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 September 25, 1997
(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 September 25, 1997, RCM Technologies, Inc. ("Registrant") acquired Camelot
Contractors Limited ("CAMELOT"), a Manchester, New Hampshire-based specialty
provider of information technology personnel. The acquisition was completed
effective as of August 1, 1997, through a stock purchase transaction (the
"Purchase") pursuant to which CAMELOT, through an exchange of all of its
outstanding shares of stock with the Registrant became a wholly-owned subsidiary
of the Registrant.
The Purchase consideration paid to the former shareholders of CAMELOT consisted
of $9,000,000 cash, 22,409 shares of common stock of the Registrant valued at
$318,433 and a $3,500,000 three year promissory note payable contingent upon
CAMELOT achieving certain base levels of operating income for each of the three
twelve month periods following the Purchase. An additional earn-out payment may
be made to the former shareholders at the end of each of the three twelve month
periods following the Purchase, to the extent that operating income exceeds
these base levels. The Purchase has been accounted for under the purchase method
of accounting. The transaction was financed with a portion of the proceeds of
the Registrant's secondary public offering. The cost in excess of net assets
acquired will be approximately $7,400,000. It is anticipated the cost in excess
of net assets acquired will be amortized over a 40 year period.
As part of the Purchase, all of the 22,409 shares of common stock issued to the
former shareholders of CAMELOT were delivered into escrow as collateral to
secure the performance of certain financial conditions. The shares held in
escrow are subject to certain restrictions on resale, however, the Registrant
has agreed to file a shelf registration statement by January 31, 1998 permitting
the resale of such shares.
The Purchase consideration paid by the Registrant was determined by negotiations
between and among the representatives of the Registrant and CAMELOT.
Following the Purchase, the directors and executive officers of CAMELOT consist
of Leon Kopyt, Stanton Remer, and Michael O'Keefe (former Chief Executive
Officer of CAMELOT prior to the Purchase).
CAMELOT's assets consist of cash, accounts receivable, contracts and office
equipment. These assets are used in providing information technology personnel
to businesses and institutions. The Registrant plans for CAMELOT to continue
such course of business under its control.
Prior to the Purchase, no material relationship existed between CAMELOT 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, June 30, 1997 and 1996
Audited Statements of Income
Years ended June 30, 1997 and 1996
Audited Statements of Changes in Stockholders' Equity,
Years ended June 30, 1997 and 1996
Audited Statement of Cash Flows,
Years ended June 30, 1997 and 1996
Notes to Financial Statements, June 30, 1997 and 1996
Unaudited Balance Sheets, July 31, 1997 and 1996
Unaudited Statements of Income and Retained Earnings, Nine Months
and three months ended July 31, 1997 and 1996
Unaudited Statements of Cash Flows,
Nine Months ended July 31, 1997 and 1996
<PAGE>
Item 7. Financial Statements and Exhibits (Continued)
(b) Pro forma financial information
Unaudited Pro Forma Condensed Combined Balance Sheet, July 31, 1997.
Unaudited Pro Forma Condensed Combined Statements of Income for the
year ended October 31, 1996 and the nine months ended July 31, 1997.
ITEM 7.
(c) Exhibits
(1) Stock Purchase Agreement, dated September 25, 1997
(2) Escrow Agreement, dated September 25, 1997
(3) Employment Agreements, dated September 25, 1997
(4) Registration Rights Agreement, dated September 25, 1997
<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: October 7, 1997
<PAGE>
CAMELOT CONTRACTORS LIMITED
FINANCIAL STATEMENTS
June 30, 1997 and 1996
<PAGE>
Frank B. Morris, PA
20 Montgomery Ave. Unit F
Bala Cynwyd, PA 19004
Tel: 610-667-6337
Fax: 610-667-3465
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Camelot Contractors Limited
I have audited the accompanying balance sheets of Camelot Contractors Limited as
of June 30, 1997 and 1996, and the related statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on our audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Camelot Contractors Limited as of
June 30, 1997 and 1996, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/Frank B. Morris, PA
October 6, 1997
Bala Cynwyd, PA
<PAGE>
CAMELOT CONTRACTORS LIMITED
BALANCE SHEETS
June 30, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
1997 1996
------------ --------
Current assets
<S> <C> <C>
Cash and cash equivalents $ 1,530,556 $ 510,351
Trade receivables 1,615,608 1,185,312
--------- ---------
Total current assets 3,146,164 1,695,663
--------- ---------
Equipment
Equipment 60,796 39,908
Furniture and fixtures 1,811 1,811
----- -----
62,607 41,719
Less accumulated depreciation 42,990 35,351
------ ------
Net equipment 19,617 6,368
------ -----
$ 3,165,781 $ 1,702,031
= ========= = =========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
Current liabilities
<S> <C> <C>
Accounts payable $ 318,157 $ 208,703
Accrued expenses 163,663 94,508
Income taxes payable 542,500 169,200
Deferred income taxes 256,523 340,668
------- -------
Total current liabilities 1,280,843 813,079
--------- -------
Shareholders' equity
Common stock of no par value; authorized 300 shares,
issued and outstanding 200 shares 100 100
Retained earnings 1,884,838 888,852
--------- -------
Total stockholders' equity 1,884,938 888,952
--------- -------
$ 3,165,781 $ 1,702,031
= ========= = =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 3 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME
Years Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
--------- -----------
<S> <C> <C>
Net sales $ 16,172,884 $ 11,056,924
- ---------- - ----------
Direct costs
Subcontractors 6,134,349 3,884,118
Labor 6,681,983 4,780,504
Payroll taxes 509,604 365,709
------- -------
13,325,936 9,030,331
---------- ---------
Gross profit 2,846,948 2,026,593
General and administrative expenses 1,212,850 1,171,776
--------- ---------
Income from operations 1,634,098 854,817
--------- -------
Other income (expense)
Interest income 15,976 8,848
Interest expense ( 231 ) ( 13,474 )
--- ------
Other expense, net 15,745 ( 4,626 )
------ -----
Income before provision for income taxes 1,649,843 850,191
--------- -------
Provision for income taxes
Current 738,002 218,600
Deferred ( 84,145 ) 111,357
------ -------
653,857 329,957
------- -------
Net Income $ 995,986 $ 520,234
= ======= = =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 4 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended July 31, 1997 and 1996
<TABLE>
<CAPTION>
Common Stock
Retained
Shares Amount Earnings
<S> <C> <C> <C> <C>
Balance, July 1, 1995 200 $ 100 $ 368,618
Net income,
year ended June 30, 1996 520,234
----------------------------------- -------
Balance, June 30, 1996 200 100 888,852
Net income,
year ended June 30, 1997 995,986
----------------------------------- -------
Balance, June 30, 1997 200 $ 100 $ 1,884,838
==================================== =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 5 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-----------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 995,986 $ 520,234
- ------- - -------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 7,640 15,723
(Decrease) in deferred income taxes ( 84,145) 111,356
Increase in trade receivables ( 430,296) ( 296,476 )
Increase (decrease) in
Accounts payable and accrued expenses 178,609 ( 6,624 )
Income taxes payable 373,300 165,150
------- -------
Net cash provided by operating activities 1,041,094 509,363
--------- -------
Cash flows from investing activities
Purchase of property and equipment ( 20,889) ( 9,058 )
------ -----
Cash flows from financing activities
Principal payments on notes payable - ( 265,000 )
Borrowings on notes payable - -
------------- -
Net cash used by financing activities - ( 265,000 )
------- - -------
Net increase in cash 1,020,205 235,305
Cash, beginning of year 510,351 275,046
----------- -------
Cash, end of year $ 1,530,556 $ 510,351
= ========= = =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 6 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
Nature of Business
The Company's operations are principally in the recruitment and employment
of personnel for temporary positions in New Hampshire and Massachusetts for
a fee. Credit is extended at regular terms without collateral after the
Company performs appropriate credit investigations.
1. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Concentration of Credit Risks
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant risk on
cash.
Depreciation
The Company charges to operating expenses annual amounts of depreciation
which allocates the cost of equipment over its estimated useful lives. The
Company uses the modified accelerated cost recovery system method for
determining the annual charge for depreciation. The depreciation expense
for 1997 and 1996 was $7,640 and $15,723, respectively.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
- 7 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
2. Income Taxes
<TABLE>
<CAPTION>
The sources of the deferred tax liability and the tax effect of each is as
follows:
1997 1996
-------------- ---------
<S> <C> <C>
Accounts receivable ($ 344,348) ($ 457,768 )
Accounts payable 60,452 80,600
Accrued payroll 27,373 36,500
------ ------
($ 256,523) ($ 340,668 )
== ======= == =======
</TABLE>
<TABLE>
<CAPTION>
The provision for income taxes charged to operations consisted of the
following as of June 30:
1997 1996
-------------- ---------
Current
<S> <C> <C>
Federal $ 581,803 $ 173,761
State 156,199 44,839
------- ------
738,002 218,600
------- -------
Deferred
Federal ( 68,894) 95,929
State ( 15,251) 15,428
- ------ ------
( 84,145) 111,357
- ------ -------
$ 653,857 $ 329,957
= ======= = =======
</TABLE>
- 8 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
3. Major Customers
Net sales for the year ended June 30, 1997 included sales from the
following major customers which each accounted for amounts in excess of 10%
of the total sales of the Company. The revenue earned and the related
amounts receivable are as follows:
<TABLE>
<CAPTION>
Revenues for Trade Receivable
the Year Ended Balance as of
June 30, 1997 June 30, 1996
--------------- ---------------
<S> <C> <C>
Customer A 2,931,607 255,293
Customer B 1,361,761 123,361
</TABLE>
4. Total Rental Expense
The Company rents office space from a related party as a tenant-at-will for
$1,574 per month plus utilities. The total rental expense included in the
income statement for the years ended June 30, 1997 and 1996 is $21,686 and
$25,417, respectively.
5. Cash Flow Information
Cash paid for interest and income taxes was as follows:
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
<S> <C> <C>
Interest $ 231 $ 13,474
= === = ======
Income taxes $ 364,702 $ 53,450
= ======= = ======
</TABLE>
6. Disclosure About Fair Value of Financial Instruments
The Company's financial instruments consist of cash, short-term trade
receivables and payables. The carrying value of all instruments approximate
their fair value.
7. Subsequent Events
On August 14, 1997, the shareholders of the Company signed a letter of
intent to sell all of the outstanding shares of the Company.
- 9 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
UNAUDITED FINANCIAL STATEMENTS
July 31, 1997 and 1996
<PAGE>
CAMELOT CONTRACTORS LIMITED
BALANCE SHEETS
July 31, 1997 and 1996
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
1997 1996
------------ --------
Current assets
<S> <C> <C>
Cash and cash equivalents $ 1,964,081 $ 994,495
Trade receivables 1,411,188 888,837
--------- -------
Total current assets 3,375,269 1,833,332
--------- ---------
Equipment
Equipment 42,103 39,908
Furniture and fixtures 1,811 1,811
----- -----
43,914 41,719
Less accumulated depreciation 35,351 19,628
------ ------
Net equipment 8,563 22,091
----- ------
$ 3,383,832 $ 1,855,423
= ========= = =========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
Current liabilities
<S> <C> <C>
Accounts payable $ 313,073 $ 183,630
Accrued payroll and payroll taxes 236,945 126,207
Income taxes payable 519,797 233,362
Deferred income taxes 340,668 -
------- -
Total current liabilities 1,410,482 543,199
--------- -------
Shareholders' equity
Common stock of no par value; authorized 300 shares,
issued and outstanding 200 shares 100 100
Retained earnings 1,973,250 1,312,124
--------- ---------
Total stockholders' equity 1,973,350 1,312,224
--------- ---------
$ 3,383,832 $ 1,855,423
= ========= = =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 1 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME AND RETAINED EARNINGS
Nine Months Ended July 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- ----------
<S> <C> <C>
Net sales $ 12,401,618 $ 8,990,464
- ---------- - ---------
Direct costs
Subcontractors 4,846,117 2,827,196
Labor 4,974,073 4,146,877
Payroll taxes 433,779 276,962
------- -------
10,253,969 7,251,035
---------- ---------
Gross profit 2,147,649 1,739,429
General and administrative expenses 880,041 970,595
------- -------
Income from operations 1,267,608 768,834
--------- -------
Other income (expense)
Interest income 20,039 8,848
Interest expense ( 231 ) ( 4,376 )
--- -----
Other expense, net 19,808 4,472
------ -----
Income before provision for income taxes 1,287,416 773,306
--------- -------
Provision for income taxes 514,966 309,322
------- -------
Net Income 772,450 463,984
Retained earnings at beginning of period 1,200,800 848,140
--------- -------
Retained earnings at end of period $ 1,973,250 $ 1,312,124
= ========= ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 2 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME
Three Months Ended July 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- ----------
<S> <C> <C>
Net sales $ 4,331,612 $ 3,659,793
- --------- - ---------
Direct costs
Subcontractors 1,732,925 473,599
Labor 1,794,943 2,312,380
Payroll taxes 143,036 56,491
------- ------
3,670,904 2,842,470
--------- ---------
Gross profit 660,708 817,323
General and administrative expenses 294,129 514,779
------- -------
Income from operations 366,579 302,544
------- -------
Other income (expense)
Interest income 10,941 5,372
Interest expense
Other expense, net 10,941 5,372
------ -----
Income before provision for income taxes 377,520 307,916
------- -------
Provision for income taxes 151,008 123,166
------- -------
Net Income $ 226,512 $ 184,750
= ======= = =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 3 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CASH FLOWS
Nine Months Ended July 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
-----------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 772,450 $ 463,984
- ------- - -------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 15,224
Increase in trade receivables ( 23,292) ( 238,415 )
Increase (decrease) in
Accounts payable and accrued expenses 129,681 ( 53,543 )
Increase in income taxes payable 379,972 150,338
------- -------
Net cash provided by (used in) operating activities 226,999 ( 19,310 )
------- ------
Cash flows from investing activities
Purchase of property and equipment ( 9,058 )
-----
Cash flows from financing activities
Principal payments on notes payable ( 140,000 )
-------
Net increase in cash 999,449 295,616
Cash, beginning of period 964,632 648,879
------- -------
Cash, end of period $ 1,964,081 $ 944,495
= ========= = =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
- 4 -
<PAGE>
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
(Unaudited)
1. General
The accompanying financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). These unaudited financial statements should be read in
conjunction with the Company's audited financial statements for the year
ended June 30, 1997 and 1996. Certain information and footnote disclosures
which are normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted. The information reflects all normal and recurring adjustments
which, in the opinion of Management, are necessary for a fair presentation
of the financial position of the Company and its results of operations for
the interim periods set forth herein.
