Document:

EXHIBIT 10.16

AMENDMENT NUMBER TEN TO REVOLVING CREDIT
AGREEMENT

This AMENDMENT
NUMBER TEN TO REVOLVING CREDIT AGREEMENT (this “Amendment”), dated as of
May __, 2008, 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”), UNITED
STATES TEST LABORATORY, L.L.C., a Kansas limited liability company (“USTL”),
ELLIOTT LABORATORIES, LLC, a California limited liability company (“ELA”)
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, ELA 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 ELA), 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, that certain Amendment Number Eight to
Revolving Credit Agreement, dated as of September 26, 2007, and that certain
Amendment Number Nine to Revolving Credit Agreement, dated as of December 5,
2007 (as so amended, the “Agreement”);

B.     Borrowers
(other than ELA) 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, ELA 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
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 acquire by
merger Elliott Laboratories, Inc., a California corporation (the “Acquisition”).
After the merger transactions are consummated, Elliott Laboratories, Inc. will
have been merged into ELA with ELA being the surviving company. In connection
with the Acquisition, Parent and, if applicable, its designee will owe certain
holdback and earnout obligations to the former shareholders of Elliott
Laboratories, Inc. (collectively, 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 ELA.

          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. 10 have been fulfilled to satisfaction of Agent and counsel.

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

          “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, the Term Loans B and the Term Loans C during such fiscal year
(excluding the proceeds of Permitted Real Estate Sales applied as permanent
reductions to the Term Loans A, the Term Loans B and the Term Loans C); in each
case calculated in accordance with GAAP.

          “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), the Term Loans B Maturity Date (in the case of the Term Loans B), and
the Term Loans C Maturity Date (in the case of the Term Loans C).

          (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.

          “LIBOR
Lending Rate Margin” means (a) with respect to all Revolving Loans, two
percentage points (200 basis points), (b) with respect to the Term Loans A and
the Term Loans B, two and one-quarter percentage points (225 basis points), and
(c) with respect to the Term Loans C, two and one-half percentage points (250
basis points).

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

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

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

          “Prime
Lending Rate” means the variable per annum rate equal to: (a) with respect
to Revolving Loans and Term Loans A and Term Loans B, the Prime Rate minus one
quarter of one percentage point (25 basis points); and (b) with respect to Term
Loans C, the Prime Rate. 

          “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, Term Loan B Commitment and Term Loan C Commitment, divided by the
Total Credit.

          “Total
Credit” means $43,829,000.

          “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, no Interest Period respecting the Term
Loans B may extend beyond the Term Loans B Maturity Date, and no Interest
Period respecting the Term Loans C may extend beyond the Term Loans C Maturity
Date.

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

          “Acton Real
Estate” means the commercial real estate owned by ETCR -and located at 533
Main Street, Acton, MA.

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

          “Acton
Real Estate Sale Proceeds” means the proceeds received from the Acton Real
Estate Sale in an amount equal to the greater of (i) $1,807,500, or (ii) the
sale price of the Acton Real Estate, net of taxes and documented out-of-pocket
costs and expenses incurred in connection with such sale.

          “Amendment
No. 10” means that certain Amendment Number Ten to Revolving Credit
Agreement, dated as of May __, 2008, among Borrowers, Agent and Lenders.

          “ELA”
means Elliot Laboratories, LLC, a California limited liability company.

          “ELA
Acquisition” means the acquisition by Parent (or its designee), through two
successive merger transactions, of Elliott Laboratories, Inc., a California
corporation.

          “Fullerton
Real Estate” means the commercial real estate owned by ETCR and located at
1536 E. Valencia Drive, Fullerton, CA.

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

          “Fullerton
Real Estate Sale Proceeds” means the proceeds received from the Fullerton
Real Estate Sale in an amount equal to the greater of (i) $3,825,000, or (ii)
the sale price of the Fullerton Real Estate, net of taxes and documented
out-of-pocket costs and expenses incurred in connection with such sale.

          “Term Loan
C Commitment” means, with respect to any Term Loan C Lender, the amount
indicated opposite such Lender’s name on Schedule 1.1C under the heading Term
Loan C 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 C
Commitment assigned to such assignee Lender (collectively, the “Term Loan C
Commitments”).

          “Term Loan
C Commitment Percentage” means, with respect to any Term Loan C Lender, the
percentage indicated on Schedule 1.1C under the heading Term Loan C 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 C Commitment
assigned to such assignee Lender.

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

          “Term Loans
C Maturity Date” means May 30, 2013.

