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EXHIBIT 10.5
 
National Technical Systems, Inc.
2010 Long-Term Incentive Plan
 
ARTICLE 1 – PURPOSE
 
The purpose of the National Technical Systems, Inc. 2010 Long-Term Incentive
Plan is to retain the services of select group of management and highly
compensated employees of National Technical Systems, Inc. and any successor
thereof (the “Corporation”) and to motivate them to contribute to the growth and
profits of the Corporation.  This Plan is intended to comply with the provisions
of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and shall be interpreted in a manner consistent with that intention.
 
ARTICLE 2 – DEFINITIONS
 
For purposes hereof, unless otherwise clearly apparent from the context, where
the following terms appear as proper nouns, they shall have the meanings
indicated below.
 
2.1
Beneficiary: Any person or persons (including, without limitation, the trustees
of any testamentary or inter vivos trust), as designated from time to time in
writing pursuant to Article 5, to whom any benefits may be payable upon the
death of a Participant.

 
2.2
Cause: Behavior of a Participant which constitutes any of the following:

 
 
a.
Willfully engaging in gross misconduct with regard to the Corporation which is
materially injurious to the Corporation,

 
 
b.
Gross negligence in the performance of the Participant’s duties and
responsibilities which is materially injurious to the Corporation,

 
 
c.
Refusal to follow proper and achievable written direction of the Board of
Directors, provided that this shall not be Cause if the Participant in good
faith believed the direction to be illegal, unethical or immoral and provides
written notification of such belief to the Board of Directors,

 
 
d.
Being convicted of (or pleading nolo contendere to) a felony involving financial
impropriety (or any other crime which would materially interfere with his
service),

 
 
e.
Willfully breaching any material obligations under any agreement with the
Corporation without proper justification,

 
 
f.
Material fraud or dishonesty with regard to the Corporation (other than good
faith expense account disputes),

 
 
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g.
Refusal to attempt to perform the Participant’s responsibilities and duties
after written notice,

 
 
h.
Entering into competition with the Corporation in any line of business in which
the Corporation was involved during the Participant’s employment; or

 
 
i.
Any other act that would be cause for termination of a Participant's employment
as defined in the Corporation's employee handbook as may be amended from time to
time.

 
2.3
Change of Control: (a) A change in the ownership of the Corporation within the
meaning of Regulations Section 1.409A-3(i)(5)(v); (b) A change in the effective
control of the Corporation within the meaning of Regulations Section
1.409A-3(i)(5)(vi), excluding for this purpose any changes in the members of the
Board; or (c) a change in the ownership of a substantial portion of the
Corporation’s assets within the meaning of Regulations Section
1.409A-3(i)(5)(vii).

 
2.4
Committee: The Compensation Committee of the Board of Directors of the
Corporation, or such other persons as may be selected by the Compensation
Committee or the Board of Directors to administer the Plan.  The Committee may
assign some of the routine administrative functions to any department of the
Corporation or another organization as approved by the board.

 
2.5
Continuing Phantom Award:  Except as may otherwise be provided in the
Participation Agreement, any unvested Phantom Stock Full-Value Shares and any
unvested Phantom Stock Appreciation-Only Shares that (i) were outstanding
immediately prior to a Change of Control, (ii) are still unvested as of the
Change of Control, and (iii) continue to vest after the Change of Control in
accordance with the vesting conditions set forth in the Participation
Agreement.  Subject to the preceding sentence, a Participant's Continuing
Phantom Awards, if any, shall become fully vested upon the earlier of (a) the
date on which the Participant has a Termination of Service due to a Qualifying
Termination or (b) the Maturity Date.

 
2.6
Corporation: National Technical Systems, Inc., a California corporation, and any
successor thereof, including any affiliated company that adopts this Plan with
the consent of the Board of Directors of the Corporation.

 
2.7
Disabled or Disability: A Participant is considered to have a Disability or to
be Disabled if the Participant meets one of the following requirements:

 
 
a)
The Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuation period
of more than 12 months.  OR

 
 
b)
The Participant is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of more than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Corporation.

