Exhibit 10.1

SECOND AMENDMENT TO

CREDIT AGREEMENT

This Second Amendment to Credit Agreement is dated as of April 20, 2018, by and
among Mastech Digital, Inc., a Pennsylvania corporation (“MDI”), in its capacity
as Borrowing Agent under the Credit Agreement (as defined below), PNC Bank,
National Association (“PNC Bank”) and the other Lenders party hereto, and PNC
Bank, in its capacity as administrative agent for the Lenders (hereinafter
referred to in such capacity as the “Administrative Agent”) (the “Second
Amendment”).

W I T N E S S E T H:

WHEREAS, MDI and the other Borrowers party thereto, the Guarantors party
thereto, the Lenders party thereto and the Administrative Agent entered into
that certain Credit Agreement, dated as of July 13, 2017, as amended by that
certain First Amendment to Credit Agreement, dated as of November 14, 2017, by
and among MDI and the other Borrowers party thereto, the Guarantors party
thereto the Lenders party thereto and the Administrative Agent (as may be
further amended, restated, modified or supplemented from time to time, the
“Credit Agreement”); and

WHEREAS, the Borrowers and the Guarantors desire to amend certain provisions of
the Credit Agreement including, among other things, a reduction in the aggregate
amount of the Revolving Credit Commitments, and the Lenders and the
Administrative Agent shall permit such amendments pursuant to the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:

1.    All capitalized terms used herein which are defined in the Credit
Agreement shall have the same meanings herein as in the Credit Agreement unless
the context clearly indicates otherwise.

2.    The definition of Swing Loan Commitment set forth in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:

Swing Loan Commitment means PNC’s commitment to make Swing Loans to the US
Revolving Borrowers pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in
an aggregate principal amount up to Five Million and 00/100 Dollars
($5,000,000.00).

3.    Section 2.9.1 of the Credit Agreement is hereby amended by deleting the
reference in sub-clause (C) thereof to “Thirty-Seven Million Five Hundred
Thousand and 00/100 Dollars ($37,500,000.00)” and in its stead inserting a
reference to “Thirty-Two Million Five Hundred Thousand and 00/100 Dollars
($32,500,000.00)”.

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

4.    Effective as of March 31, 2018, Section 9.2.14 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

9.2.14     Maximum Leverage Ratio. The Loan Parties shall not permit the
Leverage Ratio to exceed (i) 3.50 to 1.00, calculated as of March 31, 2018 and
as of the end of each fiscal quarter thereafter through and including the fiscal
quarter ending September 30, 2018, in each case for the four (4) fiscal quarters
then ended, (ii) 3.25 to 1.00, calculated as of December 31, 2018 and as of the
end of each fiscal quarter thereafter through and including the fiscal quarter
ending September 30, 2019, in each case for the four (4) fiscal quarters then
ended and (iii) 3.00 to 1.00, calculated as of December 31, 2019 and as of the
end of each fiscal quarter thereafter, in each case for the four (4) fiscal
quarters then ended.

5.    The Revolving Credit Commitment of each Lender, as set forth in the column
labeled “Amount of Commitment for Revolving Credit Loans” in Part 1 of Schedule
1.1(B) [Commitments of Lenders] of the Credit Agreement, is hereby amended and
replaced with the reduced applicable amount for such Lender set forth opposite
its name in the column labeled “Amount of Commitment for Revolving Credit Loans”
set forth in Annex 1 attached hereto (which shall be deemed an amendment and
update to Part 1 of Schedule 1.1(B) to the Credit Agreement, including a
corresponding reduction in the total “Commitment” column set forth therein).

6.    Exhibit 9.3.3 [Quarterly Compliance Certificate] of the Credit Agreement
is hereby deleted in its entirety and in its stead is inserted the Exhibit 9.3.3
[Quarterly Compliance Certificate] attached hereto as Annex 2.

7.    The provisions of Sections 2 through 6 of this Second Amendment shall not
become effective until the Administrative Agent has received the following
items, each in form and substance acceptable to the Administrative Agent and its
counsel:

(a)    this Second Amendment, duly executed by MDI, as Borrowing Agent, the
Administrative Agent and the Required Lenders;

(b)    payment of all fees and expenses owed to the Administrative Agent and its
counsel and the Lenders in connection with this Second Amendment and the Credit
Agreement (including, without limitation, any such fees and expenses payable
pursuant to any separate fee letter executed and delivered by the Administrative
Agent and acknowledged and agreed to by the Borrowers in connection herewith);

 

- 2 -

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

(c)    if necessary in connection with the reduction of the Revolving Credit
Commitments, prepayment of the revolving credit Notes, together with outstanding
Commitment Fees, and the full amount of interest accrued on the principal sum to
be prepaid (and all amounts referred to in Section 6.10 [Indemnity] of the
Credit Agreement) to the extent necessary to cause the aggregate Revolving
Facility Usage after giving effect to such prepayments to be equal to or less
than the Revolving Credit Commitments as so reduced; and

(d)    such other documents as may be requested by the Administrative Agent, if
any.