          “Term C
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 C.

          3.3     Term
Loans C. The Agreement is hereby amended to add a new Section 2.3A as
follows:

          2.3A     Term
Loans C.

                    (a)     Several
Term Loans C. Subject to the terms and conditions hereof, each Term Loan C
Lender severally agrees to make a term loan (each a “Term Loan C” and
collectively the “Term Loans C”) to Borrowers on the Amendment Date in
an amount equal to each such Term Loan C Lender’s Term Loan C Commitment, the
proceeds of which shall be used for the purposes allowed in Section 7.1(d).
Each Term Loan C Lender shall make the amount of such Lender’s Term Loan C
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 C, Agent shall disburse the Term
Loans C as directed pursuant to written disbursement instructions provided by
Borrowers.

                    (b)     Amortization.
Borrowers shall pay quarterly principal reduction payments on the Term Loans C
each in the amount of $214,285. Each such payment shall be due and payable on
the last day of each quarter commencing July 31, 2008 and continuing on the
last day of each succeeding quarter. On the Term Loans C Maturity Date, the
outstanding principal balance, and all accrued and unpaid interest under the
Term Loans C shall be due and payable in full.

                    (c)     Prepayments.
Borrowers may prepay the Term Loans C 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 C Lender. Upon receipt of any such notice of a prepayment, Agent
shall promptly notify each Term Loan C Lender thereof. Agent shall, promptly
following its receipt of any payment or prepayment of the Term Loans C, distribute
to each Term Loan C Lender its pro rata share (based upon the principal amounts
outstanding) of all amounts received by Agent pursuant to this Section 2.3A for
each such Term Loan C Lender’s respective account. All prepayments shall be
applied toward scheduled principal reductions payments owing under this Section
2.3A in inverse order of maturity.

          3.4     Interest
Rates. Section 2.4(a) of the Agreement is hereby amended to add a new
subsection (iv) as follows:

                    (iv)     Term
Loans C. Subject to the terms and conditions hereof, the Term Loans C, 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 C; provided,
however, there shall be no more than three (3) LIBOR Lending Rate
Portions of Term Loans C outstanding at any time. LIBOR Lending Rate Portions
of Term Loans C shall be in minimum amounts each of $1,000,000.

          3.5     Notes.
Sections 2.11(a) and (b) of the Agreement are hereby amended in their 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 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, Term B Note and/or Term C 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, Term Loan B
Commitment and/or Term Loan C 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.
The Term Loans C and Borrowers’ obligation to repay the same shall be evidenced
by the Term C Notes, this Agreement and the books and records of Agent and the
Term Loan C 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.

          3.6          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 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, the Term Loans B required by Section 2.3,
and the Term Loans C required by Section 2.3A, 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, and the Term Loans C required by Section 2.3A,
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.

                         (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.

                         (f)     Acton
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 Acton 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 C required
by Section 2.3A in inverse order of their maturity.

                         (g)     Fullerton
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 Fullerton 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 C required
by Section 2.3A in inverse order of their maturity.

          3.7          Section
6.16 of the Agreement is hereby amended in its entirety to read as follows:

6.16     Saugus
Real Estate. As soon as possible, but in no event more than two hundred
forty (240) days following December 5, 2007, 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.

          3.8     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;

                         (d)     Use
any proceeds of the Term Loans C for any purpose other than to fund the
purchase price, transaction costs and repayment of debt in connection with the
ELA Acquisition; or

                         (e)     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.

          3.9     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%, or the Term Loan C
Lenders the Term Loan C 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:

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

                         (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 amend, modify or
waive any provision of this Agreement regarding the allocation of prepayment
amounts to the Term Loans C or the application of such prepayment amounts to
the respective installments of principal under the respective Term Loans C
without the written consent of the Term Loan C Lenders the Term Loan C
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 (w) 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 (x) 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 (y) 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 (z) Section 2.3A
or Section 2.11 (to the extent it relates to the Term Loans C) without the
written consent of Term Loan C Lenders the Term Loan C Commitment Percentages
of which aggregate more than 66.67%; or

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

          3.12     Amendment
to Exhibit 2.11(a). Exhibit 2.11(a) to the Agreement is hereby appended
with the form of Term C Note set forth on the Exhibit 2.11(a) attached hereto.