 
 
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For purposes of the Plan, the determination of a Participant's Disability shall
be made by the Committee with the Participant's participation or the
participation of his legal representative.  The Committee shall make the final
and conclusive determination of Disability based upon all the evidence presented
to it and after due consideration of the information presented by the
Participant or his legal representative.
 
2.8
Good Reason:  Good Reason means, with respect to a Participant, any one or more
of the following that occurs without a Participant's express written consent and
where the initial existence of the below applicable event first occurred on or
after a Change of Control:

 
(i)    a material reduction of Participant's duties, position or
responsibilities, or the removal of Participant from such position and
responsibilities, unless Participant is provided with a comparable position
(i.e., a position of equal or greater organizational level, duties, authority,
and compensation);
 
(ii)           a material reduction by the Corporation in Participant's base
compensation or overall compensation package (base salary, incentive
compensation and bonus) as in effect immediately prior to such reduction;
 
(iii)           a material reduction by the Corporation in the kind or level of
employee benefits to which Participant is entitled immediately prior to such
reduction with the result that Participant's overall benefits package is
significantly reduced;
 
(iv)           Participant is requested to relocate (except for office
relocations that would not increase Participant's one way commute by more than
20 miles) which relocation causes a material change in the geographic location
at which Participant must perform services; or
 
(v)           the failure of the Corporation to obtain the assumption of this
Plan pursuant to Section 6.15.
 
Notwithstanding the foregoing, in order for a Participant to resign for Good
Reason: (x) Participant must notify the Corporation in writing within 30 days of
the initial existence of the condition described in (i) through (v) above and
must provide the Corporation with 30 days to remedy such condition, (y) the
Corporation must fail to remedy the condition within 30 days after its receipt
of Participant's written notice, and (z) Participant must terminate his/her
employment for Good Reason within ten days following the Corporation's failure
to remedy the Good Reason condition.
 
2.9
Grant Date: The effective date on which the Committee grants Phantom Stock
Full-Value or Phantom Stock Appreciation-Only Shares to a Participant.

 
 
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2.10
Grant Price:  The value of a share of common stock of the Corporation on the
Grant Date, which is assigned to a Phantom Stock Appreciation-Only Share as set
forth in the Participation Agreement.

 
2.11
In-Service Distribution Date: A date determined by an irrevocable election, at
the time specified in the Participation Agreement, for Participants to establish
the year in which their Phantom Stock benefit will be made as long as the date
selected is (a) after the Maturity Date, (b) prior to any other Payment Date,
(c) no more than 5 years after the Maturity Date, and (d) subject to such
administrative rules for the designation of the specific date as the Committee
may establish.  In the absence of an election of the specific date within a
year, the payout will be made upon the earliest Payment Date to arise.

 
2.12
Maturity Date: The date as set forth in the Participation Agreement on which a
Participant's vested Phantom Stock Full-Value or Phantom Stock Appreciation-Only
Shares are deemed to mature.

 
2.13
Maturity Price: The Value on the Payment Date; provided, that, for any
Continuing Phantom Award, the Value shall be determined as set forth in Section
2.25(1).  For the avoidance of doubt, no interest shall accrue on the Value of
any Continuing Phantom Awards from the date of the Change of Control until the
Payment Date for such awards.

 
2.14
Participant:  An employee and/or officer of the Corporation designated by the
Committee to be eligible for participation in the Plan, who executes and returns
to the Committee all forms necessary for participation in the Plan, including a
related Participation Agreement if applicable.

 
2.15
Participation Agreement: A written award agreement executed by the Corporation
and Participant.  The Board shall determine the terms and conditions set forth
in those award agreements in its sole discretion. The Phantom Stock award
agreements shall indicate the extent to which the Phantom Stock rights are
Phantom Stock Appreciation-Only Shares or Phantom Stock Full-Value Shares, the
Grant Price of those Phantom Stock rights, the Grant Date, the Vesting
Commencement Date, the applicable vesting schedules, and provide for the
In-Service Distribution Date election.  The Board shall be under no obligation
to grant Phantom Stock rights on a uniform basis among Participants.

