United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
Commission file number: 1-10245
RCM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 95-1480559
(State of Incorporation) (IRS Employer Identification No.)
2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613
(Address of principal executive offices)
(609) 486-1777
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS 17,670,243
Common Stock, $.05 par value Outstanding as of March 4, 1996
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Page
Consolidated Balance Sheets as of January 31, 1996 (Unaudited)
and October 31, 1995 (Audited) 3
Unaudited Consolidated Statements of Income for the Three Month
Periods Ended January 31, 1996 and 1995 5
Unaudited Consolidated Statement of Changes in Shareholders'
Equity for the Three Month Period Ended January 31, 1996 6
Unaudited Consolidated Statements of Cash Flows for the Three
Month Periods Ended January 31, 1996 and 1995 7
Notes to Unaudited Consolidated Financial Statements 9
ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings 12
ITEM 5 - Other Information 12
ITEM 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, 1996 and October 31, 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 127,704 $ 297,550
Accounts receivable, net of allowance for doubtful accounts
of $15,000 5,127,631 5,133,662
Prepaid expenses and other current assets 753,518 671,662
------- -------
Total current assets 6,008,853 6,102,874
--------- ---------
Property and equipment, at cost
Equipment and leasehold improvements 1,237,366 1,208,317
Less: accumulated depreciation and amortization 789,835 763,966
------- -------
447,531 444,351
------- -------
Other assets
Deposits 47,496 43,074
Intangible assets (net of accumulated amortization
of $94,474 and $73,492 in 1996 and 1995,
respectively) 3,687,220 3,711,256
--------- ---------
3,734,716 3,754,330
--------- ---------
Total assets $10,191,100 $10,301,555
========== ==========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
3
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
January 31, 1996 and October 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities
Note payable - bank $424,639 $914,435
Current maturities of long-term debt 103,145 111,945
Accounts payable and accrued expenses 149,238 340,072
Accrued payroll 937,328 1,182,934
Taxes other than income taxes 489,115 205,494
Income taxes payable 58,749 ______
------
Total current liabilities 2,162,214 2,754,880
--------- ---------
Long term debt 20,090
Shareholders' equity
Common stock, $0.05 par value; 40,000,000 shares authorized; 16,277,118 and
16,275,118 shares issued in 1996 and
1995, respectively 813,856 813,756
Additional paid-in capital 10,266,025 10,265,687
Accumulated deficit ( 2,988,174) ( 3,490,037)
------------ ----------
8,091,707 7,589,406
Less: treasury stock, at cost, 314,000 shares 62,821 62,821
------ ------
8,028,886 7,526,585
--------- ---------
Total liabilities and shareholders' equity $10,191,100 $10,301,555
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
4
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended January 31,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues $9,776,507 $6,692,756
---------- ----------
Operating Costs and Expenses
Cost of services 7,985,878 5,542,394
Selling, general and administrative 1,144,116 883,955
Depreciation and amortization 54,970 28,565
------ ------
9,184,964 6,454,914
--------- ---------
Operating Income 591,543 237,842
------- -------
Other Income (Expense)
Interest expense ( 24,901) ( 6,149)
Other, net ( 6,030) 24,572
----- ------
( 30,931) 18,423
------ ------
Income Before Income Taxes 560,612 256,265
Income Taxes 58,749 27,250
------ ------
Net Income $501,863 $229,015
======== ========
Net Income Per Share $.03 $.02
=== ===
Weighted average number of
shares outstanding 16,383,133 14,591,394
========== ==========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
5
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Three Months Ended January 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated Treasury
Shares Amount Capital Deficit Stock
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1995 16,275,118 $ 813,756 $10,265,687 ($3,490,037) ($ 62,821)
Exercise of Stock Options 2,000 100 338
Net Income 501,863
--------- ------- ---------- --------- -------
Balance, January 31, 1996 16,277,118 $ 813,856 $10,266,025 ($2,988,174) ($ 62,821)
============ ========= ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended January 31,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $501,863 $ 229,015
------- -------
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 54,970 28,565
Provision for losses on accounts
receivable ( 831)
Changes in assets and liabilities:
Accounts receivable 6,031 211,324
Prepaid expenses and other
current assets ( 81,856) 75,637
Accounts payable and accrued expenses ( 190,834) ( 114,376)
Accrued payroll ( 245,606) ( 92,039)
Taxes other than income taxes 283,621 37,392
Income taxes payable 58,749 ( 119,473)
------ -------
Total adjustments ( 114,925) 26,199
------- ------
Net cash provided by operating activities 386,938 255,214
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Three Months Ended January 31,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from investing activities:
Increase in Intangible assets ( 5,065) ($ 10,000)
Property and equipment acquired ( 29,049) ( 47,861)
Increase in deposits ( 4,422)
----- -----
Net cash used in investing activities ( 38,536) ( 57,861)
------ ------
Cash flows from financing activities:
Exercise of stock options 438
Net repayments under short term debt arrangements ( 489,796)
Repayments of long term debt ( 28,890) ( 9,367)
------ -------
Net cash used in financing activities ( 518,248) ( 9,367)
------- ------
Net increase (decrease) in cash and cash equivalents ( 169,846) 187,986
Cash and cash equivalents at beginning of period 297,550 2,534,073
------- ---------
Cash and cash equivalents at January 31, $ 127,704 $ 2,722,059
======= =========
Supplemental cash flow information:
Cash paid for:
Interest expense $ 24,901 $ 6,149
Income taxes $ $ 31,958
</TABLE>
The accompanying notes are an integral part of these
financial statements.
