SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report March 19, 1996
(Date of earliest event reported)
RCM TECHNOLOGIES, INC.
(exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
1-10245 95-1480559
(Commission File Number) (IRS Employer
` Identification Number)
2500 McClellan Avenue, Pennsauken, NJ 08109-4613
(Address of principal executive offices) (Zip Code)
(609) 486 - 1777
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On March 11, 1996, RCM Technologies, Inc. ("Registrant") acquired The Consortium
("Consortium"), a Fairfield, New Jersey-based supplier of temporary employees,
computer consultants, health care professionals and executive search services to
businesses and institutions primarily in New York, New Jersey and Pennsylvania.
The acquisition was completed through a stock purchase transaction (the
"Purchase") pursuant to which Consortium, through an exchange of all its
outstanding shares of stock with the Registrant, became a wholly-owned
subsidiary of the Registrant.
The Purchase consideration payable to the former shareholders of Consortium
consisted of 6,500,000 shares of the Registrant's common stock (the "Shares")
valued at $5,000,000. The acquisition has been accounted for under the purchase
method of accounting. The cost in excess of net assets acquired will be
approximately $4,419,546. It is anticipated the cost in excess of net assets
acquired will be amortized over a 40 year period.
The Purchase consideration paid by the Registrant was determined by negotiations
between and among the representatives of the Registrant and Consortium. The
former shareholders of Consortium were Barry Meyers, Martin Blaire, Marie
Wolfson, Howard Ross and Alexander Valcic. Following the Purchase, the executive
officers of the Registrant will be Leon Kopyt, Stanton Remer, Barry Meyers and
Martin Blaire.
As part of the Purchase, 1,625,000 of the Shares were delivered into escrow as
collateral to secure the obligation of the former Consortium shareholders to
indemnify the Registrant for income tax liabilities of Consortium, in excess of
$1,100,000 and for possible indemnification of certain other potential
liabilities. The Shares are subject to certain restrictions on resale, however,
the Registrant has agreed to file a shelf registration statement by February 15,
1997, permitting the sale of $600,000 in value of securities during the period
April 1997 through March 1998. Thereafter, the remainder of the Shares are
subject to significant restrictions on resale through March 11, 1999.
Consortium's assets consist of cash, accounts receivable, contracts and office
equipment. These assets are used in providing temporary employees, computer
consultants, health care professionals and executive search services to
businesses and institutions. The Registrant plans for Consortium to continue
such course of business under its control.
Prior to the Purchase, no material relationship existed between Consortium and
the Registrant or any of its affiliates, any director or officer of the
Registrant, or any associate of any such director or officer.
ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired
Audited Balance Sheets, December 31, 1995 and 1994
Audited Statements of Income,
Years ended December 31, 1995, 1994 and 1993
Audited Statements of Changes in Stockholders' Equity, Years
ended December 31, 1995, 1994 and 1993
Audited Statements of Cash Flows,
Years ended December 31, 1995, 1994 and 1993
<PAGE>
Financial Statements and Exhibits (Continued)
(b) Pro forma financial information
Unaudited Pro Forma Condensed Combined Balance Sheets, October 31,
1995 and January 31, 1996
Unaudited Pro Forma Condensed Combined Statements of Income
for the year ended October 31, 1995 and the three months ended
January 31, 1996.
ITEM 7.
(c) Exhibits
(1) Stock Purchase Agreement, dated March 1, 1996
(2) Registration Rights Agreement, dated March 11, 1996
(3) Escrow Agreement, dated March 11, 1996
(4) Investor Representation Certificate, dated March 11, 1996
(5) Standstill and Shareholders Agreement, dated March 11, 1996
(6) Employment Agreement, dated March 11, 1996 (Martin Blaire)
(7) Employment Agreement, dated March 11, 1996 (Barry Meyers)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
THE CONSORTIUM
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
<PAGE>
THE CONSORTIUM
INDEX TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
PAGE
INDEPENDENT AUDITORS' REPORT........................................... 1
FINANCIAL STATEMENTS
Balance Sheet...................................................... 2
Statement of Income ............................................... 3
Statement of Changes In Stockholders' Equity....................... 4
Statement of Cash Flows............................................ 5
Notes to Financial Statements...................................6 - 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
The Consortium
Fairfield, New Jersey
We have audited the accompanying balance sheet of The Consortium as of December
31, 1995, and the related statements of income, changes in stockholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Consortium as of December
31, 1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/Citrin Cooperman & Company, LLP
CERTIFIED PUBLIC ACCOUNTANTS
February 13, 1996
<PAGE>
THE CONSORTIUM
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS (Note D)
Current assets:
<S> <C>
Cash (Note B).......................................................................................$ 9,100
Accounts receivable (net of allowance for doubtful
accounts of $76,000) (Note G).................................................................... 3,965,150
Prepaid expenses and other current assets........................................................... 246,282
Total current assets.......................................................................... 4,220,532
Furniture and equipment, net (Notes A(4) and C)........................................................ 29,653
Other assets (Note A(6))............................................................................... 201,023
---------
TOTAL.........................................................................................$4,451,208
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft......................................................................................$ 145,812
Note payable - stockholders (Note D)................................................................ 1,000,000
Note payable - bank (Note D)........................................................................ 480,000
Accounts payable and accrued expenses............................................................... 284,871
Accrued payroll..................................................................................... 575,508
Payroll and income taxes payable.................................................................... 100,698
Deferred taxes payable (Note A(5)).................................................................. 183,865
Total current liabilities.................................................................. 2,770,754
Commitments (Notes D and E)
Stockholders' equity:
Common stock - $1, par value; 100,000
shares authorized; 11,861 shares issued
and 10,927 shares outstanding (Note H)........................................................... 10,927
Stock subscription receivable....................................................................... (10,027)
Retained earnings................................................................................... 1,684,554
Less: treasury stock - 934 shares at cost .......................................................... (5,000)
Total stockholders' equity ................................................................ 1,680,454
TOTAL......................................................................................$4,451,208
</TABLE>
The accompanying notes are an integral part of this statement.
- 2 -
<PAGE>
THE CONSORTIUM
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
<S> <C>
Gross revenue (Note G).................................................................................$26,361,303
Direct expenses........................................................................................ 19,913,106
Gross margin........................................................................................... 6,448,197
Selling expenses....................................................................................... 3,158,418
General and administrative expenses.................................................................... 3,215,360
Interest expense, net.................................................................................. 82,162
----------
Loss from operations before benefit of income taxes.................................................... (7,743)
Income tax benefit (Notes A(5) and F).................................................................. (49,006)
----------
NET INCOME.............................................................................................$ 41,263
==========
The accompanying notes are an integral part of this statement.
</TABLE>
- 3 -
<PAGE>
THE CONSORTIUM
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Common Retained Treasury
Stock Earnings Stock Total
<S> <C> <C> <C> <C> <C>
Balance January 1, 1995.....................$ 900 $1,643,291 $(5,000) $1,639,191
Recapitalization of
common stock to
$1 par value............................. 10,027 10,027
Stock subscription
receivable............................... (10,027) (10,027)
Net income.................................. 41,263 41,263
------- --------- ------ ---------
BALANCE DECEMBER 31, 1995...................$ 900 $1,684,554 $(5,000) $1,680,454
======= ========= ====== =========
</TABLE>
The accompanying notes are an integral part of this statement.
- 4 -
<PAGE>
THE CONSORTIUM
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C>
Net income..........................................................................................$ 41,263
----------
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................................. 49,081
Deferred tax benefit.......................................................................... (57,727)
Changes in operating assets and liabilities:
(Increase) in accounts receivable................................................................ (144,194)
(Increase) in prepaid expenses and other current assets.......................................... (65,159)
(Decrease) in cash overdraft .................................................................... (234,626)
Increase in accounts payable and accrued expenses................................................ 47,142
Increase in accrued payroll...................................................................... 71,391
Increase in payroll and income taxes payable..................................................... 29,293
(Increase) in other assets....................................................................... (2,500)
----------
Total adjustments............................................................................. (307,299)
----------
Net cash used in operating activities............................................................... (266,036)
----------
Cash flows from investing activities:
Purchase of furniture and equipment................................................................. (4,439)
----------
Net cash used in investing activities............................................................... (4,439)
----------
Cash flows from financing activities:
Net borrowings from note payable - bank............................................................. 270,000
----------
Net cash provided by financing activities........................................................... 270,000
----------
NET DECREASE IN CASH................................................................................... (475)
Cash - January 1, 1995................................................................................. 9,575
----------
CASH - DECEMBER 31, 1995...............................................................................$ 9,100
==========
Supplemental cash flow information: Cash paid during year for:
Interest.........................................................................................$ 77,192
Income taxes.....................................................................................$ 1,937
</TABLE>
The accompanying notes are an integral part of this statement.
- 5 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Note A) - Summary of Significant Accounting Policies:
1. Organization:
The Consortium (the "Company") was incorporated under the laws of the
State of New Jersey on May 19, 1975. The Company provides executive
search, temporary employees, computer consultants and health care
professionals to businesses and institutions primarily in New York, New
Jersey and Pennsylvania.
2. Use of Estimates:
The preparation of financial statements requires the Company's
management to estimate the current effects of transactions and events
whose ultimate outcomes may not be determinable until future years.
Consequently, the estimated current effects could differ from the
effects of the ultimate outcomes.
3. Fair Value of Financial Instruments:
Effective for years ended after December 15, 1995, FASB Statement No.
107, "Disclosure about Fair Value of Financial Instruments", requires
disclosure of the fair value of specified financial instruments for
which it is practicable to estimate that value. The Statement provides
that (a) fair value may be estimated either by reference to quoted
market prices, valuation models or independent valuations and (b)
practicable means that an estimate of fair value can be made without
incurring excessive costs.
As of December 31, 1995, the fair value of cash, accounts receivable,
accounts payable and accrued expenses and short-term borrowings
approximated their carrying amount.
4. Furniture and Equipment:
Furniture and equipment are stated at cost. Depreciation and
amortization are computed by the use of the Modified Accelerated Cost
Recovery System (MACRS). Such depreciation and amortization does not
differ materially from that which would have been recorded under
generally accepted accounting principles.
Expenditures for renewals and betterments which extend the originally
estimated useful life of an asset are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.
- 6 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Note A) - Summary of Significant Accounting Policies (Continued):
5. Income Taxes:
The Company prepares its income tax returns using the cash basis method
of accounting. Under this method, certain revenues are recognized when
received rather than when earned and certain expenditures are recognized
when paid rather than when incurred. Deferred taxes are provided for
based upon the resulting temporary differences.
The Company, with the consent of its shareholders has elected under the
Internal Revenue Code and New York State Tax Law to be an S corporation.
The shareholders of an S corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision for
federal income taxes has been included in these financial statements.
The provision for New York State income tax has been included to the
extent the corporate tax rate exceeds the highest personal income tax
rate. The Company is subject to New Jersey State, New York City and
Pennsylvania State income taxes.
6. Restrictive Covenants:
Restrictive covenants, arising from the acquisition of other companies
are being amortized on the straight-line method over periods prescribed
by the Internal Revenue Code. Such amortization does not differ
materially from that which would have been recorded under generally
accepted accounting principles. Amortization expense aggregated $27,283
for the year ended December 31, 1995.
(Note B) - Cash:
The Company maintains cash balances at several financial institutions. Accounts
at each institution are insured by the Federal Deposit Insurance Corporation up
to $100,000. At December 31, 1995, the Company's uninsured cash balances totaled
approximately $103,000.
- 7 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Note C) - Furniture and Equipment:
Furniture and equipment are summarized as follows:
Estimated
Useful Lives
Furniture and equipment..................$298,002 5 to 7 years
Leasehold improvements................... 12,803 Life of Lease
-------
................... 310,805
Accumulated depreciation
and amortization....................... 281,152
Total.................................$ 29,653
Depreciation and amortization expense aggregated $21,798 for the year ended
December 31, 1995.
(Note D) - Related Party Transactions:
Certain stockholders of the Company have entered into a loan agreement with a
bank whereby the stockholders may borrow up to $1,000,000; the proceeds of which
are to be used solely by the Company. The loan bears interest at the bank's base
lending rate plus .75% per annum (9.25% at December 31, 1995). Borrowings under
the agreement have been guaranteed by the stockholders, as well as
cross-guaranteed by the Company. Outstanding borrowings on this loan at December
31, 1995 were $1,000,000 and are due on demand.
Additionally, the Company has a line of credit with a commercial bank in the
amount of $1,000,000. Under the terms of the agreement, outstanding borrowings
are due on demand with interest payable monthly at the bank's base lending rate
plus 1% per annum. The line is secured by the Company's eligible accounts
receivable, and the remaining assets of the Company, and it is personally
guaranteed by certain stockholders of the Company. Outstanding borrowings on
this loan at December 31, 1995 were $480,000.
Interest expense on these loans aggregated $82,360 during 1995.
- 8 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Note E) - Commitments:
1. The Company leases office space at six locations under noncancelable
leases expiring on various dates through 1999. The Company's future
minimum rental payments required under these leases are as follows:
Year Ending December 31,
1996.....................................................$190,444
1997..................................................... 151,147
1998..................................................... 138,933
1999..................................................... 77,000
Total.................................................$557,524
Rent expense for the year ended December 31, 1995 aggregated $212,501.
In addition, the Company is obligated for escalations for the Company's
proportionate share of increases in real estate taxes and operating costs, on
certain of these leases.
2. The Company entered into a consulting agreement with an entity owned by a
former stockholder. This agreement provides for an aggregate of $195,000
to be paid to this entity in varying annual installments through December
31, 1997. As of December 31, 1995, the Company paid $145,000 under the
terms of the agreement.
The shares of the former stockholder have been placed in escrow as
collateral under this agreement.
- 9 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Note F) - Benefit for Taxes:
The provision (benefit) for state and city income taxes consists of the
following:
Current.............................. $ 8,721
Deferred:
Liability - accrual basis
adjustments........................ $ (4,838)
Asset - net operating loss carryforwards. (52,889)
-------
Net deferred taxes.................. (57,727)
-------
Total............................. $(49,006)
=======
The current provision includes New York City taxes calculated on an alternative
method. For income tax purposes, the Company has net operating loss
carryforwards aggregating approximately $1,071,000 which are available to reduce
future state taxable income, if any, through the year 2010.
(Note G) - Major Customer:
During 1995 the Company derived approximately 9.7% of gross revenue from one
customer, pursuant to a contract to provide temporary employees. At December 31,
1995 approximately $321,381 is included in accounts receivable from this
customer.
(Note H) - Common Stock:
During 1995, the Company revised its capital structure from 10,300 shares of no
par value common stock to 100,000 shares of $1 par value common stock.
(Note I) - Subsequent Event:
During January, 1996, the stockholders of the Company signed a Letter of Intent
for a Stock Purchase Agreement whereby 100% of the Company's stock will be
exchanged for 6,500,000 shares in the acquiring public company, as defined. At
December 31, 1995 the last quoted market price of the acquiring Company's stock
was $.625 per share.
- 10 -
<PAGE>
THE CONSORTIUM
INDEX TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994
PAGE
INDEPENDENT AUDITORS' REPORT........................................ 1
FINANCIAL STATEMENTS
Balance Sheet............... .................................... 2
Statement of Income and Retained Earnings........................ 3
Statement of Cash Flows.......................................... 4
Notes to Financial Statements...................................5 -8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
The Consortium
Fairfield, New Jersey
We have audited the accompanying balance sheet of The Consortium as of
December 31, 1994, and the related statements of income and retained earnings
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Consortium as of
December 31, 1994, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/Citrin Cooperman & Company, LLP
CERTIFIED PUBLIC ACCOUNTANTS
February 17, 1995
<PAGE>
THE CONSORTIUM
BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS (Note C)
Current assets:
<S> <C>
Cash ...........................................................................................$ 9,575
Accounts receivable (Note G)........................................................................ 3,820,956
Prepaid expenses and other current assets........................................................... 181,123
Total current assets.......................................................................... 4,011,654
Furniture and equipment, net (Notes A(2) and B)........................................................ 47,012
Other assets (Note A(4))............................................................................... 225,806
TOTAL.........................................................................................$4,284,472
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft......................................................................................$ 380,438
Note payable - stockholders (Note C)................................................................ 1,000,000
Note payable - bank (Note C)........................................................................ 210,000
Accounts payable and accrued expenses............................................................... 237,729
Accrued payroll..................................................................................... 504,117
Payroll and income taxes payable.................................................................... 71,405
Deferred taxes payable (Note A(3)).................................................................. 241,592
Total current liabilities.................................................................. 2,645,281
Commitments (Notes C and D)
Stockholders' equity:
Common stock - no par value; 10,300
shares authorized; 9,125 shares issued
and 8,191 shares outstanding..................................................................... 900
Retained earnings................................................................................... 1,643,291
Less: treasury stock - 934 shares at cost (Note F).................................................. (5,000)
Total stockholders' equity................................................................. 1,639,191
TOTAL......................................................................................$4,284,472
</TABLE>
The accompanying notes are an integral part of this statement.
- 2 -
<PAGE>
THE CONSORTIUM
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S> <C>
Gross revenue (Note G).................................................................................$23,755,769
Direct expenses........................................................................................ 20,599,538
Gross profit............................................................................... 3,156,231
General and administrative expenses.................................................................... 2,876,246
Interest expense, net.................................................................................. 48,599
Income from operations before provision for income taxes............................................... 231,386
Provision for income taxes (Notes A(3) and E).......................................................... 20,740
NET INCOME............................................................................................. 210,646
Retained earnings - January 1, 1994.................................................................... 1,432,645
RETAINED EARNINGS - DECEMBER 31, 1994..................................................................$ 1,643,291
</TABLE>
The accompanying notes are an integral part of this statement.
- 3 -
<PAGE>
THE CONSORTIUM
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C>
Net income..........................................................................................$ 210,646
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................................. 49,658
Deferred taxes................................................................................ 42,940
Changes in operating assets and liabilities:
(Increase) in accounts receivable................................................................ (1,196,080)
(Increase) in prepaid expenses and other current assets.......................................... (55,619)
Increase in cash overdraft ...................................................................... 5,530
Increase in accounts payable and accrued expenses................................................ 133,649
Increase in accrued payroll...................................................................... 167,954
Increase in payroll and income taxes payable..................................................... 22,850
Decrease in security deposits.................................................................... 537
Total adjustments............................................................................. (828,581)
Net cash used in operating activities............................................................... (617,935)
Cash flows from investing activities:
Purchase of furniture and equipment................................................................. (24,612)
Payment for restrictive covenant.................................................................... (155,000)
Net cash used in investing activities............................................................... (179,612)
Cash flows from financing activities:
Purchase of treasury stock.......................................................................... (5,000)
Net borrowings from note payable - bank............................................................. 210,000
Net borrowings from note payable - stockholders..................................................... 580,000
Net cash provided by financing activities........................................................... 785,000
NET DECREASE IN CASH................................................................................... (12,547)
Cash - January 1, 1994................................................................................. 22,122
CASH - DECEMBER 31, 1994...............................................................................$ 9,575
Supplemental cash flow information: Cash paid during year for:
Interest.........................................................................................$ 48,091
Income taxes.....................................................................................$ 5,374
</TABLE>
The accompanying notes are an integral part of this statement.
- 4 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(Note A) - Summary of Significant Accounting Policies:
1. Organization:
The Consortium (the "Company") was incorporated under the laws of the State
of New Jersey on May 19, 1975. The Company provides executive search, temporary
employees, computer consultants and health care professionals to businesses and
institutions primarily in New York, New Jersey and Pennsylvania.
2. Furniture and Equipment:
Furniture and equipment are stated at cost. Depreciation and amortization
are computed by the use of the Modified Accelerated Cost Recovery System
(MACRS). Such depreciation and amortization does not differ materially from that
which would have been recorded under generally accepted accounting principles.
Expenditures for renewals and betterments which extend the originally
estimated useful life of an asset are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.
3. Income Taxes:
The Company prepares its income tax returns using the cash basis method of
accounting. Under this method, certain revenues are recognized when received
rather than when earned and certain expenditures are recognized when paid rather
than when incurred. Deferred taxes are provided for based upon the resulting
temporary differences.
The Company, with the consent of its shareholders has elected under the
Internal Revenue Code and New York State Tax Law to be an S corporation. The
shareholders of an S corporation are taxed on their proportionate share of the
Company's taxable income. Therefore, no provision for federal income taxes has
been included in these financial statements. The provision for New York State
income tax has been included to the extent the corporate tax rate exceeds the
highest personal income tax rate. The Company is subject to New Jersey State,
New York City and Pennsylvania State income taxes.
4. Restrictive Covenants:
Restrictive covenants, arising from the acquisition of other companies are
being amortized on the straight-line method over periods prescribed by the
Internal Revenue Code. Such amortization does not differ materially from that
which would have been recorded under generally accepted accounting principles.
Amortization expense aggregated $27,561 for the year ended December 31, 1994.
- 5-
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(Note B) - Furniture and Equipment:
Furniture and equipment are summarized as follows:
Estimated
Useful Lives
Furniture and equipment...........$293,563 5 to 7 years
Leasehold improvements............ 12,803 Life of lease
....... 306,366
Accumulated depreciation
and amortization................ 259,354
Total..........................$ 47,012
Depreciation and amortization expense aggregated $22,097 for the year ended
December 31, 1994.
(Note C) - Related Party Transactions:
Certain stockholders of the Company have entered into a loan agreement with
a bank whereby the stockholders may borrow up to $1,000,000; the proceeds of
which are to be used solely by the Company. The loan bears interest at the
bank's base lending rate plus 1% per annum (8.5% at December 31, 1994).
Borrowings under the agreement have been guaranteed by the stockholders, as well
as cross-guaranteed by the Company. Outstanding borrowings on this loan at
December 31, 1994 were $1,000,000.
Additionally, the Company has a line of credit with a commercial bank in
the amount of $1,000,000. Under the terms of the agreement, outstanding
borrowings are due on demand with interest payable monthly at the bank's base
lending rate plus 1% per annum. The line is secured by the Company's eligible
accounts receivable, and the remaining assets of the Company, and it is
personally guaranteed by certain stockholders of the Company. Outstanding
borrowings on this loan at December 31, 1994 were $210,000
Interest expense on these loans aggregated $48,716 during 1994.
- 6 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(Note D) - Commitments:
1. The Company leases office space at six locations under noncancelable
leases expiring on various dates through 1999. The Company's future minimum
rental payments required under these leases are as follows:
Year Ending December 31,
1995.....................................................$209,416
1996..................................................... 169,678
1997..................................................... 151,147
1998..................................................... 138,933
1999..................................................... 77,000
Total.................................................$746,174
Rent expense for the year ended December 31, 1994 aggregated $199,964.
In addition, the Company is obligated for escalations for the Company's
proportionate share of increases in real estate taxes and operating costs, on
certain of these leases.
2. The Company entered into a consulting agreement with an entity owned by
a former stockholder. This agreement provides for an aggregate of $195,000 to be
paid to this entity in varying annual installments through December 31, 1997. As
of December 31, 1994, the Company paid $95,000 under the terms of the agreement.
The shares of the former stockholder have been placed in escrow as
collateral under this agreement.
(Note E) - Provision for Taxes:
The provision for state and city income taxes consists of the following:
Current..................................................$(22,200)
Deferred................................................. 42,940
Total.................................................$ 20,740
- 7 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(Note E) - Provision for Taxes (Continued):
The current provision includes New York City taxes calculated on an
alternative method. For income tax purposes, the Company has net operating loss
carryforwards aggregating $969,000 which are available to reduce future state
taxable income, if any, through the year 2009.
(Note F) - Treasury Stock:
On December 23, 1994, the Company purchased 934 shares of its common stock
from a former stockholder for $5,000.
(Note G) - Major Customer:
During 1994 the Company derived approximately 9% of gross revenue from one
customer, pursuant to a contract to provide temporary employees. At December 31,
1994 approximately $402,000 is included in accounts receivable from this
customer.