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

          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:

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

                         (b)     Agent
shall have received payment of a fee, for the ratable benefit of the Lenders,
equal to $30,000;

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

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

                         (e)     [will this be true as for closing and funding of Term Loan C?] Agent
shall have received evidence that the closing, consummation and satisfaction of
all conditions precedent in connection with the ELA Acquisition have been made
in accordance with the terms of the Agreement and Plan of Merger and all
applicable laws, rules and regulations, and confirmation that the assets of ELA
are free and clear of all claims and rights of third Persons, other than
Permitted Liens;

                         (f)     Agent
shall have received executed settlement and release agreements, with
disbursement instructions, relating to the payoff of (i) GE Capital with
respect to its loan secured by the Fullerton Real Estate, (ii) Commerce Bank
with respect to its loan secured by the Acton Real Estate, and (iii) the
sellers (and any debt of ELA that is to be paid at closing in accordance with
the Stock Purchase Agreement) in connection with the ELA Acquisition, together
with such releases and UCC-3 termination statements with respect to such
payoff, in form and substance satisfactory to Agent;

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

                         (h)     Agent
shall have received an updated draft of Schedule 1 to the Parent’s Stock Pledge
Agreement listing 100% of the membership interest of ELA;

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

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

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

                         (l)     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).

                         (m)     With
respect to ELA:

                                   (i)     receipt
by Agent of a Certificate of the Corporate Secretary of ELA, dated as of the
Amendment Date, certifying (1) the incumbency and signatures of the Responsible
Officers of ELA who are executing this Agreement and the Loan Documents on
behalf of ELA; (2) the Articles of Organization and Operating Agreement of ELA,
and all amendments thereto, as being true and correct and in full force and
effect; and (3) the resolutions of the Board of Directors of ELA 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 ELA to execute the same on behalf of ELA; 

                                   (ii)     receipt
by Agent of ELA’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 ELA, dated a recent date
prior to the Amendment Date, showing that ELA is in good standing under the
laws of the state of its organization; 

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

                                   (v)     receipt
by Agent of copies of insurance binders or insurance certificates for ELA;

                    (p)     With
respect to the Saugus Real Estate and Boxborough Real Estate, Agent shall have
received duly executed and issued amendments and endorsements, in form and
substance satisfactory to Agent, of the existing deed of trust and mortgage and
policies of title insurance as may be required by Agent to reflect the Term
Loans C.

                    (q)     With
respect to the Fullerton Real Estate, Agent shall have received duly executed
and issued deed of trust, assignment of rents and fixture filing, and a policy
of title insurance, together with a Phase II Environmental Site Assessment
report respecting such property (including conceptual cost estimates), all in
form and substance satisfactory to Agent and as may otherwise be required by
Agent.

                    (r)     With
respect to the Acton Real Estate, Agent shall have received duly executed and
issued mortgage, assignment of rents and fixture filing, and a policy of title
insurance, together with a Phase II Environmental Site Assessment report
respecting such property (including conceptual cost estimates), all in form and
substance satisfactory to Agent and as may otherwise be required by Agent.

                    (s)     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;

          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]

          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:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
NTS
  TECHNICAL SYSTEMS dba NATIONAL TECHNICAL SYSTEMS

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
XXCAL, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
APPROVED
  ENGINEERING TEST LABORATORIES, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ETCR, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ACTON
  ENVIRONMENTAL TESTING CORPORATION

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
PHASE SEVEN
  LABORATORIES, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
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:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ELLIOTT
  LABORATORIES, LLC, a California limited liability company

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
COMERICA
  BANK, in its capacities as Agent, Issuing Lender and a Lender

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Vahe S. Medzoyan, Vice President

	
 

	
 

	
 

	
 

	
FIRST BANK,
  in its capacity as a Lender

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name: Blake
  Seaton

	
 

	
Title: Vice
  President

Schedule 1.1C

Schedule of
Commitments

	
 

	
 

	
 

	
 

	
 

	
Revolving Loan Lender

	
 

	
Revolving Credit Commitment

	
 

	
Revolving Credit Commitment Percentage

	
Comerica

	
 

	
$9,900,000

	
 

	
60%

	

First Bank

	
 

	
$6,600,000

	
 

	
40%

	
 

	
 

	
 

	
 

	
 

	
Term Loan A Lender

	
 

	
Term Loan A Commitment

	
 

	
Term Loan Commitment Percentage

	
Comerica

	
 

	
$5,400,000

	
 

	
60%

	
First Bank

	
 

	
$3,600,000

	
 

	
40%

	
 

	
 

	
 

	
 

	
 

	
Term Loan B Lender

	
 

	
Term Loan B Commitment

	
 

	
Term Loan B Commitment Percentage

	
Comerica

	
 