8.    Each Loan Party hereby reconfirms and reaffirms all representations and
warranties, agreements and covenants made by it pursuant to the terms and
conditions of the Credit Agreement and the other Loan Documents, except as such
representations and warranties, agreements and covenants may have heretofore
been amended, modified or waived in writing in accordance with the Credit
Agreement.

9.    Each Loan Party acknowledges and agrees that each and every document,
instrument or agreement, which at any time has secured the Obligations hereby
continues to secure the Obligations, except to the extent such document,
instrument or agreement has been modified, terminated or expired in accordance
with their respective terms since their original execution and delivery by such
Loan Party.

10.    Each Loan Party hereby represents and warrants to the Lenders and the
Administrative Agent that (i) such Loan Party has the legal power and authority
to execute and deliver this Second Amendment, (ii) the officers of such Loan
Party executing this Second Amendment have been duly authorized to execute and
deliver the same and bind such Loan Party with respect to the provisions hereof,
(iii) the execution and delivery hereof by such Loan Party and the performance
and observance by such Loan Party of the provisions hereof and of the Credit
Agreement and all documents executed or to be executed herewith or therewith, do
not violate or conflict with the organizational agreements of such Loan Party or
any Law applicable to such Loan Party or result in a breach of any provision of
or constitute a default under any other agreement, instrument or document
binding upon or enforceable against such Loan Party, and (iv) this Second
Amendment, the Credit Agreement and the documents executed or to be executed by
such Loan Party in connection herewith or therewith constitute valid and binding
obligations of such Loan Party in every respect, enforceable in accordance with
their respective terms.

11.    Each Loan Party represents and warrants that (i) no Event of Default
exists under the Credit Agreement, nor will any occur as a result of the
execution and delivery of this Second Amendment or the performance or observance
of any provision hereof, (ii) the schedules attached to and made a part of the
Credit Agreement, are true and correct in all material respects as of the date
hereof, except as such schedules may have heretofore been amended or modified in
writing in accordance with the Credit Agreement, and (iii) it presently has no
known claims or actions of any kind at law or in equity against the Lenders or
the Administrative Agent arising out of or in any way relating to the Loan
Documents.

 

- 3 -

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

12.    Each reference to the Credit Agreement that is made in the Credit
Agreement or any other document executed or to be executed in connection
therewith shall hereafter be construed as a reference to the Credit Agreement as
amended hereby.

13.    The agreements contained in this Second Amendment are limited to the
specific agreements made herein. Except as amended hereby, all of the terms and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect. This Second Amendment amends the Credit Agreement and is
not a novation thereof.

14.    This Second Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed to be an original, but all such counterparts shall
constitute but one and the same instrument. Delivery of an executed counterpart
of a signature page of this Second Amendment by e-mail or telecopy shall be
effective as delivery of a manually executed counterpart of this Second
Amendment.

15.    This Second Amendment shall be deemed to be a contract under the Laws of
the State of New York without regard to its conflict of laws principles. Each
Loan Party hereby consents to the nonexclusive jurisdiction of the courts of the
State of New York sitting in New York County, New York and of the United States
District Court for the Southern District of New York, and any appellate court
from any thereof, with respect to any suit arising out of or mentioning this
Second Amendment.

[INTENTIONALLY LEFT BLANK]

 

- 4 -

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

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have
caused this Second Amendment to be duly executed by their duly authorized
officers the day and year first above written.

 

WITNESS:    

Mastech Digital, Inc., a Pennsylvania corporation,

as Borrowing Agent

/s/ Jennifer S. Lacey

    By:  

/s/ John J. Cronin

    Name:   John J. Cronin     Title:   Secretary

[Lender Signature Pages Follow]

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

ADMINISTRATIVE AGENT AND LENDERS:

PNC Bank, National Association,

as a Lender and as Administrative Agent

By:  

/s/ Charles J. Pascarella, Jr.