- 8 -
<PAGE>
THE CONSORTIUM
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
<PAGE>
THE CONSORTIUM
INDEX TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
PAGE
INDEPENDENT AUDITORS' REPORT........................................ 1
FINANCIAL STATEMENTS
Balance Sheet.................................................... 2
Statement of Income and Retained Earnings........................ 3
Statement of Cash Flows.......................................... 4
Notes to Financial Statements....................................5 - 7
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
The Consortium
Fairfield, New Jersey
We have audited the accompanying balance sheet of The Consortium as of December
31, 1993, and the related statements of income and retained earnings and cash
flows for the year then ended. These financial statements are the responsibility
of the management of The Consortium. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Consortium as of December
31, 1993, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/S/ Citrin Cooperman
CERTIFIED PUBLIC ACCOUNTANTS
February 4, 1994
<PAGE>
THE CONSORTIUM
BALANCE SHEET
DECEMBER 31, 1993
<TABLE>
<CAPTION>
ASSETS (Note C)
Current assets:
<S> <C>
Cash ...........................................................................................$ 22,122
Accounts receivable (less allowance for
doubtful accounts of $25,000) (Note F)........................................................... 2,624,876
Prepaid expenses and other current assets........................................................... 125,504
Total current assets.......................................................................... 2,772,502
Furniture and equipment, net (Notes A(2) and B)........................................................ 44,497
Other assets (Note A(4))............................................................................... 98,904
TOTAL.........................................................................................$2,915,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft......................................................................................$ 374,908
Note payable - stockholders (Note C)................................................................ 420,000
Accounts payable and accrued expenses............................................................... 104,080
Accrued payroll..................................................................................... 336,163
Payroll and income taxes payable.................................................................... 48,555
Deferred taxes payable (Note A(3)).................................................................. 198,652
Total current liabilities.................................................................. 1,482,358
Commitments (Notes C and D)
Stockholders' equity:
Common stock - no par value; 10,300
shares authorized; 9,125 shares issued
and outstanding.................................................................................. 900
Retained earnings................................................................................... 1,432,645
Total stockholders' equity................................................................. 1,433,545
TOTAL......................................................................................$2,915,903
</TABLE>
The accompanying notes are an integral part of this statement.
- 2 -
<PAGE>
THE CONSORTIUM
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C>
Gross revenue (Note F).................................................................................$19,817,464
Direct expenses........................................................................................ 16,909,298
Gross profit............................................................................... 2,908,166
General and administrative expenses.................................................................... 1,497,260
Officers' salaries..................................................................................... 1,092,417
Interest expense....................................................................................... 21,705
Income from operations................................................................................. 296,784
Interest income........................................................................................ 261
Income before provision for income taxes............................................................... 297,045
Provision for income taxes (Notes A(3) and E).......................................................... 100,613
NET INCOME............................................................................................. 196,432
Retained earnings - January 1, 1993.................................................................... 1,236,213
RETAINED EARNINGS - DECEMBER 31, 1993..................................................................$ 1,432,645
</TABLE>
The accompanying notes are an integral part of this statement.
- 3 -
<PAGE>
THE CONSORTIUM
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C>
Net income..........................................................................................$ 196,432
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................................. 35,065
Deferred taxes................................................................................ 69,600
Changes in operating assets and liabilities:
(Increase) in accounts receivable................................................................ (839,399)
(Increase) in prepaid expenses and other current assets.......................................... (105,314)
Increase in cash overdraft....................................................................... 374,908
(Decrease) in accounts payable and accrued expenses.............................................. (142,822)
Increase in accrued payroll...................................................................... 176,657
(Decrease) in payroll and income taxes payable................................................... (63,449)
(Increase) in security deposits.................................................................. (4,756)
Total adjustments............................................................................. (499,510)
Net cash used in operating activities............................................................... (303,078)
Cash flows from investing activities:
Purchase of furniture and equipment................................................................. (32,292)
Payment for restrictive covenant.................................................................... (48,000)
Net cash used in investing activities............................................................... (80,292)
Cash flows from financing activities:
Repayment of bank borrowings........................................................................ (24,297)
Proceeds of note payable from stockholders.......................................................... 420,000
Net cash provided by financing activities........................................................... 395,703
NET INCREASE IN CASH................................................................................... 12,333
Cash - January 1, 1993................................................................................. 9,789
CASH - DECEMBER 31, 1993...............................................................................$ 22,122
Supplemental cash flow information: Cash paid during year for:
Interest.........................................................................................$ 21,705
Income taxes.....................................................................................$ 8,584
</TABLE>
The accompanying notes are an integral part of this statement.
- 4 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
(Note A) - Summary of Significant Accounting Policies:
1. Organization:
The Consortium (the "Company") was incorporated under the laws of the State
of New Jersey on May 19, 1975. The Company provides executive search, temporary
employees, computer consultants and health care professionals to businesses and
institutions primarily in New York and New Jersey.
2. Furniture and Equipment:
Furniture and equipment are stated at cost. Depreciation and amortization
are computed by the use of the Modified Accelerated Cost Recovery System
(MACRS). Such depreciation and amortization does not differ materially from that
which would have been recorded under generally accepted accounting principles.
Expenditures for renewals and betterments which extend the originally
estimated useful life of an asset are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.
3. Income Taxes:
The Company prepares its income tax returns using the cash basis method of
accounting. Under this method, certain revenues are recognized when received
rather than when earned and certain expenditures are recognized when paid rather
than when incurred. Deferred taxes are provided for based upon the resulting
temporary differences.
The Company, with the consent of its shareholders has elected under the
Internal Revenue Code and New York State Tax Law to be an S corporation. The
shareholders of an S corporation are taxed on their proportionate share of the
Company's taxable income. Therefore, no provision for federal income taxes has
been included in these financial statements. The provision for New York State
income tax has been included to the extent the corporate tax rate exceeds the
highest personal income tax rate. The Company is subject to New Jersey State and
New York City income taxes.
Effective January 1, 1993, the Company implemented the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes", which changed the criteria for measuring the provision for income
taxes and recognizing deferred tax assets and liabilities on the balance sheet.
Deferred taxes arise from temporary differences resulting from income and
expense items reported for financial accounting and income tax purposes in
different periods. SFAS No. 109 requires computing deferred income taxes under
the liability method. The Statement requires that all deferred tax balances be
determined by using the applicable tax rate expected to be in effect when the
taxes will actually be paid or refunds received. The cumulative effect of
implementing the provisions of SFAS No. 109 was immaterial.
- 5-
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
(Note A) - Summary of Significant Accounting Policies (continued):
4. Restrictive Covenants:
Restrictive covenants, arising from the acquisition of other companies
during 1993 and 1992, are being amortized on the straight-line method over
periods prescribed by the Internal Revenue Code. Such amortization does not
differ materially from that which would have been recorded under generally
accepted accounting principles.
(Note B) - Furniture and Equipment:
Furniture and equipment are summarized as follows:
Estimated
Useful Lives
Furniture and equipment.............$270,059 5 to 7 years
Leasehold improvements.............. 12,803 Life of lease
...... 282,862
Accumulated depreciation
and amortization.................. 238,365
Total............................$ 44,497
Depreciation and amortization expense aggregated $16,199 for the year ended
December 31, 1993.
(Note C) - Related Party Transactions:
Certain stockholders of the Company have entered into a loan agreement with
a bank whereby the stockholders may borrow up to $1,000,000; the proceeds of
which are to be used solely by the Company. The loan bears interest at the
bank's base lending rate plus 1% per annum (6% at December 31, 1993). Borrowings
under the agreement have been guaranteed by the stockholders, as well as
cross-guaranteed by the Company. Interest expense paid on this loan aggregated
$5,149 during 1993.
Additionally, the Company has a line of credit with a commercial bank in
the amount of $1,000,000. Under the terms of the agreement, outstanding
borrowings are due on demand with interest payable monthly at the bank's base
lending rate plus 1% per annum. The line is secured by the Company's eligible
accounts receivable, and the remaining assets of the Company, and it is
personally guaranteed by certain stockholders of the Company. There were no
outstanding borrowings on this loan at December 31, 1993.
- 6 -
<PAGE>
THE CONSORTIUM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
(Note D) - Commitments:
The Company leases office space at six locations under noncancelable leases
expiring on various dates through 1996. The Company's future minimum rental
payments required under these leases are as follows:
Year Ending December 31,
1994.....................................................$142,845
1995..................................................... 49,079
1996..................................................... 18,333
Total.................................................$210,257
Rent expense for the year ended December 31, 1993 aggregated $197,149.
In addition, the Company is obligated for escalations for the Company's
proportionate share of increases in real estate taxes and operating costs, on
certain of these leases.
(Note E) - Provision for Taxes:
The provision for state and city income taxes consists of the following:
Current..................................................$ 31,013
Deferred................................................. 69,600
Total.................................................$100,613
The current provision includes New York City taxes calculated on an
alternative method. For income tax purposes, the Company has net operating loss
carryforwards aggregating $501,000 which are available to reduce future state
taxable income, if any, through the year 2008.
(Note F) - Major Customer:
During 1993 the Company derived approximately 9% of gross revenue from one
customer, pursuant to a contract to provide temporary employees. At December 31,
1993 approximately $424,000 is included in accounts receivable from this
customer.
- 7 -
<PAGE>
Financial Statements and Exhibits
Item 7 (b) Pro forma financial information
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial
statements give effect to the acquisition of The Consortium (Consortium) by RCM
Technologies, Inc. ("RCM") pursuant to a stock purchase transaction that was
completed on March 11, 1996. This pro forma information has been prepared
utilizing the historical financial statements of RCM and Consortium. This
information should be read in conjunction with the historical financial
statements and notes thereto of RCM which are incorporated by reference to RCM's
Form 10-K and the historical financial statements of Consortium which is
incorporated within this Form 8-K. The pro forma financial data is provided for
comparative purposes only and does not purport to be indicative of the results
which actually would have been obtained if the acquisition had been effected on
the dates indicated or of the results which may be obtained in the future.
The pro forma financial information is based on the purchase method of
accounting for the acquisition. The pro forma adjustments are described in the
accompanying Notes to Unaudited Pro Forma Condensed Combined Balance Sheet and
Notes to Unaudited Pro Forma Condensed Combined Statement of Income. The
Unaudited Pro Forma condensed combined statements of income for the year ended
October 31, 1995 and the three months ended January 31, 1996 assume that the
acquisition of Consortium had occurred on November 1, 1994 (combining the
results for the year ended October 31, 1995, for RCM and the year ended December
31, 1995, for Consortium and combining the results for the three months ended
January 31, 1996 for RCM and Consortium.) The unaudited pro forma condensed
combined balance sheets at October 31, 1995 and January 31, 1996 assumes that
the acquisition of Consortium had occurred on October 31, 1995 (combining the
balance sheets for RCM and Consortium as of October 31, 1995, and December 31,
1995, respectively, and combining the balance sheets of RCM and Consortium as of
January 31, 1996.)
Acquisition
The total purchase price for the shares acquired by the issuance of RCM
Common Stock was valued at $5,000,000 plus estimated acquisition costs of
approximately $500,000. The pro forma condensed combined financial statements
have been prepared assuming the acquisition is effectuated by the issuance of
6,500,000 shares of RCM Common Stock ("Restricted Shares").
Assumptions
Purchase Price Allocation
Although neither RCM nor Consortium has complete information at this
time as to the fair value of Consortium's individual assets and liabilities, an
estimate of the eventual allocation of the purchase price was made on the basis
of available information. The eventual allocation of the purchase price will be
made on the basis of appraisals and valuations which give effect to various
factors including the nature and intended future use of assets acquired in
determining their value. It is not anticipated that any change in the allocation
price will be material from the pro forma adjustments.
For purpose of pro forma presentations, the excess purchase price over
the net assets acquired is being amortized over an estimated life of forty (40)
years.
<PAGE>
RCM TECHNOLOGIES, INC. AND THE CONSORTIUM
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Historical Proforma
RCM Technologies, Inc. The Consortium
October 31, 1995 December 31, 1995 Adjustments Combined
Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents ............................... $ 297,550 $ 9,100 $ 306,650
Accounts and notes receivable ........................... 5,133,662 3,965,150 9,098,812
Prepaid expenses & other current assets ................. 671,662 246,282 917,944
Total current assets .................................... 6,102,874 4,220,532 10,323,406
Property and equipment-net .............................. 444,351 29,653 474,004
Intangible assets ....................................... 3,711,256 199,023 5,000,000 A 8,829,825
500,000 C
(580,454)D
Other Assets ............................................ 43,074 2,000 45,074
Total ................................................... $ 10,301,555 $ 4,451,208 $ 4,919,546 19,672,309
Liabilities and Shareholders' Equity:
Notes payable ........................................... $ 914,435 $ 1,480,000 $ 2,394,435
1,100,000 B
Other current liabilities ............................... 1,840,445 1,290,754 500,000 C 4,731,199
Total current liabilities ............................... 2,754,880 2,770,754 1,600,000 7,125,634
Long term obligations ................................... 20,090 20,090
(1,100,000)B
(580,454)D
Shareholders' equity .................................... 7,526,585 1,680,454 5,000,000 A 12,526,585
Total ................................................... $ 10,301,555 $ 4,451,208 $ 4,919,546 $ 19,672,309
<FN>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(A) to record issuance of 6.5 Million Shs of RCM Technologies, Inc.
stock in exchange for all the shares of The Consortium ........ $5,000,000
(B) to record income tax liability upon termination
of S-Corp. Income Tax Status ........................... $1,100,000
(C) to record estimated acquisition costs ......................... $ 500,000
(D) to eliminate shareholder's investment as follows:
Purchase price ................................................. $5,000,000
Excess of purchase price over net assets acquired .............. 4,419,546
Shareholders' investment as reported ........................... $ 580,454
</FN>
</TABLE>
<PAGE>
RCM TECHNOLOGIES, INC. AND THE CONSORTIUM
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
RCM Technologies, Inc The Consortium
October 31, 1995 December 31, 1995 Adjustments Combined
<S> <C> <C> <C> <C>
Revenues ............................ $ 26,915,737 $ 26,361,303 $ 53,277,040
Cost and expenses
Cost of services .................. 22,378,817 19,913,106 42,291,923
Selling, general and administrative 3,549,810 6,324,697 (484,000)B 9,154,507
(86,000)C
(150,000)D
Interest expense .................. 38,158 82,360 120,518
Other, net ........................ (124,050) (198) (124,248)
Depreciation and amortization ..... 130,397 49,081 122,989 A 302,467
Total ............................... 25,973,132 26,369,046 (597,011) 51,745,167
Income before income taxes .......... 942,605 (7,743) 597,011 1,531,873
Income taxes (benefit) .............. 93,500 (49,006) 288,000 E 217,294
(201,600)E
86,400
Net Income .......................... $ 849,105 $ 41,263 $510,611 $1,400,979
Net income per common share ......... $ 0.06 $ 45.85 $ 0.07
Average number of common
shares outstanding ................ 15,039,847 900 21,539,847
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years .................... 122,989
(B) to reclassify S-Corp. earnings charged as descretionary
salaries ......................................................... 484,000
(C) to remove expenses attributable to discontinued
operations ....................................................... 86,000
(D) to reflect reduction of expenses attributable to
consolidation of administrative overhead ........................ 150,000
(E) to provide Federal & State Income Taxes on The Consortium
adjusted taxable income and utilization of RCM's N.O.L .......... 288,000
RCM' s ... N .O.L. Utilization (201,600)
86,400
</FN>
</TABLE>
<PAGE>
RCM TECHNOLOGIES, INC. AND THE CONSORTIUM
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
January 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
RCM Technologies, Inc The Consortium
January 31, 1996 Janaury 31, 1996 Adjustments Combined
Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents ............................... $ 127,704 $ 127,704
Accounts and notes receivable ........................... 5,127,631 3,377,367 8,504,998
Prepaid expenses & other current assets ................. 753,518 173,851 927,369
Total current assets .................................... 6,008,853 3,551,218 9,560,071
Property and equipment-net .............................. 447,531 30,570 478,101
Intangible assets ....................................... 3,687,220 179,706 5,000,000 A 8,755,725
500,000 C
(580,454)D
(30,747)E
Other Assets ............................................ 47,496 21,317 68,813
Total ................................................... $ 10,191,100 $ 3,782,811 $ 4,888,799 $18,862,710
Liabilities and Shareholders' Equity:
Notes payable ........................................... 527,784 1,130,000 $ 1,657,784
(37,500)E
1,100,000 B
Other current liabilities ............................... 1,634,430 936,929 500,000 C 4,133,859
Total current liabilities ............................... 2,162,214 2,066,929 1,562,500 5,791,643
6,753 E
(1,100,000)B
(580,454)D
Shareholders' equity .................................... 8,028,886 1,715,882 5,000,000 A 13,071,067
Total ................................................... $ 10,191,100 $ 3,782,811 $ 4,888,799 $18,862,710
<FN>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(A) to record issuance of 6.5 Million Shs of RCM Technologies, Inc.
stock in exchange for all the shares of The Consortium ........ $5,000,000
(B) to record income tax liability upon termination
of S-Corp. Income Tax Status ........................... $1,100,000
(C) To record estimated acquisition costs ......................... $ 500,000
(D) to eliminate shareholder's investment as follows:
Purchase price ................................................. $5,000,000
Excess of purchase price over net assets acquired .............. 4,419,546
Shareholders' investment as reported ........................... $ 580,454
(E) to record the effect of Pro Forma adjustments resulting from the statement
of income for the Three Months
Ended January 31, 1996 ....................................... $ 6,753
</FN>
</TABLE>
<PAGE>
RCM TECHNOLOGIES, INC. AND THE CONSORTIUM
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
RCM Technologies, Inc The Consortium
January 31, 1996 January 31, 1996 Adjustments Combined
<S> <C> <C> <C> <C>
Revenues ............................ $ 9,776,507 $ 6,214,604 $15,991,111
Cost and expenses
Cost of services .................. 7,985,878 4,489,504 12,475,382
Selling, general and administrative 1,144,116 1,588,748 (37,500)B 2,695,364
Interest expense .................. 24,901 20,590 45,491
Other, net ........................ 6,030 6,030
Depreciation and amortization ..... 54,970 12,270 30,747 A 97,987
Total ............................... 9,215,895 6,111,112 (6,753) 15,320,254
Income before income taxes .......... 560,612 103,492 6,753 670,857
Income taxes ........................ 58,749 10,349 47,937 C 69,098
(47,937)C
Net Income .......................... $ 501,863 $ 93,143 $ 6,753 $ 601,759
Net income per common share ......... $ 0.03 $ 103.49 $ 0.03
Average number of common
shares outstanding ................ 16,383,133 900 22,883,133
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years ...................... 30,747
(B) to reflect reduction of expenses attributable to
consolidation of administrative overhead ......................... 37,500
(C) to provide Federal Taxes on The Consortium
adjusted taxable income and utilization of RCM's N.O.L............ 47,937
RCM's N.O.L. Utilization ................................... (47,937)
</FN>
</TABLE>
<PAGE>
Pursuant to the requirements 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.
By: /S/ Stanton Remer
Stanton Remer
Chief Financial Officer,
Treasurer and Director
Date: March 19, 1996
\PHILA2\100322_5
STOCK PURCHASE AGREEMENT
AMONG
RCM TECHNOLOGIES, INC.
THE CONSORTIUM
AND
THE SHAREHOLDERS OF
THE CONSORTIUM
Dated as of March 1, 1996
<PAGE>
\PHILA2\100322_5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
1. DEFINITIONS................................................................................... 1
2. PURCHASE AND SALE OF SHARES OF ACQUIREE....................................................... 3
3.A. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND MESSRS.
BLAIRE AND MEYERS...................................................................................... 5
3.B. REPRESENTATIONS AND WARRANTIES OF MINORITY
SHAREHOLDERS........................................................................................... 14
4. REPRESENTATIONS AND WARRANTIES OF RCM......................................................... 16
5. COVENANTS OF THE PARTIES...................................................................... 23
6. THE CLOSING................................................................................... 28
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND
ACQUIREE SHAREHOLDERS.................................................................................. 31
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM.................................................... 33
9. INDEMNIFICATION........................................................................................ 37
10. TERMINATION............................................................................................ 39
11. NOTICES....................................................................................... 39
12. ARBITRATION................................................................................... 41
13. MISCELLANEOUS................................................................................. 41
</TABLE>
<PAGE>
\PHILA2\100322_5
LIST OF SCHEDULES
3.A.2(a) Audited Financial Statements for the fiscal years ended
December 31, 1995, 1994 and 1993
3.A.3 Undisclosed Liabilities of Acquiree
3.A.5 Accounts Receivable of Acquiree as of December 31, 1995
3.A.6 Material adverse changes
3.A.7 Litigation
3.A.9 Articles of Incorporation, Bylaws and Contracts of
Acquiree
3.A.10 Tax information
3.A.11 All material Contracts and Agreements of Acquiree
3.A.12 Liens, encumbrances and general description of all real
property in which Acquiree has an ownership interest
3.A.13 Licenses, trademarks and trade names of Acquiree
3.A.14 Consents to be obtained by Acquiree
3.A.15 Capitalization of Acquiree
3.A.18 Messrs. Blaire and Meyers' Obligation
3.A.19 Approvals required to be obtained by Acquiree
Shareholders
3.A.20 Number and names of employees and compensation of all
directors and officers of Acquiree - identifies all
employee benefit plans
3.A.21 Compliance with environmental and conservation laws
3.A.22 List of all insurance policies of Acquiree
3.A.23 List of all bank accounts maintained or for the benefit
of Acquiree
3.A.24 List of 10 largest customers of Acquiree, based on dollar
volume of income for Fiscal 1995
4.1 Articles of Incorporation and Bylaws of RCM
4.3 Capitalization of RCM
4.4 Undisclosed Liabilities of RCM
<PAGE>
\PHILA2\100322_5
4.5 Subsidiaries of RCM
4.6 Material adverse changes
4.7 Litigation
4.9 Tax Information
4.10 Title to Property and Related Matters
4.11 Licenses, trademarks and trade names of RCM
4.12 Number and names of employees and compensation of all
directors and officers of RCM - identifies all employee
benefit plans
4.13 Compliance with environmental and conservation laws
4.14 List of all insurance policies of RCM
4.15 List of all bank accounts maintained or for the benefit
of RCM
4.16 List of 10 largest customers of RCM, based on dollar
volume of income for the fiscal year ended September 30,
1995
4.17 Consents to be obtained by RCM
4.21 All material Contracts and Agreements of RCM
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\PHILA2\100322_5
LIST OF EXHIBITS
Exhibit "A" Escrow Agreement
Exhibit "B" Registration Rights Agreement
Exhibit "C" Standstill and Shareholders' Agreement
Exhibit "D" Blaire Employment Agreement
Exhibit "E" Meyers Employment Agreement
Exhibit "F" Investor Representation Letter
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\PHILA2\100322_5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement" ) is made and
entered into as of this 1st day of March 1996, by and among RCM Technologies,
Inc., a Nevada corporation ("RCM"); The Consortium, a New Jersey corporation
(the "Acquiree"); and those shareholders of Acquiree identified in Section 1 of
this Agreement (the "Acquiree Shareholders").
RECITALS:
WHEREAS, the Acquiree Shareholders own in the aggregate one hundred
percent (100%) of the issued and outstanding common stock of the Acquiree (the
"Acquiree Shares"); and
WHEREAS, the Acquiree Shareholders desire to sell the Acquiree
Shares and RCM desires to purchase the Acquiree Shares, each upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS.
(a) The foregoing RECITALS are true and correct, and are
incorporated herein and made a part hereof.
(b) For purposes of this Agreement, the terms set forth
below shall have the following meanings:
Acquiree..............................................................
The Consortium, a New Jersey
corporation
Acquiree............................................................
Shareholders
Those individuals consisting of
Martin Blaire, Barry Meyers, Howard
Ross, Marie Wolfson and Alexander
Valcic, who in the aggregate own
100% of the outstanding capital
stock of The Consortium.
Blaire and Meyers................................................
Martin Blaire and Barry Meyers,
individuals who in the aggregate own
10,212 shares (93.4%) of Acquiree.
Code..........................................................
The Internal Revenue Code of 1986,
as amended.
Closing......................................................
The transaction of events set forth
in Section 6 hereof.
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Closing Date.................................................
The day on which the Closing is held
as set forth in Section 6 hereof.
Closing.......................................................
Financial Statements
Unaudited financial statements of
the Acquiree for the interim period
from January 1, 1996 through the
Closing Date.
Escrow Shares.................................................
The portion of the RCM Shares
delivered to escrow pursuant to
Section 2.4.
Excess Tax.................................................
Liability
That amount of tax liability
calculated in accordance with
Section 2.3.
Exchange Act..............................................
The Securities Exchange Act of 1934,
as amended.
Financial..............................................
Statements
Audited financial statements of the
Acquiree for the fiscal years ended
December 31, 1995, December 31, 1994, and December 31, 1993 prepared in
compliance with the requirements of generally accepted accounting principles.
Interim Financial...................................
Statements
Unaudited financial statements of the Acquiree for the interim period from
January 1, 1996 through January
31, 1996.
