EX-10.5






Exhibit 10.5



THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT




       THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Agreement”) is dated as of the 1st day of July, 2008 and is by and among
MISTRAS GROUP, INC. (formerly known as Mistras Holdings Corp.), a Delaware corporation (the
“Borrower”), BANK OF AMERICA, N.A., as Agent, Co-Lead Bookrunner and L/C Issuer (the “Agent”),
JPMORGAN CHASE BANK, N.A., as Co-Lead Bookrunner (“JPMorgan Chase”) and each lender from time to
time party hereto (collectively, “Lenders” and individually, a “Lender”).



W I T N E S S E T H:




     WHEREAS, the Borrower, the Agent, JPMorgan Chase and the Lenders, are parties to that certain
Amended and Restated Credit Agreement dated as of April 23, 2007, effective as of October 31, 2006,
as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as of
December 14, 2007 and that certain Second Amendment to Amended and Restated Credit Agreement, dated
as of May 30, 2008 (collectively, the “Credit Agreement”); and



     WHEREAS, the Borrower has requested the Lenders to make a new term loan to the Borrower in the
original principal amount of $20,000,000 under and as part of the Credit Agreement, to be used to
fund and/or to reimburse the Borrower for costs relating to the acquisition of (i) certain assets
of Inspection Technologies Inc. (“iTi”), H&G Inspection Company (“H&G”), Gonzalez Industrial X-ray,
Inc. (“Gonzalez) and South Bay Inspection, Inc. (“South Bay”, and collectively with iTi, H&G and
Gonzalez, the “2008 Asset Sellers”); (ii) the outstanding equity securities of 508732 Alberta Ltd.,
Boss Holdings Inc. and 1113090 Alberta Ltd., which together own all of the outstanding equity
securities of Nomad Inspection Services Ltd. (“Nomad”); and (iii) certain yet-to-be-determined
additional assets and/or equity securities.



     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



     1. Defined Terms. Except as otherwise indicated herein, all words and terms defined
in the Credit Agreement shall have the same meanings when used herein.



     2. Amendments to Credit Agreement.



          (a) The recital of the Credit Agreement is hereby amended to read, in its entirety, as
follows:




               Borrower has requested that Lenders provide a revolving credit
facility, a term loan, and an acquisition loan, and Lenders are willing to
do so on the terms and conditions set forth herein. In consideration of the
mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:



 









 





          (b) The following definitions are hereby added to, and inserted alphabetically in, Section
1.01 of the Credit Agreement:




               “Acquisition Loan” has the meaning specified in Section
2.01(c).




               “Acquisition Loan Closing Date” means July 1, 2008.




               “Acquisition Loan Commitment” means, as to each Lender, the
amount set forth opposite such Lender’s name on the portion of Schedule 2.01
describing the Acquisition Loan or in the Assignment and Assumption pursuant
to which such Lender becomes a party hereto, as applicable.




               “Acquisition Note” means a promissory note made by Borrower in
favor of a Lender evidencing the Lender’s Applicable Percentage of the
Acquisition Loan, substantially in the form of Exhibit G.




               “Aggregate Acquisition Loan Commitments” means the Acquisition
Loan Commitments of all Lenders.




               “Nomad” means Nomad Inspection Services Ltd.




               “Nomad Shareholders” means, at any time, the entity or entities
that collectively own and control one hundred (100%) percent of the
outstanding equity securities of Nomad.




               “2008 Asset Sellers” means, collectively, Inspection
Technologies Inc., H&G Inspection Company, Gonzalez Industrial X-ray, Inc.
and South Bay Inspection, Inc.



          (c) Each of the following definitions set forth in Section 1.01 of the Credit Agreement is
hereby amended to read, in its entirety, as follows:




               “Aggregate Commitments” means, collectively, the Aggregate
Revolving Loan Commitments, the Aggregate Term Loan Commitments and the
Aggregate Acquisition Loan Commitments.




               “Applicable Percentage” means, with respect to any Lender at
any time, the percentage (carried out to the ninth decimal place) of (i) the
Aggregate Revolving Loan Commitments represented by such Lender’s Revolving
Loan Commitment at such time; (ii) the Aggregate Term Loan Commitments
represented by such Lender’s Term Loan Commitment at such time and (iii) the
Aggregate Acquisition Loan Commitments represented by such Lender’s
Acquisition Loan Commitment at such time. If the commitment of each Lender
to make Revolving Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02 or if the
Aggregate Revolving Loan



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Commitments have expired, then the Applicable Percentage of each Lender
with respect to the Revolving Loans shall be determined based on the
Applicable Percentage of such Lender most recently in effect, giving effect
to any subsequent assignments. The initial Applicable Percentage of each
Lender is set forth opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.