Name:   Charles J. Pascarella, Jr. Title:   Senior Vice President

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

First National Bank of Pennsylvania,

as a Lender

By:  

/s/ Michael Colella

Name:   Michael Colella Title:   Vice President

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

Northwest Bank,

as a Lender

By:  

/s/ C. Forrest Tefft

Name:   C. Forrest Tefft Title:   Senior Vice President

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

Annex 1

Revolving Credit Commitments of each Lender – Update to Part 1 of Schedule
1.1(B)

 

Lender

   Amount of
Commitment for
Revolving Credit
Loans

PNC Bank, National Association

   $15,576,923.08

First National Bank of Pennsylvania

   $3,461,538.46

Northwest Bank

   $3,461,538.46

Total Revolving Credit Commitments

   $22,500,000.00

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

Annex 2

Exhibit 9.3.3 – Form of Quarterly Compliance Certificate

[See attached]

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

EXHIBIT 9.3.3

FORM OF

COMPLIANCE CERTIFICATE

                     , 20    

PNC Bank, National Association,

as Administrative Agent

The Tower at PNC Plaza

300 Fifth Avenue

Pittsburgh, PA 15222

Ladies and Gentlemen:

I refer to the Credit Agreement, dated as of July 13, 2017, by and among Mastech
Digital, Inc., a Pennsylvania corporation (“MDI”), each of the other Borrowers
party thereto from time to time, each of the Guarantors (as defined therein)
party thereto from time to time, PNC Bank, National Association (“PNC Bank”) and
various other financial institutions from time to time party thereto (PNC Bank
and such other financial institutions are each a “Lender” and collectively, the
“Lenders”) and PNC Bank, as administrative agent for the Lenders (in such
capacity, the “Administrative Agent”) (as may be amended, modified, supplemented
or restated from time to time, the “Credit Agreement”). Unless otherwise defined
herein, terms defined in the Credit Agreement are used herein with the same
meanings.

I, the ____________________ [Chief Executive Officer/President/Chief Financial
Officer] of MDI, do hereby certify, solely in my capacity as an officer of MDI
and not in my individual capacity, as of the _________ [quarter/year] ended
_______________ ___, 20___ (the “Report Date”), as follows:

 

1. CHECK ONE:

 

                        The annual financial statements of MDI and its
Subsidiaries, consisting of an audited consolidated and
consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements
of income, stockholders’ equity and cash flows for the fiscal year then ended,
all in reasonable detail and setting
forth in comparative form the financial statements as of the end of and for the
preceding fiscal year and certified
by independent certified public accountants of nationally recognized standing
satisfactory to the Administrative
Agent, in each case being delivered to the Administrative Agent and the Lenders
with this Compliance Certificate
comply with the reporting requirements for such financial statements as set
forth in Section 9.3.2 [Annual
Financial Statements] of the Credit Agreement.

OR

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

   The quarterly financial statements of MDI and its Subsidiaries, consisting of
a consolidated and consolidating balance sheet as of the end of such fiscal
quarter and related consolidated and consolidating statements of income,
stockholders’ equity and cash flows for the fiscal quarter then ended and the
fiscal year through that date, all in reasonable detail and certified (subject
to normal year-end audit adjustments) by the Chief Executive Officer, President
or Chief Financial Officer of MDI as having been prepared in accordance with
GAAP, consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
fiscal year, in each case being delivered to the Administrative Agent and the
Lenders with this Compliance Certificate comply with the reporting requirements
for such financial statements as set forth in Section 9.3.1 [Quarterly Financial
Statements] of the Credit Agreement.

2.    The representations and warranties of the Loan Parties contained in
Section 7 [Representations and Warranties] of the Credit Agreement and in each
of the other Loan Documents to which they are a party are true and correct in
all material respects (without duplication of any materiality qualifier
contained therein) with the same effect as though such representations and
warranties had been made on and as of the Report Date (except representations
and warranties which relate solely to an earlier date or time, which
representations and warranties were true and correct in all material respects
(without duplication of any materiality qualifier contained therein) on and as
of the specific dates or times referred to therein).

3.    In accordance with Section 7.2 [Updates to Schedules] of the Credit
Agreement, attached hereto as Exhibit A are updates to the schedules to the
Credit Agreement (the “Updated Schedules”). Notwithstanding the foregoing, the
Borrowing Agent (on behalf of the Loan Parties) hereby acknowledges and agrees
that no schedule shall be deemed to have been amended, modified or superseded by
the Updated Schedules, nor shall any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedule be deemed
to have been cured by the Updated Schedules, unless and until the Required
Lenders, in their sole and absolute discretion, shall have accepted in writing
the Updated Schedules, provided, however, that the Borrowing Agent may update
Schedule 7.1.2 without any Lender approval in connection with any transaction
permitted under Sections 9.2.6 [Liquidations, Mergers, Consolidations,
Acquisitions], 9.2.7 [Dispositions of Assets or Subsidiaries] and 9.2.9
[Subsidiaries, Partnerships and Joint Ventures] of the Credit Agreement.