Minority.........................................
Shareholders
Those individuals consisting of
Howard Ross, Marie Wolfson and
Alexander Valcic, who in the
aggregate own 715 shares (6.6%) of
the outstanding capital stock of
Acquiree.
RCM Shares.....................................
6.5 million shares of RCM Common
Stock to be issued to the Acquiree Shareholders pursuant to the terms of this
Stock Purchase Agreement, subject to adjustments as provided herein.
RCM...................................................
RCM Technologies, Inc., a Nevada corporation.
RCM Common Stock......................................
Common stock, $.05 par value per
share, of RCM.
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S Revocation Date.............................................
The date upon which the revocation
of the S Corporation status of
Acquiree is deemed effective for
federal tax purposes.
SEC........................................................
The Securities and Exchange
Commission.
Securities Act.............................................
The Securities Act of 1933, as
amended.
2. PURCHASE AND SALE OF SHARES OF ACQUIREE.
2.1 Purchase and Sale of Shares of Acquiree. Subject to the
terms and conditions of this Agreement, on the Closing Date, the Acquiree
Shareholders will sell, convey, assign, transfer and deliver the Acquiree Shares
to RCM, and RCM shall purchase, acquire and accept from the Acquiree
Shareholders the Acquiree Shares, which shall constitute one hundred percent
(100%) of the outstanding capital stock of Acquiree.
2.2 Purchase Consideration.
(a) On the Closing Date, (i) Acquiree Shareholders shall
deliver to RCM certificates representing the Acquiree Shares; and (ii) RCM shall
cause to be issued certificates in the name of each of the Acquiree Shareholders
in amounts as set forth in Schedule 2.2(a) representing, in the aggregate, 6.5
million shares of RCM's Common Stock (the "RCM Shares"), of which Messrs. Blaire
and Meyers shall deliver into escrow an aggregate 1.625 million shares of RCM's
Common Stock pursuant to Section 2.4 ("Escrow Shares").
(b) The RCM Shares shall be divided among the Acquiree
Shareholders in the same proportion as they own the Acquiree Shares. No other
consideration shall be payable to the Acquiree Shareholders in connection with
this Agreement.
2.3 Long-Term Contingency Regarding Federal Income
Taxes.
(a) The Acquiree, Acquiree Shareholders and RCM agree and
acknowledge that the number of RCM Shares to be paid to the Acquiree
Shareholders has been determined based upon the assumption that the tax
liability incurred by Acquiree prior to Closing associated with the recognition
of income resulting from the change in accounting method of Acquiree from cash
to accrual prior to Closing will be $1.1 million.
(b) The number of RCM Shares shall be reduced (as set forth in
this subsection (b)) by the amount by which RCM's aggregate federal and state
tax liability associated with the change in accounting method of Acquiree from
cash to accrual as
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paid out over each of the tax periods up to and including October 31, 1998,
exceeds $1.1 million (the "Excess Tax Liability"). If there is no Excess Tax
Liability, there shall be no adjustment to the RCM Shares. Within 30 days after
the date the federal tax returns for RCM for the fiscal year ended October 31,
1998 are filed, RCM shall send a notice (the "Notice") to the Acquiree
Shareholders providing in reasonable detail its calculation of the Excess Tax
Liability. Acquiree Shareholders shall have 30 days following such Notice in
which to review the calculation of the Excess Tax Liability and to notify RCM if
it disputes the amount thereof ("Dispute Notice"). In the event Acquiree
Shareholders do not provide the Dispute Notice timely, it shall be assumed that
they consent to the calculation of the Excess Tax Liability. If the Dispute
Notice is provided timely, and the parties are unable to resolve such dispute
within 30 days of RCM's receipt of such Dispute Notice, then such dispute shall
be handled in accordance with the provisions of Section 12 hereafter.
(c) The Acquiree Shareholders shall have the option to pay to
RCM in cash an amount equal to the Excess Tax Liability no less than 45 days
after its receipt of the Notice. If the Acquiree Shareholders do not pay the
Excess Tax Liability in cash prior to such 45th day, then the number of RCM
Shares shall be reduced by cancellation of a sufficient number of Escrow Shares
as shall have a value equal to the Excess Tax Liability, in accordance with the
Escrow Agreement (as defined in Section 2.4 of this Agreement) and the balance
of the Escrow Shares held in Escrow to secure such Excess Tax Liability shall be
released from Escrow and returned to the Acquiree Shareholders. For purposes of
this Agreement, the term "value" shall be determined by the average closing
price of RCM Common Stock either on The NASDAQ Stock Market or other principal
exchange upon which RCM Common Stock is regularly traded, for the 20 trading
days immediately preceding the date the Acquiree Shareholders determine the form
of payment of the Excess Tax Liability under this subparagraph (c).
2.4 Escrow Agreement. Messrs. Blaire and Meyers shall deposit
in escrow the Escrow Shares immediately upon issuance to Messrs. Blaire and
Meyers pursuant to an escrow agreement in the form of Exhibit "A" attached
hereto and made a part hereof (the "Escrow Agreement"). The Escrow Shares shall
be deemed collateral to ensure payment of the Excess Tax Liability as provided
in Section 2.3 and for the indemnification obligations of Messrs. Blaire and
Meyers pursuant to Section 10 of this Agreement.
3.A. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND MESSRS.
BLAIRE AND MEYERS. The Acquiree and Messrs. Blaire and Meyers,
jointly and severally, as a material inducement to RCM to enter
into this Agreement and consummate the transactions contemplated
hereby, make the following representations and warranties to RCM
which representations and warranties are true and correct in all
material respects at this date, and will be true and correct in all
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\PHILA2\100322_5
material respects on the Closing Date as though made on and as of
such date.
3.A.1 Shareholders of Acquiree. The Acquiree Shareholders are,
and will be on the Closing Date, the sole owners, of record and beneficially, of
all the issued and outstanding shares of the Acquiree's capital stock.
Acquiree does not own more than 5% percent of the issued and
outstanding capital stock of any other corporation or an equity interest in any
other entity.
3.A.2 Financial Statements.
(a) The Audited Financial Statements for the fiscal years
ended December 31, 1994 and 1993 ("1994 and 1993 Financial Statements") have
been attached as Schedule 3.A.2(a). The 1994 and 1993 Financial Statements and
the financial information contained therein present fairly the financial
condition of the Acquiree for the periods covered and have been prepared in
accordance with generally accepted accounting principles, consistently applied.
(b) The Audited Financial Statements for the fiscal year ended
December 31, 1995 ("1995 Financial Statements") will be delivered to RCM at or
prior to Closing. The 1995 Financial Statements and the financial information
contained therein will present fairly the financial condition of the Acquiree
for the periods covered and will be prepared in accordance with generally
accepted accounting principles, consistently applied.
(c) The Interim Financial Statements and Closing Financial
Statements will be prepared on an unaudited basis and delivered to RCM at or
prior to Closing and within 60 days of Closing, respectively. The Interim
Financial Statements and Closing Financial Statements and the financial
information contained therein will present fairly the financial condition of the
Acquiree for the interim periods covered and will be prepared in accordance with
generally accepted accounting principles, consistently applied.
(d) The books and records of Acquiree,
financial and other, are in all material respects complete and correct and have
been maintained in accordance with good business and accounting practices.
3.A.3 Undisclosed Liabilities. Acquiree does not have any
liabilities or obligations of any nature, fixed or contingent, that will not be
shown or otherwise provided for in the Financial Statements, except (a) as set
forth on Schedule 3.A.3, (b) for any tax liabilities incurred in connection with
Acquiree's conversion from an S Corporation to a C Corporation prior to
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Closing and the related change from the cash method to the accrual method of
accounting for federal income tax purposes, and (c) for liabilities and
obligations arising subsequent to the date of the Financial Statements in the
ordinary course of business, none of such liabilities referred to in this clause
(c) will individually or in the aggregate be materially adverse to the business
or financial condition of the Acquiree. There are no material loss contingencies
(as such term is used in Statement of Financial Accounting Standards No. 5 of
the Financial Accounting Standards Board) of the Acquiree that will not be
adequately provided for.
3.A.4 RCM Shares to Constitute Restricted Securities. Messrs
Blaire and Meyers represent and warrant: (a) that they have reviewed the
quarterly, annual and periodic reports of RCM, as filed by RCM with the SEC
pursuant to the Exchange Act, and that they have such knowledge and experience
in financial and business matters that they are capable of utilizing the
information set forth therein concerning RCM to evaluate the risks of investing
in the RCM Shares; (b) that they have been advised that the RCM Shares to be
issued to them by RCM constitute "restricted securities" as defined in Rule 144
promulgated under the Securities Act, and accordingly, have not been and will
not be registered under the Securities Act except as otherwise set forth in this
Agreement, and, therefore, they may not be able to sell or otherwise dispose of
such RCM Shares except if the RCM Shares are subject to an effective
registration statement filed with the SEC, in compliance with Rule 144 or
otherwise pursuant to an exemption from registration under the Securities Act;
(c) that the RCM Shares so issued are being acquired by them for their own
benefit and on their own behalf for investment purposes and not with a view to,
or for resale in connection with, a public offering or re-distribution thereof;
(d) that the RCM Shares so issued will not be resold (i) without registration
thereof under the Securities Act (unless in the opinion of counsel acceptable to
RCM, an exemption from such registration is available) or (ii) in violation of
any law; and (e) that the certificate or certificates representing the RCM
Shares to be issued will be imprinted with a legend in form and substance as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF
EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, BASED ON AN OPINION LETTER OF COUNSEL FOR THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION."
and RCM is hereby authorized to notify its transfer agent of the status of the
Shares, and to take such other action including, but not limited to, the placing
of a "Stop Transfer" order on the books
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\PHILA2\100322_5
and records of RCM's transfer agent to insure compliance with the
foregoing.
3.A.5 Accounts Receivable. Attached hereto as Schedule 3.A.5
is a list of all accounts receivable of Acquiree as of December 31, 1995 and
aging schedule pertaining thereto. All of the accounts receivable of Acquiree
now and on the Closing Date, are bona fide accounts receivable of Acquiree
representing the sales price of (or other sums or fees receivable for or in
respect of) goods, merchandise, or services sold or performed by Acquiree in
valid transactions in the regular course of its business to or for the benefit
of its customers. Such accounts receivable, subject to reserves, if any,
established within the Financial Statements, are not uncollectible or subject to
offset or counterclaim or otherwise in controversy.
3.A.6 Material Adverse Changes. Except as specifically stated
in Schedule 3.A.6 or as contemplated or required by this Agreement, from
December 31, 1995 to the date of this Agreement, the business of the Acquiree
has been operated in the ordinary course and there has not been:
(a) Any materially adverse changes in the business,
condition (financial or otherwise), results of operations, properties, assets,
liabilities, earnings or net worth of the Acquiree for such period or at any
time during such period;
(b) Any material damage, destruction or loss (whether or not covered by
insurance) affecting the Acquiree or its assets, properties or
business;
(c) Any cancellation or material breaches on any existing contract of which
Acquiree is a party that would have a material adverse effect on the business of
Acquiree;
(d) To the knowledge of Acquiree and Acquiree
Shareholders, any statute, rule, regulation or order adopted by any governmental
body, agency or authority that materially and adversely affects the Acquiree or
its business or financial condition;
(f) Any payment of bonuses or accrued salaries out of the
ordinary course of business or agreements to materially increase the rate or
terms of compensation payable or to become payable by Acquiree to its directors,
officers or key employees; provided, however, that this subsection shall not
restrict or limit the Acquiree in any way from hiring additional personnel who
are required for its operations; or
(g) To the knowledge of Acquiree and Acquiree
Shareholders, any other events or conditions of any character that
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\PHILA2\100322_5
may reasonably be expected to have a materially adverse effect on the Acquiree
or its business or financial condition.
3.A.7 Litigation. To the knowledge of Acquiree and Acquiree
Shareholders, except as set forth in Schedule 3.A.7, there are no actions,
suits, claims, investigations or legal, administrative or arbitration
proceedings pending or threatened against the Acquiree, whether at law or in
equity, or before or by any federal, state, municipal, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
nor does the Acquiree or the Acquiree Shareholders know of any basis for any
such action, suit, claim, investigation or proceeding.
3.A.8 Compliance: Governmental Authorizations. The
Acquiree has complied in all material respects with all federal,
state, local or foreign laws, ordinances, regulations and orders
applicable to its business, including without limitation, federal
and state securities, banking collection and consumer protection
laws and regulations that, if not complied with, would materially
and adversely affect its businesses. The Acquiree has all federal,
state, local and foreign governmental licenses and permits
necessary for the conduct of its business. Such licenses and
permits are in full force and effect. Neither the Acquiree nor the
Acquiree Shareholders knows of any violations of any such licenses
or permits. To the knowledge of Acquiree and Messrs. Blaire and
Meyers, no proceedings are pending or threatened to revoke or limit
the use of such licenses or permits that would have an adverse
effect on the business of Acquiree.
3.A.9 Due Organization. The Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey; it is qualified to do business and in good standing in each state
where its properties are owned, leased or operated, or the business conducted,
by them require such qualification except where failure to so qualify would not
have a material adverse effect on its financial condition, properties, business
or results of operations. The Acquiree has the power to own its properties and
assets and to carry on its business as now presently conducted. True and
complete copies of the Articles of Incorporation and Bylaws of Acquiree,
including any amendments thereto, have been attached as Schedule 3.A.9.
3.A.10 Taxes. Except as disclosed on Schedule 3.A.10, all (a)
federal, state, local or foreign tax returns (collectively, the "Returns")
required to be filed with respect to the properties, assets, operations, income
and net worth of Acquiree have been timely filed or appropriate extensions have
been obtained and such Returns are true, correct and complete; and (b) taxes and
governmental charges, including, without limitation, any interest and penalties
(collectively, "Taxes") due pursuant to such Returns have been paid or adequate
provision therefore has been made on the
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Financial Statements. Except as disclosed on Schedule 3.A.10, there are no
outstanding agreements or waivers extending the statutory period of limitation
concerning any tax liability of Acquiree, no examination of any Return of
Acquiree is currently in progress and no governmental authority has, within the
last three (3) years, notified Acquiree or Acquiree Shareholders of any tax
claim, investigation or proceeding. All monies required to be collected or
withheld by the Acquiree for income taxes, social security and other payroll
taxes related to its occupational or physical therapy personnel have been
collected or withheld, and either paid to the appropriate governmental agencies,
set aside in accounts for such purpose, or accrued, reserved against and entered
upon the books of the Acquiree and the Acquiree is not liable for any taxes or
penalties for failure to comply with any of the foregoing in connection with any
of its occupational or physical therapy personnel. With respect to the
Acquiree's computer programmers, system analysts and consultants (the
"Programmers"), the Acquiree has evaluated and classified the Programmers as
independent contractors or employees in accordance with the National Association
of Computer Consulting Businesses ("NACCB") guidelines and have entered into
independent contractor agreements on forms approved by the NACCB with the
Programmers treated as independent contractors. Acquiree has maintained,
monitored and continues to maintain and monitor the Programmers who are
independent contractors and their agreements to assure compliance with the NACCB
guidelines. To the knowledge of Messrs Blaire and Meyers, the Acquiree is
eligible to receive any funds available under the NACCB legal defense programs
for compliance with its guidelines on independent contractors. The Acquiree is
not and will not be liable for any taxes imposed under Code Sections 1374 or
1375 and has been an S Corporation for federal income tax purposes since May 1,
1987 to the S Revocation Date. Acquiree will be responsible for filing the short
period S return ending on the S Revocation Date and the filing for the one day C
Corporation period, which returns shall be reported on the closing of the books
method as set forth in Code Section 1362(e)(3) and the Acquiree shall comply
with all the necessary requirements for making such election. Set forth on
Schedule 3.A.10 is a list of all elections which have a material effect on the
calculation of Taxes payable or with respect to the income, deductions, credits,
allowances or assets of the Acquiree, except those elections pertaining to the
revocation of the S Corporation status of Acquiree prior to Closing and the
election to change from the cash to accrual method of accounting. The Acquiree
has not made, is not obligated to make, and will not, as a result of the
transactions contemplated hereby, make or become obligated to make any "excess
parachute payment" within the meaning of Section 280G of the Code (determined
without regard to subsection (b)(4) thereof).
3.A.11 Agreements. Schedule 3.A.11 contains a true
and complete list of all material contracts, agreements, mortgages,
obligations, arrangements, restrictions and other instruments to
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which the Acquiree is a party or by which the Acquiree or its assets may be
bound. True and correct copies of all items set forth on Schedule 3.A.11 have
been or will have been made available to RCM prior to the date hereof. No event
has occurred that (whether with or without notice or lapse of time) would
constitute a material default by the Acquiree under any of the contracts or
agreements set forth in Schedule 3.A.11. Neither the Acquiree nor any of the
Acquiree Shareholders have knowledge of any material default by the other
parties to such contracts or agreements.
3.A.12 Title to Property and Related Matters. The Acquiree
has, and at the time of the Closing Date will have, good and marketable title to
all of its properties, interests in properties and assets, real, personal and
mixed, owned by it at the date of this Agreement or acquired by it after the
date of this Agreement, of any kind or character, free and clear of any liens or
encumbrances, except (i) those set forth in Schedule 3.A.12, and (ii) liens for
current taxes not yet delinquent. Schedule 3.A.12 also contains a general
description of all real property in which Acquiree has an ownership interest.
Except as set forth in said Schedule 3.A.12 and except for matters that may
arise in the ordinary course of business, the assets of the Acquiree are in good
operating condition and repair, reasonable wear and tear excepted. There does
not exist any condition that materially interferes with the use thereof in the
ordinary course of the business of the Acquiree.
3.A.13 Licenses; Trademarks: Trade Names. Except as
set forth on Schedule 3.A.13, the Acquiree does not have, nor does
it own or use in its business any licenses, trademarks, trade
names, service marks, copyrights, patents or any applications for
any of the foregoing that relate to its business.
3.A.14 Due Authorization. This Agreement has been duly
authorized, executed and delivered by the Acquiree and constitutes a valid and
binding agreement of the Acquiree, enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with any of
the provisions hereof, will violate in any material respect any order, writ,
injunction or decree of any court or governmental authority, or violate or
conflict with in any material respect or constitute a default under (or give
rise to any right of termination, cancellation or acceleration under), any
provisions of the Acquiree's Articles of Incorporation or Bylaws, the terms or
conditions or provisions of any note, bond, lease, mortgage, obligation,
agreement, arrangement or restriction of any kind to which the Acquiree is a
party or by which the Acquiree or its
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properties may be bound, or violate in any material respect any statute, law,
rule or regulation applicable to the Acquiree, except that the consents
disclosed on Schedule 3.A.14 will be required pursuant to the terms of those
scheduled agreements. No consent or approval by any governmental authority is
required in connection with the execution and delivery by the Acquiree of this
Agreement or the consummation of the transactions contemplated hereby.
3.A.15 Capitalization. The authorized capitalization of the
Acquiree consists of 100,000 shares of $1.00 par value Common Stock of which
10,927 shares are issued and outstanding as of the date of this Agreement; the
Acquiree Shares have been duly authorized, validly issued, and are fully paid
and non-assessable, and were issued in compliance with applicable federal and
state securities laws and regulations. Except as set forth on Schedule 3.A.15,
there are no outstanding or presently authorized securities, warrants,
preemptive rights, subscription rights, options or related commitments or
agreements of any nature to issue any of the Acquiree's securities. Schedule
3.A.15 sets forth the share ownership and respective percentage of the
outstanding shares of Acquiree.
3.A.16 Brokerage Fees. Except for Acquest International, L.P.,
whose fees shall be paid by RCM, the Acquiree has not incurred, and will not
incur, any liability for brokerage or finder's fees or similar charges in
connection with the transactions contained within this Agreement.
3.A.17 Share Ownership. The Acquiree Shares to be surrendered
at the Closing by Messrs. Blaire and Meyers will be owned of record and
beneficially by Messrs. Blaire and Meyers, free and clear of all liens and
encumbrances of any kind and nature. There are no agreements (other than this
Agreement) to sell, pledge, assign or otherwise transfer such securities.
3.A.18 Messrs. Blaire and Meyers' Obligation. This Agreement
constitutes the valid and legally binding obligation of Messrs. Blaire and
Meyers. Except as set forth on Schedule 3.A.18, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute in any material respect a violation of or
default under, or conflict in any material respect with, any judgment, decree,
statute or regulation of any governmental authority applicable to Messrs. Blaire
and Meyers or any contract, commitment, agreement or restriction of any kind to
which either of Messrs. Blaire and Meyers are a party or by which either of
Messrs. Blaire and Meyers are bound.
3.A.19 Approvals Required. Except as set forth on
Schedule 3.A.19 or as contemplated or as required by this
Agreement, no approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any
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court, administrative agency or other governmental authority is required in
connection with the execution and delivery by the Acquiree Shareholders of this
Agreement or the consummation by them of the transactions described herein,
except to the extent that either of Messrs. Blaire and Meyers may be required to
file reports in accordance with relevant regulations under federal and state
securities laws upon execution of this Agreement and/or consummation of the
transactions contemplated hereby.
3.A.20 Employee; Benefit Plans.
(a) Schedule 3.A.20 sets forth the number and
names of the employees of Acquiree and the total 1995 compensation of each of
the directors, officers and employees of Acquiree.
(b) Acquiree does not have any "employee
benefit plans" (as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")). Schedule 3.A.20
identifies all programs, including, without limitation, any pension plans,
health and welfare plans, life, disability, medical, dental or hospitalization
insurance plans, sick-leave, vacation accrual or holiday plans, bonus, savings,
profit-sharing or other similar benefit plans, deferred compensation, stock
option, stock ownership and stock purchase plans covering employees or former
employees of Acquiree. Except as disclosed on Schedule 3.A.20, each such plan or
program has been operated substantially in accordance with its terms and, to the
extent applicable, ERISA and the Code. Acquiree does not sponsor or contribute
to, nor have they ever sponsored or been required to contribute to, any
"multiemployer plan" as such term is defined in Section 3(37) of ERISA.
(c) Except as disclosed on Schedule 3.A.20,
Acquiree does not have any written contracts, or oral contracts, including any
employment, management, agency or consulting contracts, with respect to any of
its current or retired employees.
(d) Except as disclosed on Schedule 3.A.20,
Acquiree is not a party to any collective bargaining agreement and there are no
union organizational activities or efforts to effect a representation election
pending or threatened.
(e) Except as disclosed on Schedule 3.A.20,
Acquiree has complied in all material respects with all applicable laws relating
to the employment of labor, including the provisions thereof relating to
benefits required to be provided under Part VI of Subtitle B of Title I of ERISA
or Section 4980B(f) of the Code (collectively, "COBRA"), wages, hours, working
additions, employee benefit plans and the payment of withholding and social
security taxes.
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3.A.21 Environmental Matters. Except as set forth in Schedule
3.A.21 Acquiree is in compliance with all laws, rules and regulations relating
to environmental protection and conservation (including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act and the
Superfund Amendments and Reauthorization Act of 1986, as amended and all
applicable state laws pertaining to the environment), and neither Acquiree or
Acquiree Shareholders have received any notification of any asserted present or
past failure to so comply with such laws, rules or regulations. Acquiree has
obtained and is in compliance with all permits, licenses and other
authorizations required under federal, state and local laws relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
(collectively "Environmental Requirements"). Neither Acquiree or Acquiree
Shareholders is aware of, nor have Acquiree or Acquiree Shareholders received
notice of, any circumstances which may interfere with or prevent continued
compliance, or which may give rise to any liability, or otherwise form the basis
of any claim, or investigation under Environmental Requirements, relating to the
operation of Acquiree's business. For the purpose of this Section, "hazardous
substances" shall include (1) hazardous substances as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and regulations thereunder and, (2) any substance for which state or
local laws require the clean-up, removal or other special handling of such
materials or imposing liability based upon improper handling thereof.
3.A.22 Insurance. Schedule 3.A.22 contains a list of all
policies of liability, environmental, crime, fidelity, life, fire, workers'
compensation, health, director and officer liability and all other forms of
insurance currently in effect and owned or held by Acquiree, and identifies for
each such policy, to the extent such information is reasonably available to
Acquiree, the underwriter, policy number, coverage type, premium, expiration
date and deductible. All of the insurance policies listed on Schedule 3.A.22 are
outstanding and in full force and effect and all premiums required to be paid
with respect to such policies are currently paid, provided however, Acquiree
shall be permitted to transfer such "key man" insurance obtained for Messrs.
