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Exhibit 10.8
 

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www.nts.com

 
April 5, 2012
 
Mr. Raffy Lorentzian
19750 Turtle Springs Way
Northridge, CA  91326

Re:           Separation Agreement

 
Dear Raffy:
 
This letter (the “Agreement”) summarizes the terms of your separation from
employment at National Technical Systems, Inc. (“NTS”).
 
1.
Your employment with NTS as required by this Separation Agreement will conclude
on April 30, 2012. In exchange for the promises given by you to NTS as described
in this Agreement, and as long as you continue your employment through April 30,
2012, you will receive:

 
·
A lump sum payment on April 30, 2012 in the total gross amount of $220,420.00
(less applicable withholdings);

 
 
·
At your discretion, you have the option to extend your employment through July
31, 2012 at a compensation rate equal to your current base pay rate.  If you
accept this option your final day of employment will be July 31, 2012 or sooner
at your discretion.

 
 
·
NTS will cover the expense of COBRA for 12 months commencing the actual
termination date as defined by your decision to extend your employment for a
period up to July 31, 2012.

 
 
·
Any bonus amount due from FY12.

 
 
·
A prorate, short-term bonus (based on the financial test only, not MBOs) for
FY13.  If the executive team earns a bonus based on financial performance for
FY13, you will be paid a prorata portion based on the number of months you were
employed during FY13;

 
 
·
Active participation in the development of the Press Release and 8-K

 
National Technical Systems, Inc. Corporate Headquarters
         
24007 Ventura Boulevard, Suite 200, Calabasas, CA 91302
Main: 818-591-0776
Fax: 818-591-0899

 
 
 

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·
If a Change In Control event occurs within 18 months following your actual
termination date, you will be entitled to receive a lump sum payment equal to
one year’s base salary ($220,420), said payment to be made no later than 30 days
following the Change In Control event.  If the Change In Control event occurs
more than 18 months but less than 3 years after your actual termination date,
the amount of the lump sum payment will be ratably reduced based on when the
Change In Control event occurs between the 19th and 36th months following your
actual termination date.

 
“Change In Control” means and includes each of the following occurrences:
 
 
a.
The shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company’s assets.

 
 
b.
The acquisition by any Person or Beneficial Owner (as those terms are defined in
the Securities Exchange Act of 1934), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities.

 
You acknowledge and agree that the severance compensation described herein is
not otherwise due to you under NTS’ existing policies, procedures and benefit
plans or on any other basis.
 
2.
From and after the actual termination date, you will not be entitled to any
further payments or benefits of any kind, other than as stated in this
Agreement.  Notwithstanding anything to the contrary in this Agreement, in the
event of a breach by you of any of the terms or conditions in this Agreement, or
of a breach or violation of any of the terms or conditions of the agreement
referred to in paragraph 5 below, all payments due under this Agreement will
immediately cease, and NTS will have no further obligation to you under this
Agreement.

 
3.
You acknowledge that at termination you will be paid your final pay through the
actual termination date, including any accrued but unused vacation time. You
agree that following your actual termination date, you are not entitled to
receive any further monetary payments from NTS, and that the only payments or
benefits that you are entitled to receive from NTS in the future are those
specified in paragraph 1 and 4 of this Agreement. This will also confirm that
you have not suffered any on-the-job injury for which you have not already filed
a claim.

 
National Technical Systems, Inc. Corporate Headquarters
         
24007 Ventura Boulevard, Suite 200, Calabasas, CA 91302
Main: 818-591-0776
Fax: 818-591-0899

 
 

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4.
Without limiting any of the foregoing, you further acknowledge and agree to the
following:

 
 
•
2006 Long-Term Incentive Plan (“2006 LTIP”)– You acknowledge that as of the
actual termination date, you were granted and vested in the Phantom Stock
Appreciation-Only Shares as follows:

 
 
-
Grant date February 1, 2009, 46,500 Phantom Stock Appreciation-Only Shares, at a
Grant Price of $5.89.  These awards vested on 1/31/12.

 
Once the year-end FY12 financial books are closed and the audit completed any
value related to these Grants will be calculated.  Any value created on the
February 1, 2009 awards will be paid six (6) months after the actual termination
date, in accordance with the plan.
 