8
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). This Report on Form 10-Q should be read in
conjunction with the Company's annual report on Form 10-K for the year
ended October 31, 1995. Certain information and footnote disclosures which
are normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to SEC rules and regulations. The information reflects all normal
and recurring adjustments which, in the opinion of Management, are
necessary for a fair presentation of the financial position of the Company
and its results of operations for the interim periods set forth herein. The
results for the three months ended January 31, 1996 are not necessarily
indicative of the results to be expected for the full year.
2. Pending Acquisition
On March 1, 1996, the Company entered into a stock purchase agreement ("the
Agreement") with The Consortium Inc. ("Consortium"), a privately-held
provider of information technology and health care personnel based in
Fairfield, NJ. Revenues for the year ended December 31, 1995 of Consortium
were over $26 million. The Agreement contemplates the acquisition of all of
the outstanding shares of Consortium in exchange for the issuance of 6.5
million shares of the Company's common stock to the former Consortium
shareholders.
Closing of the transaction, while anticipated for March 11,1996, remains
contingent upon, among other things, satisfactory completion of due
diligence review and the securing of certain approvals.
3. Sale of Common Stock
On February 5, 1996, the Company issued and sold 1,383,125 shares of common
stock to Limeport Investments, L.L.C. in a Private Placement transaction
for $1,000,000 ($.7230 per share). The purchase price was based on a twenty
percent discount to the twenty day average closing price prior to the
purchase of the shares. The shares are restricted securities, however, the
Company has agreed to register such shares by filing a shelf registration
with the Securities and Exchange Commission by February 15, 1997.
The principals of Limeport Investments, L.L.C. are Messrs. Peter Kuhlmann
and Peter Munk. As disclosed in Schedule 13-D filings, Peter Kuhlmann is a
General Partner in Acquest International, L.P., an investment banking firm
which primarily advises its clients in merger and acquisition transactions
and Peter Munk is the Chief Executive Officer of Barrick Gold Corporation,
a corporation whose principal business is gold mining. The President of the
Company, Leon Kopyt, has been granted certain voting rights over these
shares as long as they remain owned by Limeport Investments, L.L.C..
9
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
During the three months ended January 31, 1996, working capital increased
$498,645. This was due primarily to the increased levels of profitability
of the Company. At January 31, 1996, the Company had outstanding borrowings
under its credit facility of $424,639 as compared to $914,435 as of October
31, 1995, a decrease of $489,796. The Company, at January 31, 1996 had no
long term debt and held $127,704 of cash along with $3,240,246 of loan
availability on its $6,000,000 line of credit.
On August 31, 1995, the Company's, Intertec Design, Inc. and Cataract,
Inc., subsidiaries entered into an agreement with Mellon Bank, N.A. for
providing a credit facility in the maximum amount of $6,000,000. The
agreement expires on June 30, 1998. The credit facility is collateralized
by accounts receivable, contract rights and furniture and fixtures with
unlimited guarantees from RCM Technologies, Inc. The loan requires both
Intertec Design, Inc., Cataract, Inc., and RCM Technologies, Inc. to meet
certain objectives with respect to financial ratios and earnings. Credit
facility advances are to be used to meet cash flow requirements for
Intertec Design, Inc., and Cataract, Inc. as well as operating expenses for
RCM Technologies, Inc. Advances to RCM Technologies, Inc. in excess of its
operating expenses must have prior bank approval. The Company believes its
present credit facility will sufficiently support the operations of
Intertec Design, Inc., Cataract, Inc., and RCM Technologies, Inc.
Borrowing under the credit facility is based on 85% of accounts receivable
on which not more than ninety days have elapsed since the date of
invoicing. The interest rate charged is the prime rate of the Bank
(effective rate of 8.50% and 8.75% at January 31, 1996 and October 31,
1995, respectively).
The Company's liquidity and capital resources may be effected in the future
as the Company continues to grow through an aggressive acquisition
strategy. Towards that end, on March 1, 1996, the Company entered into a
stock purchase agreement (the "Agreement") with The Consortium, Inc.