 
2.16
Payment Date: The date on which a Participant's vested Phantom Stock Full-Value
or Phantom Stock Appreciation-Only Shares are deemed to be payable under Section
4.1(a) below.

 
2.17
Phantom Stock Appreciation-Only Shares: A form of Phantom Stock wherein the
Participant receives a contractual right to receive the difference between its
Grant Price and its Maturity Price.

 
2.18
Phantom Stock: Phantom Stock represents a mere contractual right to payment of
certain compensation in the future; not actual capital stock of, or ownership
equity, in the Corporation or its assets.  Phantom Stock under the Plan is
granted as either Phantom Stock Full-Value Shares or Phantom Stock
Appreciation-Only Shares.

 
 
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2.19
Phantom Stock Full-Value Shares: A form of Phantom Stock wherein the Participant
receives a contractual right to receive its Maturity Price.

 
2.20
Plan: The National Technical Systems, Inc. 2010 Long-Term Incentive Plan,
including any Participation Agreement, and as from time to time amended and in
effect.  The Plan is effective as of December  8, 2010.

 
2.21
Qualifying Termination:  A Termination of Service effected either by the
Corporation without Cause or by the Participant for Good Reason.

 
2.22
Sale Proceeds: The total proceeds actually received by the shareholders of the
Corporation upon a Change of Control for the sale of the Corporation decreased
by sales related transaction expenses (including, without limitation, investment
banking, accounting and legal fees and expenses and similar professional or
financial advisory fees and expenses) and any outstanding debt or liability that
is not assumed by the acquirer or surviving Corporation (as applicable).  The
Corporation Sale Proceeds shall be determined by the Committee in its sole
discretion.

 
2.23
Specified Employee:  A Participant who is a "specified employee" as defined
under Section 409A of the Code, as amended from time to time, including without
limitation, any current or future Internal Revenue Service guidance and the
regulations issued in connection with Section 409A of the Code.

 
2.24
Termination of Service: The termination of a Participant’s service as an
employee of the Corporation; provided that no Termination of Service will be
deemed to have occurred unless it constitutes a “separation from service” as
defined under Section 409A of the Code, as amended from time to time, including
without limitation, any current or future Internal Revenue Service guidance and
the regulations issued in connection with Section 409A of the Code.

 
2.25
Value: (1) In the event of a Change of Control, the Value shall be the Sale
Proceeds divided by the total number of outstanding shares of the Corporation’s
stock.  (2) For an In-Service Distribution Date, the Value shall be the
arithmetic average of the closing price of a share of the Corporation’s publicly
traded stock for the 20 business days preceding January 31st of the calendar
year selected.  (3) In all other events, the Value shall be the arithmetic
average of the closing price of a share of the Corporation’s publicly traded
stock for the 20 business days preceding the Payment Date.

 
2.26
Vesting Commencement Date: The date on which the Phantom Stock Full-Value or
Phantom Stock Appreciation-Only Shares granted to a Participant start vesting as
set forth in the Participation Agreement.

 
 
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ARTICLE 3 – ELIGIBILITY, GRANT AND VESTING
 
3.1
Eligibility/Grant.  Eligibility to commence participation in this Plan shall be
restricted to those employees and officers recommended by management and
approved by the board. As a condition of participation, eligible individuals
shall timely complete all forms necessary for participation in the Plan under
this Section, as determined by the Committee.  A Participant shall be entitled
to benefits, if any, in accordance with this Plan. It is intended that this plan
qualify as an unfunded “top hat” plan for the benefit of a select group of
management or highly compensated employees, as described in Section 201(2) of
the Employee Retirement Income Security Act of 1974, as amended, and that the
Committee limit participation in the Plan accordingly.