	
$7,590,000

	
 

	
60%

	
First Bank

	
 

	
$5,060,000

	
 

	
40%

	
 

	
 

	
 

	
 

	
 

	
Term Loan C Lender

	
 

	
Term Loan C Commitment

	
 

	
Term Loan C Commitment Percentage

	
Comerica

	
 

	
$3,600,000

	
 

	
60%

	
First Bank

	
 

	
$2,400,000

	
 

	
40%

Exhibit 2.11(a)

Form of Term C Note

SECURED TERM LOAN C PROMISSORY NOTE

	
 

	
 

	
$___________

	
Los Angeles,
  California

	
 

	
_______________,
  20__

          This
Secured Term Loan C 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.

          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, ACTON ENVIRONMENTAL
TESTING CORPORATION, a Massachusetts corporation, and ELLIOTT LABORATORIES,
LLC, a California limited liability company (collectively, “Makers”),
jointly and severally promise to pay to the order of _______________ (“Payee”),
on or before the Term Loans C Maturity Date, the principal sum of
________________ Dollars ($___________), or such lesser sum as shall equal the
aggregate outstanding principal amount of the Term Loan C made by Payee to
Makers jointly and severally pursuant to the Agreement (as defined below). 

          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.

          Makers
hereby authorize Payee to record in its books and records the date, type and
amount of the Term Loan C, 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 C or continuation, conversion, or payment thereof shall not limit or
otherwise affect Makers’ obligations under the Agreement or this Note.

          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.

          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.

          Makers
shall make all payments hereunder in lawful money of the United States of
America and in immediately available funds to Comerica Bank (“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.

          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.

          This
Note is one of the “Term C 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 C 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.

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

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

          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.

          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.

          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.

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

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

	
 

	
 

	
 

	
 

	
NATIONAL
  TECHNICAL SYSTEMS, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
NTS
  TECHNICAL SYSTEMS dba NATIONAL TECHNICAL SYSTEMS

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
XXCAL, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
APPROVED
  ENGINEERING TEST LABORATORIES, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ETCR, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ACTON
  ENVIRONMENTAL TESTING CORPORATION

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
PHASE SEVEN
  LABORATORIES, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
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:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

	
 

	
 

	
 

	
 

	
ELLIOTT
  LABORATORIES, LLC, a California limited liability company

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Raffy Lorentzian, Chief Financial Officer

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)

6.     Elliott
Laboratories, LLC, a California limited liability company

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 companyEMPLOYMENT AGREEMENT

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into effective the 13th day of August, 2007, by and between Amerityre Corporation (the “Company”), and Gary N. Benninger (the “Executive”).

PREMISES

A.

The Board of Directors of the Company (the “Board”), desires to employ the Executive as Chief Executive Officer.

B.

The Executive desires to perform all of such services as the Company’s Chief Executive Officer and both the Company and the Executive want to enter into a written agreement as to their understanding of the employment relationship.

C.

The Board has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company.  The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.

FOR AND IN CONSIDERATION of the mutual covenants contained herein and of the mutual benefits to be derived hereunder, the parties agree as follows:

1.

Definitions.   Whenever used in this Agreement, the following terms shall have the meanings set forth below:

(a)

“Accrued Benefits” shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts:

(i)

All salary, options, bonus or stock awards, earned or accrued through the Termination Date;

(ii)

Reimbursement for any and all monies advanced in connection with the Executive’s employment  for reasonable and necessary expenses incurred by the Executive and approved by the Company through the Termination Date; and    

(iii)

All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company.       

(b)

“Board” shall mean the board of directors of the Company.

(c)

“Cause” shall mean any of the following:

(i)

The engagement by the Executive in fraudulent conduct, which the Board determines, in its reasonable discretion, has a significant adverse impact on the Company in the conduct of the Company’s business; 

(ii)

 Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company’s business;

(iii)

Neglect or refusal by the Executive to perform his duties or responsibilities, which neglect or refusal, if capable of correction, is not corrected by Executive after seven (7) days’ notice in writing to Executive from the Board which specifies the neglect or refusal; or

(iv)

Material violation by the Executive of the Company’s established policies and procedures, which violation, if capable of correction,  is not corrected by Executive after seven (7) days’ notice in writing to Executive from the Board which specifies the violation.

(d)

“Change of Control” shall mean:

(i)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (d), the following acquisitions shall not constitute a Change of Control:  (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 1; or

(ii)

(1) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or (2) a majority of the members of the Board ceases to be comprised of Directors whose most recent election to the Board was approved by at least a majority of the Incumbent Board prior to such election; or

(iii)

Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)

Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(e)

“Change of Control Period” shall mean the term of this Agreement and any renewal or extension thereof.