               “Applicable Rate” means, from time to time, the following
percentages per annum, based upon the ratio of Funded Debt to EBITDA (the
“Financial Covenant”) as set forth in the most recent Compliance
Certificate received by Agent pursuant to Section 6.02(b):



Applicable Rate




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pricing	 	 	 	 	 	 	 	 	 	Eurodollar
	Level	 	Funded Debt : EBITDA	 	Base Rate +/-	 	Rate +/-
	1
	 	 	<1.76:1	 	 	 	-.75	%	 	 	+1.50	%
	2
	 	31.76:1 but <2.51:1	 	 	-.25	%	 	 	+2.00	%
	3
	 	 	32.51:1	 	 	 	+.00	%	 	 	+2.25	%







Any increase or decrease in the Applicable Rate resulting from a change in
the Financial Covenant shall become effective as of the first Business Day
of the month immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(b); provided, however, that if a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 3 shall apply as of the first Business Day of
the month following the date such Compliance Certificate was required to
have been delivered until the first Business Day of the month immediately
following the delivery of such Compliance Certificate. The Applicable Rate
in effect from the Acquisition Loan Closing Date until receipt of the
Compliance Certificate for the period ended August 31, 2008 shall be
determined based upon the Pricing Level in effect as of the date hereof.




               “Commitment” means, as to each Lender, its Revolving Loan
Commitment, its Term Loan Commitment and its Acquisition Loan Commitment.




               “Committed Loan” means the Term Loan (or any portion thereof
made by a Lender), a Revolving Loan (or any portion thereof made by a
Lender) or the Acquisition Loan (or any portion thereof made by a Lender).




               “Debt Service Coverage Ratio” means the ratio of Fixed Charge
Cash Flow to the sum of the current portion of long-term liabilities (which
shall include any conditional payments, including payments due under any
earn-out agreements, deemed due and owing in the next 12-month period)



3









 







and the current portion of capitalized lease obligations, plus interest
expense on all obligations.




               “EBITDA” means net income, less income or plus loss from
discontinued operations and extraordinary items, plus income taxes, plus
interest expense, plus depreciation, depletion, and amortization (including
non-cash loss on retirement of assets), plus stock option expense, less cash
expense related to stock options and adjusted for certain historical
expenses, accounting adjustments, and other non-cash charges, all in the
Required Lenders’ sole discretion. With respect to each acquisition by the
Borrower or any of its Subsidiaries of substantially all of the assets or
equity securities of another company, other than the acquisitions relating
to the 2008 Asset Sellers and the Nomad Shareholders, (i) for purposes of
determining compliance by the Borrower with Section 6.12 of this Agreement,
the consolidated EBITDA of the Borrower and its Subsidiaries shall not
include the EBITDA of the company that is the subject of such acquisition to
the extent attributable to periods prior to the date of such acquisition and
(ii) for purposes of determining the Applicable Rate, the consolidated
EBITDA of the Borrower and its Subsidiaries shall include the historical
EBITDA of the company that is the subject of such acquisition during the
applicable 12-month reporting period, whether or not the acquired company
was owned by the Borrower or any of its Subsidiaries during the entire
period in question. With respect to the 2008 Asset Sellers and the Nomad
Shareholders, for purposes of determining compliance by the Borrower with
Section 6.12 of this Agreement and for purposes of determining the
Applicable Rate, the consolidated EBITDA of the Borrower and its
Subsidiaries shall include the following amounts for the following periods,
which amounts represent the Agent’s determination of the aggregate
historical EBITDA of all of such acquisitions:



	 	 	 	 	 
	June 1, 2008 — August 31, 2008
	 	$	2,500,000	 
	September 1, 2008 — November 30, 2008
	 	$	1,675,000	 
	December 1, 2008 — February 28, 2009
	 	$	837,500	 
	March 1, 2009 and thereafter
	 	$	0	 







Notwithstanding the foregoing, in the event that the purchase of the
outstanding equity securities of the Nomad Shareholders has not closed prior
to July 31, 2008, the Agent shall, in its sole discretion, determine the
appropriate add-backs to the consolidated EBITDA of the Borrower and its
Subsidiaries, which shall include the Agent’s determination of aggregate
historical EBITDA of the 2008 Asset Sellers but shall not include the
aggregate historical EBITDA of the Nomad Shareholders.