("Consortium"), a privately-held provider of information technology and
health care personnel based in Fairfield, NJ. Revenues for the year ended
December 31, 1995 of Consortium were over $26 million. The Agreement
contemplates the acquisition of all of the outstanding shares of Consortium
in exchange for the issuance of 6.5 million shares of the Company's common
stock to the former Consortium shareholders. As part of the Consortium
acquisition, the Company will be required at closing to satisfy
Consortium's bank indebtedness of approximately $1,300,000. The Company
anticipates the use of its existing line of credit to satisfy this
indebtedness.
Subject to the discussions noted above, the Company does not currently have
material commitments for capital expenditures and does not anticipate
entering into any such commitments during the next twelve months. The
Company continues to evaluate acquisitions of various businesses which are
complementary to its current operations. The Company's current commitments
consist primarily of lease obligations for office space. The Company
believes that its capital resources are sufficient to meet its obligations
incurred in the normal course of business for at least the next twelve
months.
10
<PAGE>
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Results of Operations
As a result of the acquisition of Cataract, Inc. on August 30, 1995, the
Company continues to increase its profitability. This has been achieved by
the elimination of duplicate operating costs of the combined companies, the
spreading of the Company's fixed expenses over a larger revenue base, as
well as management's ability to control expenses during a period of revenue
growth.
Results of operations reflected a net income of $501,863 ($.03 per share)
in 1996 as compared to $229,015 ($.02 per share) in 1995. The improved
profitability was a 119.1% improvement over the 1995 results.
The Company's net sales increased by $3,088,751 to $9,776,507, or 46.1% for
the three months ended January 31, 1996 compared to the three months ended
January 31, 1995. This resulted principally from the acquisition of
Cataract, Inc.
Cost of services increased by $2,443,484 to $7,985507, or 44.1% for the
three months ended January 31, 1996 compared to the three months ended
January 31, 1995. This resulted from the increased level of sales.
Gross profit increased by $640,267 to $1,790,629, or 55.7% for the three
months ended January 31, 1996 compared to the three months ended January
31, 1995. Gross profit as a percentage of revenues was 18.32% for 1996 and
17.2% for 1995. The increased gross profit resulted from additional sales
as well as improved pricing margins.
Selling, general and administrative expenses (SG&A) increased $260,161 to
$1,144,116, or 11.7% of revenues for the three months ended January 31,
1996 compared to $883,955 or 13.2% of revenues for the three months ended
January 31, 1995. The increased SG&A was principally attributable to the
operations of Cataract, Inc. The decline in SG&A as a percentage of
revenues was attributable to continuing implementation of Company efforts
to increase operational efficiencies and the ability to spread fixed
administrative expenses over a larger revenue base.
Depreciation and amortization increased by $26,405 to $54,970 for the three
months ended January 31, 1996, compared to $28,565 for the three months
ended January 31, 1995. This increase was attributable to the amortization
of intangible assets incurred with the Cataract, Inc. acquisition.
Interest expense increased by $18,752 to $24,901 for the three months ended
January 31, 1996, compared to $6,149 for the three months ended January 31,
1995. This increase was attributable to additional borrowings under the
Company's line of credit facility.
Income tax expense increased by $31,499 to $58,749 for the three months
ended January 31, 1996, compared to $27,250 for the three months ended
January 31, 1995. This increase was attributable to the higher level of
profitability for 1996.
Should the acquisition of Consortium occur as contemplated, revenues are
likely to reflect significant increases commencing during the second
quarter, with greater impact being experienced during the third quarter.
While management is optimistic that this transaction is also likely to
enhance profitability through anticipated operational efficiencies and the
spreading of fixed expenses over a larger revenue base, no assurances to
this effect can be provided pending a further analysis of Consortium's
independent profitability and opportunities for operational efficiencies
and synergies.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Company or any of
its subsidiaries is a party or to which any of their property is
subject.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Subscription Agreement to sell Common Stock of RCM Technologies,
Inc. to Peter Kuhlmann, dated January 12, 1996 (Assigned to Limeport
Investments, L.L.C. on February 2, 1996 by Peter Kuhlmann).
(10.1) Registration Rights Agreement by and among RCM Technologies,
Inc. and Limeport Investments, L.L.C., dated February 5, 1996
(11) Computation of earnings per share.
(27) Financial Data Schedule.
12
<PAGE>
RCM TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
RCM Technologies, Inc.