 
3.2
Grant of Phantom Stock Rights.   The Board, in its sole discretion, may at any
time grant to one or more Participants Phantom Stock rights on such terms and
conditions, not inconsistent with the terms of this Plan document, as
recommended by the Committee.   All grants of Phantom Stock rights shall be
evidenced by a Participation Agreement.  The Board shall be under no obligation
to grant Phantom Stock rights on a uniform basis among Participants.  No Phantom
Stock shall be granted under the Plan on or following a Change of Control.

 
3.3
Vesting. The Phantom Stock rights shall vest as set forth in the Participation
Agreement.

 
Except as otherwise provided for above or in the Participation Agreement, the
Participant shall cease vesting in his or her Phantom Stock in the event of a
Termination of Service for any reason, and the Participant's then unvested
Phantom Stock shall terminate on such date. No Phantom Stock rights will be
reinstated upon re-employment unless granted anew by the Board in its sole
discretion.
 
ARTICLE 4 – BENEFITS
 
4.1
Phantom Stock Awards.

 
 
a)
Entitlement to Benefits (Maturity).  A Participant's vested Phantom Stock
(including any Continuing Phantom Award that vests after a Change of Control)
shall mature and the Participant shall be entitled to receive the amount
provided for in Section 4.1(b) below for such vested Phantom Stock commencing
upon the earlier of the following dates (“Payment Dates”): (i) the date on which
the Participant becomes Disabled; (ii) the date on which the Participant dies;
(iii) the date on which Participant has a Termination of Service for any reason
other than Cause; (iv) the specified effective date of a Change of Control of
the Corporation; (v) the Maturity Date; or (vi) the In-Service Distribution
Date.  For the avoidance of doubt, a Payment Date for any Continuing Phantom
Awards can only occur under clauses (i), (ii), (iii), (v) or (vi) above.  In the
case of a Payment Date described in clauses (i) through (vi) above, other than
for any Continuing Phantom Awards, unvested Phantom Stock (after taking into
account any vesting acceleration provisions set forth in the Participation
Agreement) shall terminate without consideration on such Payment Date.

 
 
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b) 
Payment Amount and Timing.

 
 
(i)
Phantom Stock Appreciation-Only Shares. For each vested Phantom Stock
Appreciation-Only Share, the Participant shall be entitled to receive an amount
that is equal to its Maturity Price less its Grant Price.  The foregoing amount
will generally be paid in cash provided however that the Corporation may, in its
discretion and while its common stock is publicly traded, elect to settle up to
fifty percent of such amount with vested Corporation common stock (and with such
common stock valued using its closing trading price as of the date immediately
before the date of payment or as of the most recent date in which there was a
closing trading price if there is none on the date before the date of payment).

 
 
(ii)
Phantom Stock Full-Value Shares. For each vested Phantom Stock Full-Value Share,
the Participant shall be entitled to receive an amount that is equal to its
Maturity Price.  The foregoing amount will generally be paid in cash provided
however that the Corporation may, in its discretion and while its common stock
is publicly traded, elect to settle up to fifty percent of such amount with
vested Corporation common stock (and with such common stock valued using its
closing trading price as of the date immediately before the date of payment or
as of the most recent date in which there was a closing trading price if there
is none on the date before the date of payment).

 
 
(iii)
Form and Timing of Payment. Distributions of amounts payable pursuant to vested
Phantom Stock will be paid as follows:

 
 
1.
In a lump sum within 90 days following the Participant’s death, Disability, or
Termination of Service, or the Change of Control of the Corporation; or, if
sooner,

 
 
2.
Within 90 days of a Maturity Date unless the Participant elects to defer his or
her payment, in which case the payment will be made in a lump sum by April 30th
of the calendar year selected by the Participant in the Participation Agreement.
Such year may be no sooner than five years and no later than ten years from the
Vesting Commencement Date.

 
Upon the Corporation's payment and satisfaction of the amounts payable pursuant
to vested Phantom Stock, the Participant shall have no further rights to any
benefits with respect to such Phantom Stock under the Plan.
 