(f)

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(g)

“Confidential Information” means information (i) disclosed to or known by the Executive as a consequence of or through his/her employment with the Company, (ii) not generally known outside the Company, and (iii) which relates to the Company’s business.  Confidential Information includes, but is not limited to, information of a technical nature, such as methods and materials, trade secrets, inventions, processes, formulas, systems, computer programs, and studies, and information of a business nature such as business plans, market information, costs, customer lists, and so forth.

(h)

“Developments” means all Inventions, whether or not patentable, computer programs, copyright works, trademarks, Confidential Information, Works of Authorship, and other intellectual property, made, conceived or authored by the Executive, alone or jointly with others, while employed by the Company; whether or not during normal business hours or on the Company’s premises, that are within the present or reasonably contemplated scope of the Company’s business at the time such Developments are made, conceived, or authored, or which result from or are suggested by any work the Executive or others may do for or on behalf of the Company.

(i)

“Invention” means discoveries, concepts, and ideas, whether or not patentable or copyrightable, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof, or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement of with the use of the Company’s facilities, materials or personnel), either solely or jointly with others during his engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement.

(j)

“Intellectual Property” means Inventions, Confidential Information, Works of Authorship, patent rights, trademark rights, service mark rights, copyrights, know-how, Developments and rights of like nature arising or subsisting anywhere in the world, in relation to all of the foregoing, whether registered or unregistered.

(k)

“Notice of Termination” shall mean the notice described in Section 13 hereof.

(l)

“Person” shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an executive benefit plan of the Company of an entity organized, appointed of established pursuant to the terms of any such benefit plan.

(m)

“Proprietary Information” shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive’s engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors.

(n)

“Termination Date” shall mean, except as otherwise provided in Section 13 hereof, 

(i)

The Executive’s date of death;

(ii)

Thirty (30) days after the delivery of the Notice of Termination terminating the Executive’s employment on account of Illness or Incapacity pursuant to Section 17 hereof, unless the Executive returns on a full-time basis to the performance of his duties prior to the expiration of such period;

(iii)

Thirty (30) days after the delivery of the Notice of Termination if the Executive’s employment is terminated by the Executive voluntarily; and

(iv)

Thirty (30) days after the delivery of the Notice of Termination if the Executive’s employment is terminated by the Company for any reason other than death or Disability.

(o)

“Termination Payment” shall mean the payment described in Section 15 hereof.

(p)

“Works of Authorship” means an expression fixed in a tangible medium of expression regardless of the need for a machine to make the expression manifest, and includes but is not limited to, writings, reports, drawings, sculptures, illustrations, video recordings, audio recordings, computer programs, and charts.

2.

Employment.  The Company hereby employs the Executive to perform those duties generally described in this Agreement, and the Executive hereby accepts and agrees to such employment on the terms and conditions hereinafter set forth.

3.

Stated Term.   The Executive’s Employment as Chief Executive Officer shall commence on or about September 1, 2007, and shall end on August 31, 2009, subject to the termination provision of Section 13 of this Agreement, or unless extended or renewed by the written agreement of the parties.

4.

Duties.  During the term of this Agreement, the Executive shall be employed by the Company as its Chief Executive Officer to perform the following duties:

(a)  Have general charge of the Company’s business affairs and property and general supervision over the Company’s officers, employees and agents;

(b)  Serve as a member of the Company’s executive committee;

(c)  Execute certificates representing shares of the Company’s equity securities, the issuance of which shall have been authorized by the Board;

(d)  Provide leadership, coordination and general direction regarding the Company’s policies, plans and programs to the operations of the Company and oversee their execution;

(e)  Establish goals and objectives for the operations of the Company and ensures that such goals and objectives are met;

(f)  Administer and otherwise ensure compliance with the Company’s policies and procedures and local, county, state and federal regulations;

(g)  Develop and manage Company’s strategic operating plan and budgets;

(h)  Perform related duties as required or deemed appropriate by the Board to accomplish the responsibilities and functions of the office; 

(i)  Anticipate and identify issues of concern to the Board and develop strategies and solutions;

(j) Perform miscellaneous job-related duties as assigned or serve in such other comparable officer positions as requested by the Board.