(Registrant)
Date: March 4, 1996 By:/s/ Leon Kopyt
--------------
Leon Kopyt
Chairman, President,
Chief Executive Officer
and Director
Date: March 4, 1996 By:/s/ Stanton Remer
-----------------
Stanton Remer
Chief Financial Officer,
Treasurer and Director
13
<PAGE>
EXHIBIT 11
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended January 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
--------- -------
Income
<S> <C> <C>
Net income applicable to common stock $501,863 $229,015
======= =======
Shares
Weighted average number of shares
outstanding 15,963,118 14,399,565
Common stock equivalents 420,015 191,829
------- -------
Total 16,383,133 14,591,394
========== ==========
Primary earnings per share $ .03 $ .02
========= =========
Fully diluted earnings per share $ .03 $ .02
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR THE THREE MONTHS ENDED JANUARY 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH STATEMENTS
</LEGEND>
<CIK> 0000700841
<NAME> RCM TECHNOLOGIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JAN-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 127,704
<SECURITIES> 0
<RECEIVABLES> 5,142,631
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,008,853
<PP&E> 1,237,366
<DEPRECIATION> 789,835
<TOTAL-ASSETS> 10,191,100
<CURRENT-LIABILITIES> 2,162,214
<BONDS> 0
0
0
<COMMON> 813,856
<OTHER-SE> 7,215,030
<TOTAL-LIABILITY-AND-EQUITY> 10,191,100
<SALES> 9,776,507
<TOTAL-REVENUES> 9,776,100
<CGS> 7,985,878
<TOTAL-COSTS> 9,184,864
<OTHER-EXPENSES> 30,931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,901
<INCOME-PRETAX> 560,612
<INCOME-TAX> 58,749
<INCOME-CONTINUING> 501,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 501,863
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
RCM TECHNOLOGIES, INC.
2500 McClellan Avenue (Suite 350)
Pennsauken, New Jersey 08109-4613
January 12, 1996
Mr. Peter Kuhlmann
c/o Acquest International, L.P.
1211 Avenue of the Americas
New York, New York 10036
Dear Mr. Kuhlmann:
This letter will confirm our agreement with respect to the issuance
and sale by RCM Technologies, Inc. (the "Company"), and the purchase by you, of
shares of Common Stock, $.05 par value, of the Company.
1. Subscription. On the terms and subject to the conditions set forth in
this agreement, the Company hereby agrees to sell to you,and you hereby agree to
purchase from the Company, on the "Closing Date" (as hereinafter defined) such
number of shares of Common Stock, $.05 par value (the "Shares"), of the Company
which equals the amount of $1,000,000 divided by the purchase price per Share as
determined pursuant to this Section 1. The purchase price per Share shall equal
the greater of $0.60 or the product of (i) the average of the closing prices for
the Shares as reported by NASDAQ Stock Market for the twenty (20) trading days
immediately preceding the Closing Date (the "Average Price") and (ii) (A) 80% if
the Average Price is less than $1.00, (b) 77.5% if the Average Price is equal to
or more than $1.00 but less than $1.25 or (C) 75% if the Average Price is $1.25
or more. On the Closing Date, you shall pay the purchase price for the Shares by
delivering to the Company a certified or bank cashier's check in the amount of
$1,000,000 against delivery of a stock certificate representing the Shares.
2. Representations and Warranties of the Company. The Company represents
and warrants to you as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada.
(b) The Company has all requisite legal and corporate power to execute this
Agreement. The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby have been
authorized by all necessary corporate action on the part of the Company.
(c) This Agreement has been duly executed by the Company and, assuming due
and valid execution and delivery of the same by you, constitutes the valid and
legally binding obligation of the Company enforceable in accordance with its
terms.
<PAGE>
(d) The Shares, when delivered to you, will be duly and validly issued,
fully paid and nonassessable.
3. Representations and Warranties of Subscriber. You hereby represent and
warrant to the Company as follows:
(a) Investigation. You have made your own investigation of the financial
condition and affairs of the Company and the nature of its business and are
fully familiar with the same, and you have such knowledge and experience in
financial and business matters that you are capable of evaluating the risks of
your investment in the Shares.
(b) Access to Information. You have had access to all material and relevant
information concerning the Company necessary to enable you to make an informed
investment decision with respect to your investment in the Shares. You
acknowledge that you had the opportunity to ask questions of and receive answers
from, and to obtain additional information from, the Company or its
representatives concerning the terms and conditions of the acquisition of the
Shares and the present and proposed business and financial condition of the
Company and have had all such questions answered to your satisfaction and have
been supplied all information requested.
(c) SEC Reports. You acknowledge that you have been provided with, and
reviewed to your satisfaction, copies of the reports which the Company is
required to file with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "Reports") for the two-year period
preceding the date of this Agreement.
(d) Financial Matters and Sophistication. You have such knowledge and
experience in business and financial matters, such that you are capable of
evaluating the merits and risks of investing in the Shares. You represent that
you are:
(i) an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933 (the "1933 Act"); and
(ii) that you are capable of assuming the risk of investing in the Shares.
(e) Investment Intent.