 
(iv)
Termination of Service with Cause. Any provision in this Plan to the contrary
notwithstanding, if the Participant has a Termination of Service for Cause, then
all of his or her vested and unvested Phantom Stock (including any Continuing
Phantom Awards) shall terminate as of the date of Termination of Service and the
Participant shall not be entitled to receive any amount for such Phantom Stock.

 
 
(v)
Notwithstanding Sections 4.4(b), distributions of benefits pursuant to this
Section 4.4 may be delayed or deferred if one or more of the following applies:

 
 
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1.
The Corporation reasonably anticipates that distributions of benefits would
constitute a violation of applicable law;

 
 
2.
The Corporation determines that distributions of benefits must be delayed in
order to comply with Code Section 409A(a)(2)(B)(i) (relating to payments to
certain “key employees” of certain publicly-traded companies); in such event,
any distributions of benefits to which the Participant would otherwise be
entitled during the six-month period following the date of the Participant’s
separation from Service will be delayed until the earlier of (i) the first
business day of the seventh month following the Participant’s Termination of
Service, or (ii) ten days after the Corporation receives notification of the
Participant’s death. Any such delayed payments shall be paid without interest;
or

 
 
3.
The Corporation determines that distributions of benefits must be delayed in
order to avoid “excess parachute payments” under Code Section 280G.

 
 
4.
If the Corporation reasonably anticipates that its deduction with respect to any
distribution from this Plan would be limited or eliminated by application of
Code Section 162(m), then to the extent permitted by Treas. Reg.
§1.409A-2(b)(7)(i), payment shall be delayed as deemed necessary to ensure that
the entire amount of any distribution from this Plan is deductible.  The delayed
amounts shall be distributed to the Participant (or his or her Beneficiary in
the event of the Participant’s death) at the earliest date the Corporation
reasonably anticipates that the deduction of the payment of the amount will not
be limited or eliminated by application of Code Section 162(m).  In the event
that such date is determined to be after a Participant’s Termination from
Service and the Participant to whom the payment relates is determined to be a
Specified Employee, then to the extent deemed necessary to comply with Treas.
Reg. §1.409A-3(i)(2), the delayed payment shall not be made before the first day
of the seventh month following such Participant’s Separation from Service.

 
4.2
Tax Liability.  The Participant is ultimately liable and responsible for all
taxes owed by the Participant in connection with any distribution under the
Plan, regardless of any action taken by the Corporation with respect to any tax
withholding obligations that arise in connection with a Participant's
participation in the Plan.

 
ARTICLE 5 – BENEFICIARY
 
5.1
Designation.  At the time participation in the Plan commences, or at any later
date, each Participant shall designate a Beneficiary on the Designation
Beneficiary Form (attached hereto as Exhibit A) to receive any benefits that may
become payable hereunder in the event of his or her death (Beneficiary
Designation).  A Participant may change any such Beneficiary at any time prior
to his or her death upon written notice to the Corporation.

 
 
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5.2
Subsequent Beneficiary Designations.  If the Participant shall have made more
than one Beneficiary Designation, the Beneficiary Designation most recently
filed with the Corporation prior to the time of the Participant's death shall
govern.

 
5.3
No Beneficiary Designation.  If any amounts under the Plan become payable
following a Participant’s death at a time when no Beneficiary Designation is
applicable or when no Beneficiary is in existence, such payments shall be made
in a lump sum to such Participant’s surviving spouse, or if none, such amounts
shall be paid to such Participant’s estate.

 
ARTICLE 6 - MISCELLANEOUS
 
6.1
Amendment and Termination.  The Corporation, acting through the Committee,
reserves the right to amend, in whole or in part, in writing, or to terminate
this Plan at any time and in its sole discretion, with or without notice;
provided, however, that no such action shall reduce the amount of a
Participant’s vested benefits under the Plan prior to the date of any such
amendment or termination. Any provision herein to the contrary notwithstanding,
amendment or termination of the Plan shall not accelerate, directly or
indirectly, the date on which distribution of any then vested benefit is to be
paid unless such acceleration complies with the requirements of Code Section
409A and the regulations thereunder.  In addition, notwithstanding any provision
herein to the contrary, if the Corporation determines that this Plan should be
amended to avoid triggering the tax and interest penalties imposed by Section
409A of the Code, the Corporation may amend this Plan to the extent necessary to
avoid triggering the tax and interest penalties imposed by Section 409A of the
Code.