               “Loan” means an extension of credit by a Lender to Borrower
under Article II in the form of a Revolving Loan or the Term Loan or the
Acquisition Loan.



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               “Note” means a Revolving Note, a Term Note or an Acquisition
Note.




               “Required Lenders” means, as of any date of determination,
Lenders having more than 50% of the sum of the Revolving Loan Commitments
and the outstanding principal balance of the Term Loans and the Acquisition
Loan (taken as a whole) or, if the commitment of each Lender to make Loans
and the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 8.02, Lenders holding in the aggregate more
than 50% of the total outstanding Loans (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations
being deemed “held” by such Lender for purposes of this definition);
provided that the Commitment of, and the portion of the total outstanding
Loans held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.



          (d) The definition of “Change of Control” set forth in Section 1.01 of the Credit Agreement is
hereby amended by adding the following provision at the end thereof:




Notwithstanding the foregoing, however, if any of the events or series of
events as set forth in subsections (a), (b), (c) or (d) above occurs solely
as a result of the public offering of the Borrower’s common stock pursuant
to an effective registration statement filed under the Securities Act of
1933, as amended, such event or series of events shall not be deemed a
“Change of Control” for purposes of this Agreement.



          (e) Section 2.01 of the Credit Agreement is hereby amended by adding the following provision
after subsection (b):




               (c) Acquisition Loan. (i) Subject to the terms and conditions
set forth herein, each Lender severally agrees to make a term loan
(collectively, the “Acquisition Loan”) to Borrower in an amount
equal to the amount of such Lender’s Acquisition Loan Commitment. The
Borrower shall execute and deliver to each such Lender one or more
Acquisition Notes to evidence the Acquisition Loan. The Acquisition Loan
shall be a Eurodollar Rate Loan, as further provided herein. Once repaid or
prepaid, the Acquisition Loan may not be re-borrowed.




                    (ii) The Acquisition Loan shall be disbursed in no more than two (2)
installments. On the Acquisition Loan Closing Date, the Borrower shall have
the right to request, and each Lender shall fund, the first installment of
the Acquisition Loan in an amount not to exceed such Lender’s Acquisition
Loan Commitment (collectively, the “First Acquisition Draw”). At any time
within ninety (90) days after the Acquisition Loan Closing Date, the
Borrower shall have the right to request, and each Lender shall fund, a
second installment of the



5









 







Acquisition Loan in an amount not to exceed (A) such Lender’s
Acquisition Loan Commitment minus (B) such Lender’ share of the First
Acquisition Draw (collectively, the “Second Acquisition Draw”). The
Borrower shall have no right to request, and the Lenders shall have no
obligation to fund, any installments of the Acquisition Loan other than the
First Acquisition Draw and the Second Acquisition Draw as described above.
To the extent that the aggregate amount of the First Acquisition Draw and
the Second Acquisition Draw is less than $20,000,000, or in the event that
the Borrower has not requested the Second Acquisition Draw prior to the
expiration of the 90-day period referred to above, the Borrower shall be
deemed to have automatically and irrevocably waived any right to request or
receive any more funds from the Acquisition Loan.



          (f) Section 2.03(a)(i) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:




               (a)(i) Subject to the terms and conditions set forth herein, (A) the
L/C Issuer agrees, in reliance upon the agreements of the other Lenders set
forth in this Section 2.03, (1) from time to time on any Business Day during
the period from the Closing Date until the L/C Expiration Date, to issue
Letters of Credit for the account of Borrower, and to amend or extend
Letters of Credit previously issued by it, in accordance with subsection (b)
below, and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of Borrower and any drawings thereunder; provided that the Lenders
shall have no obligation to issue a Letter of Credit unless after giving
effect to any L/C Credit Extension with respect to any Letter of Credit, (x)
the Total Revolving Loan Outstandings shall not exceed the Aggregate
Revolving Loan Commitments, (y) the aggregate Outstanding Revolving Loan
Amount of all Revolving Loans of any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Revolving Loan Amount of all L/C Obligations,
plus such Lender’s Applicable Percentage of the Term Loan plus such Lender’s
Applicable Percentage of the Acquisition Loan shall not exceed such Lender’s
Commitment, and (z) the Outstanding Revolving Loan Amount of the L/C
Obligations shall not exceed the L/C Sublimit. Each request by Borrower for
the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence. Within the foregoing limits, and subject to the terms and
conditions hereof, Borrower’s ability to obtain Letters of Credit shall be
fully revolving, and accordingly Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or
that have been drawn upon and reimbursed.