2
<PAGE>
(i) You are acquiring the Shares for your own account and not on behalf of
any other person (except that you may assign your rights herein prior to Closing
pursuant to Section 10 hereof);
(ii) You are acquiring the Shares for investment and not with a view to
distribution or with the intent to divide your participation with others by
reselling or otherwise distributing the Shares (except that you may assign your
rights herein prior to Closing pursuant to Section 10 hereof); and
(iii) Neither you nor anyone acting on your behalf has paid or will pay any
commission or other remuneration to any person in connection with the purchase
of the Shares, except as set forth herein.
(f) Understanding of Investment Risks.
You understand that an investment in the Shares involves a degree of risk.
The Shares are a suitable investment only if you can afford a total loss of your
investment. Before making the decision to purchase the Shares, you do hereby
acknowledge that you have considered carefully, among other things, the
speculative nature of an investment in shares of a public company and a number
of risks associated with an investment in the Shares.
(g) Understanding of Nature of Shares. You understand that:
(i) The Shares have not been registered under the 1933 Act or any state
securities laws and are being issued and sold in reliance upon certain of the
exemptions contained in the 1933 Act and under applicable state securities laws;
(ii) The Shares are "restricted securities" as that term is defined in Rule
144 promulgated under the 1933 Act;
(iii) The Shares cannot be sold or transferred without registration under
the 1933 Act and applicable state securities laws, unless the Company receives
an opinion of counsel reasonably acceptable to it (as to both counsel and the
opinion) that such registration is not necessary;
(iv) The Shares and any certificates issued in replacement therefor shall
bear the following legend, in addition to any other legend required by law or
otherwise:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended.
The securities represented
3
<PAGE>
by this certificate have been taken by the
registered owner for investment, and
without a view to resale or distribution
thereof, and may not be transferred or
disposed of without an opinion of counsel
satisfactory to the issuer that such
transfer or disposition does not violate
the Securities Act of 1933, as amended, or
the rules and regulations thereunder."
(v) Only the Company can register the Shares under the 1933 Act and
applicable state securities laws;
(vi) Except as set forth in this Agreement, no representations have been
made to you that the Company will register the Shares under the 1933 Act or any
applicable state securities laws, or with respect to compliance with any
exemption therefrom; and
(vii) The Company may, from time to time, make stop transfer notations in
its transfer records to ensure compliance with the 1933 Act.
(h) No Other Representations. No representation, warranty or other
statement or assertion has been made to you by the Company or by any officer or
director of the Company to induce you to purchase the Shares, other than as set
forth herein.
4. Conditions Precedent to Your Obligation. Your obligation to consummate
the purchase of the Shares on the Closing Date is, at your option, subject to
the satisfaction of the following conditions:
(a) Each of the representations of the Company contained in Paragraph 2
hereof shall be true and correct when made and in all material respects as of
the Closing Date with the same force and effect as though the same had been made
on and as of the Closing Date.
(b) You shall have obtained financing of $1,000,000 on terms acceptable to
you in your sole discretion.
(c) The Company has completed the acquisition of all or substantially all
of the assets, stock or business of The Consortium, Inc. (the "Consortium
Acquisition").
(d) You shall have received the Registration Rights Agreement, described in
Section 8 hereof, duly executed by the Company.
4
<PAGE>
5. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Company, 2500
McClellan Avenue (Suite 350), Pennsauken, New Jersey 08109-4613 on a date
specified by you by written notice given at least three (3) days prior to such
date. Either party shall have the right to terminate this Agreement, but only
prior to the Company's receipt of the foregoing notice, upon written notice to
the other in the event that the Closing has not occurred on or prior to the
earlier of (i) ten (10) days after the closing of the Consortium Acquisition or
(ii) May 31, 1996. The time and date of the Closing is referred to in this
Agreement as the "Closing Date."
6. Survival of Representations and Warranties. The parties hereto agree
that the representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement, and the Closing hereunder,
regardless of any investigation made by the parties hereto. The election of any
party to proceed with the Closing shall not be construed as a waiver of any of
his rights hereunder and the waiver of any such right shall not be deemed a
waiver of any other right derived hereunder.
7. Voting of the Shares. You hereby agree that, for so long as you retain
any Shares, Leon Kopyt is granted an irrevocable proxy entitling him to vote the
Shares owned by you, or to execute and deliver written consents or otherwise act
with respect to such Shares as fully, to the same extent and with the same
effect as you might or could do under any applicable laws or regulations
governing the rights and powers of shareholders of a corporation organized under
the laws of the State of Nevada, in connection with the election of directors of
the Company, at any regular or special meetings of the shareholders.