- 5 -
<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 Camelot Contractors Limited. ("CAMELOT") by
RCM Technologies, Inc. ("RCM") pursuant to a purchase transaction that was
completed on September 25, 1997. This pro forma information has been prepared
utilizing the historical financial statements of RCM and CAMELOT. 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 CAMELOT which is
incorporated within this Form 8-K. The pro forma financial data are 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 statement of income for the year ended
October 31, 1996 assumes that the acquisition of CAMELOT had occurred on
November 1, 1995 (combining the results for the year ended October 31, 1996, for
RCM and the twelve months ended October 31,1996 for CAMELOT). The Unaudited Pro
Forma condensed combined statement of income for the nine months ended July 31,
1997 assumes that the acquisition of CAMELOT had occurred on November 4, 1996
(combining the results for the nine months ended July 31, 1997 for RCM and
CAMELOT). The unaudited pro forma condensed combined balance sheet at July 31,
1997 assumes that the acquisition of CAMELOT had occurred on July 31, 1997.
Acquisition
The Purchase consideration payable to the former shareholders of CAMELOT
consisted of $9,000,000 cash, 22,409 shares of common stock of the Registrant
valued at $318,433 (based upon the average closing price of the Registrant's
common stock for twenty trading days immediately preceding the closing date) and
a $3,500,000 note payable contingent upon CAMELOT obtaining certain base line of
operating income. An additional earn-out payment may be made to the former
shareholders at the end of each of the first three anniversary years of the
Purchase to the extent that operating income exceeds these base levels.
Assumptions
Purchase Price Allocation
Although neither RCM nor CAMELOT has complete information at this time
as to the fair value of CAMELOT'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.
Unaudited Proforma Balance Sheet
July 31, 1997
<TABLE>
<CAPTION>
RCM Camelot Adjustments & Proforma
Technologies, Inc. Contractors, Limited Eliminations Combined
Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents ............... $ 14,833,368 1,964,082 A (9,000,000) 7,722,450
C (75,000)
Accounts and notes receivable ........... 19,252,653 1,411,188 20,663,841
Prepaid expenses & other current assets . 725,139 0 725,139
Total current assets .................... 34,811,160 3,375,270 29,111,430
Property and equipment-net .............. 1,007,603 8,562 1,016,165
Intangible assets ....................... 14,221,176 0 A 9,000,000 21,641,259
B 318,433
C 75,000
D(1,973,350)
Other Assets ............................ 111,431 0 111,431
Total ................................... $ 50,151,370 $ 3,383,832 ($ 1,654,917) $ 51,880,285
Liabilities and Shareholders' Equity:
Current Liabilities
Bank- line of credit ............ $ 2,000,000 2,000,000
Other current liabilities ....... 5,422,714 1,410,482 6,833,196
Total current liabilities ............... 7,422,714 1,410,482 8,833,196
Long Term Liabilities
Income taxes payable ............ 314,475 314,475
Shareholders' equity .................... 42,414,181 1,973,350 B 318,433 42,732,614
D (1,973,350)
Total ................................... $ 50,151,370 $ 3,383,832 ($ 1,654,917) $ 51,880,285
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to record initial cash consideration for purchase Camlot Contractors, Limited. ("CCL")
in exchange for all the shares of CCL $9,000,000
(B) to reflect issuance of $318,433 of RCMT common stock (22409 Shs) $318,433
(C) to reflect estimated acquisition costs incurred $75,000
(D) to adjust Goodwill for amount in excess net worth acquired $1,973,350
</FN>
</TABLE>
<PAGE>
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
Historical Historical Pro Forma
----------------------------------------------------------------------
RCM Progamming Camelot
Technologies, Inc Alternatives of MN Contractors LTD
(NOTE D ) Combined Adjustments Combined
--------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $61,039,173 $9,649,287 $70,688,460 12,738,134 83,426,594
----------- ---------- ----------- ----------
Cost and expenses
Cost of services 48,779,886 6,430,505 55,210,391 10,584,824 65,795,215
Selling, general and administrative 8,914,102 1,955,996 10,870,098 1,317,144 (100,000) A 12,087,242
Interest expense (income) 163,811 368,627 532,438 (4,472) 527,966
Other, net 30,216 13,889 44,105 44,105
Depreciation and amortization 329,680 139,561 469,241 185,500 B 654,741
------- ------- ------- ------- -------
Total 58,217,695 8,908,578 67,126,273 11,897,496 85,500 79,109,269
---------- --------- ---------- ---------- ----------
Income before income taxes 2,821,478 740,709 3,562,187 840,638 4,317,325
Income taxes (benefit) 453,539 188,000 641,539 336,255 (35,910) C 941,884
------- ------- ------- ------- -------- -------
Net Income $2,367,939 $552,709 $2,920,648 $504,383 49,590 $3,375,441
========== ======== ========== ======== ====== ==========
Net income per common share $0.55 $552.71 $0.68 $2,521.92 $0.78
===== ======= ===== ========= =====
Average number of common
shares outstanding 4,320,571 1,000 4,320,571 200 4,342,980
========= ===== ========= === =========
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to reflect reduction of expenses attributable to
consolidation of administrative overhead 100,000
=======
(B) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years 185,500
=======
(C) to tax effect adjustments 35,910
======
(D) Represents acquisition of Programming Alternatives of Minnesota, Inc. on
January 7, 1997 previously reported on Form 8-K filed on January 21, 1997.