6









 





          (g) Section 2.04 of the Credit Agreement is hereby amended by adding the following provisions
after subsection (b):




               (c) Commencing on July 27, 2008 and on the 27th day of each
and every calendar month thereafter, the Acquisition Loan shall be paid in
equal consecutive monthly installments of principal in the amount of
$277,777.78 each month based on a six year amortization schedule, together
with all interest accrued thereon.



          (h) Section 2.05(a) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:




               (a) Borrower may, upon notice to Agent, at any time or from time to
time voluntarily prepay the Acquisition Loan, Term Loan or Revolving Loans
in whole or in part without premium or penalty; provided that such notice
must be received by Agent not later than 11:00 a.m. three Business Days
prior to any date of prepayment of Eurodollar Rate Loans. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid and, if Eurodollar Rate Loans are to be
prepaid, the Interest Period(s) of such Loans. Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender’s Applicable Percentage of such prepayment. If such notice is given
by Borrower, Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by
all accrued interest on the amount prepaid, together with any additional
amounts required pursuant to Section 3.05. Each such prepayment shall be
applied to the Committed Loans of Lenders in accordance with their
respective Applicable Percentages.



          (i) Section 2.05(d) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:




               (d) All prepayments under this Section 2.05 to the Term Loan or the
Acquisition Loan shall be applied to installments due under the Term Loan or
the Acquisition Loan, as applicable, in the inverse order of their maturity.



          (j) Section 2.08 of the Credit Agreement is hereby amended by adding the following provisions
after subsection (b):




               (c) Facility Fee. On the Acquisition Loan Closing Date,
Borrower shall pay to the Lenders, pro rata in accordance with the Lenders’
respective Acquisition Loan Commitments, a facility fee in the amount of
$120,000.



7









 






               (d) Structuring Fee. On the Acquisition Loan Closing Date,
Borrower shall pay solely to Agent a structuring fee in the amount set forth
in that certain Summary of Terms and Conditions dated May 8, 2008. Such
structuring fee shall be in addition to the portion of the facility fee paid
to Agent in its capacity as Lender pursuant to Section 2.08(c).



          (k) Section 6.11 of the Credit Agreement is hereby amended by adding the following sentence to
the end of such section:




               Notwithstanding the foregoing, the proceeds of the Acquisition Loan
shall be applied only to fund and/or to reimburse the Borrower for costs
relating to the acquisition of (i) the assets purchased from the 2008 Asset
Sellers, (ii) the outstanding equity securities of the Nomad Shareholders
and (iii) the assets and/or voting securities of certain other entities to
be identified by the Borrower after the date hereof.



          (l) Section 6.12(a) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:




               (a) EBITDA. Maintain on a consolidated basis EBITDA of not
less than the following amounts calculated for the 12-month periods ending
on the following dates:



	 	 	 	 	 
	Fiscal Year	 	Minimum Annual EBITDA
	2008
	 	$	21,000,000	 
	2009
	 	$	29,000,000	 
	2010
	 	$	30,000,000	 
	2011
	 	$	32,400,000	 
	2012
	 	$	33,000,000	 






          (m) Section 7.02(f) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:




               (f) Investments in (i) the acquisitions of certain of the assets of the
2008 Asset Sellers and of the equity securities of the Nomad Shareholders
and (ii) other acquisition(s) of assets and/or equity securities provided
that, with respect to such other acquisition(s) all of the following
conditions are satisfied: (A) the cash portion (paid at closing and in the
first 12 months thereafter) of the purchase price shall not exceed
$7,000,000 in the aggregate in any 12-month period, (B) there shall not be
more than two such other acquisitions in any 12-month period where the cash
portion of the purchase price (paid at closing and in the first 12 months
thereafter) exceeds $3,000,000, (C) immediately following each such other
acquisition, the amount by which the Aggregate Revolving Loan Commitments
exceed the Total Revolving Loan Outstandings shall