Blaire and Meyers to the individual policies of Messrs. Blaire and Meyers.
3.A.23 Bank Accounts. Schedule 3.A.23 contains a
list of all bank accounts maintained by, or for the benefit of,
Acquiree.
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3.A.24 Customers. Set forth on Schedule 3.A.24 is a list of
the ten (10) largest customers of Acquiree based on the dollar volume of income
generated by that customer for Fiscal 1995. No such customer has terminated or,
to Acquiree's knowledge, is presently threatening to terminate its relationship
with Acquiree.
3.A.25 Prepayment Penalties. There are no prepayment penalties
or fines associated with the outstanding long-term debt or lines of credit of
Acquiree. If any such prepayment penalties or fines occur, Messrs. Blaire and
Meyers shall be liable for the payment of such penalties or fines.
3.A.26 Approval. The Board of Directors of the Acquiree have
approved the execution of this Agreement and the transactions contemplated
thereby.
3.B. REPRESENTATIONS AND WARRANTIES OF MINORITY SHAREHOLDERS. Each of
the Minority Shareholders as a material inducement to RCM to enter into this
Agreement and consummate the transactions contemplated hereby, make the
following representations and warranties to RCM which representations and
warranties are true and correct in all material respects at this date, and will
be true and correct in all material respects on the Closing Date as though made
on and as of such date.
3.B.1 RCM Shares to Constitute Restricted Securities. The
Minority Shareholders represent and warrant: (a) that they have reviewed the
quarterly, annual and periodic reports of RCM, as filed by RCM with the SEC
pursuant to the Exchange Act, and that they have such knowledge and experience
in financial and business matters that they are capable of utilizing the
information set forth therein concerning RCM to evaluate the risks of investing
in the RCM Shares; (b) that they have been advised that the RCM Shares to be
issued to them by RCM constitute "restricted securities" as defined in Rule 144
promulgated under the Securities Act, and accordingly, have not been and will
not be registered under the Securities Act except as otherwise set forth in this
Agreement, and, therefore, they may not be able to sell or otherwise dispose of
such RCM Shares except if the RCM Shares are subject to an effective
registration statement filed with the SEC, in compliance with Rule 144 or
otherwise pursuant to an exemption from registration under the Securities Act;
(c) that the RCM Shares so issued are being acquired by them for their own
benefit and on their own behalf for investment purposes and not with a view to,
or for resale in connection with, a public offering or re-distribution thereof;
(d) that the RCM Shares so issued will not be resold (i) without registration
thereof under the Securities Act (unless in the opinion of counsel acceptable to
RCM, an exemption from such registration is available), (ii) in violation of any
law; and (e) that the certificate or certificates representing the RCM Shares to
be issued will be imprinted with a legend in form and substance as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, BASED ON AN OPINION LETTER OF COUNSEL FOR THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION."
and RCM is hereby authorized to notify its transfer agent of the status of the
Shares, and to take such other action including, but not limited to, the placing
of a "Stop Transfer" order on the books and records of RCM's transfer agent to
insure compliance with the foregoing.
3.B.2 Share Ownership. The Acquiree Shares to be surrendered
by the Minority Shareholders at the Closing will be owned of record and
beneficially, by the Minority Shareholders, free and clear of all liens and
encumbrances of any kind and nature. There are no agreements (other than this
Agreement) to sell, pledge, assign or otherwise transfer such securities.
3.B.3 Acquiree Shareholders' Obligation. The Agreements made
by them herein constitute a valid and legally binding obligation on each of the
Minority Shareholders. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will constitute in any
material respect a violation of or default under, or conflict in any material
respect with, any judgment, decree, statute or regulation of any governmental
authority applicable to the Minority Shareholders or any contract, commitment,
agreement or restriction of any kind to which any of the Minority Shareholders
are a party or by which any of the Minority Shareholders are bound.
3.B.4 Approvals Required. Except as contemplated or as
required by this Agreement, no approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery by the Minority Shareholders of this Agreement
or the consummation by them of the transactions described herein, except to the
extent that any of the Minority Shareholders may be required to file reports in
accordance with relevant regulations under federal and state securities laws
upon execution of this Agreement and/or consummation of the transactions
contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF RCM. As a material
inducement to the Acquiree and the Acquiree Shareholders to enter
into this Agreement and consummate the transactions contemplated
hereby, RCM does hereby make the following representations and
warranties to the Acquiree and the Acquiree Shareholders, which
representations and warranties are true and correct in all material
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respects at this date, and will be true and correct in all material respects on
the Closing Date as though made on and as of such date.
4.1 Due Organization of RCM. RCM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, is qualified to business and in good standing in each state where the
properties owned, leased or operated, or the business conducted, by it require
such qualification except where failure to so qualify would not have a material
adverse effect on the financial condition, properties, business or results of
operations of RCM. RCM has the corporate power and authority to own its property
and assets and to carry on its business as now presently conducted. True,
correct and complete copies of the Articles of Incorporation and By-Laws of RCM,
including any amendments thereto, are attached hereto as Schedule 4.1.
4.2 SEC Reports. RCM has heretofore delivered to Acquiree and
Acquiree Shareholders copies of its Annual Reports on Form 10-K for the fiscal
years ended October 31, 1995, 1994 and 1993 and all quarterly reports for those
fiscal years (the "RCM Reports"). As of their date of filing, the RCM Reports
did not contain any untrue statements of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. Furthermore, except as otherwise disclosed in such RCM Reports, RCM
has experienced no material adverse change in its financial condition,
properties, business or prospects since the date thereof. The RCM Reports have
been prepared in compliance with all applicable securities laws, rules and
regulations, and the financial statements included therein had been prepared in
accordance with general accepted accounting principles, consistently applied,
and fairly presented the financial condition of RCM as of the date and for the
periods covered thereby.
4.3 Capitalization. The authorized capital stock of RCM
consists of 40,000,000 shares of common stock, par value $.05 per-share (the
"RCM Common Stock"), of which 17,670,243 shares were outstanding on the date of
this Agreement; all of which have been duly authorized, validly issued, and are
fully paid and nonassessable and were issued in compliance with applicable
federal and state securities laws and regulations. Except as set forth on
Schedule 4.3, there are no outstanding or presently authorized securities,
warrants, preemptive rights, subscription rights, options or related commitments
or agreements of any nature to issue any of the Acquiree's securities or to
sell, pledge, assign or otherwise transfer such securities.
4.4 Undisclosed Liabilities. Except as set forth on
Schedule 4.4, or otherwise disclosed in this Agreement or any
Schedules thereto, RCM does not have any liabilities or obligations
of any nature, fixed or contingent, that will not be shown or
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otherwise provided for in the RCM Reports, except for liabilities and
obligations arising subsequent to the date of the RCM Reports in the ordinary
course of business, none of which individually or in the aggregate will be
materially adverse to the business or financial condition of RCM. There are no
material loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 of the Financial Accounting Standards Board) of RCM
that will not be adequately provided for.
4.5 Subsidiaries. Except as set forth on Schedule 4.5, RCM has
no subsidiaries, nor does it own any interest in any other corporation,
partnership or other entity, nor does it have any right or obligation, whether
under any agreement (oral or written) or instrument of any kind, to acquire any
such interest.
4.6 Material Adverse Changes. Except as specifically stated in
Schedule 4.6, since the date of the most recent RCM Report to the date of this
Agreement, the business of RCM has been operated in the ordinary course and
there has not been:
(a) Any materially adverse changes in the business,
condition (financial or otherwise), results of operations, properties, assets,
liabilities, earnings or net worth of RCM for such period or at any time during
such period;
(b) Any material damage, destruction or loss
(whether or not covered by insurance) affecting RCM or its assets,
properties or business;
(c) Any declaration, setting aside or payment of
any dividend or other distribution in respect of any shares of the capital stock
of RCM, or any direct or indirect redemption, purchase or other acquisition of
any such stock or any agreement to do so;
(d) Any cancellation or material breaches on any
existing contract of which RCM is a party that would have a
material adverse effect on the business of RCM;
(e) To the knowledge of RCM, any statute, rule,
regulation or order adopted by any governmental body, agency or authority that
materially and adversely affects RCM or its business or financial condition;
(g) Any agreements to materially increase the rate
or terms of compensation payable or to become payable by RCM to its directors,
officers or key employees; provided, however, that this subsection shall not
restrict or limit RCM in any way from hiring additional personnel who are
required for its operations; or
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(h) Any other events or conditions of any character
that may reasonably be expected to have a materially adverse effect on RCM or
its business or financial condition.
4.7 Litigation. To the knowledge of RCM, except as set forth
in Schedule 4.7, there are no actions, suits, claims, investigations or legal,
administrative or arbitration proceedings pending or threatened against RCM,
whether at law or in equity, or before or by any federal, state, municipal,
local, foreign or other governmental department, commission, board, bureau,
agency or instrumentality, nor does RCM know of any basis for any such action,
suit, claim, investigation or proceeding.
4.8 Compliance: Governmental Authorizations. To the
best of its knowledge, RCM has complied in all material respects
with all federal, state, local or foreign laws, ordinances,
regulations and orders applicable to its business, including
without limitation, federal and state securities, banking
collection and consumer protection laws and regulations that, if
not complied with, would materially and adversely affect its
businesses. RCM has all federal, state, local and foreign
governmental licenses and permits necessary for the conduct of its
business. Such licenses and permits are in full force and effect.
RCM does not know of any violations of any such licenses or
permits. To the knowledge of RCM, no proceedings are pending or
threatened to revoke or limit the use of such licenses or permits
that would have an adverse effect on the business of RCM.
4.9 Taxes. Except as disclosed on Schedule 4.9, all (a)
federal, state, local or foreign tax returns (collectively, the "RCM Returns")
required to be filed with respect to the properties, assets, operations, income
and net worth of RCM have been timely filed or appropriate extensions have been
obtained and such RCM Returns are true, correct and complete; (b) taxes and
governmental charges, including, without limitation, any interest and penalties
(collectively, "RCM Taxes") due pursuant to such RCM Returns have been paid or
adequate provision therefore has been made on the RCM Report; and (c) federal,
state, local and foreign withholdings required with respect to the business of
RCM have been withheld and timely paid over to the appropriate governmental
authority. No RCM Returns have been audited or, to the knowledge of RCM, are
currently being audited by the Internal Revenue Service. Except as disclosed on
Schedule 4.9, there are no outstanding agreements or waivers extending the
statutory period of limitation concerning any tax liability of RCM, no
examination of any RCM Returns currently in progress and no governmental
authority has, within the last three (3) years, notified RCM of any tax claim,
investigation or proceeding.
4.10 Title to Property and Related Matters. RCM has, and
at the time of the Closing Date will have, good and marketable
title to all of its properties, interests in properties and assets,
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real, personal and mixed, owned by it at the date of this Agreement or acquired
by it after the date of this Agreement, of any kind or character, free and clear
of any liens or encumbrances, except (i) those set forth in Schedule 4.10, and
(ii) liens for current taxes not yet delinquent. Schedule 4.10 also contains a
general description of all real property in which RCM has an ownership interest.
Except as set forth in said Schedule 4.10 and except for matters that may arise
in the ordinary course of business, the assets of RCM are in good operating
condition and repair, reasonable wear and tear excepted. There does not exist
any condition that materially interferes with the use thereof in the ordinary
course of the business of RCM.
4.11 Licenses; Trademarks: Trade Names. Except as set
forth on Schedule 4.11, RCM does not have, nor does it own or use
in its business any licenses, trademarks, trade names, service
marks, copyrights, patents or any applications for any of the
foregoing that relate to its business.
4.12 Employee; Benefit Plans.
(a) Schedule 4.12 sets forth the number and names
of the employees of RCM and the total 1995 compensation of each of the
directors, officers and employees of RCM.
(b) Schedule 4.12 identifies all "employee benefit
plans" (as such term is defined in Section 3(3) of ERISA and programs,
including, without limitation, any pension plans, health and welfare plans,
life, disability, medical, dental or hospitalization insurance plans,
sick-leave, vacation accrual or holiday plans, bonus, savings, profit-sharing or
other similar benefit plans, deferred compensation, stock option, stock
ownership and stock purchase plans covering employees or former employees of
RCM. Except as disclosed on Schedule 4.12, each such plan or program has been
operated substantially in accordance with its terms and, to the extent
applicable, ERISA and the Code. RCM does not sponsor or contribute to, nor have
they ever sponsored or been required to contribute to, any "multiemployer plan"
as such term is defined in Section 3(37) of ERISA.
(c) Except as disclosed on Schedule 4.12, RCM does
not have any written contracts, or oral contracts, including any employment,
management, agency or consulting contracts, with respect to any of its current
or retired employees.
(d) Except as disclosed on Schedule 4.12, RCM is
not a party to any collective bargaining agreement and there are no union
organizational activities or efforts to effect a representation election pending
or threatened.
(e) Except as disclosed on Schedule 4.12, RCM has
complied in all material respects with all applicable laws relating
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to the employment of labor, including the provisions thereof relating to
benefits required to be provided under Part VI of Subtitle B of Title I of ERISA
or Section 4980B(f) of the Code (collectively, "COBRA"), wages, hours, working
additions, employee benefit plans and the payment of withholding and social
security taxes.
4.13 Environmental Matters. Except as set forth in Schedule
4.13, RCM is in compliance with all laws, rules and regulations relating to
environmental protection and conservation (including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act and the
Superfund Amendments and Reauthorization Act of 1986, as amended and all
applicable state laws pertaining to the environment), and RCM has not received
any notification of any asserted present or past failure to so comply with such
laws, rules or regulations. RCM has obtained and is in compliance with all
permits, licenses and other authorizations required under federal, state and
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes (collectively "Environmental Requirements"). RCM is not
aware of, nor has received notice of, any circumstances which may interfere with
or prevent continued compliance, or which may give rise to any liability, or
otherwise form the basis of any claim, or investigation under Environmental
Requirements, relating to the operation of RCM's business. For the purpose of
this Section, "hazardous substances" shall include (1) hazardous substances as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, and regulations thereunder and, (2) any substance for which
state or local laws require the clean-up, removal or other special handling of
such materials or imposing liability based upon improper handling thereof.
4.14 Insurance. Schedule 4.14 contains a list of all policies
of liability, environmental, crime, fidelity, life, fire, workers' compensation,
health, director and officer liability and all other forms of insurance
currently in effect and owned or held by RCM, and identifies for each such
policy, to the extent such information is reasonably available to RCM, the
underwriter, policy number, coverage type, premium, expiration date and
deductible. All of the insurance policies listed on Schedule 4.15 are
outstanding and in full force and effect and all premiums required to be paid
with respect to such policies are currently paid and are adequate in light of
the business of RCM.
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4.15 Bank Accounts. Schedule 4.15 contains a list of
all bank accounts maintained by, or for the benefit of, RCM.
4.16 Customers. Set forth on Schedule 4.16 is a list of the
ten (10) largest customers of RCM based on the dollar volume of income generated
by that customer for the fiscal year ended September 30, 1995. No such customer
has terminated or to RCM's knowledge is presently threatening to terminate its
relationship with RCM.
4.17 Due Authorization. This Agreement has been duly
authorized, executed, and delivered by RCM, and constitutes a legal, valid, and
binding obligation of RCM, enforceable in accordance with its terms except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with any of
the provisions hereof, will violate in any material respect any order, writ,
injunction or decree of any court or governmental authority, or violate or
conflict with in any material respect or constitute a default under (or give
rise to any right of termination, cancellation or acceleration under), any
provisions of RCM's Articles of Incorporation or Bylaws, the terms or conditions
or provisions of any note, bond, lease, mortgage, obligation, agreement,
arrangement or restriction of any kind to which the Acquiree is a party or by
which RCM or its properties may be bound, or violate in any material respect any
statute, law, rule or regulation applicable to RCM, except that the consents
disclosed on Schedule 4.17 will be required pursuant to the terms of those
scheduled agreements. No consent or approval by any governmental authority is
required in connection with the execution and delivery by RCM of this Agreement
or the consummation of the transactions contemplated hereby.
4.18 RCM Shares. The RCM Shares to be delivered to the
Acquiree Shareholders at Closing will be validly and legally issued, free and
clear of all liens, encumbrances, transfer fees and preemptive rights, and will
be fully paid and non-assessable. The RCM Shares will, however, constitute
"restricted securities" as defined in Rule 144 promulgated under the Securities
Act.
4.19 Brokerage Fees. Except for Acquest International, L.P.,
whose fees shall be paid by RCM, RCM has not incurred, and will not incur, any
liability for brokerage or finder's fees or similar charges in connection with
the transactions contained within this Agreement.
4.20 Accounts Receivable. The Financial Statements
contained within the RCM Reports reflect the accounts receivable of
RCM for the periods therein indicated. All of the accounts
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receivable of RCM now and on the Closing Date, are bona fide accounts receivable
of RCM representing the sales price of (or other sums or fees receivable for or
in respect of) goods, merchandise, or services sold or performed by RCM in valid
transactions in the regular course of its business to or for the benefit of its
customers. Such accounts receivable, subject to reserves, if any, established
within the RCM Reports are not uncollectible or subject to offset or
counterclaim or otherwise in controversy.
4.21 Agreements. Schedule 4.21 contains a true and complete
list of all material contracts, agreements, mortgages, obligations,
arrangements, restrictions and other instruments to which RCM is a party or by
which RCM or its assets is currently bound. True and correct copies of all items
set forth on Schedule 4.21 have been or will have been made available to
Acquiree and Messrs. Blaire and Meyers prior to the date hereof. No event has
occurred that (whether with or without notice or lapse of time) would constitute
a material default by RCM under any of the contracts or agreements set forth in
Schedule 4.21. RCM does not have any knowledge of any material default by the
other parties to such contracts or agreements.
4.22 Approval. The Board of Directors of RCM have
approved the execution of this Agreement and the transactions
contemplated thereby.
4.23 No Approvals Required. No approval, authorization,
consent, order or other action of, or filing with, any person, firm or
corporation or any court, administrative agency or other governmental authority
is required in connection with the execution and delivery by RCM of this
Agreement or the consummation by it of the transactions described herein, except
to the extent that the parties may be required to file reports in accordance
with relevant regulations under federal and state securities laws.
5. COVENANTS OF THE PARTIES.
5.1 Disclosure Documents.
(a) RCM shall supply to Acquiree the necessary
information in writing, or cause the necessary information to be supplied in
writing, relating to RCM for inclusion in any document(s) to be delivered to
Acquiree Shareholders in connection with seeking their approval of the
transactions contemplated by this Agreement.
(b) Acquiree shall supply to RCM the necessary
information in writing, or cause the necessary information to be supplied in
writing, relating to Acquiree for inclusion in any documents or reports to be
filed with the SEC or any regulatory
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agency in connection with the transactions contemplated by this
Agreement.
5.2 Access to Information. At all times prior to the Closing
Date or the earlier termination of this Agreement in accordance with the
provisions of Section 11, each of the parties hereto shall provide to the other
parties (and the other parties' authorized representatives) full access during
normal business hours to the premises, properties, books, records, assets,
liabilities, operations, contracts, personnel, financial information and other
data and information of or relating to such party (including without limitation
all written proprietary and trade secret information and documents, and other
written information and documents relating to intellectual property rights and
matters), and will cooperate with the other party in conducting its due
diligence investigation of such party.
5.3 Confidentiality.
(a) Confidentiality of RCM-Related Information.
With respect to information concerning RCM that is made available to Acquiree or
Acquiree Shareholders pursuant to the provisions of Section 5.2, Acquiree and
Acquiree Shareholders agree that they shall hold such information in strict
confidence, shall not use such information except for the sole purpose of
evaluating the transactions contemplated by this Agreement and shall not
disseminate or disclose any of such information other than to representatives
who need to know such information for the sole purpose of evaluating the
transactions to be undertaken pursuant to this Agreement (each of whom shall be
informed in writing by Acquiree of the confidential nature of such information
and directed by Acquiree to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Section 11, Acquiree and
Acquiree Shareholders shall immediately return all such information, all copies
thereof and all information prepared by Acquiree based upon the same, upon RCM's
request; provided, however, that one copy of all such material may be retained
by Acquiree's outside legal counsel for purposes only of resolving any disputes
under this Agreement. The above limitations on use, dissemination and disclosure
shall not apply to information that; (i) is learned by Acquiree or Acquiree
Shareholders from a third party entitled to disclose it; (ii) become known
publicly other than through Acquiree or Acquiree Shareholders or any party who
received the same through Acquiree or Acquiree Shareholders; (iii) is required
by law or court order to be disclosed by Acquiree or Acquiree Shareholders
(after notice and opportunity to oppose such disclosure); or (iv) is disclosed
with the express prior written consent thereto of RCM. Acquiree or Acquiree
Shareholders shall undertake all necessary steps to ensure that the secrecy and
confidentiality of such information will be maintained in accordance with the
provisions of this subparagraph (a);
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(b) Confidentiality of Acquiree-Related
Information. With respect to information concerning Acquiree that is made
available to RCM pursuant to the provisions of Section 5.2, RCM agrees that it
shall hold such information in strict confidence, shall not use such information
except for the sole purpose of evaluating the transactions to be undertaken
pursuant to this Agreement and shall not disseminate or disclose any of such
information other than to their directors, officers, employees, shareholders,
affiliates, agents and representatives who need to know such information for the
sole purpose of evaluating the transactions to be undertaken pursuant to this
Agreement (each of whom shall be informed in writing by RCM of the confidential
nature of such information and directed by such party to treat such information
confidentially). If this Agreement is terminated pursuant to the provisions of
Section 11, RCM agrees to return immediately all such information, all copies
thereof and all information prepared by it based upon the same, upon Acquiree's
request; provided, however, that one copy of all such material may be retained
by RCM's outside legal counsel for purposes only of resolving any disputes under
this Agreement. The above limitations on use, dissemination and disclosure shall
not apply to information that: (i) is learned by RCM from a third party entitled
to disclose it; (ii) becomes known publicly other than through RCM or any party
who received the same through either of them; (iii) is required by law or court
order to be disclosed by RCM (after notice and opportunity to oppose such
disclosure); or (iv) is disclosed with the express prior written consent thereto
of Acquiree. RCM agrees to undertake all necessary steps to ensure that the
secrecy and confidentiality of such information will be maintained in accordance
with the provisions of this subparagraph (b).
5.4 Nondisclosure. Neither RCM, Acquiree or
Acquiree Shareholders shall disclose to the public or to any third party the
existence of this Agreement or the transactions contemplated hereby or any other
material non-public information concerning or relating to the other party
hereto, other than with the express prior written consent of the other party
hereto, except as may be required by applicable securities laws as they pertain
to public companies, law or court order or to enforce the rights of such
disclosing party under this Agreement, in which event the contents of any
proposed disclosure shall be discussed with the other party before release;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, any party hereto may disclose this Agreement to any of its
directors, officers, employees, shareholders, affiliates, agents and
representative who need to know such information for the sole purpose of
evaluating the transactions contemplated by this Agreement, to any party whose
consent is required in connection with this Agreement; or to any regulatory body
where such disclosure is required under federal or state law.
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5.5 Consents. RCM and Acquiree shall cooperate and use their
best efforts to obtain, prior to the Closing Date, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts as are necessary for the consummation of
the transactions contemplated by this Agreement.
5.6 Filings. RCM and Acquiree shall, as promptly as
practicable, make any required filings, and RCM and Acquiree shall promptly make
any other required submissions, under any law, statute, order rule or regulation
with respect to the transactions contemplated by this Agreement and the related
transactions and shall cooperate with each other with respect to the foregoing.
5.7 All Reasonable Efforts. Subject to the terms and
conditions of this Agreement and to the fiduciary duties and obligations of the
board of directors of Acquiree and RCM, each of the parties to this Agreement
shall use all reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, or to remove any injunctions or other
impediments or delays, legal or otherwise, as soon as reasonable practicable, to
consummate the transactions contemplated by this Agreement.
5.8 Notification of Certain Matters. Except with respect to
the actions contemplated by this Agreement, Acquiree shall give prompt notice to
RCM, and RCM shall give prompt notice to Acquiree, of (a) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which would
cause any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing Date and (b) any
material failure of Acquiree, on the one hand, or RCM, on the other hand, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however, the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available to the party receiving such notice under this
Agreement.