6.2
Insurance: The Corporation may purchase one or more insurance policies on the
life of a Participant, as a means of providing, in whole or in part, for the
payment of benefits hereunder. However, in such event neither such Participant,
his designated Beneficiary, nor any other beneficiary shall have any rights
whatsoever therein or in the proceeds therefrom.  The Corporation shall be the
sole owner and beneficiary of any such insurance policy and shall possess and
may exercise all incidents of ownership therein.  No such policy, policies or
other property shall be held in any trust for a Participant or any other person
or as collateral security for any obligation of the Corporation hereunder.  This
Plan shall under no circumstances be deemed to constitute a contract of
insurance.

6.3
No Contract of Employment: The Plan shall under no circumstance be deemed to
have any effect upon the terms or conditions of employment of any employee of
the Corporation whether or not he or she is a Participant hereunder.  Neither
the offering of the Plan, the payment of any expenses, costs or benefit amounts
associated with the Plan, nor any documents published in connection with the
Plan shall be construed as having created a contract of employment between the
Participant and the Corporation. Nor shall it affect any right that the
Corporation may have to terminate the service of such person at will.

 
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6.4
Benefits not Transferable: Benefits under this Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge or
encumbrance by any Participant or Beneficiary and any attempt to do so shall be
null and void.  Benefits under this Plan shall not be subject to or liable for
the debts, contracts, liabilities, engagements or torts of any Participant or
any Beneficiary, nor may the same be subject to attachment or seizure by any
creditor of any Participant or any Beneficiary under any circumstances.

6.5
Capital Structure Adjustments. In the event of a change in the form of entity,
recapitalization, reorganization, merger, consolidation, separation, financing,
or like change in the organizational or capital structure of the Corporation,
the Committee shall make such changes to the Plan as the Committee deems
appropriate.  These changes shall include, but are not limited to, changes to
the definition of "Value" and "Corporation".  The Board’s determination shall be
final, binding, and conclusive.  The Committee shall interpret this section in a
manner it believes (in its discretion) to be consistent with the intent to place
Participants in substantially the same economic position as they would have had
in the absence of such an organizational or capital structure change. The Plan
shall not affect, in any way, the right or power of the Corporation to make
adjustments, re-classifications, reorganizations, or changes of its capital or
business structures, to make distributions to its shareholders, or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets.

 
6.6
Determination of Benefits:  If a Participant or Beneficiary (the “claimant”)
believes that he or she is entitled to benefits under the Plan which are not
paid to him or her or which are not being accrued for his or her benefit, the
claimant shall file a written claim therefore with the Committee.  In the event
that a member of the Committee shall be the claimant, all actions which are
required to be taken by the Committee pursuant to this Section 10.8 shall be
taken instead by the remaining members of the Committee.  Within ninety days
after receipt of an application for benefits, the Employer shall notify the
claimant of its decision with respect to the payment of benefits under the
Plan.  If special circumstances require an extension of time, the Employer shall
notify the claimant of such circumstances within ninety days after receipt of
the application, and the Employer shall thereafter notify the claimant of its
decision within 180 days after receipt of the application.  If the application
is denied in whole or in part, the Employer’s notice of denial shall be in
writing and shall state:

 
 
a.
The specific reasons for denial with specific reference to pertinent Plan
provisions upon which the denial was based;

 
 
b.
A description of any additional materials or information necessary for the
claimant to perfect his or her claim and an explanation of why the materials or
information are necessary; and

 
 
c.
An explanation of the Plan’s claims review procedure and the time limits
applicable thereto and a statement regarding a claimant’s right to bring a civil
action under ERISA Section 502(a).

