the calendar month in which it would
have ended if there were a numerically corresponding day in such calendar month;
and

(iii)           no Interest Period respecting a Revolving Loan may extend beyond
the Revolving Loans Maturity Date, no Interest Period respecting the Term Loans
A may extend beyond the Term Loans A Maturity Date and no Interest Period
respecting the Term Loans B may extend beyond the Term Loans B Maturity Date.

(b)           The following definitions are hereby added to Section 1.1 of the
Agreement in alphabetical order:

 
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“118 Acre Parcel” has the meaning given to such terms in Section 6.16.

“118 Acre Parcel Sale” means the sale of the 118 Acre Parcel.

“118 Acre Parcel Sale Proceeds” means the proceeds received from the 118 Acre
Parcel Sale in an amount equal to the greater of (i) $13,500,000, or (ii) the
sale price of the 118 Acre Parcel, net of taxes and documented out-of-pocket
costs and expenses incurred in connection with such sale, including, without
limitation, expenses related to moving Borrowers’ equipment off the 118 Acre
Parcel and otherwise preparing the 118 Acre Parcel for sale, if higher.

“25 Acre Parcel” has the meaning given to such terms in Section 6.16.

“Adjusted Working Capital” means the amount calculated as (a) the consolidated
current assets of Borrowers, minus (b) the amount of cash and cash equivalents
included in such consolidated current assets, minus (c) the consolidated current
liabilities of Borrowers (for purposes of this calculation the amount of
Revolving Loans shall be included in consolidated current liabilities).

“Amendment No. 9” means that certain Amendment Number Nine to Revolving Credit
Agreement, dated as of November 28, 2007, among Borrowers, Agent and Lenders.

“Boxborough Real Estate” means the commercial real estate owned by ETCR and
located at 1146 Massachusetts Avenue, Boxborough, Massachusetts 01719.

“Boxborough Real Estate Sale” means the sale of the Boxborough Real Estate.

“Boxborough Real Estate Sale Proceeds” means the proceeds received from the
Boxborough Real Estate Sale in an amount equal to the greater of (i) $1,312,500,
or (ii) the sale price of the Boxborough Real Estate, net of taxes and
documented out-of-pocket costs and expenses incurred in connection with such
sale, if higher.

“Consolidated EBITDA” means, with respect to any period, the sum of (without
duplication) (i) Consolidated Net Income for such period (excluding
extraordinary gains and losses); (ii) Consolidated Interest Expense during such
period; (iii) accrued federal and state income taxes payable by each Borrower
and the Subsidiaries during such period which are included in the determination
of Consolidated Net Income; (iv) each Borrower’s and the Subsidiaries’
consolidated depreciation and amortization during such period; in each case
calculated in accordance with GAAP; and (v) non-cash stock options expenses (it
being understood that the foregoing shall include USTL for all applicable
measurement periods prior to the consummation of the USTL Acquisition).

 
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“Consolidated Interest Expense” means, with respect to any period, the current
interest accrued during such period in accordance with GAAP on the aggregate
amount of each Borrower’s and the Subsidiaries’ consolidated Debt, including the
interest portion of each Borrower’s and the Subsidiaries’ consolidated Capital
Lease Obligations.

“Consolidated Net Income” means, with respect to any period, the consolidated
net income of Borrowers and the Subsidiaries after all federal, state and local
income taxes reflected on Borrowers’ Financial Statement for such period,
calculated in accordance with GAAP.

“Excess Cash Flow” means, for the applicable fiscal year of Borrowers, the
result of (i) Consolidated Net Income, plus (ii) to the extent deducted from
Consolidated Net Income, each Borrower’s consolidated depreciation, amortization
and non-cash stock option expenses during such fiscal year, plus any decrease or
minus any increase, as applicable, in (iii) Adjusted Working Capital for such
fiscal year, minus (iv) the sum of (a) unfinanced Capital Expenditures made
during such fiscal year up to the applicable amount set forth in Section 7.12,
(b) all regularly scheduled payments of principal made on Funded Debt (excluding
the Revolving Loans and any other revolving Funded Debt) during such fiscal
year, and (c) the amount of any optional prepayments made on the Term Loans A
and the Term Loans B during such fiscal year (excluding the proceeds of
Permitted Real Estate Sales applied as permanent reductions to the Term Loans A
and the Term Loans B); in each case calculated in accordance with GAAP.

“Funded Debt” means each Borrower’s (i) indebtedness heretofore or hereafter
created, issued, incurred or assumed for or in respect of money borrowed; (ii)
Capital Lease Obligations; and (iii) obligations evidenced by bonds, debentures,
notes, or other similar instruments.

“Interest Only End-Date” means December 5, 2008.

“Fixed Charge Coverage Ratio” means as of the last day of each fiscal quarter,
the ratio of: (i) Consolidated EBITDA for the four fiscal quarter period ending
on such day, minus unfinanced Capital Expenditures, dividends, and all federal,
state and local taxes paid by each Borrower and the Subsidiaries during the four
fiscal quarter period ending on such day); to (ii) the sum of (1) the current
portion (other than interest) of Borrowers’ and the Subsidiaries’ consolidated
long-term Debt, (2) the current portion of Capital Lease Obligations of each
Borrower and the Subsidiaries (exclusive of the interest portion), and (3)
Consolidated Interest Expense, in each case for the four fiscal quarter period
ending on such day; in each case calculated in accordance with GAAP.

“Fixed Rate Portion” means one-half of the outstanding balance of the Term Loans
A that Borrowers have elected to convert to the COF Lending Rate Loans pursuant
to Borrowers’ exercise of their option under Section 2.4(a)(ii).

 
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“Permitted Real Estate Sales” means, collectively, the Boxborough Real Estate
Sale and the 118 Acre Parcel Sale.

“Pre-Existing Term Debt” means, collectively, all outstanding term debt owed by
the Borrowers to Lenders under the Agreement immediately before the Amendment
Date and Borrowers’ real estate loan from GE Capital respecting the Boxborough
Real Estate and outstanding immediately before the Amendment Date.

“Saugus Real Estate” means, collectively, the 118 Acre Parcel and the 25 Acre
Parcel.

“Term Loan A Commitment” means, with respect to any Term Loan A Lender, the
amount indicated opposite such Lender’s name on Schedule 1.1C under the heading
Term Loan A Commitment or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the amount of the assigning Lender’s Term Loan A
Commitment assigned to such assignee Lender (collectively, the “Term Loan A
Commitments”).

“Term Loan A Commitment Percentage” means, with respect to any Term Loan A
Lender, the percentage indicated on Schedule 1.1C under the heading Term Loan A
Commitment Percentage or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the percentage the assigning Lender’s Term Loan A
Commitment assigned to such assignee Lender.

“Term Loan A Lender” means each of the Lenders indicated on Schedule 1.1C under
the heading Term Loan A Lenders, and also means any assignee of such Lender
pursuant to Section 11.5(c).

“Term Loans A Maturity Date” means December 1, 2012.

“Term A Notes” means, collectively, the promissory notes executed by each
Borrower to the order of each Lender pursuant to Section 2.11(a) to evidence
such Lender’s Term Loan A.

“Term Loan B Commitment” means, with respect to any Term Loan B Lender, the
amount indicated opposite such Lender’s name on Schedule 1.1C under the heading
Term Loan B Commitment or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the amount of the assigning Lender’s Term Loan B
Commitment assigned to such assignee Lender (collectively, the “Term Loan B
Commitments”).

“Term Loan B Commitment Percentage” means, with respect to any Term Loan B
Lender, the percentage indicated on Schedule 1.1C under the heading Term Loan B
Commitment Percentage or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the percentage the assigning Lender’s Term Loan B
Commitment assigned to such assignee Lender.

 
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“Term Loan B Lender” means each of the Lenders indicated on Schedule 1.1C under
the heading Term Loan B Lenders, and also means any assignee of such Lender
pursuant to Section 11.5(c).

“Term Loans B Maturity Date” means December 1, 2012.

“Term B Notes” means, collectively, the promissory notes executed by each
Borrower to the order of each Lender pursuant to Section 2.11(a) to evidence
such Lender’s Term Loan B.

“USTL” means United States Test Laboratory, L.L.C., a Kansas limited liability
company.

“USTL Acquisition” means the acquisition by Parent (or its designee) of the
membership interests in USTL.