5.9 Expenses. Each party shall bear its own expenses in
connection with the transactions contemplated by this Agreement; provided,
however, that the (i) expenses of Acquiree and Acquiree Shareholders incurred in
connection therewith shall not exceed $75,000 in the aggregate including legal,
accounting (including costs related to the preparation and filing of the
year-end and final tax returns and review and preparation of the Interim
Financial Statements and Closing Financial Statements, however, excluding any
costs relating the preparation of the 1995 Financial Statements) and other costs
incurred by Acquiree and Acquiree Shareholders in connection with this
Acquisition and (ii) Acquiree shall pay the expenses of Acquiree Shareholders
related to this
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acquisition. To the extent that Acquiree's expenses exceed $75,000, the Acquiree
Shareholders shall reimburse Acquiree for such excess amount, if any, within 65
days after the Closing Date.
5.10 Consent of Auditors. Acquiree Shareholders shall, when
necessary, obtain the necessary consents of all auditors who have provided audit
reports in connection with any of the Financial Statements which may be required
by RCM for the preparation and filing of documents and reports with the SEC.
5.11 Discharge of Bonuses. Any and all accrued bonuses or
other compensation over and above historic compensation levels which may be due
and owing to the Acquiree Shareholders shall be discharged and Acquiree released
from such obligations on or before the Closing Date.
5.12 Loss of "S" Corporation Status. Upon completion of the
transactions as contemplated by this Agreement, Acquiree Shareholders shall be
responsible for the payment and filing of any final tax returns or other
obligations incurred in connection with the termination of Acquiree's "S"
Corporation status.
5.13 Documents at Closing. Each party to this Agreement agrees
to execute and deliver on the Closing Date those documents identified in Section
6.2.
5.14 Interim Operations of RCM and Acquiree. Except as
contemplated by this Agreement, including any Exhibits and Schedules hereto, or
to the extent that the parties shall otherwise consent in writing or as
otherwise identified in Schedules 3.A.6 and 4.6, during the period from the date
of this Agreement and continuing until the Closing Date, each of RCM and
Acquiree shall carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent with such business, use all reasonable efforts to preserve
intact their present organization of such business, keep available the services
of its present officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it and they shall
not take any action, or fail to take any action, that is reasonably likely to
result in any of their respective representations and warranties set forth in
this Agreement becoming untrue as though such representations and warranties are
made as of and on the Closing Date.
5.15 Tax and Accounting Treatment of Acquiree. Prior to
Closing, Acquiree shall take any and all actions necessary to revoke its
election to be treated as an S-Corporation pursuant to the Code and to change
from the cash method of accounting to the accrual method of accounting.
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5.16 Prohibition on Trading in RCM Stock. The Acquiree and
Acquiree Shareholders acknowledge that the United States Securities Laws
prohibit any person who has received material non-public information concerning
the matters which are the subject matter of this Agreement from purchasing or
selling the securities of RCM, or from communicating such information to any
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities of RCM. Accordingly, the
Acquiree Shareholders agree that they will not purchase or sell any securities
of RCM, or communicate such material non-public information to any other person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell securities of RCM, until no earlier than 72 hours
following the dissemination of a Current Report on Form 8-K to the SEC
announcing the Closing pursuant to this Agreement.
6. THE CLOSING.
6.1 The Closing. The closing ("Closing") of the purchase and
sale and other transactions contemplated by this Agreement shall take place (a)
at the offices of Clark, Ladner, Fortenbaugh & Young, 2005 Market Street, 22nd
Floor, Philadelphia, PA 19103, 10:00 a.m, local time on March 11, 1996, or (b)
at such other time and place and on such other date as RCM and Acquiree or
Acquiree Shareholders shall agree. The date of the Closing is referred to herein
as the "Closing Date."
6.2 Transactions at Closing. On the Closing Date, the
following transactions shall occur, all of such transactions being
deemed to occur simultaneously:
(a) the Acquiree and Acquiree Shareholders will
deliver, or cause to be delivered, to RCM the following:
(i) stock certificates representing the
Acquiree Shares being surrendered hereunder, duly endorsed with stock powers
attached in blank;
(ii) all corporate records of the Acquiree,
including without limitation corporate minute books (which shall contain copies
of the Articles of Incorporation and Bylaws, as amended to the Closing Date),
stock books, stock transfer books, corporate seals; and such other corporate
books and records as may reasonably be requested by RCM and its counsel;
(iii) a certificate executed by the Acquiree and the Acquiree
Shareholders to the effect that all representations and warranties made by the
Acquiree and Acquiree Shareholders under this Agreement are true and correct as
of the Closing Date, as though originally given to RCM on said date;
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(iv) a certificate of good standing for the Acquiree from the
Secretary of the State of New Jersey, dated at or about the Closing Date, to the
effect that such corporation is in good standing under the laws of such state;
(v) an incumbency certificate for the Acquiree
signed by all of the officers thereof dated at or about the Closing
Date;
(vi) certified Articles of Incorporation of the Acquiree dated
at or about the Closing Date and a copy of the Bylaws of the Acquiree certified
by the Secretary of the Acquiree dated at or about the Closing Date;
(vii) certified resolutions from the Secretary of the Acquiree
dated at or about the Closing Date authorizing the transactions contemplated
under this Agreement;
(viii) the Registration Rights Agreement
described in Exhibit "B" signed by each of the Acquiree
Shareholders;
(ix) the Escrow Agreement described in Exhibit
"A" signed by the Acquiree Shareholders and the Escrow Agent;
(x) an Employment Agreement described in
Exhibit "D" signed by Martin Blaire and RCM;
(xi) an Employment Agreement described in
Exhibit "E" signed by Barry Meyers and RCM;
(xii) an Investor Representation Letter
described in Exhibit "F" signed by each of the Acquiree
Shareholders;
(xiii) a Standstill and Shareholders' Agreement
described in Exhibit "C" signed by each of the Acquiree
Shareholders and RCM;
(xiv) resignations of all officers and
directors of Acquiree, following which Leon Kopyt and Barry Meyers shall be
elected by RCM as the sole directors of Acquiree;
(xv) any documentation associated with the
transactions contemplated by Section 5.15 of this Agreement;
(xvi) such documents as may be needed to
accomplish the Closing under the corporate laws of the states of
incorporation of RCM and Acquiree;
(xvii) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to
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the provisions of this Agreement or that may be reasonably
requested in furtherance of the provisions of this Agreement;
(xviii) an opinion of counsel in form and
substance satisfactory to RCM.
(b) RCM will deliver or cause to be delivered to
the Acquiree and the Acquiree Shareholders:
(i) a certificate or certificates of RCM
Common Stock which represent the Delivered Shares. The certificate or
certificates of RCM Common Stock which represent the RCM Shares shall bear the
following legend.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF EXEMPTION FROM
REGISTRATION, UNDER THE SECURITIES ACT OF 1933, BASED ON AN
OPINION LETTER OF COUNSEL FOR THE CORPORATION OR A NON-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION."
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS IN
OF AN AGREEMENT DATED AS OF MARCH 1, 1996
BETWEEN RCM TECHNOLOGIES, INC. AND THE PERSONS
IDENTIFIED IN SUCH AGREEMENT AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SAID AGREEMENT IS ON
FILE AT THE OFFICES OF THE CORPORATE SECRETARY
OF RCM TECHNOLOGIES, INC."
(ii) a certificate of RCM's President to effect
that all representations and warranties of RCM under this Agreement are
reaffirmed on the Closing Date, as though originally given to the Acquiree and
the Acquiree Shareholders on said date;
(iii) certificate from the Secretary of State of Nevada dated
at or about the Closing Date that RCM is in good standing under the laws of said
state;
(iv) certified resolution of the Secretary of RCM dated at or
about the Closing Date authorizing the transactions contemplated under this
Agreement;
(v) an opinion of counsel in form and substance
satisfactory to the Acquiree and the Acquiree Shareholders;
(vi) the Registration Rights Agreement
described in Exhibit "B" signed by each of the Acquiree
Shareholders;
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(vii) the Escrow Agreement described in Exhibit
"A" signed by the Acquiree Shareholders and the Escrow Agent;
(viii) an Employment Agreement described in
Exhibit "D" signed by Martin Blaire and RCM;
(ix) an Employment Agreement described in
Exhibit "E" signed by Barry Meyers and RCM;
(x) a Standstill and Shareholders' Agreement
described in Exhibit "C" signed by each of the Acquiree
Shareholders and RCM;
(xi) such documents as may be needed to
accomplish the Closing under the corporate laws of the state of
incorporation of RCM and Acquiree;
(xii) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of this
Agreement, or that may be reasonably requested in furtherance of the provisions
of this Agreement.
(c) Blaire and Meyers shall deliver the Escrow
Shares into escrow pursuant to the terms of the Escrow Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND ACQUIREE
SHAREHOLDERS. All obligations of the Acquiree and the Acquiree Shareholders
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date (unless otherwise stated herein), of each of the following conditions, any
one or all of which may be waived by the Acquiree or the Acquiree Shareholders:
7.1 The transactions identified within this Agreement shall
constitute a tax-free reorganization pursuant to Section 368 of the Code.
7.2 The Board of Directors of RCM shall have approved the
execution of this Agreement and the transactions contemplated thereby.
7.3 The representations and warranties made by or on behalf of
RCM contained in this Agreement or in any certificate or document delivered to
the Acquiree or the Acquiree Shareholders pursuant to the provisions hereof at
the Closing Date shall be true in all respects at and as of the time of the
Closing Date as though such representations and warranties were made at and as
of such time.
7.4 RCM shall have performed and complied in all
material respects with all covenants, agreements and conditions
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required by this Agreement to be performed or complied with by it
prior to or at the Closing.
7.5 RCM shall have delivered all of the Schedules required
herein, and copies of the documents referred to therein, to the Acquiree and
such Schedules and documents shall have been reasonably acceptable to Acquiree
and Acquiree Shareholders.
7.6 There shall be delivered to the Acquiree and the Acquiree
Shareholders an officer's certificate of RCM to the effect that all of the
representations and warranties of RCM set forth herein are true and complete in
all material respects as of the Closing Date, and that RCM has complied in all
material respects with its covenants and agreements set forth herein that are
required to be complied with by the Closing Date.
7.7 No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Closing and the other
transactions contemplated by this Agreement.
7.8 RCM shall have obtained the approval of its
principal lender of this Agreement and the transactions
contemplated thereby.
7.9 The indebtedness owed by the Acquiree and Acquiree
Shareholders to United Jersey Bank, excluding any prepayment penalties, as of
the Closing shall have been discharged in full; the Acquiree and the Acquiree
Shareholders and their spouses shall be removed from any guarantees with respect
to such indebtedness; and evidence of such discharges shall be produced at
Closing.
7.10 RCM shall have executed an Employment Agreement with each
of Messrs. Blaire and Meyers substantially in form and substance similar to that
attached hereto as Exhibits "D" and "E", respectively.
7.11 RCM and Acquiree Shareholders shall have executed a
Standstill and Shareholders' Agreement substantially in form and substance
similar to that attached hereto as Exhibit "C".
7.12 RCM and Acquiree Shareholders shall have executed a
Registration Rights Agreement substantially in form and substance similar to
that attached hereto as Exhibit "B".
7.13 RCM and Acquiree Shareholders shall have executed an
Escrow Agreement substantially in form and substance similar to that attached
hereto as Exhibit "A".
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7.14 Acquiree Shareholders shall have completed prior to the
Closing Date, to their satisfaction, a due diligence review of the financial
condition, results of operations, properties, assets, liabilities, business or
prospects of RCM.
7.15 All director, shareholder, lender, lessor and other
parties' consents and approvals, as well as all filings with, and all necessary
consents or approvals of, all federal, state and local governmental authorities
and agencies, as are required of RCM under this Agreement, applicable law or any
applicable contract or agreement (all as contemplated by this Agreement) to
complete the Closing shall have been secured.
7.16 Leon Kopyt shall have agreed to remain employed by RCM as
an executive officer of RCM for a period of at least two (2) years following the
Closing.
7.17 There shall have occurred no material adverse change to
the business, operations, assets, management, regulatory environment and
business prospects of RCM.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM. All
obligations of RCM under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or all of which may be waived in
writing by RCM:
8.1 The Board of Directors of the Acquiree have approved the
execution of this Agreement and the transactions contemplated thereby.
8.2 The representations and warranties made by the Acquiree
and the Acquiree Shareholders contained in this Agreement or in any certificate
or document delivered to RCM at the Closing pursuant to the provisions hereof
shall be true in all respects at and as of the time of the Closing as though
such representations and warranties were made at and as of such time.
8.3 The Acquiree and the Acquiree Shareholders shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
them prior to or at the Closing.
8.4 The Acquiree shall have delivered all of the Schedules
required herein, and copies of the documents referred to therein, to RCM and
such Schedules and documents shall have been reasonably acceptable to RCM.
8.5 There shall be delivered to RCM an officer's certificate
of the Acquiree to the effect that all of the representations and warranties of
the Acquiree set forth herein are true and complete in all material respects as
of the Closing Date,
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and that the Acquiree has complied in all material respects with its covenants
and agreements set forth herein that are required to be complied with by the
Closing Date; and there shall be delivered to RCM certificates signed by Messrs.
Blaire and Meyers and the Minority Shareholders to the effect that the
representations and warranties of Messrs. Blaire and Meyers and the Minority
Shareholders made within this Agreement are true and correct in all material
respects.
8.6 RCM shall have completed prior to the Closing Date, to its
satisfaction, a due diligence review of the financial condition, results of
operations, properties, assets, liabilities, business or prospects of the
Acquiree.
8.7 RCM shall have obtained the approval of its principal
lender of this Agreement and the transactions contemplated thereby.
8.8 Acquiree shall not have any "built-in gains" from the
termination of its "S"-Corporation status.
8.9 All director, shareholder, lender, lessor and other
parties' consents and approvals, as well as all filings with, and all necessary
consents or approvals of, all federal, state and local governmental authorities
and agencies, as are required of Acquiree or Acquiree Shareholders under this
Agreement, applicable law or any applicable contract or agreement (all as
contemplated by this Agreement) to complete the Closing shall have been secured.
8.10 No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Closing and the other
transactions contemplated by this Agreement.
8.11 Acquiree Shareholders shall have executed a Registration
Rights Agreement substantially in form and substance similar to that attached
hereto as Exhibit "B".
8.12 Acquiree Shareholders shall have executed an Escrow
Agreement substantially in form and substance similar to that attached hereto as
Exhibit "A".
8.13 Messrs. Blaire and Meyers shall each have executed an
Employment Agreement substantially in form and substance similar to that
attached hereto as Exhibits "D" and "E", respectively.
8.14 Acquiree Shareholders shall have executed an Investor
Representation Letter substantially in form and substance similar to that
attached hereto as Exhibit "F".
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8.15 Acquiree Shareholders shall have executed a Standstill
and Shareholders' Agreement substantially in form and substance similar to that
attached hereto as Exhibit "C".
8.16 Acquiree and Acquiree Shareholders shall take all actions
necessary to effect the resignation of all of the current directors and officers
of Acquiree in the manner identified in Section 6.2(a)(xiv).
8.17 Except as contemplated or as required by this Agreement,
there shall have occurred no material adverse change to the business,
operations, assets, management, regulatory environment and business prospects of
Acquiree.
8.18 Financial Statements.
(a) The 1995 Financial Statements of Acquiree shall
reflect (i) gross revenues of at least $26 million; (ii) gross margin of no less
than $6 million; (iii) "recast net income" of not less than $807,500; (iv)
stockholders equity (defined as total assets less total liabilities) of at least
$1,640,000; and (v) working capital (defined as total current assets less total
current liabilities) of not less than $1,410,000.
(b) For the purposes of subparagraph 8.18(a) above,
the term "recast net income" shall be the net income of the Acquiree reflected
on its 1995 Financial Statements (which amount shall be no less than $40,215),
plus certain additions thereto of $767,285 for officer bonuses, fringe benefits,
stock repurchase and discontinued operations.
(c) The Acquiree shall have provided the Interim
Financial Statements to RCM which reflect: (i) shareholders equity and working
capital on the last day of the period covered by the Interim Financial
Statements is no less than those required at subparagraphs 8.18(a)(iv) and
(a)(v) above; and (ii) gross revenues, gross profits and recast net income
(inclusive, for the purposes of the Interim Financial Statements, of expenses
associated with this transaction identified in Section 5.9) through the period
reflected therein in amounts that are in proportion to those required in
subparagraphs 8.18(a)(i), (ii) and (iii) above to be reflected during Fiscal
1995, taking into account seasonality, expenses of this transaction and weather
related business interruptions.
For the purpose of subparagraphs 8.18(a) and 8.18(c)
above, unless otherwise defined herein, the terms utilized therein shall have
the respective meanings accorded to them under generally accepted accounting
principles applied in a manner consistent with the most recent Financial
Statements of Acquiree.
9. INDEMNIFICATION.
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9.1 Messrs Blaire and Meyers. Messrs. Blaire and Meyers
jointly and severally shall indemnify, defend and hold harmless, for such period
of time as set forth in Section 13.3, RCM from and against any and all demands,
claims, actions or causes of action, judgments, assessments, losses,
liabilities, damages or penalties and reasonable attorneys' fees and related
disbursements (collectively, "Claims") where such Claim or Claims, in the
aggregate exceed $50,000, and in such case for the entire amount of such Claim
or Claims in the aggregate, incurred by RCM which arise out of or result from a
misrepresentation, breach of warranty, or breach of any covenant of Acquiree or
Acquiree Shareholders contained herein or in the Schedules annexed hereto or in
any other documents or instruments furnished by the Acquiree or Acquiree
Shareholders pursuant hereto or in connection with the transactions contemplated
hereby or thereby. Notwithstanding the preceding sentence, the liability of
Messrs. Blaire and Meyers arising from this Agreement or the transactions
related thereto shall be limited to the Escrow Shares in accordance with the
terms of the Escrow Agreement, except, however, where there is evidence of bad
faith, fraud or wanton misconduct, the liability of Messrs. Blaire and Meyers
arising form this Agreement or the transactions related thereto shall be
unlimited and Messrs. Blaire and Meyers shall be liable for the entire amount of
such Claim. In addition, in the event that a Claim is based on Section 3.A.10,
then RCM shall assume the defense of such Claim on behalf of Messrs. Blaire and
Meyers at no cost to Messrs. Blaire and Meyers, however, Messrs. Blaire and
Meyers shall be liable for any monetary damages which may result from a Claim
based on Section 3.A.10, provided further, that Messrs. Blaire and Meyers'
liability for such monetary damages shall be limited to the Escrow Shares.
9.2 RCM. RCM shall indemnify, defend and hold harmless
Acquiree and Acquiree Shareholders from and against any and all Claims incurred
by the Acquiree and/or any Acquiree Shareholder which arise out of or result
from a misrepresentation, breach of warranty or breach of any covenant of RCM
contained herein or in any ancillary certificates or other documents or
instruments furnished by RCM pursuant hereto or in connection with the
transactions contemplated hereby or thereby.
9.3 Methods of Asserting Claims for Indemnification.
All claims for indemnification under this Agreement shall be
asserted as follows:
(a) Third Party Claims. In the event that any
Claim for which a party (the "Indemnitee") would be entitled to indemnification
under this Agreement is asserted against or sought to be collected from the
Indemnitee by a third party the Indemnitee shall promptly notify the other party
(the "Indemnitor") of such Claim, specifying the nature thereof, the applicable
provision in this Agreement or other instrument under which the Claim arises,
and the amount or the estimated amount thereof (the "Claim
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Notice"). The Indemnitor shall have 30 days (or, if shorter, a period to a date
not less than 10 days prior to when a responsive pleading or other document is
required to be filed but in no event less than 10 days from delivery or mailing
of the Claim Notice) (the "Notice Period") to notify the Indemnitee (i) whether
or not it disputes the Claim and (ii) if liability hereunder is not disputed,
whether or not it desires to defend the Indemnitee. If the Indemnitor elects to
defend by appropriate proceedings, such proceedings shall be promptly settled or
prosecuted to a final conclusion in such a manner as to avoid any risk of damage
to the Indemnitee; and all costs and expenses of such proceedings and the amount
of any judgment shall be paid by the Indemnitor.
If the Indemnitee desires to participate in, but not control,
any such defense or settlement, it may do so at its sole cost and expense. If
the Indemnitor has disputed the Claim, as provided above, and shall not defend
such Claim, the Indemnitee shall have the right to control the defense or
settlement of such Claim, in its sole discretion, and shall be reimbursed by the
Indemnitor for its reasonable costs and expenses of such defense if it shall
thereafter be found that such Claim was subject to indemnification by the
Indemnitor hereunder.
(b) Non-Third Party Claims. In the event that the
Indemnitee should have a Claim for indemnification hereunder which does not
involve a Claim being asserted against it or sought to be collected by a third
party, the Indemnitee shall promptly send a Claim Notice with respect to such
Claim to the Indemnitor. If the Indemnitor does not notify the Indemnitee within
the Notice Period that it disputes such Claim, the Indemnitor shall pay the
amount thereof to the Indemnitee. If the Indemnitor disputes the amount of such
Claim, and settlement among the parties cannot be reached within 45 days, the
controversy in question shall be submitted to arbitration pursuant to paragraph
13 hereafter. Once the amount in controversy has been settled either among the
parties or by virtue of arbitration or default, if the party against whom such
liability rests is an Acquiree Shareholder, then such Claim may be paid in cash
or in stock. Payments in stock by an Acquiree Shareholder may be made by
application to the Escrow Agent in accordance with the terms of the Escrow
Agreement.
(c) Cooperation of Parties. If either party
chooses to defend or participate in the defense of any liability, it shall have
the right to receive from the other party, subject to any restriction of
applicable law or that may be necessary to preserve the privilege of
attorney-client communications, any books, records or other documents within
such other party's control that are necessary or appropriate for such defense.
10. TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any
time prior to the Closing Date:
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(a) by mutual written consent of RCM and Acquiree;
(b) by any of RCM and Acquiree:
(i) if the Closing shall not have occurred by the
Closing Date unless such date is extended by the mutual written agreement of RCM
and Acquiree, and in such event, only until the date the Closing Date has been
so extended; provided, however, that the right to terminate this Agreement under
this Section 11(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of,or resulted
in, the failure of the Closing Date to occur on or before that date; or
(ii) if any court of competent jurisdiction, or any
governmental body, regulatory or administrative agency or commission having
appropriate jurisdiction shall have issued an order, decree or filing or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) If any party hereto shall default in the observance or in
the due and timely performance of any of the Covenants of the parties contained
in Section 5 of this Agreement, the non-defaulting party may, upon written
notice, terminate this Agreement and in that event, the defaulting party shall
indemnify, hold harmless and assume full and complete responsibility for any and
all expenses of the non-defaulting party incurred in this transaction, without
prejudice to its or their rights and remedies available under law, including the
right to recover expenses, costs and other damages. Notwithstanding the
foregoing, the non-defaulting party may elect to waive such breach by the
defaulting party and proceed with the Closing, thereby waiving any right to
damages as a result of such breach.
11. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or sent by overnight delivery, confirmed telecopy or prepaid
first class registered or certified mail, return receipt requested, to the
following addresses, or such other addresses as are given to the other parties
to this Agreement in the manner set forth herein:
11.1 If to RCM, to:
Mr. Leon Kopyt
Chief Executive Officer
RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, New Jersey 08109-4613
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\PHILA2\100322_5
with a courtesy copy to:
Stephen M. Cohen, Esq.
Clark Ladner Fortenbaugh & Young
One Commerce Square
2005 Market Street
Philadelphia, Pennsylvania 19103
Telephone Number: (215) 241-1800
Telecopy Number: (215) 241-1857
and
Norman Berson, Esquire
Fineman & Bach, P.C.
1608 Walnut Street
Philadelphia, PA 19103
11.2 If to the Acquiree Shareholders, to:
Martin Blaire
Lewis Road
Irvington, NY 10533
Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
Howard Ross
1260 Westover Road
Stamford, CT 06902
Marie Wolfson
210 Marc Boulevard
Boonton, NJ 07005
Alexander Valcic
412 East 55th Street
New York, NY 10022
11.3 If to the Acquiree, to:
The Consortium
277 Fairfield Road
Fairfield, NJ 07004
Telephone Number: (201) 227-3700
Telecopy Number: (201) 882-7704
with a courtesy copy to:
Joshua B. Gillon, Esquire
38
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\PHILA2\100322_5
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
New York, NY 10019
Telephone Number: (212) 956-1500
Telecopy Number: (212) 956-3252
Any such notices shall be effective when delivered in person or sent by
telecopy, one business day after being sent by overnight delivery or three
business days after being sent by registered or certified mail. Any of the
foregoing addresses may be changed by giving notice of such change in the
foregoing manner, except that notices for changes of address shall be effective
only upon receipt.