The Executive shall devote substantially all of his working time and efforts to the business of the Company and its subsidiaries and shall not during the term of this Agreement be engaged in any other substantial business activities which will significantly interfere or conflict with the reasonable performance of his duties hereunder.

5.

Compensation.

(a)

Salary.  For all services rendered by the Executive, the Company shall pay to the Executive a salary of $300,000 per year (“Annual Salary”) throughout the term of this Agreement, payable semi-monthly.  All salary payments shall be subject to withholding and other applicable taxes. The rate of salary may be increased at any time as the Board may determine, based on earnings, increased business activities of the Company, or such other factors as the Board may deem appropriate.

(b)

Stock Options. The Executive has previously been granted an option to purchase up to 150,000 shares of the Company’s common stock (the “Executive Options”) at an exercise price of $5.36 per share, of which 100,000 such Executive Options have vested to the Executive and 50,000 Executive Options vest on June 30, 2008, provided Executive is employed by the Company on the vesting date. In connection with the Executive’s employment as Chief Executive Officer, the Company shall grant the Executive an option to purchase up to 150,000 shares of the Company’s common stock (the “New Executive Options”) at an exercise price of $4.04 per share, which amount represents the closing price of the Company’s common stock as quoted on the NASDAQ Stock Market on August 8, 2007. The New Executive Options will be granted from the authorized option pool under the Company’s 2005 Stock Option and Award Plan and be exercisable for a term of five (5) years from the date of Grant, provided Executive is employed by the Company on the vesting dates specified below. The vesting of the New Executive Option shall be as follows: 

(i)

50,000 on June 30, 2008; 

(ii)

100,000 on June 30, 2009;

(iii)

In the event of a Change in Control, all of the Executive Options and New Executive Options, not previously vest, shall vest immediately.

(c)

Stock Award.  In connection with Executive’s employment, the Company grants to the Executive a stock award of 25,000 shares of the Company’s common stock (the “Stock Award”) valued at $4.04 per share, which value is based on the closing price of the Company’s common stock as quoted on the NASDAQ Stock Market on August 8, 2007. The Stock Award shall vest on August 31, 2008, provided Executive is employed by the Company on that date. The Stock Award will be granted from the authorized pool under the Company’s 2005 Stock Option and Award Plan. 

(d)

Bonus Compensation. In connection with Executive’s employment, Executive will be eligible to earn bonus compensation up to 100% of Annual Salary under Section 5(a) based on the Company meeting the following financial performance objectives:

Fiscal  Years Ending June 30, 2008 and 2009:

(i)

If at June 30, 2008 the Company’s actual cash loss is reduced at least 50% from the Company’s actual cash loss at June30, 2007; or if the Company has Net Income at June 30, 2008 less than $999,999.99; then Executive will earn a performance cash bonus of 25% of Annual Salary; and if at June 30, 2009 the Company has Net Income between $1.00 and $999,999.99; then Executive will earn a performance cash bonus of 25% of Annual Salary; or

(ii)

If at June 30, 2008 or 2009 the Company has Net Income between $1,000,000 and $1,999,999.99; then Executive will earn a performance cash bonus of 50% of Annual Salary; or

(iii)

If at June 30, 2008 or 2009 the Company has Net Income between $2,000,000 and $3,999,999.99; then Executive will earn a performance cash bonus of 75% of Annual Salary; or

(iv)

If at June 30, 2008 or 2009 the Company has Net Income of $4,000,000 or above; then Executive will earn a performance cash bonus of 100% of Annual Salary. 

(v)

“Actual cash loss” as used above means Net Cash Used by Operating Activities per the Company’s fiscal year Statement of Cash Flow.  “Net Income” as used above means Net Income, per the Company’s fiscal year Profit and Loss Statement.

(e)

Executive Benefits.  The Company shall provide such health and medical insurance for the Executive in the form and program chosen by the Company for such full-time employees.  In addition to the stock option plan specified in subsection (b) above, the Executive shall be entitled to participate in any retirement, pension, profit-sharing, stock option, or other plan as in effect from time to time on the same basis as other employees.

6.

Expenses.  The Company will reimburse the Executive for expenses incurred in connection with the Company’s business, including expenses for travel, lodging, meals, beverages, entertainment, and other items on the Executive’s periodic presentation of an account of such expenses.

7.

Vacations.  Executive shall be entitled each year during the term hereof to a paid vacation of at least four (4) weeks.  Vacation shall be taken by Executive at a time and with starting and ending dates mutually convenient to the Company and Executive.  Vacation or portions of vacations not used in one employment year shall not carry over to the succeeding employment year.

8.