 
 •
2006 Supplemental Executive Retirement Plan (“SERP”) as amended and restated,
effective as of December 31, 2008 – You acknowledge that as of the actual
termination date, you have a vested value of $141,000.00 in your Employer Credit
Account, which will be paid and distributed in accordance with Section 4.2 of
the SERP.   If the Company is acquired, or in the event of change in control,
NTS will provide notice to the acquiring company that it will assume this
obligation and a copy of the assumption will be provided to you.

 
 
5.
At no time either before or after the actual termination date will you disclose
any Confidential Information gained during or as a result of your employment by
NTS.  Confidential Information means any information that is, or should
reasonably be understood to be, confidential or proprietary to
NTS.  Confidential Information includes but is not limited to all information,
whether in written, oral, electronic, magnetic, photographic or any other form,
that relates to matters not generally known to the public and/or not publicly
disclosed by NTS including:  past, present and future businesses, products,
product specifications, designs, drawings, concepts, samples, intellectual
property, inventions, know-how, sources, costs, pricing, technologies,
customers, vendors, other business relationships, business ideas and methods,
distribution methods, inventories, manufacturing processes, computer programs
and systems, employees, hiring practices, operations, marketing strategies and
other technical, business and financial information.

 
 
6.
You agree to deliver to NTS all documents and materials, of whatever nature,
relating to NTS, its products and/or its services, including reports, files,
memoranda, records, software, credit cards, door and file keys, computers,
computer access codes, disks and instructional manuals and other physical or
personal property which you received, prepared or helped prepare in connection
with your employment with NTS.  You further agree that you will not keep any
copies or excerpts of any of the above items.

 
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7.
Except for claims arising out of the promises contained here, any and all Claims
(as defined below), which you may have against NTS (as defined below) arising
out of your employment with NTS or the termination of that employment, are fully
and completely settled, and all liability or potential liability arising out of
any such Claim is hereby released.  “Claims,” as used in this Agreement shall
include but not be limited to those based upon or arising out of any alleged
violation of your civil rights, wrongful discharge, breach of contract, tort,
common law, statutory and constitutional claims, or any state, local or federal
statute (including but not limited to the California Fair Employment and Housing
Act, the California Labor Code, the Americans with Disabilities Act, Title VII
of the Civil Rights Act of 1964, as amended, the Employee Retirement Income
Security Act, the Worker Adjustment and Retraining Notification Act, the
California Worker Adjustment and Retraining Notification Act) and any other law
prohibiting race, sex, sexual orientation, national origin, disability, or
perceived disability discrimination.  “NTS,” as used in this Agreement, shall
include, in addition to National Technical Systems, Inc., any predecessor,
successor, parent, subsidiary or affiliate of National Technical Systems, Inc.
or any officer, director, employee, shareholder or affiliate of it.

Notwithstanding the foregoing, the released Claims shall not include (i) any
claims based on obligations created by or reaffirmed in this Agreement; (ii) any
vested rights under any pension or 401(k) plans maintained by NTS; (iii) your
right to indemnification by NTS, to the full extent permitted by law, as
provided by California Labor Code Section 2802 and California Corporations Code
Section 317, including as to matters which relate to events occurring on or
before your execution of this Agreement; provided, however, that nothing
contained herein is intended to, nor shall it be construed to, provide you with
rights to indemnity greater than those to which you would be entitled in the
absence of this Agreement.

8.
You acknowledge that it is your intention to fully and finally resolve and
release any and all Claims, known or unknown, which may exist against NTS and
recognize that you may later discover facts in addition to or different from
those which you now know or believe to be true.  In furtherance of this
intention, and to finally resolve all matters between yourself and NTS, you
agree to waive and relinquish any and all rights and benefits afforded by
Section 1542 of the Civil Code of the State of California which provides as
follows:

 
A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.
 