(c)           The following definitions are hereby deleted from Section 1.1 of
the Agreement without replacement: “Amendment No. 5”; “Consolidated Total
Liabilities to Consolidated Effective Tangible Net Worth Ratio”; “Current
Liabilities”; “Debt Service Coverage Ratio”; “Dynamic Assets”; “Equipment”;
“Equipment Facility B Loan Commitment”; Equipment Facility B Loan Commitment
Percentage”; “Equipment Facility B Loan Lender”; “Equipment Facility B Loans”;
“Equipment Facilities B Loans Conversion Date”; “Equipment Facility B Loans
Maturity Date”; “Equipment Facility B Loans Notes”; “Equipment Fee”; “Equipment
Loan Commitment”; Equipment Loan Commitment Percentage”; “Equipment Loan
Lender”; “Equipment Loans”; “Equipment Loans Conversion Date”; “Equipment Loans
Maturity Date”; “Equipment Loans Notes”; “Hoffman”; “Hoffman Employment
Agreement”; “Hoffman Stock”; “Quick Ratio”; “Term Loan C Commitment”; “Term Loan
C Commitment Percentage”; “Term Loan C Lender”; “Term Loans C Maturity Date”;
“Term C Notes”; “Term Loan Commitment”; “Term Loan Commitment Percentage”; “Term
Loan Lender”; “Term Loans Maturity Date”; and “Term Notes”.
 
3.3           Term Loans A. Section 2.2 of the Agreement is hereby amended in
its entirety as follows:

2.2           Term Loans A.

(a)           Several Term Loans. Subject to the terms and conditions hereof,
each Term Loan A Lender severally agrees to make a term loan (each a “Term Loan
A” and collectively the “Term Loans A”) to Borrowers on the Amendment Date in an
amount equal to each such Term Loan A Lender’s Term Loan A Commitment, the
proceeds of which shall be used for the purposes allowed in Section 7.1(b). Each
Term Loan A Lender shall make the amount of such Lender’s Term Loan A available
to Agent in same day funds, not later than 9:00 a.m. (Pacific time), on the
Amendment Date, or as soon as practicable thereafter. After Agent’s receipt of
the proceeds of the Term Loans A, Agent shall disburse the Term Loans A as
directed pursuant to written disbursement instructions provided by Borrowers.

 
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(b)           Amortization. Borrowers shall pay twenty (20) quarterly principal
reduction payments on the Term Loans A, each in the aggregate amount of
$321,428.57. Each such payment shall be due and payable on the last day of each
quarter commencing February 28, 2008 and continuing on the last day of each
succeeding quarter. On the Term Loans A Maturity Date, the outstanding principal
balance, and all accrued and unpaid interest under the Term Loans A shall be due
and payable in full.

(c)           Prepayments. Borrowers may prepay the Term Loans A at any time, in
whole or in part, without penalty or premium except as otherwise required by
Section 2.7(a) with respect to repayments of LIBOR Lending Rate Portions and
Section 2.16 with respect to prepayments of COF Lending Rate Loans. All
principal amounts so repaid or prepaid may not be reborrowed. Borrowers shall
give Agent at least two (2) LIBOR Business Days’ prior written notice of any
prepayment of a LIBOR Lending Rate Portion, upon receipt of which, Agent shall
promptly give notice to each Term Loan A Lender. Upon receipt of any such notice
of a prepayment, Agent shall promptly notify each Term Loan A Lender thereof.
Agent shall, promptly following its receipt of any payment or prepayment of the
Term Loans A, distribute to each Term Loan A Lender its pro rata share (based
upon the principal amounts outstanding) of all amounts received by Agent
pursuant to this Section 2.2 for each such Term Loan A Lender’s respective
account. All prepayments shall be applied toward scheduled principal reduction
payments owing under this Section 2.2 in inverse order of maturity.

3.4           Term Loans B. Section 2.3 of the Agreement is hereby amended in
its entirety as follows:

 
2.3
Term Loans B.

(a)           Several Term Loans B. Subject to the terms and conditions hereof,
each Term Loan B Lender severally agrees to make a term loan (each a “Term Loan
B” and collectively the “Term Loans B”) to Borrowers on the Amendment Date in an
amount equal to each such Term Loan B Lender’s Term Loan B Commitment, the
proceeds of which shall be used for the purposes allowed in Section 7.1(c). Each
Term Loan B Lender shall make the amount of such Lender’s Term Loan B available
to Agent in same day funds, not later than 9:00 a.m. (Pacific time), on the
Amendment Date, or as soon as practicable thereafter. After Agent’s receipt of
the proceeds of the Term Loans B, Agent shall disburse the Term Loans B as
directed pursuant to written disbursement instructions provided by Borrowers.

(b)           Amortization. From the Amendment Date until the Interest Only
End-Date, no principal payments shall be due on the outstanding Term Loans B;
provided that Borrowers shall make interest payments thereon during such period
in accordance with Section 2.4. Following the Interest Only End-Date, Borrowers
shall pay quarterly principal reduction payments on the Term

 
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Loans B in the amounts and for the periods set out in the below table. Each such
payment shall be due and payable on the last day of each quarter commencing
February 28, 2009 and continuing on the last day of each succeeding quarter. On
the Term Loans B Maturity Date, the outstanding principal balance, and all
accrued and unpaid interest under the Term Loans B shall be due and payable in
full.

Periods
 
Amounts
     
Years 2-5 of the Term of Term Loan B
 
Quarterly Principal Payment
     
2/28/09 - 11/30/09
 
$158,125
     
2/28/10 - 11/30/10
 
$316,250
     
2/28/11 - 11/30/11
 
$474,375
     
2/29/12 - 11/30/12
 
$474,375

 
(c)           Prepayments. Borrowers may prepay the Term Loans B at any time, in
whole or in part, without penalty or premium except as otherwise required by
Section 2.7(a) with respect to repayments of LIBOR Lending Rate Portions. All
principal amounts so repaid or prepaid may not be reborrowed. Borrowers shall
give Agent at least two (2) LIBOR Business Days’ prior written notice of any
prepayment of a LIBOR Lending Rate Portion, upon receipt of which, Agent shall
promptly give notice to each Term Loan B Lender. Upon receipt of any such notice
of a prepayment, Agent shall promptly notify each Term Loan B Lender thereof.
Agent shall, promptly following its receipt of any payment or prepayment of the
Term Loans B, distribute to each Term Loan B Lender its pro rata share (based
upon the principal amounts outstanding) of all amounts received by Agent
pursuant to this Section 2.3 for each such Term Loan B Lender’s respective
account. All prepayments shall be applied toward scheduled principal reductions
payments owing under this Section 2.3 in inverse order of maturity.

3.5           Interest Rates. Section 2.4(a) of the Agreement is hereby amended
in its entirety as follows:

(a)           Interest Rate Options.

(i)           Revolving Loans. Subject to the terms and conditions hereof, all
Revolving Loans, or portions thereof, may be outstanding as either Prime Lending
Rate Portions or LIBOR Lending Rate Portions, by designating, in accordance with
Sections 2.5(b) and 2.6(b), either the Prime Lending Rate or the LIBOR Lending
Rate to apply to all or any portion of the unpaid principal balance of the
Revolving Loans; provided, however, there shall be no more than three (3) LIBOR
Lending Rate Portions of Revolving Loans outstanding at any time. LIBOR Lending
Rate Portions shall be in minimum

 
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amounts each of 1,000,000.

(ii)         Term Loans A. Subject to the terms and conditions hereof, the Term
Loans A, or portions thereof, may be outstanding as either Prime Lending Rate
Portions or LIBOR Lending Rate Portions, by designating, in accordance with
Sections 2.5(b) and 2.6(b), either the Prime Lending Rate, or the LIBOR Lending
Rate to apply to all or any portion of the unpaid principal balance of the Term
Loans A; provided, however, there shall be no more than three (3) LIBOR Lending
Rate Portions of the Term Loans A outstanding at any time. LIBOR Lending Rate
Portions of the Term Loans A shall be in minimum amounts each of $1,000,000;
provided, further, as soon as possible, but in no event more than ninety (90)
days following the Amendment Date, Borrowers shall have the option upon three
(3) Business Days’ prior written notice to Agent, to either (1) convert one-half
of the outstanding balance of the Term Loans A (i.e., the Fixed Rate Portion of
the Term Loans A) to COF Lending Rate Loans or (2) enter into an interest rate
swap agreement in form and substance satisfactory to the Term Loan A Lenders
with respect to the Fixed Rate Portion of the Term Loans A. If Borrowers fail to
exercise such option, the Term Loans A shall continue to be outstanding as
either Prime Lending Rate Portions or LIBOR Lending Rate Portions in accordance
with this clause (ii). Once the Fixed Rate Portion of the Term Loans A has been
converted to the COF Lending Rate Loans pursuant to this clause (ii), such COF
Lending Rate Loans may not be converted back to Prime Lending Rate Portions or
LIBOR Lending Rate Portions.

(iii)        Term Loans B. Subject to the terms and conditions hereof, the Term
Loans B, or portions thereof, may be outstanding as either Prime Lending Rate
Portions or LIBOR Lending Rate Portions, by designating, in accordance with
Sections 2.5(b) and 2.6(b), either the Prime Lending Rate, or the LIBOR Lending
Rate to apply to all or any portion of the unpaid principal balance of the Term
Loans B; provided, however, there shall be no more than three (3) LIBOR Lending
Rate Portions of Term Loans B outstanding at any time. LIBOR Lending Rate
Portions of Term Loans B shall be in minimum amounts each of $1,000,000.