8









 







not be less than $5,000,000, (D) the acquired entity is in a line of
business substantially similar to the business conducted by Borrower or its
Subsidiaries, and (E) pro-forma compliance with the financial covenants
contained in Section 6.12 can be evidenced by Borrower to the reasonable
satisfaction of Agent and Required Lenders; provided, however, that in all
such instances notice of such other acquisition shall be delivered to the
Agent no later than 15 days prior to the date of the closing of such other
acquisition, and all material acquisition documents shall promptly be
delivered to the Agent upon the Agent’s request; and



          (n) Section 7.06 of the Credit Agreement is hereby further amended by adding the following new
subsection (e) after subsection (d):




               (e) Borrower may issue or sell its common stock in connection with a
public offering pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended, provided that the terms and
conditions of such offering are reasonably acceptable to the Agent and the
Lenders in all respects.



          (o) Schedule 2.01 to the Credit Agreement is hereby deleted in its entirety and replaced with
the revised Schedule 2.01 attached hereto.



          (p) Schedule 10.02 to the Credit Agreement is hereby deleted in its entirety and replaced with
the revised Schedule 10.02 attached hereto.



          (q) Exhibit G attached hereto is hereby added to the Credit Agreement as Exhibit G thereto.



     3. Reaffirmation of Amended and Restated Guaranty. In order to induce the Agent and
the Lenders to enter into this Agreement and amend the Credit Agreement as provided herein,
concurrently herewith, each of Quality Services Laboratories, Inc., CONAM Inspection & Engineering
Services, Inc., Physical Acoustics Corporation and CISMIS Springfield Corp. has executed and
delivered to the Agent a Reaffirmation of Amended and Restated Guaranty.



     4. Amendment to Loan Documents.



          (a) In order to induce the Agent and the Lenders to enter into this Agreement and amend the
Credit Agreement as provided herein, concurrently herewith, the Borrower has executed and delivered
or caused to be executed and delivered to the Agent, the following amendments to Loan Documents:




	 	(i)	 	First Amendment to Amended and Restated
Security Agreement;
	 
	 	(ii)	 	First Amendment to Trademark and Patent
Security Agreement;
	 
	 	(iii)	 	First Amendment to Amended and Restated Pledge
Agreement; and




9









 






	 	(iv)	 	Second Amendment to Subordination Agreement.





          (b) In order to induce the Agent and the Lenders to enter into this Agreement and amend the
Credit Agreement as provided herein, immediately after the consummation of the purchase by the
Borrower, or any direct or indirect Subsidiary of the Borrower (the “Nomad Purchaser”), of the
outstanding equity securities of the Nomad Shareholders, Borrower shall cause the Nomad Purchaser
to (i) notify the Agent thereof in writing; (ii) execute and deliver to the Agent a Stock Pledge
Agreement, in form and substance acceptable to the Agent, pursuant to which the Nomad Purchaser
pledges to the Agent sixty-five (65%) percent of the outstanding equity securities of each of the
Nomad Shareholders and (iii) cause to be delivered to Agent an opinion of counsel to the Nomad
Purchaser. The Borrower has informed the Agent that, immediately after the purchase by the Nomad
Purchaser of the outstanding equity securities of the Nomad Shareholders, the Borrower currently
intends to amalgamate (the “Amalgamation”) the Nomad Purchaser, the Nomad Shareholders and Nomad
into one legal entity (the “Amalgamated Entity”). The Borrower shall deliver to the Agent full
copies of all of the documents effectuating the Amalgamation. In the event that the Amalgamation
is consummated, the Stock Pledge Agreement referred to in this subparagraph 4(b) shall be delivered
by the Subsidiary or Subsidiaries of the Borrower that, following the Amalgamation, collectively
own and control one hundred (100%) percent of the outstanding equity securities of the Amalgamated
Entity.



     5. Subordinated Target Notes; Subordination Agreement.



          (a) (i) In connection with the purchase of the assets from the 2008 Asset Sellers, CONAM has
delivered to the applicable 2008 Asset Sellers unsecured subordinated promissory notes (each, a
“Subordinated Target Note”) in payment of a portion of the purchase price for the assets being
acquired from each 2008 Asset Seller by the Borrower or a Subsidiary. Payments under the
Subordinated Target Notes are subordinated and made subject in all respects to any and all Notes
from the Borrower in favor of the Agent or the Lenders and any and all rights of the Agent or the
Lenders thereunder to the extent provided in the terms and conditions of each such applicable
Subordinated Target Note.