9.
In addition to the release set forth above, you voluntarily and knowingly waive
all rights or claims arising under the Federal Age Discrimination in Employment
Act. This waiver is given only in exchange for consideration in addition to
anything of value to which you are entitled. This waiver does not waive rights
or claims that may arise after the date of execution of this Agreement. You
acknowledge that (a) this paragraph is written in a manner calculated to be
understood by you, (b) by reviewing this paragraph you have been advised in
writing to consult with an attorney before executing this Agreement, (c) you are
being given a period of twenty-one (21) days within which to consider this
paragraph, and (d) to the extent you execute this Agreement, including this
paragraph, before the expiration of the twenty-one (21) day period, you do so
knowingly and voluntarily. You will have the right to cancel and revoke this
Agreement during a period of seven (7) days following your execution of it. In
order to cancel and revoke this Agreement, you must deliver to NTS, prior to the
expiration of the seven (7) day period, a written notice of cancellation and
revocation. This Agreement will be effective at the end of the seven (7) day
period if no revocation has been received.

 
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Nothing in this Agreement shall affect the Equal Employment Opportunity
Commission’s (EEOC) rights and responsibilities to enforce the Civil Rights Act
of 1964, as amended, the Age Discrimination in Employment Act of 1967, as
amended, or any other applicable law, nor shall anything in this Agreement be
construed as a basis for interfering with your protected right to file a timely
charge with, or participate in an investigation or proceeding conducted by, the
EEOC, or any other state, federal or local government entity; provided, however,
if the EEOC or any other state, federal or local government entity commences an
investigation on your behalf, you specifically waive and release your right, if
any, to recover any monetary or other benefits of any sort whatsoever arising
from any such investigation or otherwise, nor will you seek or accept
reinstatement to your former position with NTS.
 
10.
You understand and agree that to the fullest extent permitted by law, you are
precluded from filing or pursuing any legal claim of any kind against NTS at any
time in the future, in any federal or state court, administrative agency or
other tribunal, arising out of any of the claims that you have waived by virtue
of executing this Agreement.  You agree not to file or pursue any such legal
claims.

 
11.
You agree that you will not, for a period of twelve months from the actual
termination date, directly or indirectly recruit, solicit or induce, or attempt
to induce, any employee, consultant or vendor of NTS to terminate employment or
any other relationship with NTS.  You agree that you will not at any time use
Confidential Information to recruit, solicit, retain or hire any of NTS’
employees, consultants or vendors. You further agree to execute the
Confidentiality and Non-Disclosure Agreement (a copy of which is attached) and
acknowledge that this agreement remains in full force and effect following the
termination date.

 
12.
You agree that except as may be required by law, neither you nor any member of
your family will disclose to any individual or entity (other than your legal,
tax or financial advisors) the terms of this Agreement.  In the event that such
disclosure is made, any outstanding obligations of NTS under this Agreement will
immediately terminate at the option of NTS.

 
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13.
You acknowledge that money damages are an inadequate remedy for any breach by
you of any of the provisions of paragraphs 5, 6, 11 or 12 of this Agreement, and
therefore NTS may be entitled to injunctive relief for any such breach.

 
14.
The provisions of this Agreement are severable.  If any provision is held to be
invalid or unenforceable, it will not affect the validity or the enforceability
of any other provision.

 
15.
You acknowledge you have received, or had the opportunity to receive,
independent legal advice from legal counsel of your choice with respect to the
advisability of making the settlement provided for in this Agreement and with
respect to the advisability of executing this Agreement.

 
16.
This Agreement is governed by California law without regard to conflict of law
principles.

 
17.
Any controversy, dispute, or claim between the parties to this Agreement,
including any claim arising out of, in connection with, or in relation to the
formation, interpretation, performance or breach of this Agreement shall be
settled exclusively by arbitration, before a single arbitrator, in accordance
with the rules of the American Arbitration Association.

 
This Agreement fully sets forth the terms of your separation of employment from
NTS and supersedes any prior discussions or agreements whether verbal or written
with regard to that subject.  Please indicate your agreement to such terms by
signing the extra copy and returning it to me.
 

   
Sincerely,
          /s/ William McGinnis           William McGinnis     President, Chief
Executive Officer     National Technical Systems, Inc.
 
 
 
ACCEPTED AND AGREED TO:           /s/ Raffy Lorentzian     Raffy Lorentzian    
            April 5, 2012     Date    

 
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