</FN>
</TABLE>
<PAGE>
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
Nine Months Ended July 31, 1997
<TABLE>
<CAPTION>
Historical Pro Forma
RCM Camelot
Technologies, Inc. Contractors LTD
Adjustments Combined
<S> <C> <C> <C> <C>
Revenues .................................. $76,540,067 12,401,618 88,941,685
Cost and expenses
Cost of services ........................ 58,275,612 10,253,969 68,529,581
Selling, general and administrative ..... 12,616,194 880,041 75,000 A 13,421,235
Interest expense (income) ................. 282,444 66,900 B 329,536
Depreciation and amortization ............. 368,503 139,125 C 507,628
Total ..................................... 71,542,753 11,114,202 131,025 82,787,980
Income before income taxes ................ 4,997,314 1,287,416 6,153,705
Income taxes (benefit) .................... 2,093,066 514,966 ( 55,031)D 2,553,002
Net Income ................................ $ 2,904,248 $ 772,450 75,995 $ 3,600,704
Net income per common share ............... $ 0.53 $ 3,862.25 $ 0.65
Average number of common
shares outstanding ...................... 5,522,945 200 5,545,348
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to reflect reduction of expenses attributable to
consolidation of administrative overhead 75,000
======
(C) to eliminate interest income earned on cash consideration 66,900
======
(B) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years 139,125
== =======
(D) to tax effect adjustments 55,031
======
</FN>
</TABLE>
Item 7. (c) Exhibits
STOCK PURCHASE AGREEMENT
AMONG
RCM TECHNOLOGIES, INC.
CAMELOT CONTRACTORS LIMITED
AND
THE SHAREHOLDERS OF
CAMELOT CONTRACTORS LIMITED
Dated as of September 25, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. PURCHASE AND SALE OF SHARES OF ACQUIREE 2
3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE
AND OTHERS 5
4. REPRESENTATIONS AND WARRANTIES OF RCM 14
5. COVENANTS OF THE PARTIES 16
6. THE CLOSING 20
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE
AND ACQUIREE SHAREHOLDERS 24
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM 25
9. INDEMNIFICATION 27
10. TERMINATION 29
11. NOTICES 30
12. MISCELLANEOUS 31
<PAGE>
LIST OF SCHEDULES
2.4 List of persons eligible to receive
Additional Purchase Consideration
3.2(a) Financial Statements for the fiscal years ended June 30, 1997, June
30, 1996 and June
30, 1995
3.3 Undisclosed Liabilities of Acquiree
3.5 Accounts Receivable of Acquiree as of August
31, 1997
3.6 Material adverse changes
3.7 Litigation
3.9 Articles of Incorporation, Bylaws and
Amendments thereto of Acquiree
3.10 Tax information
3.11 All material Contracts and Agreements of
Acquiree
3.12 Liens, encumbrances and general description
of all real property in which Acquiree has
an ownership interest
3.13 Licenses, trademarks and trade names of
Acquiree
3.14 Consents to be obtained by Acquiree
3.15 Capitalization of Acquiree
3.18 Messrs. Trotman, O'Keefe and Stevens'
Obligation
3.19 Approvals required to be obtained by
Acquiree Shareholders
3.20 Number and names of employees and compensation of all directors and
officers of Acquiree - identifies all employee benefit plans
3.21 Compliance with environmental and
conservation laws
3.22 List of all insurance policies of Acquiree
3.23 List of all bank accounts maintained or for
the benefit of Acquiree
3.24 List of 10 largest customers of Acquiree,
based on dollar volume of income for Fiscal
1997
3.26 Internal Revenue Service correspondence re:
the Programmers
4.1 Articles of Incorporation and Bylaws of RCM
4.3 Consents to be obtained by RCM
<PAGE>
LIST OF EXHIBITS
Exhibit "A" Registration Rights Agreement
Exhibit "B" O'Keefe Employment Agreement
Exhibit "C" Stevens Employment Agreement
Exhibit "D" Investor Representation Letter
Exhibit "E" Escrow Agreement
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of this day of , 1997, by and among RCM TECHNOLOGIES, INC., a
Nevada corporation ("RCM"); CAMELOT CONTRACTORS LIMITED, a New Hampshire
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 . . . . . . . Camelot Contractors Limited,
a New Hampshire corporation.
Acquiree Shareholders. That entity and those individuals consisting of the
Amarly Corporation ("Amarly") and Angela Trotman ("Trotman"), Michael D. O'Keefe
(O'Keefe") and Richard E. Serodio also known as Richard E. Stevens ("Stevens")
who in the aggregate own 100% of the outstanding capital stock of Acquiree.
Code . . . . . . . . . The Internal Revenue Code of 1986, as amended.
Closing . . . . . . .
The transaction of events set forth in Section 6 hereof.
Closing Date . . . . . The day on which the Closing is held as set forth in
Section 6 hereof.
Closing Balance Sheet. Unaudited balance sheet of the Acquiree as of the Closing
Date.
Effective Closing Date Commencement of business on August 4, 1997.
Escrow Shares . . . .
Share certificates in the names of the Acquiree Shareholders representing shares
of RCM Common Stock which as of the Closing Date have an aggregate valuation of
$500,000 (for this purpose "valuation" shall mean the average of the closing
price of the RCM Common Stock for the twenty trading days immediately preceding
the Closing Date (the "Escrow Shares")).
Exchange Act . . . . .
The Securities Exchange Act of 1934, as amended. Financial . . . . . . Unaudited
financial statements of Statements the Acquiree for the fiscal years ended June
30, 1997, June 30, 1996, and June 30, 1995 prepared in compliance with the
requirements of GAAP.
Interim Financial . . Unaudited financial statements of the Statements . . . . .
Acquiree for the interim period from July 1, 1997 through September 30, 1997.
GAAP . . . . . . . . Generally accepted accounting principles, consistently
applied.
Net Operating Income Subsequent to the Closing Date and (NOI) . . . . . . . .
with respect to the ongoing business formerly conducted by Acquiree gross
revenue (billed services at invoice value reduced by customer discounts, returns
and allowances) minus direct operating expenses, cost of sales and general and
administrative expenses (including the salaries of O'Keefe and Stevens) but
excluding (a) RCM Corporate Fees and (b) Federal and state income taxes.
RCM . . . . . . . . .
RCM Technologies, Inc., a Nevada corporation.
RCM Common Stock . . Common stock, $.05 par value per share, of RCM
RCM Corporate Fee . . All costs incurred by RCM not directly related to the
ongoing business conducted by Acquiree such as legal, accounting and SEC filing
fees.
SEC . . . . . . . . . The Securities and Exchange Commission.
Securities Act . . . The Securities Act of 1933, as amended.
Tangible Net Worth. . The amount by which all assets of Acquiree excluding
intangible assets, as that term is defined under GAAP, exceeds all of Acquiree's
liabilities.
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 pay to
the Acquiree Shareholders the purchase consideration in the sum of $13,000,000
subject to adjustments as hereafter set forth (the "Purchase Consideration") as
follows:
$9,000,000 - by wire transfer of
immediately available
funds to bank accounts
designated by Acquiree
Shareholders;
$500,000 -By delivery by RCM of
the Escrow Shares to the
Acquiree Shareholders;
$3,500,000 Deferred consideration payable in three
equal annual instalments of $1,166,667 each within
sixty (60) days of the initial three anniversaries
of the Closing Date (the "Deferred Consideration")
provided that in the event the NOI of Acquiree is
less than $1,700,000 for any year in which a
payment is due (the "Shortfall") then the amount
of the installment payable for that year shall be
reduced $5.00 for each $1.00 of Shortfall. As used
herein the term "year" means the periods ending
12, 24 and 36 months, respectively, following the
last day of the month in which the Closing
occurred.