3.6           Notice of Borrowing Requirements. Section 2.5(b) of the Agreement
is hereby amended in its entirety as follows:

(b)           Each Borrowing shall be made upon telephonic notice given by a
Responsible Officer of Borrowers, followed by a Notice of Borrowing, given by
facsimile or personal service, delivered to Agent at the address set forth in
the Notice of Borrowing. If for a Prime Lending Rate Portion, Agent shall be
given such notice no later than 11:00 a.m., Pacific time, one (1) Business Day
prior to the day on which such Borrowing is to be made, and, if for a LIBOR
Lending Rate Portion, Agent shall be given notice no later than 9:00 a.m.,
Pacific time, three (3) LIBOR Business Days prior to the day on which such
Borrowing is to be made, and such notice shall state the amount and purpose
thereof (subject to the provisions of Section 2.1). Upon receipt of any Notice
of Borrowing from

 
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Borrowers, (x) Agent shall promptly notify each Revolving Loan Lender thereof,
(y) each Revolving Loan Lender will make the amount of its pro rata share of
each Borrowing available to Agent for the account of Borrowers at Agent’s
Lending Office for such Loans prior to 10:00 a.m., Pacific time, on the date
requested by Borrowers in funds immediately available to Agent and (z) such
Borrowing will then be made available to Borrowers by Agent crediting the
account of Borrowers on the books of such Lending Office with the aggregate of
the amounts made available to Agent by Revolving Loan Lenders, and in like funds
as received by the Agent.

3.7           Conversion or Continuation Requirements. Section 2.6(a) of the
Agreement is hereby amended in its entirety as follows:

(a)           Parent shall have the option to: (i) convert, at any time, all or
any portion of any of the outstanding Loans, subject to the requirements of
Section 2.4(a), from a portion bearing interest at one of the interest rate
options available pursuant to Section 2.4(a) to another; or (ii) upon the
expira­tion of any Interest Period applicable to a LIBOR Lending Rate Portion,
to continue all or any portion of such LIBOR Lending Rate Portion as a LIBOR
Lending Rate Portion with the succeeding Interest Period(s) of such continued
LIBOR Lending Rate Portion commencing on the expiration date of the Interest
Period previously applica­ble thereto; provided, however, that a LIBOR Lending
Rate Portion may only be converted to a Prime Lending Rate Portion or continued
as a LIBOR Lending Rate Portion on the expiration date of the Interest Period
applicable thereto; provided further, however, that no outstanding Loan, or
portion thereof, may be continued as, or be converted into, a LIBOR Lending Rate
Portion in the event that, on the earlier of the date of the delivery of the
Notice of Conversion or Continuation or the telephonic notice in respect
thereof, any Event of Default or Unmatured Event of Default has occurred and is
continuing; provided further, however, that if Parent fails to deliver the
appropriate Notice of Conversion or Continuation or the telephonic notice in
respect thereof pursuant to the required notice period before the expiration of
the Interest Period of a LIBOR Lending Rate Portion, such LIBOR Lending Rate
Portion shall automatically be converted to a Prime Lending Rate Portion;
provided further, however, that no outstanding portion of a Loan may be
continued as, or be converted into, a LIBOR Lending Rate Portion in the event
that, after giving effect to any such conversion or continuation, there would be
more than nine (9) LIBOR Lending Rate Portions outstanding. If Borrowers elect
to convert the Fixed Rate Portion of the Term Loans A to the COF Lending Rate
Loans pursuant to Section 2.4(a)(ii), such COF Lending Rate Loans may not be
converted back into Prime Lending Rate Portions or LIBOR Lending Rate Portions.

3.8           Notes. Sections 2.11(a) and (b) of the Agreement are hereby
amended in its entirety as follows:

(a)           Borrowers agree that, upon the request to Agent by any Lender if
and to the extent that such Lender has a Commitment as of the date of

 
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such request, or in connection with any assignment pursuant to Section 11.5(c),
to evidence such Lender’s Loans, Borrowers will execute and deliver to such
Lender a Revolving Note, Term A Note and/or Term B Note, as applicable,
substantially in the forms of Exhibit 2.11(a), with appropriate insertions as to
payee, date and principal amount (each, as amended, supplemented, replaced or
otherwise modified from time to time, a “Note” and, collectively, the “Notes”),
payable to the order of such Lender and in a principal amount equal to such
Lender’s Revolving Credit Commitment, Term Loan A Commitment and/or Term Loan B
Commitment, as applicable. Each Note shall (x) be dated the date the applicable
Commitment became effective, (y) be payable as provided herein and (z) provide
for the payment of interest in accordance with Section 2.4.

(b)           The Revolving Loans and Borrowers’ obligation to repay the same
shall be evidenced by the Revolving Notes, this Agreement and the books and
records of Agent and the Revolving Loan Lenders. The Term Loans A and Borrowers’
obligation to repay the same shall be evidenced by the Term A Notes, this
Agreement and the books and records of Agent and the Term Loan A Lenders. The
Term Loans B and Borrowers’ obligation to repay the same shall be evidenced by
the Term B Notes, this Agreement and the books and records of Agent and the Term
Loan B Lenders. Agent shall maintain the Register pursuant to Section 10.13, and
a sub-account therein for each Lender, in which shall be recorded (i) the amount
of each Loan made hereunder, whether each such Loan is a LIBOR Lending Rate
Portion, a Prime Lending Rate Portion or the COF Lending Rate Loans, and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrowers to each
Lender hereunder and (iii) both the amount of any sum received by Agent
hereunder from Borrowers and each Lender’s share thereof; provided, however, any
failure by Agent to maintain the Register or any such sub-account with respect
to any Loan or continuation, conversion or payment thereof shall not limit or
otherwise affect Borrowers’ obligations hereunder or under the Notes.

3.9           Mandatory Principal Reductions. Section 2.14 of the Agreement is
hereby amended in its entirety as follows:

2.14          Mandatory Principal Reductions.
 
(a)           Asset Sales. Each Borrower shall pay to Agent for the account of
the Lenders, on the first Business Day following such Borrower’s receipt
thereof, one hundred percent (100%) of the Net Cash Proceeds derived from each
and all of its Asset Sales other than Permitted Real Estate Sales; provided that
so long as no Event of Default has occurred and is continuing, Borrowers shall
be permitted to retain the Net Cash Proceeds derived from (i) the Permitted
Asset Sales, and (ii) any other Asset Sales, other than the Permitted Real
Estate Sales, not to exceed $300,000 in any transaction or series of
transactions or $500,000 in the aggregate in any fiscal year of Parent;
provided, however, in accordance with Section 7.7, Borrowers shall not conduct
or

 
13

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consummate any Asset Sales unless and until the prior written consent of Agent
and the Majority Lenders has been obtained, or unless such Asset Sale is
otherwise permitted by Section 7.7. Agent shall apply such Net Cash Proceeds
FIRST toward accrued and unpaid Expenses, SECOND toward accrued and unpaid
interest on the Loans, THIRD toward the remaining scheduled principal reduction
payments on the Term Loans A required by Section 2.2 and the Term Loans B
required by Section 2.3, on a pro rata basis, in inverse order of their
maturity, and FOURTH, toward outstanding Revolving Loans. In the event that any
payments are applied toward outstanding Revolving Loans pursuant to this
Section, the Revolving Credit Commitments shall be permanently reduced by the
amount of such payments.

(b)           Issuance of Subordinate Debt and/or Capital Stock. Borrowers shall
also pay to Agent for the account of the Lenders one hundred percent (100%) of
the net proceeds from the issuance of any subordinate Debt or fifty percent
(50%) of the net proceeds from the issuance of Capital Stock of Parent (other
than Capital Stock issued in connection a Permitted Acquisition) concurrent with
any such issuance; provided that so long as no Event of Default has occurred and
is continuing, Parent shall be entitled to retain the proceeds from the exercise
of employee stock options not to exceed $1,000,000 in the aggregate in any
fiscal year; provided further that Parent shall not issue any subordinate Debt
without the prior written consent of Agent and the Majority Lenders and
execution and delivery of a subordination agreement with respect thereto, in
form and substance satisfactory to Agent and the Majority Lenders in their sole
and absolute discretion. Agent shall apply such payment of proceeds FIRST toward
accrued and unpaid Expenses, SECOND toward accrued and unpaid interest on the
Loans, THIRD toward the remaining scheduled principal reduction payments on the
Term Loans A required by Section 2.2 and the Term Loans B required by Section
2.3, on a pro rata basis, in inverse order of their maturity, and FOURTH, toward
outstanding Revolving Loans. In the event that any payments are applied toward
outstanding Revolving Loans pursuant to this Section, the Revolving Credit
Commitments shall be permanently reduced by the amount of such payments.