4.    No Event of Default or Potential Default exists on the Report Date; no
Event of Default or Potential Default has occurred or is continuing since the
date of the previously delivered Compliance Certificate; no Material Adverse
Change has occurred since the date of the previously delivered Compliance
Certificate; and no event has occurred or is continuing since the date of the
previously delivered Compliance Certificate that may reasonably be expected to
result in a Material Adverse Change.

[NOTE: If any Event of Default, Potential Default, Material Adverse Change or
event which may reasonably be expected to result in a Material Adverse Change
has occurred or is continuing, set forth on an attached sheet the nature thereof
and the action which the Loan Parties have taken, are taking or propose to take
with respect thereto.]

 

- 2 -

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

5.     Indebtedness (Sections 9.2.1(iii) and (xii)).

(a)    Indebtedness of the Loan Parties and their Subsidiaries incurred with
respect to Purchase Money Security Interests and Capital Leases, in the
aggregate, as of the Report Date is $                    , which does not exceed
the permitted maximum of One Million and 00/100 Dollars ($1,000,000.00) at any
time outstanding.

(b)    Unsecured Indebtedness of the Loan Parties and their Subsidiaries not
otherwise permitted in items (i) through (xi) of Section 9.2.1 of the Credit
Agreement [Indebtedness], in the aggregate, as of the Report Date is
$                    , which does not exceed the permitted maximum of Five
Hundred Thousand and 00/100 Dollars ($500,000.00) at any time outstanding.

6.    Loans and Investments (Section 9.2.4(ii) and (viii)).

(a) Loans and advances to employees, officers, managers, directors, members or
shareholders of a Loan Party in the ordinary course of business to meet expenses
incurred by such Persons in the ordinary course of business (including, without
limitation, relocation expenses), in the aggregate, as of the Report Date is
$                    , which does not exceed the permitted maximum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00) at any time outstanding.

(b)    Loans, advances and investments by US Loan Parties in Canadian Loan
Parties in an amount, measured at the time any such loan, advance or investment
was made, in the aggregate, as of the Report Date is $                    ,
which does not exceed the permitted maximum of Fifty Million and 00/100 Dollars
($50,000,000.00) at any time outstanding.

7.    Dispositions of Assets or Subsidiaries (Section 9.2.7(v)). The aggregate
value of all assets sold, transferred or leased by MDI and its Subsidiaries
during the term of the Credit Agreement (except pursuant to clauses (i) through
(iv) of Section 9.2.7 [Dispositions of Assets] of the Credit Agreement), in the
aggregate, as of the Report Date equals $                    , which does not
exceed the permitted maximum of Two Million and 00/100 Dollars ($2,000,000.00)
during the term of the Credit Agreement1.

8.    Minimum Fixed Charge Coverage Ratio (Section 9.2.13). The Fixed Charge
Coverage Ratio for the period equal to the four (4) consecutive fiscal quarters
ending as of the Report Date is [Insert from item 8(C) below] to 1.0, which is
not less than the required ratio for such period as determined by reference to
Table 1.

TABLE 1

 

1  The proceeds of any such sale, transfer or lease must have been applied in
accordance with Section 6.7.3 [Sale of Assets] of the Credit Agreement.

 

- 3 -

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

Fiscal Quarters Ending

   Required Fixed Charge
Coverage Ratio

June 30, 2017 through and including December 31, 2020

   1.15 to 1.00

March 31, 2021 and thereafter

   1.20 to 1.00

The Fixed Charge Coverage Ratio shall be computed as follows:

A) EBITDA for the four (4) consecutive fiscal quarters then ending on the Report
Date equals $                    , and is computed in each case of MDI on a
Consolidated Basis as follows:

 

     (i)    net income (or loss) (excluding extraordinary gains or losses
including, without
limitation, those items created by mandated changes in accounting treatment)   
$                       plus               (ii)    interest expense   
$                       plus               (iii)    all charges against or minus
credits to income for federal, state and local income
tax expenses    $                       plus               (iv)    non-cash
share issuance and share option related compensation expense items
(SFAS 123, 148 and APB 25 and each of their respective successors)   
$                       plus            