(b) At the Closing
Acquiree Shareholders shall deposit in escrow the Escrow Shares pursuant to the
Escrow Agreement attached hereto at Exhibit "E". The Escrow Shares shall be
deemed collateral to ensure that the provisions of Section 2.3(b) hereof are
complied with.
2.3 Adjustments To
Purchase Consideration.
(a) Pre-Closing Adjustments.
If the NOI of Acquiree for the period July 1, 1996 to June 30, 1997 (determined
after reducing the deduction for executive compensation from $288,000 to
$225,000) as reflected in Acquiree's Financial Statements is less than
$1,700,000, then the cash portion of the Purchase Consideration shall be reduced
$5.00 for each $1.00 that the NOI for the period specified is less than
$1,700,000.
(b) Post Closing Adjustments.
(i) If the Closing
Balance Sheet shall reflect (a) cash of less than $1,350,000, or (b) Tangible
Net Worth of less than $2,300,000, then, to the extent of the greater of
subsections (a) or (b) of this section (b)(i), the portion of the Purchase
Consideration represented by the Escrow Shares and valued as described in
Section 1 hereof shall be reduced dollar for dollar for each dollar of such
deficiency and if the value of the Escrow Shares ($500,000) is insufficient to
cover this reduction in full then further offset shall be made against the
Deferred Consideration to the full extent of any such reduction;
(ii) If the Closing
Balance Sheet reflects Tangible Net Worth in excess of $2,350,000 then (a) if
the cash as reflected in such Closing Balance Sheet is in excess of $1,400,000,
then the cash portion of the Purchase Consideration shall be increased dollar
for dollar for each dollar by which the Tangible Net Worth exceeds $2,350,000
and such amount shall be paid with the cash available in excess of $1,400,000 at
the Closing, and in the event such cash in insufficient to satisfy the amount in
which the Tangible Net Worth exceeds $2,350,000 then this remaining amount not
satisfied by the cash in excess of $1,400,000 shall be paid from the proceeds of
the collection of Acquiree's accounts receivable during the period immediately
following the Closing; or (b) if the cash as reflected in such Closing Balance
Sheet is less than $1,400,000 then the cash portion of the Purchase
Consideration shall be increased dollar for dollar for each dollar by which the
Tangible Net Worth exceeds $2,350,000 and such amount shall be paid from the
proceeds of the collection of Acquiree's accounts receivable during the period
immediately following the Closing.
2.4 Additional Purchase
Consideration. If the NOI for any year in which an installment of Deferred
Consideration is due exceeds $1,700,000, then twenty-five percent (25%) of the
amount over and above and in excess of $1,700,000 shall, within sixty (60) days
of the end of such year, be paid as additional consideration to those persons
designated in Schedule 2.3 hereof in the proportions described in that Schedule.
2.5 Registration Rights.
Subject to the provisions of the Registration Rights Agreement, not later than
January 31, 1998 with respect to the Escrow Shares RCM shall prepare and file 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 Escrow Shares.
3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND THE
ACQUIREE SHAREHOLDERS. The Acquiree and the Acquiree Shareholders, 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 material respects on the Closing Date as though made on and as of
such date.
3.1 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.
3.2 Financial Statements.
(a) The Financial Statements
for the fiscal years ended June 30, 1997, June 30, 1996 and June 30, 1995
("1997, 1996 and 1995 Financial Statements") have been attached as Schedule
3.2(a). The 1997, 1996 and 1995 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 GAAP.
(b) The Interim Financial
Statements and Closing Balance Sheet will be prepared on an unaudited basis and
delivered to RCM at or prior to Closing. 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 GAAP.
(c) 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.
(d) Audited financial
statements of Acquiree for the periods covered by the Financial Statements (the
"Audited Financial Statements") will be prepared at RCM's expense within
forty-five (45) days following the Closing. Such Audited Financial Statements
will not differ in any material respect from the Financial Statements to be
delivered to RCM prior to the Closing.
3.3 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 in Schedule 3.3, and (b) 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 (b) 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.
3.4 RCM Shares to Constitute Restricted Securities. The
Acquiree 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) 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
Escrow 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 ensure compliance with the foregoing.
3.5 Accounts Receivable. Attached hereto as Schedule 3.5 is a
list of all accounts receivable of Acquiree as of August 31, 1997 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 collectible in full and are not subject to
offset or counterclaim or otherwise in controversy.
3.6 Material Adverse Changes. Except as specifically stated in
Schedule 3.6 or as contemplated or required by this Agreement, from June 30,
1997 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) 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;
(e) 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
(f) Any other events or conditions of any character that may
reasonably be expected to have a materially adverse effect on the Acquiree or
its business or financial condition.
3.7 Litigation. Except as set forth in Schedule 3.7, 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,
or any basis for any such action, suit, claim, investigation or proceeding.
3.8 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 Acquiree Shareholders know of any violations of any
such licenses or permits. 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.
3.9 Due Organization. The Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Hampshire; 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 3.9.
3.10 Taxes. Except as disclosed on Schedule 3.10, 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 therefor has been made on the Financial Statements. Except as
disclosed on Schedule 3.10, 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 or other payroll taxes 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. Set forth on Schedule 3.10 is a list of all
actions 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. 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).
3.11 Agreements. Schedule 3.11 contains a true and complete list
of all material contracts, agreements, mortgages, obligations, arrangements,
restrictions and other instruments to 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 3.11 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 of agreements set forth in Schedule 3.11. Neither the
Acquiree nor the Acquiree Shareholders have knowledge of any material default by
the other parties to such contracts or agreements.
3.12 Title to Property and Related Matters. The Acquiree has, and
at the time of the Closing 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 3.12, and (ii) liens for
current taxes not yet delinquent. Schedule 3.12 also contains a general
description of all real property in which Acquiree has an ownership interest.
Except as set forth in said Schedule 3.12 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.
3.13 Licenses; Trademarks; Trade Names. Except as set forth on
Schedule 3.13, 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.
3.14 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 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 3.14 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.
3.15 Capitalization. The authorized capitalization of the
Acquiree consists of 300 shares of no par value Common Stock of which 200 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 3.15, 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 3.15 sets forth the share
ownership and respective percentage of each of the Acquiree Shareholders.
3.16. Brokerage Fees. Except for Robert A. Cohen, whose fees
shall be paid by Acquiree Shareholders, 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.
3.17 Share Ownership. The Acquiree Shares to be surrendered at
the Closing by the Acquiree Shareholders will be owned of record and
beneficially by the Acquiree 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.
3.18 The Acquiree Shareholders' Obligation. This Agreement
constitutes the valid and legally binding obligation of the Acquiree
Shareholders. Except as set forth on Schedule 3.18, 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 the Acquiree
Shareholders or any contract, commitment, agreement or restriction of any kind
to which any of the Acquiree Shareholders are a party or by which any of the
Acquiree Shareholders are bound.