(c)           Excess Cash Flow. Borrowers shall also pay to Agent for the
account of the Lenders fifty percent (50%) of the Excess Cash Flow earned during
each and every fiscal year of Parent. Such payment of Excess Cash Flow shall (i)
be in addition to any scheduled principal payments, or optional prepayments, and
(ii) be paid within ten (10) Business Days after Parent’s delivery of its annual
Financial Statements pursuant to Section 6.3(e) (commencing with the financial
statements for the year ending January 31, 2009), and shall be based upon the
Excess Cash Flow disclosed in such Financial Statements. Agent shall apply such
payment of Excess Cash Flow toward the remaining scheduled principal reduction
payments on the Term Loans B required by Section 2.3 in inverse order of their
maturity.

 
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(d)           Boxborough Real Estate Sale. Borrowers shall pay to Agent for the
account of the Lenders, on the first Business Day following Borrowers’ receipt
thereof, one hundred percent (100%) of the Boxborough Real Estate Sale Proceeds.
Agent shall apply such proceeds FIRST toward accrued and unpaid Expenses, SECOND
toward accrued and unpaid interest on the Loans, and THIRD, toward the remaining
scheduled principal reduction payments on the Term Loans A required by Section
2.2 in inverse order of their maturity.

(e)           118 Acre Parcel Sale. Borrowers shall pay to Agent for the account
of the Lenders, on the first Business Day following Borrowers’ receipt thereof,
one hundred percent (100%) of the 118 Acre Parcel Sale Proceeds. Agent shall
apply such proceeds FIRST toward accrued and unpaid Expenses, SECOND toward
accrued and unpaid interest on the Loans, and THIRD, toward the remaining
scheduled principal reduction payments on the Term Loans B required by Section
2.3 in inverse order of their maturity.

3.10          Facility Fee. Section 2.15(c) of the Agreement is hereby amended
in its entirety as follows:
 
(c)           Borrowers shall pay to Agent for the ratable account of the
Lenders an annual facility fee (the “Facility Fee”) in an amount equal to the
result of (i) the sum of each Lender’s Revolving Credit Commitment as in effect
on November 30 of each year multiplied by (ii) one quarter of one percent
(0.25%); provided, however, if the Revolving Loans Maturity Date shall occur
within 12 months after November 30 of any year, then Borrowers shall pay a
Facility Fee in an amount equal to the result of (i) the sum of each Lender’s
Revolving Credit Commitment as in effect on November 30 of such year multiplied
by (ii) one quarter of one percent (0.25%) multiplied by the result of (x) the
number of months (or fractions thereof) from November 30 of such year through
and including the Revolving Loans Maturity Date divided by (y) 12. The Facility
Fee shall be fully earned and non-refundable, and shall be due and payable on
November 30 of each year.

3.11          Equipment Fee. Section 2.15(e) of the Agreement is hereby deleted
in its entirety without replacement.

3.12          COF Lending Rate Loans. Section 2.16 of the Agreement is hereby
amended in its entirety as follows:

 
2.16
Prepayments of COF Lending Rate Loans.

 
(a)           Agent and the Term Loan A Lenders are not under any obligation to
accept any prepayment of the COF Lending Rate Loans except as described below or
as required under applicable law. Borrowers may prepay the COF Lending Rate
Loans in increments of Five Hundred Dollars ($500.00) prior to the Term Loans A
Maturity Date as long as (i) Agent is provided written notice of such prepayment
at least five (5) Business Days prior to the Prepayment Date;

 
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and (ii) Borrowers pay the Prepayment Amount on the Prepayment Date. The notice
of prepayment shall contain the Prepayment Date.

(b)           The Prepayment Amount shall be due and payable on the Prepayment
Date, and Borrowers shall pay to Agent, for the account of the Term Loan A
Lenders, as applicable, in addition to any other amount that may then be due
hereunder, the Prepayment Amount on the Prepayment Date. Agent, in its sole
discretion, may accept any prepayment of the COF Lending Rate Loans even if not
required to do so hereunder and may deduct from the amount to be applied against
the COF Lending Rate Loans any other amounts required to be paid as part of the
Prepayment Amount. Agent’s determination of the Prepayment Amount will be
conclusive, absent manifest error. If requested in writing by Borrowers, Agent
will provide Borrowers a written statement specifying the Prepayment Amount.

(c)           BY INITIALING BELOW, BORROWERS ACKNOWLEDGE(S) AND AGREE(S) THAT:
(A) THERE IS NO RIGHT TO PREPAY THE COF LENDING RATE LOANS, IN WHOLE OR IN PART,
WITHOUT PAYING THE PREPAYMENT AMOUNT, EXCEPT AS OTHERWISE REQUIRED UNDER
APPLICABLE LAW; (B) BORROWERS SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT
AMOUNT IF AGENT AND LENDERS EXERCISE THEIR RIGHT TO ACCELERATE PAYMENT OF THE
OBLIGATIONS, INCLUDING WITHOUT LIMIT, ACCELERATION UNDER A DUE-ON-SALE
PROVISION; (C) BORROWERS WAIVE ANY RIGHTS UNDER SECTION 2954.10 OF THE
CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE; AND (D) AGENT AND LENDERS HAVE
MADE THE LOANS EVIDENCED BY THIS AGREEMENT AND THE NOTES IN RELIANCE ON THESE
AGREEMENTS.

/s/ LB                                  
BORROWERS’ INITIALS

3.13          Financial Statements. Section 6.3(a) of the Agreement is hereby
amended in its entirety as follows:
 
(a)           as soon as available but not later than forty-five (45) days after
the end of each quarter (provided that the following with respect to the month
of January shall be due not later than April 30 of the applicable year), (i) a
detailed summary of Borrowers’ accounts receivable, and (ii) a Compliance
Certificate from the Chief Financial Officer of Parent, stating, among other
things, that he or she has reviewed the provisions of this Agreement and the
Loan Documents and that, to the best of his or her knowledge after due and
diligent inquiry there exists no Event of Default or Unmatured Event of Default,
and containing the calculations and other details necessary to demonstrate
compliance with Sections 7.12 and 7.15 (as applicable);

3.14          Vacant Saugus Parcel. Section 6.16 is hereby added to the
Agreement as follows:

 
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6.16         Saugus Real Estate. As soon as possible, but in no event more than
one hundred eighty (180) days following the Amendment Date, Borrowers shall
either (a) cause the Saugus Real Estate to be subdivided such that the 118 acres
as more particularly described on Exhibit 6.16 attached hereto (the “118 Acre
Parcel”) is separate and can be insured by a separate policy of title insurance
from the 25 acres contiguous to the 118 Acre Parcel and located at 20970 Center
Pointe Parkway, Saugus, California 91350 (the “25 Acre Parcel”); or (b) deliver
to Agent a Phase II Environmental Site Assessment report with respect to the 25
Acre Parcel in form and substance (including conclusions as to the lack of
hazardous waste and other environmental problems) satisfactory to Agent, in its
sole and unrestricted discretion. If and when the Saugus Real Estate is
subdivided into the 118 Acre Parcel and the 25 Acre Parcel, Agent may, in its
sole and unrestricted discretion, require that (i) the Deed of Trust (as defined
below), as modified by the First Amendment (as defined below), be further
modified such that the Deed of Trust shall be recorded against each of the 118
Acre Parcel and the 25 Acre Parcel, with the correct applicable legal
description attached to each modification of the Deed of Trust, and (ii) the
title policy for the Saugus Real Estate, issued pursuant to Section 4(p)(iv) of
Amendment No. 9, be split into two (2) ALTA Extended Coverage Loan title
policies (Form 2006), one of which covers the 118 Acre Parcel, and the other of
which covers the 25 Acre Parcel, each in an amount and containing such
endorsements as Agent may request, in its sole and unrestricted discretion.

3.15           Use of Funds. Section 7.1 of the Agreement is hereby amended in
its entirety as follows:
 
(a)           Use any proceeds of the Revolving Loans for any purpose other than
for working capital;

(b)           Use any proceeds of the Term Loans A for any purpose other than to
refinance the Pre-Existing Term Debt, payment of closing costs in connection
with the USTL Acquisition, or for working capital purposes;

(c)           Use any proceeds of the Term Loans B for any purpose other than to
fund the purchase price paid by Parent in connection with the USTL Acquisition;
or

(d)           Use any portion of the proceeds of the Loans in any manner which
might cause the Loans, the applica­tion of the proceeds thereof, or the
transactions contemplated by this Agreement to violate Regulation T, U, or X of
the Board of Governors of the Federal Reserve System, or any other regulation of
such board, or to violate the Securities and Exchange Act of 1934, as amended or
supplemented.

3.16         Asset Sales. Section 7.7 of the Agreement is hereby amended in its
entirety as follows:

 
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7.7           Asset Sales. Conduct any Asset Sale, or permit any Subsidiary
(other than an Excluded Subsidiary) to do so, other than (i) dispositions of
obsolete, worn or nonfunctional equipment (ii) sales of inventory in the
ordinary course of business, (iii) any Asset Sale or series of related Asset
Sales that generate Net Cash Proceeds of less than Five Hundred Thousand Dollars
($500,000), (iv) the Permitted Asset Sales, and (v) the Permitted Real Estate
Sales.