Nevada Residence/Working Facilities.  During the term of this Agreement Executive agrees to make his official residence within Clark County Nevada.  The Company shall provide the Executive with offices and facilities appropriate to the Executive’s position and suitable for the performance of the Executive’s duties.

9.

Nondisclosure of Proprietary and Confidential Information.  Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes and the performance of services which involve experimental and inventive work; and that the success of the Company=s business depends upon the protection of the processes, products and services by patent, copyright or by secrecy; and that the Executive has had, or during the course of  his engagement may have, access to Proprietary and Confidential Information of the Company, as herein defined, or other information and data of a secret or propriety nature of the Company which the Company desires to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees and acknowledges that:

(a)

The Company has exclusive property rights to all Proprietary and Confidential Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary and Confidential Information to the Company.  Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary or Confidential Information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling.

(b)

All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary and Confidential Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or complied by the Executive at any time or made available to him prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him in trust solely for the benefit of the Company, and shall be delivered to the Company by him on the termination of his engagement or at any other time on the request of the Company.

(c)

The Executive will not assert any rights under any inventions, trademarks, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him prior to his being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary or Confidential Information.

10.

Assignment Of Inventions.

(a)

All Inventions shall be the sole property of the Company, and the Executive agrees to perform the provisions of this Section 10 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an the Executive or consultant.

(b)

The Executive shall maintain written notebooks in which he shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company’s behalf.  The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his engagement or, upon the request of the Company, at any time prior thereto. 

(c)

The Executive shall apply, at the Company’s request and expense, for United States and foreign letters patent or copyrights either in the Executive’s name or otherwise as the Company shall desire.

(d)

The Executive hereby assigns to the Company all of his rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions.

(e)

The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive’s inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company of its nominee.  The Executive acknowledges and agrees that any copyright developed or conceived of, by the Executive during the term of his employment which is related to the business of the Company shall be a “work for hire” under the copyright law of the United States and other applicable jurisdictions.

(f)

The Executive represents that his performance of all the terms of this Agreement and as an Executive of or consultant to the Company does not and will not breach any trust prior to his employment by the Company.  The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he has not brought and will not bring with him to the Company or use in the performance of his responsibilities at the Company any materials or documents of a former Company which are not generally available to the public, unless he has obtained written authorization from the former Company for their possession and use, a copy of which has been provided to the Company.

(g)

No provisions of the Paragraph shall be deemed to limit the restrictions applicable to the Executive under Section 9 and 10.

11.

Shop Rights.  The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined herein but which are conceived of or made by Executive during the period he is engaged by the Company or with the use or assistance of the Company’s facilities, materials, or personnel.

12.

Non-Compete.  The Executive hereby agrees that during the term of this Agreement and any renewal or extension term thereof, and for the period of two years from the termination thereof, that the Executive will not:

(a)

Own, manage, operate, or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof.  For purposes of this paragraph, ownership of securities of not in excess of two and one-half percent (2.5%) of any class of securities of a public company listed on a national securities exchange or on the National Association of Securities Dealers Automated Quotation System (NASDAQ) shall not be considered to be competition with the Company or any subsidiary thereof;

(b)

Act as, or become employed as, an officer, director, executive, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries;

(c)

Solicit any similar business to that of the Company’s for, or sell any products or services that are in competition with the Company’s products and services to, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof; or

(d)

Solicit the employment of, or hire, any full time the Executive employed by the Company or its subsidiaries as of the date of termination of this Agreement.

13.

Termination.  The Company may terminate this Agreement without Cause on September1, 2008.  If this Agreement is so terminated, then Company will be obligated to pay the Executive six months severance, which includes one-half of the Executive’s Annual Salary, pro rata share of earned Bonus Compensation through the termination date, six-months of the Executive Benefits and the Stock Award as set forth in section 5. If this Agreement is terminated by the Company without Cause, after August 31, 2008, the Executive shall be entitled to the termination payment set forth in section 15. Any termination by the Company or the Executive of the Executive’s employment during the term hereof shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures:

(a)

The Notice of termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination;

(b)

Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the members of the Board;

(c)

Any Notice of Termination by the Executive shall be provided to the Board at least 30 days prior to leaving the employment of the Company.  Upon the end of the thirty days, all compensation provisions of this Agreement shall cease.

14.

Termination Upon Change of Control.  Notwithstanding any provision of this Agreement to the contrary, the Executive may terminate this Agreement upon a Change of Control, provided the Executive has been given ninety (90) days to consider whether to continue in the same capacity with the acquiring entity or accept Termination Payments consistent with Section 15 below.