 
During the sixty day period following a claimant’s receipt of a notice of denial
of his application for benefits, the claimant or his duly authorized
representative may review pertinent documents and within sixty days submit a
written request to the Employer for review of the denial.
 
 
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A claimant submitting a request for review shall be allowed to submit questions
and comments in writing to the Committee and shall be proviced, on requiest and
free of chare, reasonable access to and copies of relevant documents and an
opportunity to submit issues and comments in writing.  Within sixty days after
receipt of the request for review, the Committee shall issue a written decision
to the claimant.  If special circumstances require an extension of time, the
Committee shall issue a written decision no later than 120 days after receipt of
the request for review.  The Committee’s decision shall include specific reasons
for the decision, written in a manner calculated to be understood by the
claimant, and contain specific references to pertinent Plan provisions upon
which the decision is based, provided that the claimant is entitled, on request
and free of charge to reasonable access to and copies of relevant
documents.  The decision of the Committee is final and conclusive.
 
In the event that the Committee requests additional information necessary to
determine the claim or appeal from a claimant, the claimant shall have at least
45 days in which to respond.  The period for making a benefit determination or
deciding an appeal, as the case may be, shall be tolled from the date of the
notification to the claimant of the request for additional information until the
date the claimant responds to such request or, if earlier, the expiration of the
deadline provided by the Committee.
 
6.7
No Trust: No action by the Corporation or its Board of Directors under this Plan
shall be construed as creating a trust, escrow or other secured or segregated
fund or other fiduciary relationship of any kind in favor of any Participant or
Beneficiary or any other persons otherwise entitled to benefits under the
Plan.  The status of the Participant and any Beneficiary with respect to any
liabilities assumed by the Corporation hereunder shall be solely that of
unsecured creditors of the Corporation.  The Plan constitutes a mere promise by
the Corporation to make benefit payments in the future.  Any insurance policy or
any other asset acquired or held by the Corporation in connection with
liabilities assumed by it hereunder, shall not be deemed to be held under any
trust, escrow or other secured or segregated fund or other fiduciary
relationship of any kind for the benefit of a Participant or Beneficiary or to
be security for the performance of the obligations of the Corporation, but shall
be and remain a general, unpledged, unrestricted asset of the Corporation at all
times subject to the claims of general creditors of the
Corporation.  Notwithstanding the foregoing, the Corporation may transfer
assets.

 
6.8
Plan Administration: The Plan shall be administered by the Committee.  The Board
and Committee shall have the exclusive authority, sole discretion and
responsibility for all matters in connection with the operation and
administration of the Plan.  The Committee's powers and duties shall include,
but not be limited to, the following: (a) responsibility for the compilation and
maintenance of all records necessary in connection with the Plan; (b)
authorizing the payment of all benefits under and expenses of the Plan; (c)
authority to engage such legal, accounting and other professional services as it
may deem proper. The Board shall, without limitation, have (a) authority to
interpret the Plan; and (b) authority to determine eligibility for benefits
under the Plan and to resolve all issues of fact and law in connection with such
determination and (c) discretionary authority to accelerate vesting of any
Phantom Stock upon a Change of Control.  Decisions by the Board and Committee
shall be final and binding upon all parties.

 
 
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The Committee, from time to time, may allocate to other persons or organizations
any of its rights, powers, and duties with respect to the operation and
administration of the Plan.  Any such allocation shall be reviewed from time to
time by the Committee; shall, unless the Committee specifies otherwise, carry
such discretionary authority as the Committee possesses regarding the matter;
and shall be terminable upon such notice as the Committee in its sole
discretion, deems reasonable and prudent under the circumstances.

6.9
Satisfaction of Claims: Any payment to a Participant or Beneficiary or the legal
representative of either, in accordance with the terms of this Plan shall to the
extent thereof be in full satisfaction of all claims such person may have
against the Corporation.  The Corporation may require such payee, as a condition
to such payment, to execute a receipt and release therefore in such form as
shall be determined by the Corporation.