8. Registration Rights Agreement. On the Closing Date, the Company shall
execute and deliver to you a Registration Rights Agreement which provides that
the Company will, at its sole cost and expense, prepare and file with the
Securities and Exchange Commission a Shelf Registration Statement covering all
the Shares then owned by you by February 15, 1997 and thereafter seek to obtain
the effectiveness thereof. The Registration Rights Agreement shall also provide
that the Company shall maintain the effectiveness of such Shelf Registration
Statement until such time as Rule 144 promulgated under the 1933 Act becomes
available to you with respect to the resale of the Shares. Notwithstanding the
foregoing, the Company shall have no obligation (i) to assist in the offering or
disposition of the Shares, (ii) to obtain a commitment from an underwriter
relative to the sale of the Shares, or (iii) to include such Shares within an
underwritten offering.
9. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in
5
<PAGE>
writing and personally delivered, sent by electronic facsimile transmission
with a copy by first class mail, sent by overnight courier service, or sent by
first class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows or to such other address as a party may hereafter
designate by notice given pursuant hereto:
In the case of the Company:
RCM Technologies, Inc.
2500 McClellan Avenue (Suite 350)
Pennsauken, New Jersey 08109-4613
Attn: Leon Kopyt, Chief Executive Officer
Fax No.: (609) 486-0802
In the case of Peter Kuhlmann:
Peter Kuhlmann
c/o Acquest International, L.P.
1211 Avenue of the Americas
New York, New York 10036
Fax No.: (212) 719-1763
10. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
Notwithstanding the foregoing, this Agreement and all rights and obligations
hereunder may not be assigned or transferred, without the prior written consent
of the other party, except that you may assign your rights hereunder to any
partnership of which you are a general partner or any limited liability company
of which you are a member, provided that such partnership or limited liability
company agrees in writing to be bound by the terms hereof.
11. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by you and the Company.
12. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York from time to time
in effect.
13. Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one
6
<PAGE>
instrument. A facsimile signature by any party on a counterpart of this
Agreement shall be binding and effective for all purposes. Such party shall,
however, subsequently deliver to the other party an original, executed copy of
this Agreement.
Very truly yours,
RCM TECHNOLOGIES, INC.
By:/s/LEON KOPYT
Leon Kopyt,
Chief Executive Officer
ACCEPTED AND AGREED TO:
/s/
PETER M. KUHLMANN
7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of February 5, 1996 by and
among RCM Technologies, Inc., a Nevada corporation (the "Company") and Limeport
Investments, L.L.C., a Delaware limited liability company (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company and Holder are parties to a Subscription Agreement
dated January 12, 1996 (the "Subscription Agreement") pursuant to which Holder
acquired 1,383,125 shares of the Company's Common Stock (the "Subscription
Shares");
WHEREAS, the parties hereto desire to set forth their agreement concerning
the registration of the Company's common stock under the Securities Act of 1933,
as amended.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
(a) "Closing" shall mean that date upon which a closing of the Subscription
Agreement occurs.
(b) "Registration Statement" shall mean a registration statement for
secondary sales of the Restricted Stock on Form S-3 or other comparable form.
(c) "Restricted Stock" shall mean the Subscription Shares and all
additional shares of Common Stock of the Company issued to Holder by virtue of
its ownership of the Subscription Shares (by stock dividend, stock split or
similar transaction).
(d) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at any relevant time.
(e) "SEC" shall mean the United States Securities and Exchange Commission.
(f) "Trading Day" shall mean any day on which the New York Stock Exchange
is open for trading.
2. Shelf Registration.
(a) The Company shall prepare and file, not later than February 15, 1997, a
Registration Statement with the SEC under and in compliance with the Securities
Act covering all the Restricted Stock and use its best efforts to promptly have
such Registration Statement declared effective for the purpose of facilitating
the public resale of the Restricted Stock.
<PAGE>
(b) The Company's obligation in Subparagraph 2(a) above extends only to the
use of the Company's best efforts to register such Restricted Stock pursuant to
a Registration Statement. The Company shall indemnify and hold harmless the
Holder, its members, its managers, and any underwriter or managing underwriter,
if any, designated by the Holder in accordance with Paragraph 7 hereof. The
Company shall cooperate with such underwriter, if any, pursuant to an
underwriting agreement containing usual and customary terms, but shall not be
obligated to obtain a commitment from an underwriter relative to the sale of
such Restricted Stock, whether in a public offering or private placement
transaction.
(c) The Company shall notify Holder that the SEC has declared the
Registration Statement effective, and the Restricted Stock subject thereto
effectively registered and eligible for public sale, as soon as practicable, but
in any event no later than two (2) days after receipt of confirmation thereof
from the SEC.