               (ii) The Borrower covenants that, notwithstanding Section 3 of each of the Subordinated Target
Notes, neither the Borrower nor CONAM shall prepay, or permit or suffer the prepayment by CONAM, of
any amounts under any of the Subordinated Target Notes, other than monthly installments due and
owing in accordance with Section 1 thereof, without the prior written consent of the Agent, which
may be withheld for any reason or no reason, and the Borrower agrees and acknowledges that any such
prepayment shall result in an Event of Default.



               (iii) The Borrower covenants that, notwithstanding the provisions of each of the Subordinated
Target Notes, neither the Borrower nor CONAM shall agree to amend any of the Subordinated Target
Notes without the prior written consent of the Agent, which may be withheld for any reason or no
reason, and the Borrower agrees and acknowledges that any such amendment shall result in an Event
of Default.



          (b) In connection with the purchase of the outstanding equity securities of the Nomad
Shareholders, the Nomad Purchaser or the Amalgamated Entity, as applicable, intends to



10









 







deliver to each of (i) John Dyer; (ii) Harry Boss and Maxine Boss; and (iii) Michael Smith and
Vonda Todd (collectively, the “Nomad Noteholders”), an unsecured subordinated promissory note
(collectively, the “Nomad Notes”) in payment of a portion of the purchase price for the outstanding
equity interests being acquired from the Nomad Noteholders by the Nomad Purchaser. In order to
induce the Agent and the Lenders to enter into this Agreement and amend the Credit Agreement as
provided herein, the Nomad Purchaser or the Amalgamated Entity, as applicable, shall execute and
deliver to the Agent, and shall cause each of the Nomad Noteholders to execute and deliver to the
Agent, upon closing of the Nomad Purchaser’s purchase of the Nomad Noteholders’ outstanding equity
securities, a subordination agreement in form and substance reasonably acceptable to the Agent,
pursuant to which the Nomad Notes, and all rights of the Nomad Noteholders thereunder, are
unconditionally and without limitation subordinated and made subject in all respects to any and all
Notes from the Borrower in favor of the Agent or the Lenders and any and all rights of the Agent or
the Lenders thereunder.



     6. Representations and Warranties. In order to induce the Agent and the Lenders to
enter into this Agreement and amend the Credit Agreement as provided herein, the Borrower hereby
represents and warrants to the Agent and the Lenders that:



          (a) All of the representations and warranties of the Borrower set forth in the Credit
Agreement and the Loan Documents are true, complete and correct in all material respects on and as
of the date hereof with the same force and effect as if made on and as of the date hereof and as if
set forth at length herein.



          (b) No Default or Event of Default presently exists and is continuing on and as of the date
hereof and no Default or Event of Default will be caused by or result from the closing of the
Acquisition Loan, the funding of the Acquisition Loan or the consummation of the transactions
contemplated under the Acquisition Loan.



          (c) Since the date of the Borrower’s most recent financial statements delivered to the Agent,
no material adverse change has occurred in the business, assets, liabilities, financial condition
or results of operations of the Borrower, and no event has occurred or failed to occur which has
had a material adverse effect on the business, assets, liabilities, financial condition or results
of operations of the Borrower.



          (d) With respect to each purchase transaction between the Borrower and each of the 2008 Asset
Sellers, as of the date hereof:



               (i) Such purchase transaction has closed and all assets purchased thereunder have been
delivered to the Borrower;



               (ii) All conditions to such closing set forth in the applicable purchase agreement have been
satisfied in full;



               (iii) There are no liens or encumbrances on the purchased assets, other than those created
pursuant to this Agreement and the other Loan Documents;



11









 





               (iv) There exist no disputes between the Borrower and any such 2008 Asset Seller; and




               (v) The Subordinated Target Notes are unsecured.



          (e) The Borrower has full power and authority to execute, deliver and perform any action or
step which may be necessary to carry out the terms of this Agreement and all other documents
executed in connection herewith (this Agreement and all such other documents are collectively
referred to herein as the “Amendment Documents”); each Amendment Document to which the
Borrower is a party has been duly executed and delivered by the Borrower and is the legal, valid
and binding obligation of the Borrower enforceable in accordance with its terms, subject to any
applicable bankruptcy, insolvency, general equity principles or other similar laws affecting the
enforcement of creditors’ rights generally.