12. ARBITRATION.
If a dispute arises as to interpretation of this Agreement, it
shall be decided finally by three arbitrators in an arbitration proceeding
conforming to the Rules of the American Arbitration Association applicable to
commercial arbitration. The arbitrators shall be appointed as follows: one by
RCM, one by the Acquiree Shareholders and the third by the said two arbitrators,
or, if they cannot agree, then the third arbitrator shall be appointed by the
American Arbitration Association. The third arbitrator shall be chairman of the
panel and shall be impartial. The arbitration shall take place in Princeton, New
Jersey. The decision of a majority of the Arbitrators shall be conclusively
binding upon the parties and final, and such decision shall be enforceable as a
judgment in any court of competent jurisdiction. Each party shall pay the fees
and expenses of the arbitrator appointed by it, its counsel and its witnesses.
The parties shall share equally the fees and expenses of the impartial
arbitrator.
13. MISCELLANEOUS.
13.1 Further Assurances. At any time, and from time to time,
after the Closing Date, each party will execute such additional instruments and
take such further action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
13.2 Nature of Representations and Warranties. All of
the parties hereto are executing and carrying out the provisions of
this Agreement in reliance on the representations, warranties,
covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for, and any
investigation that they might have made or any other
representations, warranties, covenants, agreements, promises or
information, written or oral, made by the other party or parties or
any other person shall not be deemed a waiver of any breach of any
such representation, warranty, covenant or agreement.
39
<PAGE>
\PHILA2\100322_5
13.3 Survival of Representations. All covenants, agreements,
representations and warranties made herein shall survive the Closing Date for a
period of eighteen (18) months from the Closing Date, except such survival
period shall be unlimited where there is evidence of bad faith, fraud or wanton
misconduct. All covenants and agreements by or on behalf of the parties hereto
that are contained or incorporated in this Agreement shall bind and inure to the
benefit of the successors and assigns of all parties hereto.
13.4 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the
subject matter hereof. It supersedes all prior negotiations,
letters and understandings relating to the subject matter hereof.
13.5 Amendment. This Agreement may not be amended,
supplemented or modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any such amendment,
supplement or modification is sought.
13.6 Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other
parties.
13.7 Choice of Law. This Agreement shall be interpreted,
construed and enforced in accordance with the laws of the State of
New Jersey.
13.8 Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this agreement.
13.9 Number and Gender. Words used in this Agreement,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context indicates is appropriate.
13.10 Construction. The parties hereto and their respective
legal counsel participated in the preparation of this Agreement; therefore, this
Agreement shall be construed neither against nor in favor of any of the parties
hereto, but rather in accordance with the fair meaning thereof.
13.11 Effect of Waiver. The failure of any party at any time
or times to require performance of any provision of this Agreement will in no
manner affect the right to enforce the same. The waiver by any party of any
breach of any provision of this Agreement will not be construed to be a waiver
by any such party of any succeeding breach of that provision or a waiver by such
party of any breach of any other provision.
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\PHILA2\100322_5
13.12 Severability. The invalidity, illegality or
unenforceability of any provision or provisions of this Agreement will not
affect any other provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or unenforceability of a portion
of any provision of this Agreement affect the balance of such provision. In the
event that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
13.13 Binding Nature. This Agreement will be binding upon
and will inure to the benefit of any successor or successors of the
parties hereto.
13.14 No Third-Party Beneficiaries. No person shall be deemed
to possess any third-party beneficiary right pursuant to this Agreement. It is
the intent of the parties hereto that no direct benefit to any third party is
intended or implied by the execution of this Agreement.
13.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
13.16 Facsimile Signature. This Agreement may be executed
and accepted by facsimile signature and any such signature shall be
of the same force and effect as an original signature.
41
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\PHILA2\100322_5
IN WITNESS THEREOF, the parties have executed this Agreement as of the
date first above written.
RCM TECHNOLOGIES, INC.
ATTEST
By: By:
Name:
Title:
THE CONSORTIUM
ATTEST
By: By:
Name:
Title:
Martin Blaire
Barry Meyers
Howard Ross
Marie Wolfson
Alexander Valcic
\PHILA2\99664_3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of March 11, 1996 by and
among RCM Technologies, Inc., a Nevada corporation (the "Company") and the
Shareholders of The Consortium, a New Jersey corporation, listed on Schedule "A"
attached hereto and made a part hereof (the "Holders").
W I T N E S S E T H:
WHEREAS, the Company and Holders are parties to a Stock Purchase
Agreement dated as of March 1, 1996 (the "Stock Purchase Agreement") pursuant to
which the Company acquired 100% of the outstanding stock of The Consortium (the
"Acquisition");
WHEREAS, pursuant to the Acquisition, the Holders are to receive
certain shares of the Company's $.05 par value common stock (the "Common
Stock");
WHEREAS, the parties hereto desire to set forth their agreement
concerning the registration under the Securities Act of 1933, as amended of the
Common Stock issued to the Holders in connection with the Acquisition.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
(a) "Acquisition" shall mean the Acquisition by the Company of
100% of the outstanding stock of The Consortium pursuant to the terms of the
Stock Purchase Agreement entered into on March 1, 1996.
(b) "Closing" shall mean that date upon which a closing
of the Acquisition occurs.
(c) "Company" shall mean RCM Technologies, Inc.
(d) "Exchange Act" shall mean the Securities Exchange
Act of 1934.
(e) "Holders" shall mean the former shareholders of The
Consortium (identified on the signature page hereof) who have
<PAGE>
\PHILA2\99664_3
received shares of the Company's Common Stock pursuant to the
Acquisition.
(f) "Restricted Stock" shall mean the Common Stock of the
Company that has been issued to the Holders pursuant to the Acquisition and any
Common Stock issued as a dividend or distribution with respect to, or in
exchange or replacement of, such Common Stock.
(g) "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.
(h) "SEC" shall mean the United States Securities and
Exchange Commission.
(i) "Trading Day" shall mean any day on which the New
York Stock Exchange is open for trading.
Capitalized terms used in this Registration Rights Agreement and not
otherwise defined herein shall have the same meaning ascribed thereto in the
Stock Purchase Agreement.
2. Shelf Registration.
(a) RCM shall prepare and file, not later than February 15,
1997, a Registration Statement with the SEC and use its best efforts to as
promptly as possible have such Registration Statement declared effective for the
purpose of facilitating the public resale of the Restricted Stock subject to the
limitations upon resale set forth at subparagraph 2(c) hereafter, or as
otherwise contained herein. The Company 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; nor shall the
Company be restricted in any manner from including the distribution, issuance or
resale of any other securities within such Registration Statement.
(b) RCM agrees to indemnify and hold harmless each of the
Holders, requesting or joining in a registration, each underwriter (as defined
in the Securities Act) if any managing the offering of the securities
thereunder, each person who controls any such Holder or underwriter within the
meaning of Section 15 of the Securities Act and/or Section 20 of the Exchange
Act and each of the officers, directors, employees and agents of the foregoing
in their respective capacities as such, to the fullest extent
2
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\PHILA2\99664_3
permitted by law, from and against any and all actions, suits, claims,
proceedings, costs, losses, damages, judgments, amounts paid in settlement and
expenses (including without limitation reasonable attorneys' fees and
disbursements) to which any of them may become subject under the Securities Act
or otherwise insofar as the same arise out of or are based on (i) any untrue or
alleged untrue statement of any material fact contained in such Registration
Statement on the effective date thereof, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereof,
(ii) 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
or (iii) any violation by RCM of any federal or state law, rule or regulation
applicable to RCM and relating to action required of or inaction by RCM in
connection with any such registration.
(c) Public resale by the Holders of the Restricted Stock shall
be subject to the following limitations: (i) no public resales by any of the
Holders will be permitted earlier than April 1, 1997; (ii) from April 1, 1997
through March 11, 1998 (the second anniversary of the Closing) all public
resales by Martin Blaire and Barry Meyers, in the aggregate, will be limited to
that number of shares of Restricted Stock that upon resale will yield gross
proceeds to Messrs. Blaire and Meyers of $600,000, and no public resales will be
permitted during this period by any of the other Holders; (iii) from March 11,
1998 (the second anniversary of the Closing through March 11, 1999 (the third
anniversary of the Closing), each of the Holders will be permitted to effectuate
the public resale of shares of Restricted Stock limited in a manner calculated
under Rule 144(e) under the Act (as such Rule is in effect on the Closing), as
though such shares of Restricted Stock were treated as "restricted securities"
held by "affiliates" or "persons other than affiliates," whichever the case may
be, to the extent such terms are defined under Rule 144, however, in no event
greater than 50,000 shares per week per Holder; and (iv) following March 11,
1999 (the third anniversary of the Closing), public resales of the Restricted
Stock will be permitted without regard to numerical limitations under this
subparagraph 2(c).
3. Registration Procedures. The Company shall:
(a) prepare and file with the Commission a Registration
Statement with respect to the Restricted Stock by no later than February 15,
1997 and use its best efforts to cause such Registration Statement to become
effective as promptly as possible and to remain effective until all of the
Restricted Stock has been sold pursuant thereto;
3
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\PHILA2\99664_3
(b) prepare and file with the Commission 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 to 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
Holders' intended method of disposition set forth in such Registration Statement
for such period;
(c) furnish to each Holder and to each underwriter, if any,
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 Holders, 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 Holder 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 therein not misleading in light of the
circumstances under which they were made;
(f) make available for inspection by each Holder, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
Holder 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 Holder, underwriter, attorney, accountant or agent in connection with such
Registration Statement;
4
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\PHILA2\99664_3
(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 of all of the Restricted Stock, 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;
(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;
(i) enter into normal and customary underwriting arrangements
or an underwriting agreement and take all other reasonable and customary actions
if the Holders sell their shares of Restricted Stock pursuant to an underwriting
(however, in no event shall the Company, in connection with such underwriting,
be required to undertake any special audit of a fiscal period in which an audit
is normally not required);
(j) notify the Holders if there are any amendments to the
Registration Statement, any requests by the SEC to supplement or amend the
Registration Statement, or of any threat by the SEC or state securities
commission to undertake a stop order with respect to sales under the
Registration Statement; and
(k) cooperate in the timely removal of any restrictive legends
from the shares of Restricted Stock in connection with the resale of such shares
covered by an effective Registration Statement.
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 paragraphs (2) and (3) 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,
"blue sky" fees, 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
5
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\PHILA2\99664_3
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) Except as otherwise provided herein, the Company will pay
all Registration Expenses in connection with the Registration Statement filed
pursuant to paragraphs (2) and (3) of this Agreement. All Selling Expenses in
connection with any Registration Statement filed pursuant to paragraphs (2) and
(3) of this Agreement shall be borne by the participating Holders in proportion
to the number of shares sold by each, or by such persons other than the Company
(except to the extent the Company may be a seller) as they may agree.
5. Obligations of Holder.
(a) In connection with each registration hereunder, each
selling Holder will furnish to the Company in writing such information with
respect to such seller and the securities held by such seller, and the proposed
distribution by them 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 such seller's Restricted Stock in the
Registration Statement. Each selling 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 therein not
misleading in light of the circumstances in which they were made.
(b) In connection with each registration pursuant to paragraph
(2) of this Agreement, the Holders included therein 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.
6. Information Blackout.
(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 Holders 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, all Holders shall suspend
sales of Restricted Stock pursuant to such registration statement until the
earlier of:
(i) thirty (30) days after the Company makes
such good faith determination, and
(ii) such time as the Company notifies the
Holders 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.
6
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\PHILA2\99664_3
7. 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 Holders.
(d) Notices. All communications under this Agreement
shall be sufficiently given if delivered by hand or by overnight
courier 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
Telephone Number: (609) 486-1777
Telecopy Number: (609) 488-8833
with a copy to:
Stephen M. Cohen, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone Number: (215) 241-1868
Telecopy Number: (215) 241-1857
(ii) if to the Holders, to:
Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
7
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\PHILA2\99664_3
Martin Blaire
Lewis Road
Irvington, NY 10533
Marie Wolfson
210 Marc Boulevard
Boonton, NJ 07005
Howard Ross
1260 Westover Road
Stamford, CT 06902
Alexander Valcic
412 East 55th Street
New York, NY 10022
with a copy to:
Joshua B. Gillon, Esquire
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
New York, NY 10019
Telephone Number: (212) 956-1500
Telecopy Number: (212) 956-3252
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 and
understandings between the parties with respect to such subject matter.
8
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\PHILA2\99664_3
ATTEST: RCM TECHNOLOGIES, INC.
By:____________________________ By: __________________
Name:
Title:
- ----------------------------
Barry Meyers
- ----------------------------
Martin Blaire
- ----------------------------
Marie Wolfson
- ----------------------------
Howard Ross
- -----------------------------
Alexander Valcic
<PAGE>
\PHILA2\99664_3
SCHEDULE A
List of Shareholders of The Consortium
Martin Blaire
Barry Meyers
Marie Wolfson
Howard Ross
Alexander Valcic
10
\PHILA2\99813_4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of March 11, 1996 among
RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"), MARTIN BLAIRE and BARRY
MEYERS (in the aggregate, the "Acquiree Shareholders") and Acquest
International, L.P., as escrow agent (the "Escrow Agent").
WHEREAS, RCM, Acquiree, Acquiree Shareholders and three other
shareholders of Acquiree have previously entered into a Stock Purchase Agreement
dated as of March 1, 1996 (the "Stock Purchase Agreement"), providing for the
purchase of 100% of the outstanding stock of Acquiree by RCM on the Closing Date
(the "Acquisition"); and
WHEREAS, the Stock Purchase Agreement provides in Section 2.4 for the
establishment of an escrow fund whereby a portion of the RCM Shares consisting
of 1,625,000 shares of the Common Stock of RCM (the "Escrow Shares") shall upon
the closing of the Acquisition be placed in escrow to secure the obligation of
the Acquiree Shareholders to pay the Excess Tax Liability under Section 2.3 of
the Stock Purchase Agreement and for possible indemnification claims presented
by RCM against Acquiree Shareholders under Section 10 of the Stock Purchase
Agreement, in each case in the manner and to the extent set forth herein and in
the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of RCM, Acquiree and Acquiree
Shareholders entering into the Stock Purchase Agreement and of the mutual
premises and agreements herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
SECTION 1. Definitions, Other Agreements.
(a) All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Stock Purchase
Agreement. In addition, the term "Escrow Fund" and references to the Escrow
Shares when used at any time shall mean all shares of common stock of RCM owned
by Acquiree Shareholders held in escrow hereunder by the Escrow Agent.
(b) It is expressly understood and agreed by the parties hereto that
all references in this Agreement to the Stock Purchase Agreement and to any
exhibits to such Stock Purchase Agreement are for the convenience of the parties
hereto other than the Escrow Agent, and the Escrow Agent shall have no
obligations or duties with respect thereto other than the obligation to refer to
the Stock Purchase Agreement for the purpose of determining the definitions of
certain capitalized terms used herein and not otherwise defined herein or to
interpret any provisions of such other agreements referred to in this Agreement
for purposes of implementation thereof.
SECTION 2. Appointment of Escrow Agent.
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\PHILA2\99813_4
Acquest International, L.P. hereby accepts its appointment as Escrow Agent to
serve in accordance with the terms, conditions and provisions of this Agreement.
The acceptance by the Escrow Agent of its duties under this Agreement is subject
to the terms and conditions set forth at Section 7 hereafter, which the parties
to this Agreement hereby agree shall govern and control with respect to the
rights, duties, liabilities and immunities of the Escrow Agent.
SECTION 3Establishment of Escrow Fund.
(a) On the Closing Date, Acquiree Shareholders shall, pursuant to
Section 2.4 of the Stock Purchase Agreement, deposit with the Escrow Agent the
stock certificates evidencing the Escrow Shares (which consist of 1.625 million
shares of RCM Common Stock), all of which shall be registered on the share
transfer books of RCM in the names of the Acquiree Shareholders who own the
Escrow Shares comprising the Escrow Fund. If dividends are paid, or a
distribution is made, by RCM with respect to the Escrow Shares, in cash or in
property, such dividends or distributions shall also be held as a part of the
Escrow Fund. In the event of any stock splits, recapitalizations or other
adjustments to the capital stock of RCM, the resulting number of shares or other
securities which the Escrow Shares convert shall be deemed the Escrow Fund.
(b) By virtue of the Acquiree Shareholders' execution of this Escrow
Agreement, the Acquiree Shareholders have, without any further act of any
Acquiree Shareholder, consented to: (i) the establishment of this escrow
pursuant to the Stock Purchase Agreement in the manner set forth herein, and
(ii) all of the other terms, conditions and limitations in this Agreement.
SECTION 4Operation and Administration of the Escrow Fund.
(a) To the extent provided herein and in the Stock Purchase Agreement,
the Escrow Fund shall be established and thereafter applied (i) to the Excess
Tax Liability which may be owed by the Acquiree Shareholders to RCM as provided
in Section 2.3 of the Stock Purchase Agreement; and (ii) to the payment of
indemnification claims asserted by RCM during the eighteen (18) month period
following Closing ("Claims") for the benefit of RCM as provided in Section 10 of
the Stock Purchase Agreement.
(b) RCM shall make application to the Escrow Agent, with a copy to the
Acquiree Shareholders (the "Application"), if it has incurred or suffered
damages or losses (i) for any unpaid Excess Tax Liability by virtue of Acquiree
Shareholders' failure to timely pay such liabilities pursuant to Section 2.3 of
the Stock Purchase Agreement or (ii) for damages or losses to which it is
entitled to indemnification under Section 10 of the Stock Purchase Agreement.
The Application shall identify the amount of the damages or losses
2
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\PHILA2\99813_4
(the "Claim Amount") and state that the Acquiree Shareholders have elected to
apply the Claim Amount against the Escrow Shares.
(c) Unless the Escrow Agent is otherwise informed in writing by either
or both of the Acquiree Shareholders within 20 days from the date of the
Application, that either or both of them dispute the Claim Amount or the
application thereof against the Escrow Shares, then the Escrow Agent shall
release to RCM for cancellation that number of Escrow Shares as are equal in
"value" to the Claim Amount. For this purpose, the "value" of the Escrow Shares
shall be determined by the average closing price of the shares of Common Stock
of RCM as traded on The NASDAQ Stock Market or other principal exchange upon
which its shares are regularly traded for the twenty (20) trading days
immediately preceding the date of the Claim Notice. The Escrow Agent shall
release the Escrow Shares to RCM for cancellation on a prorata basis based upon
the proportionate interest of each of the Acquiree Shareholders in and to the
Escrow Fund.
(d) If the Escrow Agent is notified that either or both of the Acquiree
Shareholders in good faith contest the Claim Amount or the application of the
Claim Amount against the Escrow Shares, then, and in that event, the Escrow
Agent shall be permitted to submit the issues in dispute to arbitration in
accordance with the provisions of Section 13 of the Stock Purchase Agreement.
Once these issues have been resolved in accordance with the arbitration
procedure set forth within the Stock Purchase Agreement and if the resolution of
the dispute is such that the Acquiree Shareholders owe money to RCM, then
Acquiree Shareholders shall have 10 days to satisfy such liability, and if such
liability is not timely satisfied, then in such event, the Escrow Agent shall
release to RCM for cancellation that number of Escrow Shares as are equal in
"value" to the amount of the Acquiree Shareholders' liability determined in
arbitration; whereupon such Claim Amount shall be deemed satisfied in full by
virtue of the application of such Escrow Shares. For this purpose, the term
"value" of the Escrow Shares shall be determined in accordance with subparagraph
(c) above.
SECTION 5. Release of Escrow Shares; Termination.
(a) Subject to the provisions of subparagraph (c) below, on
the date that is one (1) year following the Closing Date (the "Determination
Date"), the Escrow Agent shall make a determination of the greater of: (i) 10%
of the number of shares of RCM Common Stock issued to the Acquiree Shareholders
at the Closing, as adjusted for any subsequent stock splits, recapitalizations
or any other adjustment to the capital stock of RCM; or (ii) such number of
shares of RCM Common Stock with a value equal to RCM's independent accountants'
good faith estimate of the Excess Tax Liability (which estimate RCM shall cause
to be delivered to the
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\PHILA2\99813_4
Acquiree Shareholders and the Escrow Agent prior to the Determination Date). The
number of Escrow Shares so determined by the Escrow Agent shall hereafter be
referred to as the "Remaining Escrow Shares".
(b) The Remaining Escrow Shares shall continue to be held in escrow
subject to the terms of this Agreement and shall continue to be subject to
cancellation in the manner provided for at Section 4 until the eighteenth (18th)
month following the Closing Date.
(c) In addition to the Remaining Escrow Shares, on the Determination
Date, upon written notification from any of the parties hereto, the Escrow Agent
shall retain in escrow that number of Escrow Shares that may, upon reasonable
estimate, be necessary in order to satisfy any pending, outstanding or contested
Claims under the Stock Purchase Agreement. These Escrow Shares shall continue to
be held in escrow until resolution of these claims.
(d) Escrow Shares in excess of the sum of: (i) the Remaining
Escrow Shares; and (ii) the Escrow Shares retained pursuant to
subparagraph (c) above shall be released to the Acquiree
Shareholders on the Determination Date.
(e) On the date that is eighteen (18) months following the Closing Date
(the "Release Date"), the Escrow Agent shall continue to retain in escrow
subject to the terms of this Agreement any Escrow Shares that, in RCM's
independent accountants' good faith estimate (which estimate RCM shall cause to
be delivered to the Acquiree Shareholders and the Escrow Agent prior to the
Release Date), may be required to satisfy the Excess Tax Liability, to the
extent that the Excess Tax Liability has not been satisfied otherwise as of that
date, and any Escrow Shares that may, upon reasonable estimate, be necessary to
satisfy any pending, outstanding or contested RCM Claims timely submitted
pursuant to Section 10 of the Stock Purchase Agreement executed on even date
herewith. The balance of the Escrow Shares shall be released to the Acquiree
Shareholders. The Escrow Shares retained pursuant to this subparagraph shall
remain subject to escrow until resolution of the matters identified herein.
(f) Upon resolution of the Excess Tax Liability pursuant to Section 2.3
of the Stock Purchase Agreement, the portion of the Escrow Shares held in Escrow
to secure such liability shall be released as provided therein.
(g) Once all of the Escrow Shares have been either released to RCM for
cancellation or returned to the Acquiree Shareholders, the provisions of this
Escrow Agreement shall no longer be of any force and effect and this Escrow
Agreement shall be deemed to have terminated.
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\PHILA2\99813_4
SECTION 6. Fees and Expenses of Escrow Agent.
The Escrow Agent shall be entitled to reimbursement of all reasonable
out-of-pocket expenses incurred by the Escrow Agent in connection with the
performance of his functions hereunder, including reasonable fees and
disbursements of counsel. The responsibility for payment of reimbursements to
the Escrow Agent shall be assumed by RCM.
SECTION 7. Duties and Liabilities of the Escrow Agent.
(a) The Escrow Agent shall act hereunder as depositary only, and it
shall not be responsible or liable in any manner whatever for any determinations
regarding the cancellation and forfeiture of the Escrow Shares to be made
pursuant to Section 4 hereof. It is agreed that the duties and obligations of
the Escrow Agent are those herein specifically provided and no other. Except as
otherwise specifically provided in this Agreement, the Escrow Agent shall not
have any liability under, nor duty to inquire into, the terms and provisions of
any agreement or instrument, other than this Agreement. The duties of the Escrow
Agent are ministerial in nature, and the Escrow Agent shall not incur any
liability whatsoever other than for its own willful misconduct or gross
negligence.
(b) The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto. The Escrow Agent shall not have any responsibility
for the genuineness or validity of any document or other material presented to
or deposited with it nor shall it have any liability for any action taken,
suffered or omitted in accordance with any written instructions or certificates
given to it hereunder and believed by it in good faith to be what it purports to
be and to be signed by the proper party or parties, nor for retaining the Escrow
Fund in the absence of instructions to the contrary.
(c) The Escrow Agent shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection with this Agreement, except its own gross negligence or willful
misconduct.
(d) The Escrow Agent may consult with, and obtain the advice of, legal
counsel selected by it in the event of any question as to any of the provisions
hereof or its duties hereunder, and the Escrow Agent shall incur no liability
and shall be fully protected for any action taken, suffered or omitted by it in
good faith in accordance with the advice of such counsel, provided that the
Escrow Agent shall have used reasonable care in the selection of such counsel.