3.17         Capital Expenditures. Section 7.12 of the Agreement is hereby
amended in its entirety as follows:
 
7.12         Capital Expenditures. Make, or permit any Subsidiary (other than an
Excluded Subsidiary) to make, any Capital Expenditures, or any commitments
therefor, in excess of (a) $5,500,000 in the aggregate, on a consolidated basis,
for fiscal year ending January 31, 2008, (b) $6,500,000 in the aggregate, on a
consolidated basis, for fiscal year ending January 31, 2009, and (c) $7,000,000
in the aggregate, on a consolidated basis, for fiscal year ending January 31,
2010 and each fiscal year ending thereafter; provided, that, if Agent and
Lenders shall consent to an acquisition of all or substantially all of the
Assets or the business of any other Person (a “Permitted Acquisition”), the
fixed assets acquired by Borrowers from such Permitted Acquisition shall be
excluded from the calculation of Capital Expenditures for the purposes hereof;
provided, further, that Agent and Lender are under no obligation to consent to
any such acquisition and Borrowers acknowledge and agree that such consent may
be withheld in Agent and Lenders sole and absolute discretion. Without in any
way limiting or qualifying the foregoing, any such consent to a Permitted
Acquisition by Agent and Lenders shall be based, in part, on Borrowers’
agreement to revise the Capital Expenditures covenant giving effect to such
Permitted Acquisition and otherwise in form and substance satisfactory to Agent
and Lenders in their sole and absolute discretion.

3.18         Financial Condition. Section 7.15 of the Agreement is hereby
amended in its entirety as follows:

7.15         Financial Condition. Permit or suffer:
 
(a)           the Consolidated Effective Tangible Net Worth, measured as of the
end of each fiscal quarter, at any time to be less than $15,000,000 plus the sum
of (i) an amount equal to twenty-five percent (25%) of the Consolidated Adjusted
Net Income for each fiscal year, commencing with the fiscal year ending January
31, 2008 (but in no event less than zero with respect to any fiscal year), and
(ii) an amount equal to seventy-five percent (75%) of the net proceeds of any
sale of Real Property Collateral.

(b)           the ratio of Funded Debt to Consolidated EBITDA, on a trailing
four fiscal quarter basis, measured as of the end of each fiscal quarter, at

 
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any time to exceed the ratio indicated in the table below opposite the
applicable period:

 
January 31, 2008 – October 31, 2008
3.00:1.00

 
January 31, 2009 and thereafter
2.75:1.00

(c)           the Fixed Charge Coverage Ratio, measured as of the end of each
fiscal quarter, at any time to be less than 1.25:1.00.

3.19           Remedies. Clause (i) of Section 8.2 of the Agreement is hereby
amended in its entirety as follows:

(i) with the consent of the Majority Lenders, Agent may or upon the request of
the Majority Lenders, Agent shall, without notice of its election and without
demand, immediately terminate the Revolving Credit Commitments, whereupon
Lenders’ obligation to make Loans to Borrowers and Issuing Lender’s obligation
to issue Letters of Credit shall immediately cease;

3.20         Replacement of Affected Lenders. The first paragraph of Section
10.16 of the Agreement is amended as follows:

          
10.16       Replacement of Affected Lenders. If any Lender (other than Agent)
(x) is owed a material amount of increased costs under Section 2.7 or ceases to
be obligated to make LIBOR Lending Rate Loans as a result of the operation of
Sections 2.8 or 2.9, (y) refuses to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which have
been approved pursuant to Section 11.4 by the Majority Lenders, the Revolving
Loan Lenders the Revolving Credit Commitment Percentage of which aggregate more
than 66.67%, the Term Loan A Lenders the Term Loan A Commitment Percentage of
which aggregate more than 66.67%, or the Term Loan B Lenders the Term Loan B
Commitment Percentage of which aggregate more than 66.67%, as applicable; or
(z) is in default of its obligations hereunder, then Agent shall have the right,
but not the obligation, to replace such Lender (the “Replaced Lender”) with one
or more Eligible Assignees (collectively, the “Replacement Lender”) provided,
that:

3.21         Expenses. Clause (iv) of Section 11.3(c) of the Agreement is hereby
amended in its entirety as follows:

          
(iv) all losses and expenses which any Indemnified Person sustains or incurs as
a result of (x) any prepayment of the COF Lending Rate Loans prior to the Term
Loans A Maturity Date, for any reason, including termination of this Agreement
or pursuant to Section 8.2, or (y) any failure by Borrowers, for any reason, to
borrow any LIBOR Lending Rate Portion in accordance with the terms hereof.

3.22         Amendments and Waivers. Sections 11.4 (iv) and (v) of the Agreement
are hereby amended in their entirety as follows:

 
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(iv)           amend, modify or waive any provision of this Agreement regarding
the allocation of prepayment amounts to the Term Loans A or the application of
such prepayment amounts to the respective installments of principal under the
respective Term Loans A without the written consent of the Term Loan A Lenders
the Term Loan A Commitment Percentages of which aggregate more than 66.67%; or
amend, modify or waive any provision of this Agreement regarding the allocation
of prepayment amounts to the Revolving Loans or the application of such
prepayment amounts to the respective installments of principal under the
respective Revolving Loans without the written consent of the Revolving Loan
Lenders the Revolving Loan Commitment Percentages of which aggregate more than
66.67%; or amend, modify or waive any provision of this Agreement regarding the
allocation of prepayment amounts to the Term Loans B or the application of such
prepayment amounts to the respective installments of principal under the
respective Term Loans B without the written consent of the Term Loan B Lenders
the Term Loan B Commitment Percentages of which aggregate more than 66.67%; or

(v)           subject to clause (i) of this Section 11.4 as it relates to
reducing the amount or extending the scheduled date of maturity of any Loan or
any installment thereof, amend, modify or waive any provision of (x) Section 2.1
or Section 2.11 (to the extent it relates to Revolving Loans) without the
written consent of Revolving Loan Lenders the Revolving Loan Commitment
Percentages of which aggregate more than 66.67%; or (y) Section 2.2 or
Section 2.11 (to the extent it relates to the Term Loans A) without the written
consent of Term Loan A Lenders the Term Loan A Commitment Percentages of which
aggregate more than 66.67%; or (z) Section 2.3 or Section 2.11 (to the extent it
relates to the Term Loans B) without the written consent of Term Loan B Lenders
the Term Loan B Commitment Percentages of which aggregate more than 66.67%; or

3.23         Amendment to Schedule 1.1C. Schedule 1.1C of the Agreement is
hereby replaced with the Schedule 1.1C attached hereto.

3.24         Amendment to Exhibit 2.11(a). Exhibit 2.11(a) to the Agreement is
hereby appended with the forms of Term A Note and Term B Note set forth on the
Exhibit 2.11(a) attached hereto.

3.25         Amendment to Schedule 5.9. Schedule 5.9 (Subsidiaries) of the
Agreement is hereby replaced with the Schedule 5.9 attached hereto.

3.26         Schedule 6.16. Schedule 6.16 (Legal Description of 118 Acre Parcel)
attached hereto is hereby added to the Agreement in proper numerical order.

4.             Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to and contingent upon the
fulfillment of each and every one of the following conditions:

 
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(a)           Agent shall have received this Amendment, duly executed by
Borrowers and all Lenders;

(b)           Agent shall have received the Term A Notes payable to each Lender
in the amount of such Lender’s respective Term Loan A Commitment, duly executed
by Borrowers;

(c)           Agent shall have received the Term B Notes payable to each Lender
in the amount of such Lender’s respective Term Loan B Commitment, duly executed
by Borrowers;

(d)           Lenders shall have received and reviewed the audited financial
statements of USTL dated December 31, 2006 and October 31, 2007.

(e)           Lenders shall have reviewed to their satisfaction the Interests
Purchase Agreement and related documents and agreements in connection with the
USTL Acquisition, and shall have received an executed collateral assignment of
Parent’s rights arising under such Interests Purchase Agreement, in form and
substance satisfactory to Agent;

(f)           Agent shall have received evidence that the closing, consummation
and satisfaction of all conditions precedent in connection with the USTL
Acquisition have been made in accordance with the terms of the Interests
Purchase Agreement and all applicable laws, rules and regulations, and
confirmation that the assets of USTL are free and clear of all claims and rights
of third Persons, other than Permitted Liens;

(g)           Agent shall have received executed settlement and release
agreements, with disbursement instructions, relating to the payoff of (i) GE
Capital with respect to its existing real estate loan to Borrowers, and (ii) the
sellers (and any debt of USTL that is to be paid at closing in accordance with
the Interests Purchase Agreement) in connection with the USTL Acquisition,
together with such releases and UCC-3 termination statements with respect to
such payoff, in form and substance satisfactory to Agent;

(h)           Agent shall have received an Addendum to Revolving Credit
Agreement and an Addendum to Security Agreement, duly executed by USTL, together
with all Schedules thereto, in form and substance satisfactory to Agent and
Lenders;

(i)           Agent shall have received an updated draft of Schedule 1 to the
Parent’s Stock Pledge Agreement listing 65% of the shares of outstanding common
stock of AETL Testing, Inc., together with the original stock certificate
representing such ownership interest, a blank stock power duly executed by
Parent and a Control Agreement duly executed by AETL Testing, Inc. in connection
therewith;

(j)           Agent shall have received a Limited Liability Company Membership
Interest Pledge Agreement, duly executed by NTS, with respect to one hundred
percent (100%) of the issued and outstanding membership interests of USTL;

(k)           Agent shall have received, for the pro rata account of Lenders,
all Expenses owing on the Amendment Date;

 
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(l)           No Material Adverse Effect shall have occurred and be continuing,
as determined by Lenders in their reasonable discretion;

(m)           No Event of Default or Unmatured Event of Default shall have
occurred and be continuing; and

(n)           All of the representations and warranties set forth herein, in the
Loan Documents and in the Agreement shall be true, complete and accurate in all
respects as of the date hereof (except for representations and warranties which
are expressly stated to be true and correct as of an earlier date).