          (f) The execution, delivery and performance of the Amendment Documents by the Borrower will
not (i) violate any provision of any existing law, statute, rule, regulation or ordinance, (ii)
conflict with, result in a breach of, or constitute a default under (A) the certificate of
incorporation or by-laws of the Borrower, (B) any order, judgment, award or decree of any court,
governmental authority, bureau or agency, or (C) any mortgage, indenture, lease, contract or other
agreement or undertaking to which the Borrower is a party or by which the Borrower or any of its
properties or assets may be bound, or (iii) result in the creation or imposition of any lien or
other encumbrance upon or with respect to any property or asset now owned or hereafter acquired by
the Borrower, other than Liens in favor of the Lenders.



          (g) No consent, license, permit, approval or authorization of, exemption by, notice to, report
to, or registration, filing or declaration with any person is required in connection with the
execution, delivery, performance or validity of the Amendment Documents or the transactions
contemplated thereby.



     7. No Defenses. The Borrower acknowledges that, as of June 26, 2008, the outstanding
principal balance of the Substitute Revolving Note in favor of Bank of America, N.A. dated as of
May 30, 2008 was $5,807,500.00 , the outstanding principal balance of the Substitute Revolving Note
in favor of JPMorgan Chase dated as of May 30, 2008 was $5,807,500.00 , the outstanding principal
balance of the Substitute Term Note in favor of Bank of America, N.A dated as of April 23, 2007 was
$11,250,000.00 , and the outstanding principal balance of the Substitute Term Note in favor of
JPMorgan Chase dated as of April 23, 2007 was $11,250,000.00 The Borrower acknowledges and agrees
that as of the date hereof it has no defenses, offsets or counterclaims to its Obligations to the
Agent and/or the Lenders under the Credit Agreement or any other Loan Document and hereby waives
and releases all claims against the Agent and Lenders with respect to the Obligations and the
documents evidencing or securing the same.



     8. Agent and Lender Costs. The Borrower shall reimburse the Agent and Lenders on
demand for all costs incurred in connection with this transaction, including but not limited to
legal, searches, filings and other expenses incurred in connection with this Agreement and the
other Amendment Documents, whether or not the transactions contemplated under this Agreement are
completed. The Borrower irrevocably authorizes the Agent to charge the Borrower’s Master Account
for the amount of such fees and expenses.



12









 





     9. No Change. Except as expressly set forth herein, all of the terms and provisions
of the Credit Agreement shall continue in full force and effect.



     10. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey.



     11. Counterparts. This Agreement may be signed in several counterparts, each of which
shall be an original and all of which shall constitute one and the same instrument.



[Signatures on following pages]




13









 








     IN WITNESS WHEREOF, the undersigned have caused their duly authorized representatives to
execute and deliver this Agreement as of the day and year first above written.



	 	 	 	 	 
	 	MISTRAS GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BANK OF AMERICA, N.A., as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	Vice President 	 
	 
	 	BANK OF AMERICA, N.A., as a Lender,

Co-Lead Bookrunner and L/C Issuer

 	 
	 	By:  	 	 
	 	 	Name:  	William T. Franey 	 
	 	 	Title:  	Vice President 	 
	 
	 	JPMORGAN CHASE BANK, N.A. as a
Lender and Co-Lead Bookrunner

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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SCHEDULE 2.01




COMMITMENTS

AND APPLICABLE PERCENTAGES




	 	 	 	 	 	 	 	 	 
	 	 	Revolving Loan	 	 
	Lender	 	Commitment	 	Applicable Percentage
	 
	Bank of America, N.A.
	 	$	7,500,000	 	 	 	50.000000000	%
	JPMorgan Chase Bank, N.A.
	 	$	7,500,000	 	 	 	50.000000000	%
	 
	 	 	 	 	 	 	 
	Total
	 	$	15,000,000	 	 	 	100.000000000	%






	 	 	 	 	 	 	 	 	 
	 	 	Term Loan	 	 
	Lender	 	Commitment	 	Applicable Percentage
	 
	Bank of America, N.A.
	 	$	12,500,000	 	 	 	50.000000000	%
	JPMorgan Chase Bank, N.A.
	 	$	12,500,000	 	 	 	50.000000000	%
	 
	 	 	 	 	 	 	 
	Total
	 	$	25,000,000	 	 	 	100.000000000	%






	 	 	 	 	 	 	 	 	 
	 	 	Acquisition Loan	 	 
	Lender	 	Commitment	 	Applicable Percentage
	 
	Bank of America, N.A.
	 	$	10,000,000	 	 	 	50.000000000	%
	JPMorgan Chase Bank, N.A.
	 	$	10,000,000	 	 	 	50.000000000	%
	 
	 	 	 	 	 	 	 
	Total
	 	$	20,000,000	 	 	 	100.000000000	%






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SCHEDULE 10.02




AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES




BORROWER:

Mistras Group, Inc.