3.19 Approvals Required. Except as set forth on Schedule 3.19 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 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 the Acquiree 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.
3.20 Employee; Benefit Plans.
(a) Schedule 3.20 sets forth the number and names of the
employees of Acquiree and the total 1996 compensation to each of the directors,
officers and employees of Acquiree.
(b) Except as disclosed on Schedule 3.20, 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 3.20 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 3.20,
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 terms is defined in Section
3(37) of ERISA.
(c) Except as disclosed on Schedule 3.20, 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 3.20, 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 3.20, 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
conditions, employee benefit plans and the payment of withholding and social
security taxes.
3.21 Environmental Matters. Except as set forth in Schedule 3.21
to the best of Acquiree's knowledge 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. To the best of Acquiree's knowledge, Acquiree has
obtained and is in compliance with all permits, licenses and other
authorizations required under federal, state and local 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"). To the best of Acquiree's knowledge
there are no 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.
3.22 Insurance. Schedule 3.22 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, the underwriter, policy number, coverage type, premium, expiration date
and deductible. All of the insurance policies listed on Schedule 3.22 are
outstanding and in full force and effect and all premiums required to be paid
with respect to such policies are currently paid.
3.23 Bank Accounts. Schedule 3.23
contains a list of all bank accounts maintained by, or
for the benefit of, Acquiree.
3.24 Customers. Set forth on Schedule 3.24 is a list of the ten
(10) largest customers of Acquiree based on the dollar volume of income
generated by that customer for Fiscal 1997. No such customer has terminated or,
to Acquiree's knowledge, is presently threatening to terminate its relationship
with Acquiree.
3.25 Approval. The Board of Directors of the Acquiree have
approved the execution of this Agreement and the transactions contemplated
hereby.
3.26 Programmers. 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 Internal Revenue Service regulations. Acquiree has
maintained, monitored, continues to maintain and monitor the Programmers who are
independent contractors to assure compliance with Internal Revenue Service
regulations. Attached as Schedule 3.26 is correspondence from the Internal
Revenue Service verifying the correctness of Acquiree's classification of the
Programmers.
3.27 Due Organization of Amarly. Amarly is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Hampshire.
3.28 Due Authorization of Amarly. This Agreement has been duly
authorized, executed, and delivered by Amarly, and constitutes a legal, valid,
and binding obligation of Amarly, 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 Amarly'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 Amarly is a party or
by which Amarly or its properties may be bound, or violate in any material
respect any statute, law, rule or regulation applicable to Amarly.
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 Acquire and the Acquiree
Shareholders, 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.
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 do business and is 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 Bylaws of RCM,
including any amendments thereto, are attached hereto as Schedule 4.1.
4.2 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.
4.3 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 4.3 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.
4.4 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 until
such time as a Registration Statement is filed pursuant to Section 2.5 hereof
and declared effective.
4.5 Brokerage Fees. Except for Robert A. Cohen whose fees shall
be paid by Acquiree Shareholders, 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.
4.6 Approval. The Board of Directors of RCM have approved the
execution of this Agreement and the transactions contemplated hereby.
4.7 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 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 10, 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 the
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 10, Acquiree and
the 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 the
Acquiree Shareholders from a third party entitled to disclose it; (ii) became
known publicly other than through Acquiree or the Acquiree Shareholders or any
party who received the same through Acquiree or the Acquiree Shareholders; (iii)
is required by law or court order to be disclosed by Acquiree or the 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
the 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).
(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 10, 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) became 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 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 (b);
5.4 Nondisclosure. Neither RCM nor Acquiree nor the 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 parties hereto, other
than with the express prior written consent of the other parties 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 representatives 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 any regulatory body where such disclosure is required under
federal or state law.
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 reasonably 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 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.
5.10 Documents at Closing. Each party to this Agreement agrees to
execute and deliver on the Closing Date those documents identified in Section
6.2.
5.11 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 Schedule 3.6 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 organizations 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.
5.12 Prohibition on Trading in RCM Stock. The Acquiree and the
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 filing of a Current Report on Form 8-K with the SEC announcing the
Closing pursuant to this Agreement.
5.13 Independent Contractors. If, with respect to any period
prior to the Closing, any governmental authority (i) challenges the status as
independent contractors of any of Acquiree's contractors; or (ii) asserts the
applicability to Acquiree's employees or contractors of statutes, ordinances or
regulations regulating the wages, working conditions and hours of employment of
such individuals, then after any final determination (with Acquiree having the
right to control and pay the costs and counsel fees in connection with any
agency examination or determination) any payroll or other taxes and any interest
or penalties attributable thereto and any liability for additional employment
compensation and any fines or penalties connected therewith shall be the
obligation of Acquiree and the Acquiree Shareholders, and shall be paid to RCM
within ten (10) days thereafter or, at the option of RCM, shall be subject to
indemnification provided for in Section 9 hereafter.
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 Fineman & Bach, P.C., 1608 Walnut Street, 19th Floor,
Philadelphia, PA 19103, 10:00 a.m. local time on September 25, 1997, 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".
(a) Notwithstanding the actual date of the Closing the
purchase and sale and other transactions contemplated by this Agreement shall be
deemed to have occurred on the Effective 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 the 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 the Acquiree
Shareholders under this Agreement are true and correct as of the Closing Date,
as though originally given to RCM on said date;
(iv) a certificate of
existence for the Acquiree from the Secretary of the State of New Hampshire,
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 "A" signed by
each of the Acquiree Shareholders;
(ix) the Escrow Agreement
signed by the Acquiree Shareholders and RCM;
(x) an Employment Agreement
described in Exhibit "B" signed by Michael D. O'Keefe
and RCM;
(xi) an Employment Agreement
described in Exhibit "C" signed by Richard E. Stevens
and RCM;
(xii) an Investor
Representation Letter described in Exhibit "D" signed
by each of the Acquiree Shareholders;
(xiii) an Employment
Agreement substantially in the form of Exhibits "B" and "C" signed by RCM and
such Employees of Acquiree as are selected by RCM;
(xiv) resignations of all
officers and directors of Acquiree, following which
Leon Kopyt shall be elected by RCM as the sole
director of Acquiree;
(xv) such documents as may be
needed to accomplish the Closing under the corporate
laws of the states of incorporation of RCM and
Acquiree;
(xvi) 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;
(xvii) an opinion of counsel
in form and substance satisfactory to RCM;
(xviii) a certificate of
existence for Amarly from the Secretary of State of New Hampshire dated at or
about the Closing Date to the effect that such corporation is in good standing
under the laws of such state;
(xix) an incumbency
certificate for Amarly signed by all the officers
thereof dated at or about the Closing Date;
(xx) certified resolutions
from the Secretary of Amarly dated at or about the Closing date authorizing the
transactions contemplated under this Agreement.
(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 RCM 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, 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."