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\PHILA2\99813_4
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall have received instructions, claims or
demands from any party hereto which, in its reasonable opinion, conflict with
any of the provisions of this Agreement or with instructions, claims or demands
of any other party hereto, the Escrow Agent shall refrain from taking any action
and its sole obligation shall be to keep safely all property held in escrow
hereunder until it shall be directed otherwise in writing by all of the
surviving parties hereto or by a final order or judgment of an arbitration panel
or court of competent jurisdiction, or an award of an arbitrator pursuant to an
arbitration conducted pursuant to Section 13 of the Stock Purchase Agreement.
(f) The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to initiate or defend any
legal proceedings which may be instituted against it in respect of the subject
matter of this Agreement, provided that the Escrow Agent shall at all times take
such action as is reasonably necessary to keep safely all property held in
escrow hereunder. If the Escrow Agent does elect to so act or is required to so
act in order to keep safely all property held in escrow hereunder, the Escrow
Agent will do so only to the extent that it is indemnified to its reasonable
satisfaction against the cost and expense of such defense or initiation.
SECTION 8. Liability of Representative.
The Representative shall incur no liability with respect to any action
taken or suffered by him in his capacity as Representative in reliance upon any
note, direction, instruction, consent, statement or other documents believed by
him to be genuinely and duly authorized, nor for other action or inaction except
his own willful misconduct or gross negligence. The Representative may, in all
questions arising under this Escrow Agreement, rely on the advice of counsel and
for anything done, omitted or suffered in good faith by the Representative based
on such advice, the Representative shall not be liable to anyone. The
Representative shall be indemnified and saved harmless by the Acquiree
Shareholders from all losses, costs and expenses which he may incur as a result
of involvement in any legal proceedings arising from the performance of his
duties hereunder.
SECTION 9. Amendment.
This Agreement may be amended, modified or rescinded by and upon
written notice to the Escrow Agent given by RCM, on the one hand, and the
Representative, on the other hand; provided that the rights, duties,
liabilities, indemnities and immunities of the Escrow Agent hereunder may not be
adversely affected at any time without the written consent of the Escrow Agent;
and provided further that the interests of the Acquiree Shareholders may not be
6
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\PHILA2\99813_4
adversely affected without the written consent of all of the
Acquiree Shareholders.
SECTION 10. Voting of Escrow Shares.
All rights to vote the Escrow Shares while they are part of the Escrow
Fund shall be retained by the Acquiree Shareholders. Neither the Representative
nor the Acquiree Shareholders shall have any right to transfer or assign their
interests in Escrow Shares in the Escrow Fund during such period of time as such
Shares remain a part of the Escrow Fund unless RCM shall first have consented
thereto in writing and provided that any such transferee shall deliver to the
Escrow Agent a duly signed stock power covering such RCM Shares and the Escrow
Agent shall hold such transferee's shares and stock powers in escrow subject to
this Agreement.
SECTION 11. Notices.
Any notices or other communications required or permitted hereunder
shall be sufficiently given if sent by certified mail, postage prepaid and
return receipt requested, or by hand delivery or by telecopy (promptly confirmed
by delivery of an original copy of such notice or communication):
(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
Telephone Number: (609) 486-1777
Telecopy Number: (609) 488-8833
with a copy to:
Stephen M. Cohen, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone Number: (215) 241-1868
Telecopy Number: (215) 241-1857
(ii) If to the Acquiree Shareholders, to:
Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
Martin Blaire
Lewis Road
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\PHILA2\99813_4
Irvington, NY 10533
with a copy to:
Joshua B. Gillon, Esquire
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
New York, NY 10019
Telephone Number: (212) 956-1500
Telecopy Number: (212) 956-3252
SECTION 12. Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit of
the successors and permitted assigns of each of the parties hereto.
SECTION 13. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 14. Governing Law.
This Agreement shall be governed by and construed and interpreted in
accordance with the law of the State of New Jersey applicable to contracts
executed and to be performed entirely within said State.
SECTION 15. Severability.
In case any provision in this Agreement shall be held invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions hereof will not in any way be affected or impaired thereby, unless
the provisions held invalid shall substantially impair the benefits of the
remaining portions of this Agreement.
SECTION 16. Consent to Limited Jurisdiction.
The Escrow Agent hereby agrees that any legal action or proceeding with
respect to disputes arising out of this Agreement not otherwise subject to
arbitration under Section 13 of the Stock Purchase Agreement may be brought in
the courts of the State of New Jersey or of the United States of America for the
District of New Jersey, and, by execution and delivery of this Agreement, the
Escrow Agent irrevocably accepts for itself and in respect of the property held
by it as Escrow Agent hereunder the jurisdiction of the aforesaid courts, it
being understood and agreed that such consent to jurisdiction is for the sole
and limited purpose of resolving disputes under this Agreement and shall in no
way be
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\PHILA2\99813_4
deemed to be a general and unconditional consent to the
jurisdiction of the aforesaid courts.
SECTION 17. Resignation and Removal of Escrow Agent.
(a) The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving written notice of its resignation to each of the parties hereto, at
their respective addresses set forth in Section 11 of this Agreement, at least
thirty (30) days prior to the date specified for such resignation to take
effect. The Escrow Agent may be removed at any time by an instrument or
concurrent instruments in writing delivered to the Escrow Agent and signed by
each of the parties hereto (other than the Escrow Agent).
(b) If at any time the Escrow Agent shall resign or shall be removed in
accordance with the provisions of clause (a) above, RCM and the Representative
shall use their respective best efforts to jointly appoint a successor escrow
agent under this Agreement. In the event of the resignation or removal of the
Escrow Agent, if no appointment of a successor escrow agent shall have been made
pursuant to the preceding sentence within the thirty (30) day period referred to
in the first sentence of paragraph (a) above, then the retiring Escrow Agent may
apply to any court of competent jurisdiction to appoint a successor escrow
agent. Such court may thereupon, after such notice, if any, as such court may
deem proper and prescribe, appoint a successor escrow agent hereunder.
SECTION 18. Indemnification. RCM and the Acquiree Shareholders, jointly
and severally agree to indemnify, defend and hold the Escrow Agent harmless from
and against any and all loss, damage, liability and expense that may be incurred
by the Escrow Agent arising out of or in connection with its duties, obligations
or performance as Escrow Agent hereunder, except as caused by its negligence or
willful misconduct, including without limitation the reasonable legal costs and
expenses of defending itself against any claim or liability in connection with
its performance hereunder. The terms of this Section 18 shall survive the
termination of this Agreement and, with respect to claims arising in connection
with the Escrow Agent's duties while acting as such, the resignation or removal
of the Escrow Agent. The Escrow Agent agrees to notify RCM and the
Representative in writing of the written assertion of a claim against the Escrow
Agent or of any suit or proceeding commenced against the Escrow Agent promptly
after the Escrow Agent has received any such written assertion of a claim or has
been served with the summons or other legal process, in each case giving
information as to the nature and basis of the claim, but in no event will the
failure to give such notice affect the obligation of RCM to indemnify the Escrow
Agent pursuant to this Section 18 unless the rights of RCM and Acquiree
Shareholders shall have been materially impaired by such failure. Each of RCM
and the Acquiree Shareholders will be entitled to participate at its own expense
in the defense of any suit or proceeding brought to enforce any such
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\PHILA2\99813_4
claim and, if it so elects in writing, may assume the entire defense and control
of any such suit or proceeding. Neither RCM nor the Acquiree Shareholders shall
be liable for any counsel fees or other expenses incurred by the Escrow Agent
after the date that RCM or the Acquiree Shareholders shall have so elected to
assume the defense and control of any such suit or proceeding. In addition,
neither RCM nor the Acquiree Shareholders shall be liable for any settlement of
any such suit, proceeding or claim without the prior written consent of RCM and
the Representative.
SECTION 19. Third Party Beneficiary Rights. Each Acquiree Shareholder
is an intended third party beneficiary of this Agreement and, from and after the
Closing Date, each such Acquiree Shareholder shall have the right to enforce its
rights and the obligations of each of the other parties to this Agreement to the
extent the Representative fails to do so.
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\PHILA2\99813_4
IN WITNESS WHEREOF, the parties hereto other than the Representative
have duly caused this Agreement to be executed, and the Representative has duly
executed this Agreement, as of the date first written above.
ATTEST: RCM TECHNOLOGIES, INC.
By:____________________________ By: __________________________
Name:
Title:
- --------------------------------
Barry Meyers
- --------------------------------
Martin Blaire
- ------------------------------- -------------------------------
Escrow Agent Street Address
- --------------------------------
City, State, Zip Code
Telephone No.___________________
Telefax No._____________________
\PHILA2\104116_2
INVESTOR REPRESENTATION CERTIFICATE
RCM Technologies, Inc.
2500 McClellan Avenue
Suite 350
Pennsauken, New Jersey 08109-4613
Gentlemen:
This Certificate is being delivered in connection with a certain Stock
Purchase Agreement by and among the undersigned, RCM Technologies, Inc. ("RCM"),
and The Consortium ("Acquiree") dated March 1, 1996, pursuant to which RCM has
agreed to issue to the undersigned certain shares of its common stock (the
"Shares") in consideration for the undersigned's shares of Acquiree. In
connection therewith, the undersigned acknowledges and attests to the following,
all of which acknowledgements and attestations have been relied upon by RCM in
agreeing to sell the Shares to the undersigned pursuant to the Stock Purchase
Agreement:
(i) except with respect to the rights granted to the undersigned
pursuant to the Registration Rights Agreement also entered into on even date
herewith, the Shares are not being registered under the Securities Act of 1933,
as amended (the "Act") on the basis of the statutory exemption provided by
Section (4)2 thereof, relating to transactions not involving a public offering,
and that RCM's reliance on the statutory exemption thereof is based in part on
the representations made by the undersigned in this Certificate;
(ii) the undersigned acknowledges and represents: (a) that he has
reviewed such quarterly, annual and periodic reports of RCM as have been filed
with the Securities and Exchange Commission (the "Reports") pursuant to the
Exchange Act of 1934 and that he has such knowledge and experience in financial
and business matters that he is capable of utilizing the information set forth
therein, concerning RCM to evaluate the risk of investing in RCM; (b) that he
has been advised that the Shares to be issued to him by RCM constitute
"restricted securities" as defined in Rule 144 promulgated under the Act, and
accordingly, will not be registered under the Act, except as otherwise provided
in the Registration Rights Agreement, and, therefore, he may only be able to
sell or otherwise dispose of such Shares in accordance with Rule 144, pursuant
to an effective Registration Statement or otherwise pursuant to an exemption
form registration under the Act; (c) that the Shares so issued are being
acquired by him for his own benefit and on his own behalf for investment
purposes and not with a view to, or for resale in connection with, a public
offering or redistribution thereof; (d) that the Shares so issued will not be
resold (i) without registration thereof under the Act (unless in
<PAGE>
\PHILA2\104116_2
the opinion of counsel acceptable to RCM, an exemption from such registration is
available) or (ii) in violation of any law; and (e) that Certificate or
Certificates representing the Shares to be issued will be imprinted with a
legend in form and substance substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, BASED ON AN OPINION LETTER OF COUNSEL FOR THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION. THE CERTIFICATES REPRESENTING THESE SECURITIES ARE
SUBJECT TO CERTAIN RESTRICTIONS UPON RESALE AND TO THE TERMS
AND PROVISIONS OF A STANDSTILL AND SHAREHOLDERS' AGREEMENT
DATED MARCH 11, 1996.
and RCM is hereby authorized to notify its transfer agent of the status
of the Shares and to take such other action including, but not limited to, the
placing of a "stop-transfer" order on the transfer agent's books and records to
assure compliance with the Securities Act of 1933, as amended.
(iii) the undersigned has been afforded the opportunity to review and
is familiar with the Reports of RCM and has based his decision to be a party to
the Stock Purchase Agreement solely on the information contained therein;
(iv) the undersigned is able to bear the economic risks of an
investment in the Shares and he represents and warrants that his overall
commitment to his investments which are not readily marketable is not
disproportionate to his net worth;
(v) (a) he is at least 21 years of age; (b) he has adequate means of
providing for his current needs and personal contingencies; (c) he has no need
for liquidity in his investment in the Shares; (d) he maintains his domicile and
is not a transient or temporary resident at the address shown above; and (e) all
of his investments and commitments to non-liquid assets and similar investments
are, and after his acquisition of the Shares, will be reasonable in relation to
his net worth and current needs;
(vi) the undersigned understands that no federal or state
agency has approved or disapproved the Shares, passed upon or
2
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\PHILA2\104116_2
endorsed the merits of the sale of the Shares set forth within the Stock
Purchase Agreement or made any finding or determination as to the fairness of
the Shares for investment; and
(vii) the undersigned recognizes that the Shares of common stock of RCM
are presently eligible for trading on The NASDAQ Stock Market-Small Cap Index,
however, that RCM has made no representations, warranties or assurances as to
the future trading value of the Shares, whether a public market will continue to
exist for the resale of the Shares, or whether the Shares can be sold at a price
reflective of past trading history at any time in the future.
IN WITNESS WHEREOF, the undersigned has executed this Investor
Representation Certificate on this 11th day of March, 1996.
- ------------------------- --------------------------------
Witness
3
\PHILA2\99917_4
STANDSTILL AND SHAREHOLDERS' AGREEMENT
This Agreement dated as of March 11, 1996, between each of the persons
identified on Schedule A hereto (the "Holders") and RCM Technologies, Inc., a
Nevada corporation (the "Company").
R E C I T A L S:
WHEREAS, the Company and Holders are parties to a Stock Purchase
Agreement dated as of March 1, 1996 (the "Stock Purchase Agreement") pursuant to
which the Company acquired 100% of the outstanding stock of The Consortium, a
New Jersey corporation (the "Acquiree");
WHEREAS, the Holders represent the former holders of 100% of
the outstanding capital stock of Acquiree;
WHEREAS, as a result of a closing under the Stock Purchase Agreement,
Holders acquired 6,500,000 shares of the Common Stock of the Company (the "RCM
Shares");
WHEREAS, the parties desire to set forth certain agreements concerning
the RCM Shares and other matters.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions
(a) "Acquiree" shall mean The Consortium, a New Jersey
corporation.
(b) "Company" shall mean RCM Technologies, Inc., a
Nevada corporation.
(c) "Holders" shall mean the former shareholders of The
Consortium all of whom received RCM Shares pursuant to the Stock Purchase
Agreement.
(d) "Stock Purchase Agreement" shall mean that agreement
entered into as of March 1, 1996, among the Company, the Holders and Acquiree.
(e) "Voting Securities" shall mean all classes of capital
stock of the Company which are then entitled to vote generally in the election
of directors of the Company.
Unless otherwise indicated herein, any capitalized terms utilized in
this Agreement shall have the meaning ascribed thereto in the Stock Purchase
Agreement.
<PAGE>
\PHILA2\99917_4
2. Covenants of Holders
(a) During the term identified in subparagraph (b) below:
(i) Each of the Holders shall vote all Voting
Securities owned by him in connection with the election of directors of the
Company for all of the nominees of a majority of the Board of Directors of the
Company and, unless the Company otherwise consents in writing, on all other
matters to be voted on by the holders of Voting Securities, in accordance with
the recommendation of the majority of the Board of Directors; provided that the
Voting Securities owned by Holders may be voted as such members determine in
their sole discretion on any Significant Event. As used herein, the term
"Significant Event" means any (A) sale of substantially all of the assets of the
Company; (B) acquisition of the Company by a third party through a merger
transaction in which the Company is the target company; or (C) transaction or
series of related transactions which results in the issuance and/or sale by the
Company of more than 20% of the outstanding capitalization on a fully diluted
basis, if that on a proforma basis, the proportionate net stockholders' equity
of the Holders after such proposed transaction would be diluted. The Holders, as
holders of Voting Securities, shall be present, in person or by proxy, at all
meetings of shareholders of the Company so that all Voting Securities
beneficially owned by them may be counted for the purpose of determining the
presence of a quorum at such meetings.
(ii) No Holder shall deposit any Voting Securities
in a voting trust or subject any Voting Securities to any arrangement or
agreement with respect to the voting of such Voting Securities, except in
connection with a transfer permitted under 2(a)(v)(D).
(iii) No Holder shall solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to the recommendation of the majority of
the Board of Directors of the Company with respect to any matter.
(iv) No Holder shall join a partnership, limited
partnership, limited liability company, limited liability partnership, syndicate
or other group or otherwise act in concert with any person, for the purpose of
acquiring, holding, voting or disposing of Voting Securities, or otherwise
become a "person" within the meaning of Section 13(d)(3) of the Exchange Act,
other than with other Holders.
(v) In addition to the limitations upon public
2
<PAGE>
\PHILA2\99917_4
resale contained in Section 2(c) of the Registration Rights Agreement executed
on even date herewith by and among the Company and the Holders (the
"Registration Rights Agreement"), no Holder shall, directly or indirectly, offer
or sell or transfer any Voting Securities except (A) to another Holder; (B) in
gift or other similar transactions not involving sales for consideration, to
family members or trusts, provided, however, that such family members (or
trustee) as a condition to such transfer agree in writing to be bound by the
terms of this Agreement as if they were a Holder; (C) in other transactions in
which Voting Securities are sold or transferred to any person or related group
of persons who would immediately thereafter, to the knowledge of any Holder,
own, or have the right to acquire Voting Securities representing no more than
one percent of the total combined voting power of all Voting Securities then
outstanding; or (D) as a result of any pledge or hypothecation to a financial
institution to secure a bona fide loan, or the foreclosure of any lien or
encumbrance which might be placed upon any Voting Securities (whether
voluntarily or involuntarily).
(b) The covenants identified in Section 2(a)(i)-(v) shall
continue in full force and effect until the earlier of (i) the date upon which
Leon Kopyt no longer serves as an officer of the Company; or (ii) six (6) months
following the date upon which both Messrs. Blaire and Meyers cease to be
employees of the Company (the "Termination Date"), provided, however, that the
Termination Date shall be deemed to occur on any such earlier date that the
employment of both of Messrs. Blaire and Meyers is terminated without cause.
3. Covenants Regarding Board Representation
(a) Effective April 15, 1996, the Company shall (i) increase
its Board of Directors from five (5) members to seven (7) members; (ii) appoint
Messrs. Blaire and Meyers to such openings as a Class C and Class A member,
respectively; and (iii) appoint Messrs. Blaire and Meyers to the Executive
Committee of the Board of Directors of the Company.
(b) The Company shall (i) continue to nominate Messrs. Blaire
and Meyers as management nominees for election to the Board of Directors upon
expiration of their respective terms and (ii) cause Messrs. Blaire and Meyers to
be appointed to the Executive Committee of the Board of Directors, for so long
as: (A) the Holders, in the aggregate, continue to own, directly or
beneficially, 50% or more of the RCM Shares (as adjusted by any stock splits,
recapitalization or other adjustments to the capital stock of the Company), and
(B) either of Messrs. Blaire or Meyers remain as a management level employee of
the Company; provided,
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\PHILA2\99917_4
however, that: (X) in the event only one of Messrs. Blaire or Meyers is a
management level employee, then only that individual shall be entitled to the
rights set forth in clauses (i) and (ii) hereof; and (Y) the provisions of
clause (B) above shall not be effective to abrogate the Company's obligations in
clauses (i) and (ii) above if the employment of either or both of Messrs. Blaire
and Meyers is terminated by the Company without cause; in which case the Company
shall remain obligated to undertake those actions identified in clauses (i) and
(ii) hereof for the remaining period of any employment agreements pursuant to
which Messrs. Blaire or Meyers were employed upon such termination.
4. Negative Covenant
The Company shall not undertake the corporate actions
described below without the written consent of either of Messrs.
Blaire or Meyers:
(a) the sale of all or substantially all of the assets
of the Company on a consolidated basis;
(b) the acquisition of the Company by a third party
through a merger transaction in which the Company is the target
Company; or
(c) a transaction or series of related transactions that
result in the issuance and/or sale by the Company of more than 20% of its
outstanding capital stock of the Company outstanding at that time, if, on a
proforma basis, the proportionate net stockholders' equity of the Holders
immediately after the completion of such proposed transaction would be diluted.
Notwithstanding the foregoing, no such written consent shall
be required if: (i) the Holders, in the aggregate, own, directly or
beneficially, less than 50% of the RCM Shares (subject to adjustment for stock
splits, recapitalization or other adjustments to the capital stock of the
Company); or (ii) neither Messrs. Blaire nor Meyers, nor their designees
continue to serve on the Board of Directors of the Company; or (iii) the
Holders, in the aggregate, own beneficially less than 15% of the outstanding
capital stock of the Company.
5. Termination of Prior Shareholders Agreements - Release of
Acquiree
(a) The execution of this Agreement by the Holders shall
constitute the formal termination of any and all prior shareholders
agreements or arrangements in their former capacity as holders of
the common stock of Acquiree, including, but not limited to: (i)
4
<PAGE>
\PHILA2\99917_4
Employee Shareholder Agreement dated July 6, 1995 between Acquiree and Alexander
Valcic; (ii) Employee Shareholder Agreement dated June 29, 1995 between Acquiree
and Howard Ross; (iii) Employee Shareholder Agreement dated June 30, 1995
between Acquiree and Marie Wolfson; and (iv) Shareholders Agreement dated
September 25, 1992 between Acquiree, Martin L. Blaire and Barry S. Meyers, all
as amended or supplemented from time to time.
(b) Each of the Holders, individually, do hereby remise,
release and forever discharge Acquiree, as well as each of its directors and
officers (the "Releasees") of and from any and all manner of actions, causes of
action, suits, debts, accounts, bonds, covenants, agreements, understandings,
contracts, controversies, judgments, damages, claims, liabilities and demands of
any kind or nature whatsoever, at law or in equity, including but not limited to
those matters arising under any and all Shareholders Agreements or similar
arrangements with Acquiree, whether such be presently known or unknown, which
against any of the Releasees the Holders ever had, now have or hereafter can
have or may claim to have for or by reason of any cause, matter or thing
whatsoever, from the beginning of the world to the date hereof; provided,
however, notwithstanding the foregoing, the Holders do not release the Acquiree
from its obligations to indemnify and hold harmless each Holder, under the
Certificate of Incorporation of Acquiree (as amended) or as otherwise
contemplated by the New Jersey Business Corporation Act, for any liabilities
incurred by them in their capacity as an officer and/or director of the
Acquiree.
6. Restrictive Covenants
(a) In recognition of their continued employment with Acquiree
following the Closing under the Stock Purchase Agreement, each of Alexander
Valcic, Howard Ross and Marie Wolfson (in the aggregate, the "Non-Executive
Employee") do hereby agree to comply with the restrictive covenants set forth in
subparagraph 6(a)(i) and (ii), for the one (1) year period following the
termination of such Non-Executive Employee, if a termination of such
Non-Executive Employee occurs within the two (2) year period following the
Closing. In the event a Non-Executive Employee is not terminated within the two
(2) year period following Closing, then such Non Executive Employee and the
Company shall conduct negotiations in good faith to determine an appropriate
non-competition period for the Non-executive Employee.
(i) The Non-Executive Employee shall not engage,
directly or indirectly, whether as owner, partner, joint venturer, shareholder,
director, employee, agent, consultant, advisor, officer or otherwise, in any
other business or enterprise which is in direct competition with the Company;
provided, however, that (i)
5
<PAGE>
\PHILA2\99917_4
with respect to Alexander Valcic, such non-competition shall only apply to the
computer consulting industry and the business of the permanent placement of
computer personnel in the greater New York metropolitan area and (ii) with
respect to Howard Ross, such non competition shall only apply to the placement
of general temporary personnel in the greater New York metropolitan area.
(ii) The Non-Executive Employee shall not as owner,
partner, joint venturer, shareholder, director, employee, agent, consultant,
advisor, officer or otherwise, directly or indirectly: (A) engage in business
with, solicit the business of, contract with, or otherwise do business with, or
cause any entity with which the Non-Executive Employee is associated to engage,
solicit, contract or otherwise do business with, in respect of business which is
in direct or indirect competition with the business then conducted by the
Company, any persons or entities who, at the time of such termination are, or at
any time within the period of six (6) months prior to such termination were, a
party to an engagement letter or agreement with, or who were otherwise clients
of the Company, or (B) employ as an employee, engage as an independent
contractor, or otherwise retain or solicit, or seek to so employ, engage or
retain, any person who is at such time, or was during any portion of the six (6)
months prior to the termination of the Non Executive Employee's employment by
the Company, an employee of, or an independent contractor for the Company.
Notwithstanding the foregoing, however, each of the Non-Executive Employees may
make passive investments of not more that 5% of the total issued and outstanding
securities of any corporation which competes with the Company and whose
securities are regularly traded on any national securities exchange or in the
over-the-counter market.