3. Registration Procedures. The Company will use its best efforts to:
(a) prepare and file with the SEC a Registration Statement with respect to
all the Restricted Stock and use its best efforts to cause such Registration
Statement to become and remain effective for the period of the distribution
contemplated thereby or as required under the Securities Act;
(b) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the period specified
in Subparagraph 3(a) above and as comply with the provisions of the Securities
Act with respect to the disposition of all Restricted Stock covered by such
Registration Statement in accordance with the sellers' intended method of
disposition set forth in such Registration Statement for such period;
(c) furnish to each seller and to each underwriter such number of copies of
the Registration Statement and the prospectus included therein (including each
preliminary prospectus), as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such Registration Statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such Registration Statement under the securities or blue sky laws of
such jurisdictions as the sellers, or, in the case of an underwritten public
offering, the managing underwriter shall reasonably request; provided, however,
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(e) immediately notify each seller under such Registration Statement and
each underwriter, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required or necessary to be stated therein in order to make the
statements contained there in not misleading in light of the circumstances then
existing;
<PAGE>
(f) make available for inspection by each seller, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;
(g) For purposes of Subparagraphs 3(a) and 3(b) above, the period of
distribution of Restricted Stock shall be deemed to extend until (A) in an
underwritten public offering, each underwriter has completed the distribution of
all securities purchased by it; and (B) in any other registration, all shares of
Restricted Stock covered thereby shall have been sold; and
(h) if the Common Stock of the Company is listed on any securities exchange
or automated quotation system, the Company shall use its best efforts to list
(with the listing application being made at the time of the filing of such
Registration Statement or as soon thereafter as is reasonably practicable) the
Restricted Stock covered by such Registration Statement on such exchange or
automated quotation system.
4. Expenses.
(a) For the purposes of this Paragraph (4), the term "Registration
Expenses" shall mean: all expenses incurred by the Company in complying with
paragraph (2) of this Agreement, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company (other than the expenses of any
special audit as described below), fees of the National Association of
Securities Dealers, Inc. ("NASD"), fees and expenses of listing shares of
Restricted Stock on any securities exchange or automated quotation system on
which the Company's shares are listed and fees of transfer agents and
registrars. The term "Selling Expenses" shall mean: all underwriting discounts
and selling commissions applicable to the sale of Restricted Stock, and all
accountable or non- accountable expenses paid to any underwriter in respect of
the sale of Restricted Stock.
(b) The Company will pay all Registration Expenses in connection with the
Registration Statement filed pursuant to paragraph (2) of this Agreement. All
Selling Expenses in connection with any Registration Statement filed pursuant to
paragraph (2) of this Agreement shall be borne by the participating sellers in
such Registration Statement in proportion to the number of shares sold by each,
or by such persons other than the Company (except to the extent the Company
shall be a seller) as they may agree.
5. Obligations of Holder.
(a) Holders shall notify the Company in writing at least three (3) Trading
Days prior to the resale of shares of Restricted Stock during the first thirty
(30) days following the date of the prospectus pursuant to which such resales
are to be effectuated and at least five (5) trading days prior to the resale of
shares of Restricted Stock when such resales occur more than thirty (30) Trading
Days after the date of the prospectus pursuant to which such resales are to be
effectuated.
<PAGE>
(b) In connection with each registration hereunder, the Holder will furnish
to the Company in writing such information with respect to the Holder and the
securities held by the Holder, and the proposed distribution by it as shall be
reasonably requested by the Company in order to assure compliance with federal
and applicable state securities laws, as a condition precedent to including the
Holder's Restricted Stock in the Registration Statement. The Holder also shall
agree to promptly notify the Company of any changes in such information included
in the Registration Statement or prospectus as a result of which there is an
untrue statement of material fact or an omission to state any material fact
required or necessary to be stated therein in order to make the statements
contained there in not misleading in light of the circumstances then existing.
(c) In connection with each registration pursuant to paragraph (2) of this
Agreement, the Holder will not effect sales thereof until notified by the
Company of the effectiveness of the Registration Statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update a
Registration Statement or prospectus. At the end of any period during which the
Company is obligated to keep a Registration Statement current, the Holder shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and the
Holder shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
6. Sales Blackout Period.
(a) At any time when a Registration Statement effected pursuant to
Paragraph 2 relating to Restricted Stock is effective, upon written notice from
the Company to the Holder that the Company has determined in good faith that
sale of Restricted Stock pursuant to the registration statement would require
disclosure of non-public material information not otherwise required to be
disclosed under applicable law having material adverse effect on the Company (an
"Information Blackout"), the Holder shall suspend sales of Restricted Stock
pursuant to such Registration Statement until the earlier of:
(i) thirty (30) days after the Company notifies Holder of such good faith
determination, and
(ii) such time as the Company notifies the Holder that such material
information has been disclosed to the public or has ceased to be material or
that sales pursuant to such Registration Statement may otherwise be resumed (the
number of days from such suspension of sales by the Holders until the day when
such sale may be resumed hereunder is hereinafter called a "Sales Blackout
Period").
(b) Notwithstanding anything to the contrary contained herein, (i) the
Company shall not initiate two (2) consecutive Sales Blackout Periods based upon
substantially the same set of facts and circumstances, and (ii) the total number
of days in multiple Sales Blackout Periods shall not exceed sixty (60) days in
any twelve-month period.