195 Clarksville Road

Princeton Junction, NJ 08550

Attention: Paul “Pete” Peterik

Telephone: 609.716.4103

Telecopier: 609.716.4179

Electronic Mail: ppeterik@pacndt.com

U.S. Taxpayer Identification Number: 22-3341267




With a copy to:




Fulbright & Jaworski L.L.P.

666 Fifth Avenue

New York, NY 10103

United States of America

Attention: Sheldon G. Nussbaum

                    Joseph F. Daniels




ADMINISTRATIVE AGENT:




Administrative Agent’s Office 

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

101 N. Tryon Street

Mail Code: NC1-001-04-39

Charlotte, NC 28255-0001

Attention: Renee Daniels-Moring

Telephone: (704) 387-9468

Telecopier: (704) 310-3288

Electronic Mail: renee.d.daniels-moring@bankofamerica.com

Account No.: 136-621-225-0600

Ref: Mistras Group, Inc.

ABA# 026009593




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Other Notices as Administrative Agent:

Bank of America, N.A.

Agency Management

Mail Code: IL1-231-10-41

231 S. La Salle St.

Chicago, IL 60604

Attention: Felicia Brinson

Telephone: (312) 828-7299

Telecopier: (877) 216-2432

Electronic Mail: felicia.brinson@bankofamerica.com




L/C ISSUER:

Standby Letters of Credit:




Bank of America, N.A.

Trade Operations

One Fleet Way

Mail Code: PA6-580-02-30

Scranton, PA 18507

Attention: Alfonso (Al) Malave

Telephone: 570.330.4212

Telecopier: 570.330.4186

Electronic Mail: alfonso.malave@bankofamerica.com




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EXHIBIT G




FORM OF ACQUISITION NOTE



$                                         




     FOR VALUE RECEIVED, the undersigned (“Borrower”), hereby promises to pay to
                     or its registered assigns (“Lender”), in accordance with the provisions of
the Agreement (as hereinafter defined), the principal amount of each Acquisition Loan from time to
time made by the Lender to Borrower under that certain Amended and Restated Credit Agreement, dated
as of April 23, 2007, effective as of October 31, 2006, as amended by that certain First Amendment
to Amended and Restated Credit Agreement dated as of December 14, 2007, that certain Second
Amendment to Amended and Restated Credit Agreement dated as of May 30, 2008 and that certain Third
Amendment to Amended and Restated Credit Agreement dated as of July 1, 2008 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among Borrower, the Lenders from
time to time party thereto, JPMorgan Chase Bank, N.A., as Co-Lead Bookrunner and Bank of America,
N.A., as Agent, Co-Lead Bookrunner and L/C Issuer.



     Borrower promises to pay interest on the unpaid principal amount of the Acquisition Loan from
the date of such Loan until such principal amount is paid in full, at such interest rates and at
such times as provided in the Agreement. All payments of principal and interest shall be made to
the Agent for the account of the Lender in Dollars in immediately available funds at the Agent’s
Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear
interest, to be paid upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in the Agreement.



     This Note is one of the Acquisition Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and conditions
provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the
Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable all as provided in the Agreement.



     Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Note.



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     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
JERSEY.



	 	 	 	 	 
	 	MISTRAS GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	                                         	 
	 	 	Title:  	                                         	 
	 



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LOANS AND PAYMENTS WITH RESPECT THERETO




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Amount of	 	 	 	 
	 	 	 	 	 	 	 	 	Principal	 	Outstanding	 	 
	 	 	Type of	 	Amount of	 	End of	 	or Interest	 	Principal	 	 
	 	 	Loan	 	Loan	 	Interest	 	Paid This	 	Balance	 	Notation
	Date	 	Made	 	Made	 	Period	 	Date	 	This Date	 	Made By
	 
	 	 	 	 	 	 	 	 	 	 	 	 






20