15.

Termination Payments. In the event the Executive’s employment is terminated by the Company during the term hereof after August 31, 2008 for reasons other than Cause, the Executive shall be paid six months severance, which includes one-half of the Executive’s Annual Salary, pro rata share of earned Bonus Compensation through the termination date and six-months of the Executive Benefits as set forth in section 5 as full settlement of any sums owed under this Agreement and for any potential actions for breach of this Agreement by the Company.  Other than any payments set forth in this Section 15, the Executive shall be entitled to no further compensation nor any other payments after such termination.  The Executive shall receive no further payments if terminated for Cause other than Accrued Benefits.

16.

Death During Employment.  If the Executive dies during the term of this Agreement, the Company shall have no further obligations to pay the Executive other than any Accrued Benefits.

17.

Illness or Incapacity.   If the Executive is unable to perform the Executive’s services by reason of illness or incapacity for a period of more than three (3) consecutive months, the compensation thereafter payable to the Executive during the next three (3) consecutive months shall be 50% of the compensation provided for herein. During such period of illness or incapacity, the Executive shall be entitled to receive incentive compensation if any. Notwithstanding the foregoing, if such illness or incapacity does not cease to exist within a six (6) consecutive month period, the Executive shall not be entitled to receive any further compensation nor any payments for such illness or incapacity, and the Company may terminate this Agreement without further liability to the Executive.  Any existing options to purchase the Company’s common stock held by the Executive at the time of termination shall be governed by the terms of the option and not affected by this provision.  Notwithstanding any of the foregoing, if such illness or incapacity ceases prior to six (6) consecutive months, at the termination of such illness or incapacity, the Executive shall be entitled to receive the Executive’s full compensation payable pursuant to the terms of this Agreement.

18.

Non-transferability.  Any right to receive any payment due under this Agreement or any other rights hereunder are expressly declared nontransferable.

19.

Indemnification.  The Company shall indemnify the Executive and hold the Executive harmless from liability for acts or decisions made by the Executive while performing services for the Company to the greatest extent permitted by applicable law.  The Company shall use its best efforts to obtain coverage for the Executive under any insurance policy now in force or hereafter obtained during the term of this Agreement insuring officers and directors of the Company against such liability.

20.

Assignment.  This Agreement may not be assigned by either party without the prior written consent of the other party.

21.

Entire Agreement.  This Agreement is and shall be considered to be the only agreement or understanding between the parties hereto with respect to the employment of the Executive by the Company.  All negotiations, commitments, and understandings acceptable to both parties have been incorporated herein.  No letter, telegram, or communication passing between the parties hereto covering any matter during this contract period, or

1

any plans or periods thereafter, shall be deemed a part of this Agreement; nor shall it have the effect of modifying or adding to this Agreement unless it is distinctly stated in such letter, telegram, or communication that is to constitute a part of this Agreement and is attached as an amendment to this Agreement and is signed by the parties to this Agreement.

22.

Enforcement.  Each of the parties to this Agreement shall be entitled to any remedies available in equity or by statute with respect to the breach of the terms of this Agreement by the other party.  The Executive hereby specifically acknowledges and agrees that a breach of the provisions of Sections 9, 10, 11 or 12 of this Agreement will cause irreparable harm and damage to the Company, that the remedy at law, for the breach or threatened breach of this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the provisions of  Sections 9, 10, 11 or 12 of this Agreement.

23.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.  Venue for any subsequent legal proceeding involving disputes arising out of this Agreement shall lie exclusively in Nevada’s Eighth Judicial District Court, Clark County, Nevada.    

24.

Severability.  If and to the extent that any court of competent jurisdiction holds any provision or any part thereof of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement.

25.

Waiver.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach hereof shall constitute a waiver of any such breach or of any covenant, agreement, term, or condition.

26.

Litigation Expenses.  In the event that it shall be necessary or desirable for the Executive or the Company to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the provisions of this Agreement, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs, and expenses incurred by the prevailing party in connection with the enforcement of this Agreement.  Payment shall be made upon the conclusion of such action.

27.

Survivability.   The provisions of Sections 9, 10, 11, 12 and 22 shall survive termination of this Agreement.

AGREED AND ENTERED INTO as of the date first above written.

Company:

Executive:

AMERITYRE CORPORATION

By/s/Kenneth C. Johnsen

/s/Gary N. Benninger

Duly Authorized Representative

Gary N. Benninger

2

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