(o)           With respect to USTL:

(i)           receipt by Agent of a Certificate of the Class A member of USTL,
dated as of the Amendment Date, certifying (1) the incumbency and signatures of
the Responsible Officers of USTL who are executing this Agreement and the Loan
Documents on behalf of USTL; (2) the Operating Agreement of USTL and all
amendments thereto as being true and correct and in full force and effect; and
(3) the resolutions of the Class A member of USTL as being true and correct and
in full force and effect, authorizing the execution and delivery of this
Agreement and the Loan Documents, and authorizing the transactions contemplated
hereunder and thereunder, and authorizing the Responsible Officers of USTL to
execute the same on behalf of USTL;

(ii)           receipt by Agent of USTL’s Articles of Organization and all
amendments thereto, certified by the Secretary of State of its state of
organization and dated a recent date prior to the Amendment Date;

(iii)           receipt by Agent of a certificate of status and good standing
for USTL, dated a recent date prior to the Amendment Date, showing that USTL is
in good standing under the laws of the state of its organization;

(iv)           receipt by Agent of a certificate signed by the Class A member of
USTL, dated as of the Amendment Date, certifying that (1) both immediately
before and immediately after giving effect to the transactions contemplated by
this Agreement and the Loan Documents, USTL is and will be Solvent; (2) to the
best of its knowledge after due and diligent inquiry, the representations and
warranties of USTL contained in this Agreement and the Loan Documents are true
and correct in all material respects, and (3) to the best of its knowledge after
due and diligent inquiry, both immediately before and immediately after giving
effect to the transactions contemplated by this Agreement and the Loan
Documents, no Event of Default is continuing or shall result therefrom;

(v)           receipt by Agent of Uniform Commercial Code and other public
record searches with respect to USTL, in each case reasonably satisfactory to
Agent; and

(vi)           receipt by Agent of copies of insurance binders or insurance
certificates for USTL;

(p)           With respect to the Saugus Real Estate:

 
22

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(i)            ETCR shall have executed, acknowledged and recorded in the
Official Records of Los Angeles County, California Recorder’s Office (the
“Official Records”) a Correction Grant Deed, in the form prepared and delivered
by Agent to ETCR, which Correction Grant Deed changes the name in which the
Saugus Real Estate is held from Ersland Training Center Corporation, a
California corporation, to ETCR, INC., a California corporation formerly known
as Ersland Training Center Corporation also known as E.T.C.R., Inc., a
California corporation

(ii)            ETCR shall have executed, acknowledged and delivered to Agent a
First Amendment to Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing (the “First Amendment”), in the form prepared and delivered by
Agent to ETCR, which First Amendment shall amend the terms of that certain Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated
November 21, 2001, executed by ETCR, as trustor, to Chicago Title Insurance
Company, as trustee, for the benefit of Agent, which was recorded on November
27, 2001 as Instrument No. 01-2242850 in the Official Records (the “Deed of
Trust”);

(iii)           ETCR shall have executed and delivered to Agent an Environmental
Indemnity Agreement, in the form prepared and delivered by Agent to ETCR; and

(iv)           ETCR shall, at its sole cost and expense, cause a title company
satisfactory to Agent, in its sole and unrestricted discretion, to issue an ALTA
Extended Coverage Loan Policy (Form 2006) insuring the Deed of Trust (as amended
by the First Amendment) in favor of Agent and in such amount and including such
endorsements as requested by Agent, in its sole and unrestricted discretion, and
containing only such exceptions that are acceptable to Agent, in its sole and
unrestricted discretion;

(q)           With respect to the Boxborough Real Estate:

(i)             ETCR shall have executed, acknowledged and delivered to Agent a
Mortgage with Power of Sale, Assignment of Rents, Security Agreement and Fixture
Filing (the “Mortgage”), in the form prepared and delivered by Agent to ETCR;

(ii)            ETCR shall have executed, acknowledged and delivered, and caused
the tenant of the Boxborough Real Estate to execute, acknowledge and deliver, to
Agent a Subordination of Lease, in the form prepared and delivered by Agent to
ETCR; and

(iii)           ETCR shall, at its sole cost and expense, cause a title company
satisfactory to Agent, in its sole and unrestricted discretion, to issue an ALTA
Extended Coverage Loan Policy (Form 2006) insuring the Mortgage in favor of
Agent and in such amount and including such endorsements as requested by Agent,
in its sole and unrestricted discretion, and containing only such exceptions
that are acceptable to Agent, in its sole and unrestricted discretion; and

(r)            receipt by Agent of such other documents, instruments and
agreements as Agent may reasonably request in connection with the transactions
contemplated hereunder or to perfect or protect the liens and security interests
granted to Agent for the ratable benefit of Lenders in connection herewith;

 
23

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5.             Representations and Warranties. In order to induce Agent and
Lenders to enter into this Amendment, each Borrower hereby represents and
warrants to Agent and Lenders that:

(a)           No Event of Default or Unmatured Event of Default is continuing;

(b)           All of the representations and warranties set forth in the
Agreement and the Loan Documents are true, complete and accurate in all material
respects (except for representations and warranties which are expressly stated
to be true and correct as of an earlier date); and

(c)           This Amendment has been duly executed and delivered by Borrowers,
and after giving effect to this Amendment, the Agreement and the Loan Documents
continue to constitute the legal, valid and binding agreements and obligations
of Borrowers, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, and similar laws and
equitable principles affecting the enforcement of creditors’ rights generally.

6.             Counterparts; Telefacsimile Execution. This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

7.             Integration. The Agreement as amended by this Amendment
constitutes the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and thereof, and supersedes any and
all prior agreements and understandings, oral or written, relating to the
subject matter hereof and thereof.

8.             Reaffirmation of the Agreement. The Agreement as amended hereby
and the other Loan Documents remain in full force and effect.

[remainder of page intentionally left blank]

 
24

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment as of the date first hereinabove written.

  NATIONAL TECHNICAL SYSTEMS, INC.               By: /s/ Lloyd Blonder    
Lloyd Blonder, Senior Vice President,
Finance, Treasurer and
Assistant Secretary
              NTS TECHNICAL SYSTEMS dba NATIONAL
TECHNICAL SYSTEMS
              By: /s/ Lloyd Blonder    
Lloyd Blonder, Senior Vice President,
Finance, Treasurer and
Assistant Secretary
              XXCAL, INC.               By: /s/ Lloyd Blonder     Lloyd Blonder,
Vice President, Treasurer
and Assistant Secretary
              APPROVED ENGINEERING TEST
LABORATORIES, INC.
              By: /s/ Lloyd Blonder    
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
              ETCR, INC.               By: /s/ Lloyd Blonder    
Lloyd Blonder, Vice President, Treasurer
and Assistant Secretary

Amendment Number Nine to Revolving Credit Agreement
 
S-1

--------------------------------------------------------------------------------

 
 

  ACTON ENVIRONMENTAL TESTING
CORPORATION
             
By:
/s/ Lloyd Blonder    
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Clerk
              PHASE SEVEN LABORATORIES, INC.               By: /s/ Lloyd Blonder
   
Lloyd Blonder, Vice President, Treasurer
and Assistant Secretary
                    UNITED STATES TEST LABORATORY, L.L.C.,
a Kansas limited liability company
             
By:
NTS TECHNICAL SYSTEMS dba
NATIONAL TECHNICAL SYSTEMS, a
California corporation
       
Its:
Class A Member
        By: /s/ Lloyd Blonder    
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and Assistant Secretary
              COMERICA BANK, in its capacities as Agent,
Issuing Lender and a Lender
              By: /s/ Vahe S. Medzoyan    
Vahe S. Medzoyan, Vice President
              FIRST BANK, in its capacity as a Lender               By: /s/
Blake Seaton   Name: Blake Seaton   Title: Vice President

Amendment Number Nine to Revolving Credit Agreement
 
S-2

--------------------------------------------------------------------------------

 
 
Schedule 1.1C
Schedule of Commitments

Revolving Loan Lender
Revolving Credit
Commitment
Revolving Credit
Commitment Percentage
Comerica
First Bank
$ 9,900,000
$ 6,600,000
60%
40%
Term Loan A Lender
Term Loan A Commitment
Term Loan Commitment
Percentage
Comerica
First Bank
$ 5,400,000
$ 3,600,000
60%
40%
Term Loan B Lender
Term Loan B Commitment
Term Loan C Commitment
Percentage
Comerica
First Bank
$ 7,590,000
$ 5,060,000
60%
40%

 
27

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Exhibit 2.11(a)
Form of Term A Note and Term B Note

 
28

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SECURED TERM LOAN A PROMISSORY NOTE

         
Los Angeles, California
$___________
 
_______________, 20____

This Secured Term Loan A Promissory Note (this “Note”) is being delivered
pursuant to that certain Revolving Credit Agreement, dated as of November 21,
2001, as amended, by and among Makers (as defined below), the financial
institutions from time to time parties thereto as the Lenders, and Comerica
Bank, as contractual representative for itself and the Lenders (as the same may
be at any time heretofore or hereafter amended, supplemented, or otherwise
modified or restated, the “Agreement”). Initially capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Agreement.