(b) At all times, both during and after the Non Executive
Employee is a stockholder of the Company, such Non Executive Employee shall be
deemed to be in a fiduciary capacity for the benefit of the Company, and not use
or disclose to any third party, any trade secret, information, knowledge or data
not generally known to, or easily obtainable by, the public which the
Non-Executive Employee may have learned, discovered, developed, conceived,
originated or prepared during or as a result of the Non Executive Employee's
relationship with the Company, with respect to the operations, business,
affairs, products, technologies or services of the Company.
(c) If in any proceeding, a Court shall refuse to enforce any
covenant in this Paragraph 6 because such covenant covers too extensive a
geographic area or too long a period of time or for any other reason, any such
covenant shall be deemed amended to the extent (but only to the extent) required
by law, and shall be enforced as amended.
6
<PAGE>
\PHILA2\99917_4
(d) In the event a Non-Executive Employee violates any of the
covenants in this Paragraph 6, the Company shall be deemed to have suffered
irreparable harm, and shall be entitled to seek and obtain equitable relief in
the form of temporary restraining orders and preliminary injunctions to enforce
said covenants. In such event, such Non-Executive Employee hereby waives the
claim or defense that an adequate remedy exists at law and shall not advance in
any such action or proceeding the claim or defense that such remedy at law
exists. Such remedy shall be in addition to any other remedy available at law or
in equity. Furthermore, in the event of such breach, such Non-Executive Employee
shall be liable for all of the costs and expenses, including, but not limited to
reasonable legal fees, in obtaining such equitable relief.
7. Right of First Refusal
(a) In the event that a Holder proposes to dispose in a
privately negotiated transaction effectuated other than (i) by means of a public
resale, (ii) to another Holder or (iii) to a family member, any or all of the
RCM Shares ("Selling Shares") then owned by such Holder (the "Selling Holder"),
then the Selling Holder shall provide written notice to the Company of his
intention (the "Selling Notice") to dispose of his Selling Shares. The Selling
Notice shall contain the terms upon which such proposed disposition shall occur,
including the amount and price per share of the Selling Shares. Upon receipt of
the Selling Notice, the Company shall have the option for a period of eleven
(11) calendar days (the "Option Period") to purchase the Selling Shares offered
in the Selling Notice on the same terms and conditions set forth therein. The
Selling Holder, upon the earlier of receiving written notification from the
Company that it elects not to purchase the Selling Shares or the expiration of
the Option Period, may dispose of all, but not less than all, of the Selling
Shares identified in the Selling Notice, on the same terms and conditions as are
set forth in the Selling Notice. In the event the Selling Holder intends to
dispose of the Selling Shares on terms different from those presented to the
Company in the Selling Notice, or the Selling Holder does not dispose of the
Selling Shares within ninety (90) calendar days from the date of receipt by the
Company of the Selling Notice, then the Selling Shares shall once again be
subject to all of the terms and provisions of this Section 7.
(b) In the event that a Holder proposes to dispose of the
Selling Shares in an open market transaction, the Selling Holder shall provide a
Selling Notice to the Company. Upon receipt of the Selling Notice, the Company
shall have the option for one (1) calendar day to purchase the Selling Shares
offered in the Selling Notice upon the terms and conditions set forth therein.
7
<PAGE>
\PHILA2\99917_4
8. Preemptive Rights
If RCM issues any Voting Securities for cash (other than
pursuant to employee stock option plans or in an underwritten public offering),
then the Acquiree Shareholders shall have the right to purchase, on the same
terms as such issuance, that number of Voting Securities so that the Acquiree
Shareholders own the same percentage of the Company's Voting Securities as they
owned immediately prior to such issuance.
9. Miscellaneous
(a) The Holders, on one hand, and the Company, on the other
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any Court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they maybe entitled at
law or in equity.
(b) If requested in writing by the Company, the Holders shall
present or cause to present promptly all certificates representing Voting
Securities now owned or hereafter acquired by members of the Holder Group for
the placement thereon of the following legend, which will remain thereon as long
as such Voting Securities are subject to the restrictions contained in this
Agreement, and which will be in addition to any legend that denotes the
securities as "restricted securities" under the Securities Act of 1933, as
amended;
"The securities represented by this certificate are subject to
the provisions of an agreement dated as of March 1, 1996
between RCM Technologies, Inc. and the persons identified in
such agreement and may not be sold or transferred except in
accordance therewith. A copy of said agreement is on file at
the offices of the corporate secretary of RCM Technologies,
Inc."
The Company may enter a stop transfer order with the transfer
agent or agents of Voting Securities against the transfer of Voting Securities
except in compliance with the requirements of this Agreement. The Company agrees
to remove promptly any stop transfer order with respect to, and issue promptly
an legend and certificates in substitution for, certificates of any Voting
8
<PAGE>
\PHILA2\99917_4
Securities that are no longer subject to the restrictions contained in this
Agreement.
(c) As used herein, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act and the term "person"
shall mean any individual, partnership, corporation, trust, limited liability
company, or other entity.
(d) This Agreement contains the entire understanding of the
parties with respect to the transaction contemplated hereby and the Agreement
maybe terminated only by an agreement in writing executed by the parties hereto.
(e) Descriptive headings are for the convenience only
and shall not control or affect the meaning or construction or any
provision of this Agreement.
(f) For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto, and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
(g) All notices (including a Selling Notice), consents, and
requests, instructions, approvals and other communications provided for herein
and all legal processing in regard hereto shall be valid if given, made or
served, if in writing and delivered personally, by facsimile, or sent by
registered mail, postage prepaid
(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
with a courtesy copy to;
Stephen M. Cohen, Esq.
Clark Ladner Fortenbaugh & Young
One Commerce Square
2005 Market Street
Philadelphia, Pennsylvania 19103
Telephone Number: (215) 241-1800
Telecopy Number: (215) 241-1857
(ii) If to the Holders, to:
9
<PAGE>
\PHILA2\99917_4
Martin Blaire
Lewis Road
Irvington Road, NY 10533
Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
Howard Ross
1260 Westover Road
Stamford, CT 06902
Marie Wolfson
210 Marc Boulevard
Boonton, NJ 07005
Alexander Valcic
412 East 55th Street
New York, NY 10022
with a courtesy copy to;
Joshua B. Gillon, Esquire
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
10
<PAGE>
\PHILA2\99917_4
New York, New York 10019
Telephone Number: (212) 956-1500
Telecopy Number: (212) 956-3252
Any such notices shall be effective (i) when delivered in person or sent by
telecopy, (ii) one business day after being sent by overnight delivery or (iii)
three business days after being sent by registered or certified mail. Any of the
foregoing addresses may be changed by giving notice of such change in the
foregoing manner, except that notices for changes of address shall be effective
only upon receipt.
(h) From and after the Termination Date or earlier termination
of this Agreement, the covenants of the parties set forth herein shall be of no
further force and effect and the parties shall be under no further obligation
with respect thereto.
(i) This Agreement shall be governed by construed and forced
in accordance with the laws of the State of New Jersey applicable to contracts
made and to be performed therein.
11
<PAGE>
\PHILA2\99917_4
IN WITNESS WHEREOF, the Holders and the Company have caused this
Agreement to be duly executed, in the case of accompanied by its respective
officers, each of who is duly authorized, all as of the day and year first above
written.
RCM TECHNOLOGIES, INC.
ATTEST
By: By:
Secretary Name:
Title:
THE HOLDERS:
Martin Blaire
Barry Meyers
Howard Ross
Marie Wolfson
Alexander Valcic
For the purpose of consenting to, and joining with the provisions of
Paragraph 5(a) hereof:
THE CONSORTIUM
ATTEST
By:________________________ By:________________________
Secretary Name:________________
Title:_______________
<PAGE>
\PHILA2\99917_4
SCHEDULE A
Martin Blaire
Barry Meyers
Howard Ross
Marie Wolfson
Alexander Valcic
13
\PHILA2\99807_2
EMPLOYMENT AND NON-COMPETITION AGREEMENT
AGREEMENT made as of this 11th day of March, 1996, by and between RCM
TECHNOLOGIES, INC., a Nevada corporation (hereafter "Employer") and MARTIN
BLAIRE (hereafter "Employee").
In consideration of the mutual promises herein contained and intending
to be legally bound hereby, the parties agree as follows:
1. EMPLOYMENT:
Employer hereby employees Employee and Employee accepts
employment upon the terms and conditions of this Agreement.
2. TERM:
The term of the employment pursuant to this Agreement (the
"Employment Term") shall be for two (2) years commencing March 11, 1996, and
terminating March 11, 1998.
3. DUTIES:
Employee shall (a) have the title of Executive Vice President
and (b) devote his full time, attention and best efforts to his duties as
Executive Vice-President. Employee's principal place of business shall be in the
greater New York metropolitan area, subject to the reasonable travel
requirements of his position. Employee shall at all times discharge his duties
in
<PAGE>
\PHILA2\99807_2
consultation with and under the supervision of the Chief Executive
Officer of Employer.
4. COMPENSATION:
For all services to be rendered by Employee hereunder,
Employer shall pay to Employee a salary of $240,000 per annum, to be paid in
accordance with the general payroll practices of the Employer as from time to
time in effect. Employee shall also be entitled, subject to the terms and
conditions of particular plans and programs, to all fringe benefits afforded to
other executives of Employer, including, but not by way of limitation, the right
to participate in any pension, stock option, retirement, major medical, group
health, disability, accident and life insurance, car allowances, bonuses and
other employee benefit programs made generally available, from time to time, by
the Employer.
5. VACATIONS, HOLIDAYS, ILLNESS, DISABILITY:
(a) Employee shall receive four (4) weeks of paid
vacation in each calendar year, to be taken at times which do not unreasonably
interfere with the performance of the Employee's duties hereunder. Any unused
vacation time from any fiscal year shall be subject to accumulation or
forfeiture in accordance with the policy of Employer as in effect from time to
time.
(b) Employee shall be entitled to those holidays allowed
for by Company policy.
(c) If Employee is prevented from performing his duties by
reason of illness or incapacity for an aggregate of thirty (30) days in any year
of this Agreement, Employer shall not be obligated to pay Employee compensation
for any period of absence in excess of
-2-
<PAGE>
\PHILA2\99807_2
the aggregate of thirty (30) days in any year. Sick pay shall be non-cumulative
and, to the extent not used, shall not be paid to Employee.
(d) If Employee is prevented from performing his duties by
reason of verifiable physical or mental illness or incapacity for a continuous
period of ninety (90) days, then Employer, in addition to the remedy provided
for in subparagraph (c) hereof, may on fifteen (15) days prior notice, terminate
Employee's employment. Employer shall include Employee in such disability
insurance coverage as Employer provides for executive level employees of
Employer.
6. TERMINATION:
(a) Notwithstanding any other provision hereof, the employment
of Employee shall terminate immediately upon the death of Employee or Employee's
discharge by Employer for "good and sufficient cause" (as defined below). In the
event of Employee's death while employed by Employer, Employer will pay
Employee's named beneficiary, or if there be none then living, to his estate,
Employee's base salary at the date of his death for a period of six (6) months
after the date of death, payable weekly.
(b) "Good and sufficient cause" shall mean:
(i) a material breach of this Agreement which has
not been cured within 15 days of written
notice thereof; or
(ii) action or behavior reasonably expected to have
a material adverse effect on the reputation of
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<PAGE>
\PHILA2\99807_2
Employer, including acts of moral turpitude or
dishonesty.
(c) If Employee is terminated for "good and sufficient cause",
then Employer shall provide Employee, upon termination, a written explanation
for such termination, identifying such "good and sufficient cause."
7. EXPENSES:
During the Employment Term, Employer agrees to pay all
reasonable expenses incurred by Employee in furtherance of the business of
Employer including travel and entertainment expense. Employer agrees to
reimburse Employee for any such expenses upon submission by him of a statement
itemizing such expenses.
8. MEDICAL INSURANCE:
During the Employment Term, Employer shall pay for and include
Employee and his family in the medical insurance coverage provided for executive
management of Employer.
9. NON-DISCLOSURE/NON-COMPETITION:
(a) For the purposes of this Section 9, the term "Employer"
shall mean Employer and all of its subsidiaries and affiliates. Employee will
not, during or at any time after termination of employment hereunder, without
authorization of Employer, disclose to, or make use of for himself or for any
person, corporation, or other entity, any trade secret or other confidential
information concerning the business, clients, methods, operations, financing or
services of Employer. Trade secrets and confidential information shall mean
information disclosed to Employee or known by him as a consequence of his
employment by
-4-
<PAGE>
\PHILA2\99807_2
Employer, whether or not pursuant to this Agreement, and not generally known in
the industry. Without limiting the generality of the foregoing, trade secrets
and confidential information shall include market analysis and market expansion
plans of Employer and all technical information relating to products or systems
developed or being developed by Employer and all planned product or system
improvements or changes to the extent not generally known to the industry. It
shall not be a breach of this Section 9 if Employee discloses information that
is already generally known to the public or if Employee is required to disclose
such information by law or court order.
(b) Employee agrees that he will not, directly or indirectly,
during the Employment Term and for a period of one (1) year thereafter, within
the geographic areas in which Employer conducts its operations upon the
termination of his employment, engage in the business of placement of technical
or temporary personnel, whether as an employee, owner, partner, agent, director,
officer of shareholder and, without limiting the generality of the foregoing, do
any of the following:
(i) Solicit, divert, accept business from or
otherwise take away any client of Employer who is or was a client during the
Employment Term, including all clients directly or indirectly produced or
generated by Employee;
(ii) Solicit, induce or contract with any of the
Employer's employees to leave Employer or to work for Employee or
any company with which Employee is connected; or
-5-
<PAGE>
\PHILA2\99807_2
(iii) Solicit, divert or take away any of Employer's
sources of business.
(c) If Employee is terminated, prior to the expiration of the
Employment Term, without "good and sufficient cause", as such term is defined in
Paragraph 6(b), then the non-competition period shall remain in effect during
the term of employment plus the six (6) month period following the date Employee
was terminated without "good and sufficient cause."
(d) Notwithstanding the provisions contained in this Section
9, Employee shall have the right to beneficially own no more than five percent
(5%) of the stock of a public company which is a competitor of Employer.
10. REMEDIES:
Employee agrees that a violation of any of the provisions of
paragraph 9 hereof will cause irreparable damage to Employer the exact amount of
which it will be impossible to ascertain and, for that reason, Employee agrees
that Employer shall be entitled to injunctive relief restraining any violation
of paragraph 9 hereby by Employee and any person, firm or corporation associated
with him, such right to be cumulative and in addition to all other remedies
available to Employer by reason of such violation.
11. SEVERANCE:
Upon the earlier of the expiration of the Employment Term or
the date, if at all, Employee is otherwise terminated without "good and
sufficient cause" (the "Expiration Date"), Employee shall be entitled to
continue to receive a salary at the level of his existing salary as of the
Expiration Date for the one (1) year
-6-
<PAGE>
\PHILA2\99807_2
period following the Expiration Date. In the event Employee is terminated with
"good and sufficient cause", Employee shall not be entitled to any amounts under
this Paragraph 11.
12. ARBITRATION:
Except for matters arising under paragraphs 9, 10 and 11
hereof, any controversy, claim or dispute arising out of or relating to this
Agreement, shall be submitted to arbitration in the City of Princeton, State of
New Jersey, in accordance with the rules of the American Arbitration
Association; the expenses of the arbitration shall be paid equally by Employer
and Employee. Any judgment upon the award made and rendered by the arbitration
may be entered in a Court of competent jurisdiction.
13. CHOICE OF LAW:
This Agreement shall be governed by the law of the State of
New Jersey without regard to conflicts of law principles.
14. NOTICES:
Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail,
return receipt requested, as follows:
IF TO EMPLOYEE: Martin Blaire
Lewis Road
Irvington, NY 10533
IF TO EMPLOYER: RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, NJ 08109-4613
-7-
<PAGE>
\PHILA2\99807_2
15. BINDING EFFECT:
The terms of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective personal representatives,
successors and assigns.
16. INTEGRATION-AMENDMENT:
This Agreement contains the entire agreement between the
parties hereto, with respect to the transactions contemplated herein and
supersedes all previous representation, negotiations, commitments and writings
with respect thereto. No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by all parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
RCM TECHNOLOGIES, INC.
BY:
ATTEST:
MARTIN BLAIRE
-8-
<PAGE>
\PHILA2\104618_1
EMPLOYMENT AND NON-COMPETITION AGREEMENT
AGREEMENT made as of this 11th day of March, 1996, by and between RCM
TECHNOLOGIES, INC., a Nevada corporation (hereafter "Employer") and BARRY MEYERS
(hereafter "Employee").
In consideration of the mutual promises herein contained and intending
to be legally bound hereby, the parties agree as follows:
1. EMPLOYMENT:
Employer hereby employees Employee and Employee accepts
employment upon the terms and conditions of this Agreement.
2. TERM:
The term of the employment pursuant to this Agreement (the
"Employment Term") shall be for two (2) years commencing March 11, 1996, and
terminating March 11, 1998.
3. DUTIES:
Employee shall (a) have the title of Chief Operating Officer
and (b) devote his full time, attention and best efforts to his duties as Chief
Operating Officer. Employee's principal place of business shall be in the
greater New York metropolitan area, subject to the reasonable travel
requirements of his position. Employee shall at all times discharge his duties
in consultation
<PAGE>
\PHILA2\104618_1
with and under the supervision of the Chief Executive Officer of
Employer.
4. COMPENSATION:
For all services to be rendered by Employee hereunder,
Employer shall pay to Employee a salary of $240,000 per annum, to be paid in
accordance with the general payroll practices of the Employer as from time to
time in effect. Employee shall also be entitled, subject to the terms and
conditions of particular plans and programs, to all fringe benefits afforded to
other executives of Employer, including, but not by way of limitation, the right
to participate in any pension, stock option, retirement, major medical, group
health, disability, accident and life insurance, car allowances, bonuses and
other employee benefit programs made generally available, from time to time, by
the Employer.
5. VACATIONS, HOLIDAYS, ILLNESS, DISABILITY:
(a) Employee shall receive four (4) weeks of paid
vacation in each calendar year, to be taken at times which do not unreasonably
interfere with the performance of the Employee's duties hereunder. Any unused
vacation time from any fiscal year shall be subject to accumulation or
forfeiture in accordance with the policy of Employer as in effect from time to
time.
-2-
<PAGE>
\PHILA2\104618_1
(b) Employee shall be entitled to those holidays allowed
for by Company policy.
(c) If Employee is prevented from performing his duties by
reason of illness or incapacity for an aggregate of thirty (30) days in any year
of this Agreement, Employer shall not be obligated to pay Employee compensation
for any period of absence in excess of the aggregate of thirty (30) days in any
year. Sick pay shall be non-cumulative and, to the extent not used, shall not be
paid to Employee.
(d) If Employee is prevented from performing his duties by
reason of verifiable physical or mental illness or incapacity for a continuous
period of ninety (90) days, then Employer, in addition to the remedy provided
for in subparagraph (c) hereof, may on fifteen (15) days prior notice, terminate
Employee's employment. Employer shall include Employee in such disability
insurance coverage as Employer provides for executive level employees of
Employer.
6. TERMINATION:
(a) Notwithstanding any other provision hereof, the employment
of Employee shall terminate immediately upon the death of Employee or Employee's
discharge by Employer for "good and sufficient cause" (as defined below). In the
event of Employee's death while employed by Employer, Employer will pay
Employee's named beneficiary, or if there be none then living, to his estate,
Employee's base salary at the date of his death for a period of six (6) months
after the date of death, payable weekly.
-3-
<PAGE>
\PHILA2\104618_1
(b) "Good and sufficient cause" shall mean:
(i) a material breach of this Agreement which has
not been cured within 15 days of written
notice thereof; or
(ii) action or behavior reasonably expected to
have a material adverse effect on the
reputation of Employer, including acts of
moral turpitude or dishonesty.
(c) If Employee is terminated for "good and sufficient cause",
then Employer shall provide Employee, upon termination, a written explanation
for such termination, identifying such "good and sufficient cause."
7. EXPENSES:
During the Employment Term, Employer agrees to pay all
reasonable expenses incurred by Employee in furtherance of the business of
Employer including travel and entertainment expense. Employer agrees to
reimburse Employee for any such expenses upon submission by him of a statement
itemizing such expenses.
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8. MEDICAL INSURANCE:
During the Employment Term, Employer shall pay for and include
Employee and his family in the medical insurance coverage provided for executive
management of Employer.
9. NON-DISCLOSURE/NON-COMPETITION:
(a) For the purposes of this Section 9, the term "Employer"
shall mean Employer and all of its subsidiaries and affiliates. Employee will
not, during or at any time after termination of employment hereunder, without
authorization of Employer, disclose to, or make use of for himself or for any
person, corporation, or other entity, any trade secret or other confidential
information concerning the business, clients, methods, operations, financing or
services of Employer. Trade secrets and confidential information shall mean
information disclosed to Employee or known by him as a consequence of his
employment by Employer, whether or not pursuant to this Agreement, and not
generally known in the industry. Without limiting the generality of the
foregoing, trade secrets and confidential information shall include market
analysis and market expansion plans of Employer and all technical information
relating to products or systems developed or being developed by Employer and all
planned product or system improvements or changes to the extent not generally
known to the industry. It shall not be a breach of this Section 9 if Employee
discloses information that is already generally known to the public or if
Employee is required to disclose such information by law or court order.
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(b) Employee agrees that he will not, directly or indirectly,
during the Employment Term and for a period of one (1) year thereafter, within
the geographic areas in which Employer conducts its operations upon the
termination of his employment, engage in the business of placement of technical
or temporary personnel, whether as an employee, owner, partner, agent, director,
officer of shareholder and, without limiting the generality of the foregoing, do
any of the following:
(i) Solicit, divert, accept business from or
otherwise take away any client of Employer who is or was a client during the
Employment Term, including all clients directly or indirectly produced or
generated by Employee;
(ii) Solicit, induce or contract with any of the
Employer's employees to leave Employer or to work for Employee or
any company with which Employee is connected; or
(iii) Solicit, divert or take away any of Employer's
sources of business.
(c) If Employee is terminated, prior to the expiration of the
Employment Term, without "good and sufficient cause", as such term is defined in
Paragraph 6(b), then the non-competition period shall remain in effect during
the term of employment plus the six (6) month period following the date Employee
was terminated without "good and sufficient cause."
(d) Notwithstanding the provisions contained in this
Section 9, Employee shall have the right to beneficially own no
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more than five percent (5%) of the stock of a public company which is a
competitor of Employer.
10. REMEDIES:
Employee agrees that a violation of any of the provisions of
paragraph 9 hereof will cause irreparable damage to Employer the exact amount of
which it will be impossible to ascertain and, for that reason, Employee agrees
that Employer shall be entitled to injunctive relief restraining any violation
of paragraph 9 hereby by Employee and any person, firm or corporation associated
with him, such right to be cumulative and in addition to all other remedies
available to Employer by reason of such violation.
11. SEVERANCE:
Upon the earlier of the expiration of the Employment Term or
the date, if at all, Employee is otherwise terminated without "good and
sufficient cause" (the "Expiration Date"), Employee shall be entitled to
continue to receive a salary at the level of his existing salary as of the
Expiration Date for the one (1) year period following the Expiration Date. In
the event Employee is terminated with "good and sufficient cause", Employee
shall not be entitled to any amounts under this Paragraph 11.
12. ARBITRATION:
Except for matters arising under paragraphs 9, 10 and 11
hereof, any controversy, claim or dispute arising out of or relating to this
Agreement, shall be submitted to arbitration in the City of Princeton, State of
New Jersey, in accordance with the rules of the American Arbitration
Association; the expenses of the
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arbitration shall be paid equally by Employer and Employee. Any judgment upon
the award made and rendered by the arbitration may be entered in a Court of
competent jurisdiction.
13. CHOICE OF LAW:
This Agreement shall be governed by the law of the State of
New Jersey without regard to conflicts of law principles.
14. NOTICES:
Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail,
return receipt requested, as follows:
IF TO EMPLOYEE: Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
IF TO EMPLOYER: RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, NJ 08109-4613
15. BINDING EFFECT:
The terms of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective personal representatives,
successors and assigns.
16. INTEGRATION-AMENDMENT:
This Agreement contains the entire agreement between the
parties hereto, with respect to the transactions contemplated herein and
supersedes all previous representation, negotiations, commitments and writings
with respect thereto. No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by all parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
RCM TECHNOLOGIES, INC.
BY:
ATTEST:
BARRY MEYERS
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