(ii) a certificate of RCM's
Secretary to the 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 "A" signed by each of
the Acquiree Shareholders;
(vii) the Escrow Agreement
signed by the Acquiree Shareholders and RCM;
(viii) an Employment
Agreement described in Exhibit "B" signed by Michael
D. O'Keefe and RCM;
(ix) an Employment Agreement
described in Exhibit "C" signed by Richard E. Stevens
and RCM;
(x) an Employment Agreement
substantially in the form of Exhibits "B" and "C"
signed by RCM and such employees of Acquiree as are
selected by 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.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND THE 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 Board of Directors of RCM shall have approved the
execution of this Agreement and the transactions contemplated thereby.
7.2 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.
7.3 RCM 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 it prior to or at the Closing.
7.4 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 the Acquiree Shareholders.
7.5 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.
7.6 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.
7.7 RCM shall have obtained the approval of its principal lender
of this Agreement and the transactions contemplated hereby.
7.8 RCM shall have executed an Employment Agreement with each of
Messrs. O'Keefe and Stevens and such other employees of Acquiree as may be
selected by RCM substantially in form and substance similar to that attached
hereto as Exhibits "B" and "C", respectively.
7.9 RCM and Acquiree Shareholders shall have executed a
Registration Rights Agreement substantially in form and substance similar to
that attached hereto as Exhibit "A".
7.10 RCM and the Acquiree Shareholders shall have executed the
Escrow Agreement substantially in form and substance similar to that attached
hereto as Exhibit "E".
7.11 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.
7.12 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.
7.13 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 each of the Acquiree and Amarly
shall have approved the execution of this Agreement and the transactions
contemplated hereby.
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 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.
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
each of the Acquiree and Amarly to the effect that all of the representations
and warranties of the Acquiree and Amarly set forth herein are true and complete
in all material respects as of the Closing Date, and that the Acquiree and
Amarly have 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 the Acquiree Shareholders
to the effect that the representations and warranties of each 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 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 the 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.
8.9 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.
8.10 Acquiree Shareholders shall have executed a Registration
Rights Agreement substantially in form and substance similar to that attached
hereto as Exhibit "A".
8.11 Messrs. O'Keefe and Stevens and such other employees of
Acquiree as may be selected by RCM shall each have executed an Employment
Agreement substantially in form and substance similar to that attached hereto as
Exhibits "B" and "C", respectively.
8.12 Acquiree Shareholders shall have executed an Investor
Representation Letter substantially in form and substance similar to that
attached hereto as Exhibit "D".
8.13 Acquiree and the 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).
8.14 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.
8.15 RCM and the Acquiree Shareholders shall have executed an
Escrow Agreement substantially in form and substance similar to that attached
hereto as Exhibit "E".
9. INDEMNIFICATION.
9.1 Acquiree Shareholders. The Acquiree Shareholders, jointly and
severally shall indemnify, defend and hold harmless 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") 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 the Acquiree Shareholders pursuant hereto or in connection with
the transactions contemplated hereby or thereby.
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
misrepresentation, breach of warranty or breach of any covenant of RCM contained
herein or in the Schedules annexed hereto or in any 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 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, the
controversy in question shall be submitted to arbitration pursuant to Section 10
hereof.
(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.
9.4 Right of Set Off. The amount of any Claims as to which RCM is
entitled to indemnification hereunder may be set off by RCM first against the
Deferred Consideration and, to the extent the amount of such Deferred
Compensation is insufficient to cover such Claims, then against amounts
remaining payable as Additional Purchase Consideration.
10. 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 Philadelphia, Pennsylvania. 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.
11. Termination. This Agreement may be
terminated and the transactions contemplated by this
Agreement may be abandoned at any time prior to the
Closing Date:
(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 10(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.
12. 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:
12.1 If to RCM, 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:
Norman S. Berson, Esquire
Fineman & Bach, P.C.
1608 Walnut Street, 19th
Floor
Philadelphia, PA 19103
Telephone No. (215)
893-8710
Telecopy No. (215)
893-8719
12.2 If to the Acquiree
Shareholders, to:
Angela Trotman
18 Parrish Hill Drive
Nashua, NH 03063
Michael D. O'Keefe
12 Cambridge Road
Bedford, NH 03110
Richard E. Serodio
5 Camelot Drive
Bedford, NH 03110
12.3 If to Amarly Corporation, to:
Amarly Corporation
172 Amherst Road, Suite
21
Bedford, NH 03110
12.4 If to the Acquiree, to:
Camelot Contractors
Limited
172 Route 101, Unit 9
Bedford, New Hampshire
03110
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.
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 required 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.
13.3 Survival of Representations. All covenants, agreements,
representations and warranties made herein shall survive the Closing Date for a
period of three (3) years 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 indicated 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.
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.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day first above written.
RCM
TECHNOLOGIES, INC.
ATTEST:
By:
By:
Name:
Title:
CAMELOT
CONTRACTORS LIMITED
ATTEST:
By:
By:
Name:
Title:
AMARLY
CORPORATION
ATTEST:
By:
By:
Name:
Title:
ANGELA TROTMAN
MICHAEL D. O'KEEFE
[Signatures continued on next page]
RICHARD E. STEVENS
RICHARD E. SERODIO
[NSB\RCM CAMELOT AGREEMENT]
<PAGE>
SCHEDULE 2.4
[List of persons
eligible to receive
Additional Purchase
Consideration]
Camelot Contractors Limited Employees Trust dated
9/23/97
<PAGE>
SCHEDULE 3.2(a)
[Unaudited Financial Statements for the fiscal years ended June 30,
1997, June 30, 1996 and June 30, 1995]
<PAGE>
SCHEDULE 3.3
[Undisclosed Liabilities of Acquiree]
None
<PAGE>
SCHEDULE 3.5
[Accounts Receivable of Acquiree
as of August 31, 1997]
<PAGE>
SCHEDULE 3.6
[Material adverse changes]
None
<PAGE>
SCHEDULE 3.7
[Litigation]
None except attached claim of David M. McNamara
<PAGE>
SCHEDULE 3.9
[Articles of Incorporation, Bylaws
and Amendments thereto of Acquiree]
<PAGE>
SCHEDULE 3.10
[Tax information]
None
<PAGE>
SCHEDULE 3.11
[All material Contracts and
Agreements of Acquiree]
<PAGE>
SCHEDULE 3.12
{Liens, encumbrances and general
description of all real property in
which Acquiree has an ownership interest]
None
<PAGE>
SCHEDULE 3.13
[Licenses, trademarks and trade names of Acquiree]
None
<PAGE>
SCHEDULE 3.14
[Consents to be obtained by Acquiree]
None
<PAGE>
SCHEDULE 3.15
[Capitalization of Acquiree]
Angela Trotman - 66 2/3 shares
Richard E. Serodio -
16 2/3 shares
Michael D. O'Keefe
- 16 2/3 shares
Amarly Corporation
- 100 shares
<PAGE>
SCHEDULE 3.18
[Messrs. Trotman, O'Keefe and Stevens' Obligation]
None
<PAGE>
SCHEDULE 3.19
[Approvals required to be obtained
by Acquiree Shareholders]
None
<PAGE>
SCHEDULE 3.20
[Number and names of employees and
compensation of all directors and
officers of Acquiree -
identifies all employee benefit plans]
<PAGE>
SCHEDULE 3.21
[Compliance with environmental
and conservation laws]
None
<PAGE>
SCHEDULE 3.22
{List of all insurance policies of Acquiree]
<PAGE>
SCHEDULE 3.23
[List of all bank accounts maintained or
for the benefit of Acquiree]
<PAGE>
SCHEDULE 3.24
[List of 10 largest customers of Acquiree,
based on dollar volume of income for Fiscal 1997]
<PAGE>
SCHEDULE 3.26
[Internal Revenue Service
correspondence re: the Programmers]
<PAGE>
SCHEDULE 4.1
[Articles of Incorporation and Bylaws of RCM]
<PAGE>
SCHEDULE 4.3
[Consents to be obtained by RCM]
Mellon Bank
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of September 25,
1997 among RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"),
ANGELA TROTMAN, MICHAEL D. O'KEEFE and RICHARD E. SERODIO a/k/a
RICHARD E. STEVENS and AMARLY CORPORATION (the "Acquiree
Shareholders"), and NORMAN S. BERSON as escrow agent (the "Escrow
Agent").