<PAGE>
7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless Holder, its members, managers and agents, and any broker-dealer or
underwriter selling Restricted Stock pursuant to any Registration Statement from
and against any and all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or prospectus or related
document, registration, notification or filing relating to the Restricted Stock
or in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of, or are based upon, any such untrue
statement or omission (or allegation with respect thereto) based upon
information furnished to the Company by Holder or on Holder's behalf expressly
for use therein.
(b) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
Holder which is indemnified pursuant to subparagraph 7(a), the Company (with
counsel reasonably acceptable to Holder) shall assume the defense thereof, and
shall assume the payment of all expenses. Holder shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of Holder
unless the Company has agreed to pay such fees and expenses. Except as expressly
provided above, in the event that the Company shall not assume the defense of
any such action or proceeding within a reasonable period of time, Holder may
take such action in connection therewith as it deems necessary or desirable,
including retention of counsel, and the Company shall thereafter be liable to
Holder pursuant to this Agreement for any legal or other expenses subsequently
incurred by it in investigating, preparing for or defending against such action
or proceeding. The Company shall not be liable for any settlement of any such
action or proceeding effected without the Company's written consent (which
consent shall not be unreasonably withheld), but, if settled with its written
consent or if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless Holder from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. The Company will not consent to any settlement, or the
entry of judgment pursuant thereto, (i) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to Holder of
a written release from all liability in respect of such claim or litigation in
form reasonably satisfactory to Holder, and (ii) which has not been consented to
in writing by Holder, which consent shall not be unreasonably withheld.
(c) Indemnification by Holder. Holder agrees to indemnify and hold harmless
the Company, its directors and officers and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to the same extent as the foregoing indemnity from the Company to Holder,
but only with respect to (i) information furnished by Holder or on Holder's
behalf expressly for use in any Registration Statement or prospectus relating to
the Restricted Stock, or any amendment or supplement thereto, or any preliminary
prospectus, and (ii) the actions or omissions of its broker- dealer(s). In case
any action or proceeding shall be brought against the Company or its directors
or officers, or any such controlling person, in respect to which indemnity may
be sought against Holder, Holder shall have the rights and duties given to the
Company, and the Company or its directors or officers, or such controlling
person, shall have the rights and duties given to Holder, by the preceding
subparagraph 7(b).
(d) Contribution. If the indemnification provided for in subparagraph 7(a)
is unavailable to the Company or Holder in respect of any losses, claims,
damages, liabilities or judgments referred to herein, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments as between the
Company, on the one hand, and Holder, on the other, in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
Holder, on the other, in connection with the statements, actions or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and Holder, on the other, shall be determined by
reference to among other things, (i) whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the Company or
by Holder, or (ii) whether the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading was the responsibility of the Company or Holder, and
(iii) the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and Holder agree that it would not be just and equitable if
contribution pursuant to this subparagraph 7(d) were determined by any method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, suit, proceeding or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(b) Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Holder.
<PAGE>
(d) Notices. All communications under this Agreement shall be sufficiently
given if delivered by hand or by overnight courier, sent by electronic facsimile
transmission with a copy by first class mail or mailed by registered or
certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Mr. Leon Kopyt
Chief Executive Officer
RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, New Jersey 08109-4613
Fax No.: (609) 486-0802
with a copy to:
Stephen M. Cohen, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Fax No.: (215) 241-1857
(ii) if to Holder, to:
Limeport Investments, L.L.C.
c/o Mr. Peter M. Kuhlmann
Acquest International, L.P.
1211 Avenue of the Americas
New York, NY 10036
Fax No.: (212) 719-1763
with a copy to:
Salomon R. Sassoon, Esquire
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
Fax No.: (212) 735-8708
or at such other address as any of the parties shall have furnished in writing
to the other parties hereto.
(e) Successors and Assigns; Holders as Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and assigns, and the agreements of the Company herein shall inure to
the benefit of all Holders and their respective successors and assigns.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Entire Agreement; Survival; Termination. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements
<PAGE>
and understandings between the parties with respect to such subject matter.
(h) SEC Filings. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner. Upon the
request of Holder, the Company will deliver to Holder a written statement as to
whether it has complied with such informational requirements.
(i) The Company's and Holder's Authority. The Company and Holder have full
right and authority to enter into and to make the agreements made by them
herein, and this Agreement has been duly authorized and delivered by the Company
and Holder and is enforceable against the Company and Holder in accordance with
its terms.
RCM TECHNOLOGIES, INC.
By:_/s/ Leon Kopyt
Name:Leon Kopyt
Title:
LIMEPORT INVESTMENTS, L.L.C.
By:/s/Peter Kuhlmann
Peter M. Kuhlmann, Manager