(v)

   depreciation    $                        plus            

(vi)

   amortization    $                        plus               (vii)    non-cash
stock based compensation    $                       plus or minus (as
applicable)   

 

- 4 -

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

   (viii)    any non-cash charges related to the Acquisitions or Permitted
Acquisitions, including goodwill impairment or other expenses or credits in
connection with the consummation of the Acquisitions or Permitted Acquisitions
or adjustments to the contingent purchase price component of the Acquisitions or
a Permitted Acquisition    $                        plus             (ix)   
non-recurring costs and expenses in connection with the Acquisitions and
Permitted Acquisitions, in an amount not to exceed $2,200,000 in the aggregate
for the Acquisitions and all Permitted Acquisitions    $                       
plus             (x)    costs and expenses related to severance in an aggregate
amount not to exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00)
during the term of the Credit Agreement    $                        Plus      
      (xi)    to the extent treated as an expense item, the portion of the
Acquisition Earn-Out paid as a bonus to the employees of Mastech Canada in
accordance with the Canadian Acquisition Agreement, in an aggregate amount not
to exceed Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00)
   $                        plus             (xii)    EBITDA with respect to a
business acquired by the Loan Parties pursuant to the Acquisitions or a
Permitted Acquisition, calculated on a pro forma basis, using historical
numbers, in accordance with GAAP as if the Acquisitions or the Permitted
Acquisition had been consummated at the beginning of such period    $
                      

 

- 5 -

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

plus             (xiii)    EBITDA with respect to a business liquidated, sold or
disposed of by the Loan Parties pursuant to Section 9.2.7 [Dispositions of
Assets or Subsidiaries], calculated on a pro forma basis, using historical
numbers, in accordance with GAAP as if such liquidation, sale or disposition had
been consummated at the beginning of such period    $                          
   The total of 8(A)(i) through 8(A)(xiii) equals EBITDA    $
                      

B) Fixed Charges for the four (4) consecutive fiscal quarters then ending on the
Report Date equals $                    , and is computed in each case of MDI on
a Consolidated Basis as follows:

   (i)    cash interest expense    $                        plus            
(ii)    scheduled principal installments (excluding prepayments of Loans) on
Total Indebtedness (as adjusted for prepayments) including, without limitation,
payments under Capital Leases    $                        plus             (iii)
   cash income tax expense    $                        plus             (iv)   
Capital Expenditures    $                        plus             (v)    Stock
Repurchases    $                        plus             (vi)    dividends or
distributions    $                              The total of 8(B)(i) through
8(B)(vi) equals Fixed Charges    $                       

(C)The ratio of item 8(A) to item 8(B) equals the Fixed Charge Coverage Ratio

 

- 6 -

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

9.    Maximum Leverage Ratio (Section 9.2.14). The Leverage Ratio for the period
equal to the four (4) consecutive fiscal quarters ending as of the Report Date
is [Insert from item 9(C) below] to 1.0, which is not greater than the required
ratio for such period as determined by reference to Table 2:

TABLE 2

 

Fiscal Quarters Ending

   Maximum Leverage Ratio

March 31, 2018 through and including September 30, 2018

   3.50 to 1.00

December 31, 2018 through and including September 30, 2019

   3.25 to 1.00

December 31, 2019 and thereafter

   3.00 to 1.00

The Leverage Ratio shall be computed as follows:

(A)     Total Funded Debt on the Report Date equals $                    , and
is computed as follows:

 

   1.1.1.    all Indebtedness representing borrowed money, including both
current and long term portion thereof    $                        plus         
   1.1.2.    Capital Lease Obligations    $                        plus         
   1.1.3.    reimbursement obligations under letters of credit    $
                       plus             1.1.4.    obligations under any Swap
(excluding net obligations under a Swap (exclusive of any mark to market
adjustment not requiring any actual cash payment or settlement))    $
                       plus             1.1.5.    contingent and guaranty
obligations2    $                              The sum of items 9(A)(i) through
9(A)(v) equals Total Funded Debt    $                       

(B)     EBITDA (from item 8(A) above)

   $                       

 

 

2  Excluding any Indebtedness in respect of the Acquisition Earn-Out.

 

- 7 -

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

(C)    The ratio of item 9(A) to item 9(B) equals the Leverage Ratio.

[INTENTIONALLY LEFT BLANK]

 

- 8 -

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

IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has
executed this Compliance Certificate this ____ day of _______________, 20___.

 

WITNESS:     Mastech Digital, Inc., a Pennsylvania corporation     By:  

 

    Name:  

 

    Title:  

 

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

EXHIBIT A

Updated Schedules

[see attached]