1.             FOR VALUE RECEIVED, NATIONAL TECHNICAL SYSTEMS, INC., a
California corporation, NTS TECHNICAL SYSTEMS, a California corporation, dba
National Technical Systems, XXCAL, INC., a California corporation, APPROVED
ENGINEERING TEST LABORATORIES, INC., a California corporation, ETCR, INC., a
California corporation, PHASE SEVEN LABORATORIES, INC., a California
corporation, UNITED STATES TEST LABORATORY, L.L.C., a Kansas limited liability
company, and ACTON ENVIRONMENTAL TESTING CORPORATION, a Massachusetts
corporation (collectively, “Makers”), jointly and severally promise to pay to
the order of _______________ (“Payee”), on or before the Term Loans A Maturity
Date, the principal sum of ________________ Dollars ($___________), or such
lesser sum as shall equal the aggregate outstanding principal amount of the Term
Loan A made by Payee to Makers jointly and severally pursuant to the Agreement
(as defined below).

2.             Makers promise to make principal reduction payments on the
outstanding principal balance hereof in the amounts and on the dates specified
in the Agreement. Makers further promise to pay interest from the date of this
Note in like money on the aggregate outstanding principal amount hereof at the
rates and on the dates provided in the Agreement. All computations of interest
shall be in accordance with the provisions of the Agreement.

3.             Makers hereby authorize Payee to record in its books and records
the date, type and amount of the Term Loan A, and of each continuation,
conversion and payment of principal made by Makers, and Makers agree that all
such notations shall, in the absence of manifest error, be conclusive as to the
matters so noted; provided, however, any failure by Payee to make such notation
with respect to the Term Loan A or continuation, conversion, or payment thereof
shall not limit or otherwise affect Makers’ obligations under the Agreement or
this Note.

4.             Upon the occurrence and during the continuance of an Event of
Default, in addition to and not in substitution of any of Agent or Lenders’
other rights and remedies with respect to such Event of Default, the entire
unpaid principal balance owing hereunder shall bear interest at the applicable
Lending Rate plus three hundred (300) basis points. In addition, interest,
Expenses and Fees, and other amounts due hereunder or under the Agreement not
paid when due shall bear interest at the Prime Lending Rate plus three hundred
(300) basis points until such overdue payment is paid in full.

 
29

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5.             If any payment due hereunder, whether for principal, interest, or
otherwise, is not paid on or before the tenth day after the date such payment is
due, in addition to and not in substitution of any of Payee’s other rights and
remedies with respect to such nonpayment, Makers shall pay to Payee, a late
payment fee (“Late Payment Fee”) equal to five percent (5%) of the amount of
such overdue payment. The Late Payment Fee shall be due and payable on the
eleventh day after the due date of the overdue payment with respect thereto.

6.             Makers shall make all payments hereunder in lawful money of the
United States of America and in immediately available funds to Comerica Bank, a
Michigan banking corporation (“Agent”), for the account of Payee, at Agent’s
office located at 15303 Ventura Boulevard, Suite 100, Sherman Oaks, CA 91403,
Attention: Vahe S. Medzoyan; or to such other address as Agent may from time to
time specify by notice to Makers in accordance with the terms of the Agreement.

7.             In no event shall the interest rate and other charges hereunder
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Payee has received interest and other
charges hereunder in excess of the highest rate applicable hereto, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce, the principal balance hereof, and the provisions hereof shall be deemed
amended to provide for the highest permissible rate. If there is no principal
balance outstanding, Payee shall refund to Makers such excess.

8.             This Note is one of the “Term A Notes” issued pursuant to the
Agreement and is governed by the terms thereof. The Agreement, among other
things, contains provisions for acceleration of the maturity of this Note upon
the happening of certain stated events and also for prepayments on account of
principal of this Note prior to the maturity hereof upon the terms and
conditions specified in the Agreement. This Note and the Term Loan A evidenced
hereby may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer on the Register maintained by Agent
pursuant to the terms of the Agreement.

9.             This Note is secured by the Liens granted to Agent, for the
ratable benefit of Lenders, under the Loan Documents.

10.           Makers hereby waive presentment for payment, notice of dishonor,
protest and notice of protest.

11.           THE VALIDITY OF THIS NOTE AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF
LAWS.

 
30

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(a)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT PAYEE’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE PAYEE ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. MAKERS AND PAYEE
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.

(b)           MAKERS AND PAYEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR
ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. MAKERS AND PAYEE REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.           This Note hereby incorporates the Reference Provision set forth in
Section 11.10 of the Loan Agreement.

 
31

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IN WITNESS WHEREOF, Makers have duly executed this Note as of the date first
above written.

 
NATIONAL TECHNICAL SYSTEMS, INC.
             
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and
   
Assistant Secretary
             
NTS TECHNICAL SYSTEMS dba NATIONAL
 
TECHNICAL SYSTEMS
             
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and
   
Assistant Secretary
             
XXCAL, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
             
APPROVED ENGINEERING TEST
 
LABORATORIES, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
           
ETCR, INC.
       
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary

 
32

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ACTON ENVIRONMENTAL TESTING
 
CORPORATION
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Clerk
             
PHASE SEVEN LABORATORIES, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
             
UNITED STATES TEST LABORATORY, L.L.C.,
 
a Kansas limited liability company
             
By:
NATIONAL TECHNICAL SYSTEMS,
   
INC., a California corporation
       
Its:
Class A Member
       
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and Assistant Secretary

 
33

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SECURED TERM LOAN B PROMISSORY NOTE

   
$___________
Los Angeles, California
 
_______________, 20__

This Secured Term Loan B Promissory Note (this “Note”) is being delivered
pursuant to that certain Revolving Credit Agreement, dated as of November 21,
2001, as amended, by and among Makers (as defined below), the financial
institutions from time to time parties thereto as the Lenders, and Comerica
Bank, as contractual representative for itself and the Lenders (as the same may
be at any time heretofore or hereafter amended, supplemented, or otherwise
modified or restated, the “Agreement”). Initially capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Agreement.

1.           FOR VALUE RECEIVED, NATIONAL TECHNICAL SYSTEMS, INC., a California
corporation, NTS TECHNICAL SYSTEMS, a California corporation, dba National
Technical Systems, XXCAL, INC., a California corporation, APPROVED ENGINEERING
TEST LABORATORIES, INC., a California corporation, ETCR, INC., a California
corporation, PHASE SEVEN LABORATORIES, INC., a California corporation, UNITED
STATES TEST LABORATORY, L.L.C., a Kansas limited liability company, and ACTON
ENVIRONMENTAL TESTING CORPORATION, a Massachusetts corporation (collectively,
“Makers”), jointly and severally promise to pay to the order of _______________
(“Payee”), on or before the Term Loans B Maturity Date, the principal sum of
________________ Dollars ($___________), or such lesser sum as shall equal the
aggregate outstanding principal amount of the Term Loan B made by Payee to
Makers jointly and severally pursuant to the Agreement (as defined below).

2.           Makers promise to make principal reduction payments on the
outstanding principal balance hereof in the amounts and on the dates specified
in the Agreement. Makers further promise to pay interest from the date of this
Note in like money on the aggregate outstanding principal amount hereof at the
rates and on the dates provided in the Agreement. All computations of interest
shall be in accordance with the provisions of the Agreement.

3.           Makers hereby authorize Payee to record in its books and records
the date, type and amount of the Term Loan B, and of each continuation,
conversion and payment of principal made by Makers, and Makers agree that all
such notations shall, in the absence of manifest error, be conclusive as to the
matters so noted; provided, however, any failure by Payee to make such notation
with respect to the Term Loan B or continuation, conversion, or payment thereof
shall not limit or otherwise affect Makers’ obligations under the Agreement or
this Note.