6.10
Governing Law: The Plan shall be construed, administered, and governed in all
respects in accordance with the laws of the State of California without regard
to applicable conflicts of law or choice of law principles. By electing to
participate in the Plan, each Participant on behalf of himself and his
beneficiaries irrevocably and unconditionally (a) submits to the exclusive
personal jurisdiction of the United States Federal courts and the State of
California state courts located in Los Angeles County, California (“California
Courts”) with respect to any lawsuit, claim or cause of action arising under or
with respect to this Plan; (b) agrees that the California Courts shall have
exclusive subject matter jurisdiction over any such lawsuit, claim or cause of
action; (c) agrees that venue with respect to any such lawsuit, claim or cause
of action is proper and most convenient in such California Courts; and (d)
agrees not to assert or raise any objection to jurisdiction or venue in the
California Courts. BY ELECTING TO PARTICIPATE IN THE PLAN, EACH PARTICIPANT, ON
BEHALF OF HIMSELF AND HIS BENEFICIARIES, IRREVOCABLY WAIVES THE RIGHT TO A TRIAL
BY JURY IN ANY AND ALL ACTIONS OR PROCEEDINGS BROUGHT WITH RESPECT TO ANY
PROVISION OF THIS PLAN AND/OR WITH RESPECT TO ANY CLAIMS ARISING OUT OF, OR
RELATED TO, THIS PLAN.

6.11
Gender and Number: Words used herein in the masculine, feminine or neuter gender
shall be construed as though they were also used in another gender in all cases
where they would so apply.  Words used herein in the singular or plural form
shall be construed as though they were also used in the other form in all cases
where they would so apply.

6.12
Severability: In the event that a court of competent jurisdiction determines
that any provision of the Plan is in violation of any statute or public policy,
only those provisions of the Plan that violate such statute or public policy
shall be stricken.  All provisions of the Plan that do not violate any statute
or public policy shall continue in full force and effect.  Further, any court
order striking any provision of the Plan shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the
Corporation in establishing the Plan.

 
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6.13
Indemnification: The Corporation agrees to and shall indemnify and hold harmless
each Indemnified Person (as hereinafter defined), to the full extent permitted
by law and the Corporation’s Articles of Incorporation and Bylaws, from and
against all claims, losses, damages, causes of action, suits, and liability of
every kind, including all expenses of litigation, court costs and reasonable
attorney’s fees and expenses, incurred in connection with the
Plan.  “Indemnified Person” shall mean each director, officer, Committee member,
Claims Administrator or employee of the Corporation acting as a fiduciary of the
Plan.

6.14
Expenses: The expenses of administering the Plan shall be borne by the
Corporation.

6.15
Successors and Assigns: This Plan shall be binding on and inure to the benefit
of the Corporation and the Participants and their Beneficiaries, and their
respective heirs and assigns.

6.16
Captions. The captions of this Plan are descriptive only and do not affect the
intent or interpretation of the Plan.

6.17
Notices.  Any notice required or permitted to be given hereunder shall be in
writing sent by either personal delivery, overnight delivery, or United Sates,
registered or certified mail, return receipt requested, all of which shall be
properly addressed with postage or delivery charges prepaid, to the Committee or
Participant at their respective addresses described below, or at such other
addresses as either the Corporation or Participant may hereafter designate to
the other in writing:

 
To the Committee:
National Technical Systems, Inc. 2010 Long-Term Incentive Plan

 
24007 Ventura Blvd. Suite 200
 
Calabasas, California 91302
 
 
To any Participant:
To the Participant’s last known address as shown in the Corporation’s Human
Resource Department records

 
Notices sent by personal delivery shall be deemed given upon actual
receipt.  Notices sent by overnight delivery shall be deemed given on the next
business day.  Notices sent via United States registered or certified mail shall
be deemed given two business days from mailing.
 
 
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ACKNOWLEDGED:

National Technical Systems, Inc.
      By:
/s/ William McGinnis
      Its:
CEO and President
     
Dated: December 8, 2010
 

 

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