4.           Upon the occurrence and during the continuance of an Event of
Default, in addition to and not in substitution of any of Agent or Lenders’
other rights and remedies with respect to such Event of Default, the entire
unpaid principal balance owing hereunder shall bear interest at the applicable
Lending Rate plus three hundred (300) basis points. In addition, interest,
Expenses and Fees, and other amounts due hereunder or under the Agreement not
paid when due shall bear interest at the Prime Lending Rate plus three hundred
(300) basis points until such overdue payment is paid in full.

 
34

--------------------------------------------------------------------------------

 
 
5.           If any payment due hereunder, whether for principal, interest, or
otherwise, is not paid on or before the tenth day after the date such payment is
due, in addition to and not in substitution of any of Payee’s other rights and
remedies with respect to such nonpayment, Makers shall pay to Payee, a late
payment fee (“Late Payment Fee”) equal to five percent (5%) of the amount of
such overdue payment. The Late Payment Fee shall be due and payable on the
eleventh day after the due date of the overdue payment with respect thereto.

6.           Makers shall make all payments hereunder in lawful money of the
United States of America and in immediately available funds to Comerica Bank, a
Michigan banking corporation (“Agent”), for the account of Payee, at Agent’s
office located at 15303 Ventura Boulevard, Suite 100, Sherman Oaks, CA 91403,
Attention: Vahe S. Medzoyan; or to such other address as Agent may from time to
time specify by notice to Makers in accordance with the terms of the Agreement.

7.           In no event shall the interest rate and other charges hereunder
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Payee has received interest and other
charges hereunder in excess of the highest rate applicable hereto, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce, the principal balance hereof, and the provisions hereof shall be deemed
amended to provide for the highest permissible rate. If there is no principal
balance outstanding, Payee shall refund to Makers such excess.

8.           This Note is one of the “Term B Notes” issued pursuant to the
Agreement and is governed by the terms thereof. The Agreement, among other
things, contains provisions for acceleration of the maturity of this Note upon
the happening of certain stated events and also for prepayments on account of
principal of this Note prior to the maturity hereof upon the terms and
conditions specified in the Agreement. This Note and the Term Loan B evidenced
hereby may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer on the Register maintained by Agent
pursuant to the terms of the Agreement.

9.           This Note is secured by the Liens granted to Agent, for the ratable
benefit of Lenders, under the Loan Documents.

10.           Makers hereby waive presentment for payment, notice of dishonor,
protest and notice of protest.

11.           THE VALIDITY OF THIS NOTE AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF
LAWS.

 
35

--------------------------------------------------------------------------------

 
 
(a)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT PAYEE’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE PAYEE ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. MAKERS AND PAYEE
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.

(b)           MAKERS AND PAYEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR
ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. MAKERS AND PAYEE REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.           This Note hereby incorporates the Reference Provision set forth in
Section 11.10 of the Loan Agreement.

 
36

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IN WITNESS WHEREOF, Makers have duly executed this Note as of the date first
above written.

 
NATIONAL TECHNICAL SYSTEMS, INC.
             
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and
   
Assistant Secretary
             
NTS TECHNICAL SYSTEMS dba NATIONAL
 
TECHNICAL SYSTEMS
             
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and
   
Assistant Secretary
             
XXCAL, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
             
APPROVED ENGINEERING TEST
 
LABORATORIES, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
             
ETCR, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary

 
37

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ACTON ENVIRONMENTAL TESTING
 
CORPORATION
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Clerk
             
PHASE SEVEN LABORATORIES, INC.
             
By:
     
Lloyd Blonder, Vice President, Treasurer
   
and Assistant Secretary
             
UNITED STATES TEST LABORATORY, L.L.C.,
 
a Kansas limited liability company
             
By:
NTS TECHNICAL SYSTEMS dba
   
NATIONAL TECHNICAL SYSTEMS,
   
INC., a California corporation
       
Its:
Class A Member
       
By:
     
Lloyd Blonder, Senior Vice President,
   
Finance, Treasurer and Assistant Secretary

 
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Schedule 5.9
 
Subsidiaries

Direct Subsidiaries of Parent (100% Owned unless otherwise noted below):
 
1.
NTS, Technical Systems, a California Corp. (dba National Technical Systems)

2.
XXCAL, Inc., a California Corp.

3.
National Quality Assurance, Inc., a Massachusetts Corp. (50% Owned)

4.
NTS Europe, Gmbh

5.
AETL Testing, Inc., a Canadian Corp. (dba NTS Calgary)

Direct Subsidiaries of NTS (100% Owned unless otherwise noted below):

1.
Acton Environmental Testing Corporation, a Massachusetts Corp.

2.
Approved Engineering Testing Laboratories, Inc., a California Corp.

3.
ETCR Inc., A California Corp.

4.
Phase Seven Laboratories, a California Corp.

5.
United States Test Laboratory, L.L.C., a Kansas limited liability company
(subject to closing of Amendment No. 9 on December 5, 2007)

 
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Schedule 6.16

Legal Description of 118 Acre Parcel

PARCEL A:

THE SOUTHERLY 58 FEET (MEASURED ALONG THE EASTERLY AND WESTERLY LINE) OF LOT 4
IN FRACTIONAL SECTION 19, AND ALL OF LOT 1 IN FRACTIONAL SECTION 30, BOTH IN
TOWNSHIP 4 NORTH, RANGE 15 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.

EXCEPT THAT PORTION INCLUDED WITHIN THE LINES OF THE 305 FOOT WIDE STRIP OF LAND
CONVEYED TO THE CITY OF LOS ANGELES, BY DEED RECORDED ON OCTOBER 19, 1965 AS
DOCUMENT NO. 758, IN BOOK D 3085 PAGE 602 OFFICIAL RECORDS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.

ALSO EXCEPTING THAT PORTION LYING WESTERLY OF THE EASTERLY LINE OF THE ABOVE
DESCRIBED 305 FOOT WIDE STRIP OF LAND CONVEYED TO THE CITY OF LOS ANGELES BY
DEED RECORDED OCTOBER 19, 1965 AS INSTRUMENT NO. 758 IN BOOK D3085 PAGE 692,
OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

ALSO EXCEPTING THEREFROM AN UNDIVIDED ONE/HALF INTEREST IN ALL OIL, MINERALS,
GAS AND OTHER HYDROCARBON SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL
PROPERTY HEREIN DESCRIBED, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY
MARIAN SPAULDER, BY DEED RECORDED JUNE 30, 1976 AS INSTRUMENT NO. 539 AND BY
EDWARD SHAPIRO, ET UX, BY DEED RECORDED AUGUST 12, 1976 AS INSTRUMENT NO. 21,
BOTH OFFICIAL RECORDS.

PARCEL B:

LOT 2 IN FRACTIONAL SECTION 30, TOWNSHIP 4 NORTH, RANGE 15 WEST, SAN BERNARDINO
MERIDIAN, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ACCORDING TO THE
OFFICIAL PLAT OF SAID LAND FILED IN THE DISTRICT LAND OFFICE MARCH 29, 1877.

EXCEPT THEREFROM THAT PORTION OF SAID LAND DEEDED TO THE CITY OF LOS ANGELES, BY
DEED RECORDED DECEMBER 22, 1965 AS INSTRUMENT NO. 524 IN BOOK D3153, PAGE 582,
OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

ALSO EXCEPTING THAT PORTION LYING WESTERLY OF THE EASTERLY LINE OF THE ABOVE
DESCRIBED 305 FOOT WIDE STRIP OF LAND CONVEYED TO THE CITY OF LOS ANGELES BY
DEED RECORDED DECEMBER 22, 1965 AS INSTRUMENT NO. 524 IN BOOK D3153 PAGE 582,
OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 
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ALSO EXCEPTING THEREFROM AN UNDIVIDED ONE/HALF INTEREST IN ALL OIL, MINERALS,
GAS AND OTHER HYDROCARBON SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL
PROPERTY HEREIN DESCRIBED, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY
LULA LANTERMAN JOHNSON, ET AL, BY DEED RECORDED JUNE 28, 1979 AS INSTRUMENT NO.
79-703754, OFFICIAL RECORDS.

PARCEL C:

THE EAST HALF OF THE NORTHWEST QUARTER OF SECTION 30, TOWNSHIP 4 NORTH, RANGE 15
WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.

EXCEPT THEREFROM, ALL OIL, OIL RIGHTS, NATURAL GAS RIGHTS, MINERAL RIGHTS, AND
OTHER HYDROCARBON SUBSTANCES BY WHATEVER NAME KNOWN, TOGETHER WITH APPURTENANT
RIGHTS THERETO, WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF SAID
LAND NOR ANY PORTION OF THE SUBSURFACE LYING ABOVE A DEPTH OF 500 FEET, AS
EXCEPTED OR RESERVED IN INSTRUMENTS OF RECORD.

PARCEL D:

LOTS 1 AND 2, SECTION 25, TOWNSHIP 4 NORTH, RANGE 16 WEST, SAN BERNARDINO BASE &
MERIDIAN, ACCORDING TO PLAT OF SAID LAND.

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