WHEREAS, RCM, Camelot Contractors Limited ("Acquiree"), and the
Acquiree Shareholders have previously entered into a Stock Purchase
Agreement dated as of September 25, 1997,(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
2.2(b) for the establishment of an escrow fund whereby shares of
the RCM Common Stock to be received by the Acquiree Shareholders
(the "Escrow Shares") shall upon the closing of the Acquisition be
placed in escrow to ensure compliance with the requirements of
Section 2.3(b) of the Stock Purchase Agreement; and
WHEREAS, the terms of the Stock Purchase Agreement are
incorporated herein by reference.
NOW, THEREFORE, in consideration of RCM and the Acquiree
Shareholders entering into the Stock Purchase Agreement and of the
mutual promises 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 the
Acquiree Shareholders held in escrow hereunder by the Escrow Agent.
1
<PAGE>
(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
Norman S. Berson hereby accepts his appointment as Escrow
Agent to serve in accordance with the terms, conditions and
provisions of this Agreement. The acceptance by the Escrow Agent
of his duties under this Agreement is subject to the terms and
conditions set forth at Section 6 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 3. Establishment of Escrow Fund.
(a) On the Closing Date, the Acquiree Shareholders
shall, pursuant to Section 2.2(a) of the Stock Purchase Agreement,
deposit with the Escrow Agent the stock certificates evidencing the
Escrow Shares endorsed in blank.
(b) By virtue of the execution of this Escrow Agreement,
the Acquiree Shareholders and RCM have, without any further act on
the part of any of them, 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 4. Operation and Administration of the Escrow
Fund.
(a) To the extent provided herein and in the Stock
Purchase Agreement, the Escrow Fund is established to secure
compliance by Acquiree of Section 2.3(b) of the Stock Purchase
Agreement.
(b) Within thirty (30) days from the Closing Date RCM and
the Acquiree Shareholders shall cause to be prepared to their
mutual satisfaction an unaudited financial statement of Acquiree as
of the Closing Date (the "Closing Financial Statement"). If the
Closing Financial Statements reflects (a) cash of less than
$1,350,000 or (b) Tangible Net Worth of less than $2,300,000 then,
2
<PAGE>
to the extent of the greater of subsections (a) or (b) (the
"Shortfall"), within ten (10) days from the delivery of the Closing
Financial Statement, RCM may make application (the "Application")
to the Escrow Agent with a copy to the Acquiree Shareholders. The
Application shall identify the nature and amount of the Shortfall
and that number of Escrow Shares as are equal in "value" to be
released to RCM to satisfy the deficiency (the "Claim Amount").
(c) Unless any of the Acquiree Shareholders notifies the
Escrow Agent within ten (10) days from the date of the Application
that any of them in good faith contests the Claim Amount or the
application thereof against the Escrow Shares, then the Escrow
Agent shall release to RCM for cancellation the number of Escrow
Shares pro rata specified in the Application.
For purposes of this Section the "value" of the
Escrow Shares shall be determined by the average closing price of
RCM Common Stock 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
Application.
(d) If Acquiree's Closing Financial Statement reflects
Tangible Net Worth equal to or in excess of $2,300,000, then,
within ten (10) days from the delivery of the Closing Financial
Statement, any of the Acquiree Shareholders may make a written
request, with a copy to RCM requesting the release of the entire
number of Escrow Shares to them. Unless RCM notifies the Escrow
Agent within ten (10) days from the date of such request that it
contests such request, then the Escrow Agent shall release to the
Acquiree Shareholders the entire number of Escrow Shares.
If RCM or the Acquiree Shareholders contest any
Application or requests submitted hereunder then, and in that
event, the Escrow Agent may (i) retain the Escrow Shares pending
receipt of a written agreement relating thereto signed by the
Acquiree Shareholders and RCM or a court order relating thereto, or
(ii) the Escrow Agent may commence suit in a court of competent
jurisdiction and deposit the Escrow Shares in such proceeding or in
a similar proceeding brought by the parties.
(e) Once the Escrow Shares have been either released to
the Acquiree Shareholders or delivered to RCM, 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.
SECTION 5. Fees and Expenses of Escrow Agent.
The Escrow Agent will impose no charge for his services
except for reimbursement of reasonable out-of-pocket expenses
incurred by the Escrow Agent in connection with the performance of
3
<PAGE>
his functions hereunder, including reasonable fees and
disbursements of counsel. The responsibility for payment of fees
and reimbursements to the Escrow Agent shall be assumed by RCM.
SECTION 6. Duties and Liabilities of the Escrow Agent.
(a) The Escrow Agent shall act hereunder as depositary
only, and he shall not be responsible or liable in any manner
whatsoever for any determinations regarding the release or refusal
to release from escrow 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 his 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 RCM and the Acquiree
Shareholders. The Escrow Agent shall not have any responsibility
for the genuineness or validity of any document or other material
presented to or deposited with him nor shall he have any liability
for any action taken, suffered or omitted in accordance with any
written instructions or certificates given to him hereunder and
believed by him 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 him in
good faith, or for any mistake of fact or law, or for anything
which he may do or refrain from doing in connection with this
Agreement, except his own gross negligence or willful misconduct.
(d) The Escrow agent may consult with, and obtain the
advice of, legal counsel selected by him in the event of any
question as to any of the provisions hereof or his duties
hereunder, and the Escrow Agent shall incur no liability and shall
be fully protected for any action taken, suffered or omitted by him
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.
(e) 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 him
in respect of the subject matter of this Agreement, provided that
4
<PAGE>
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 he
is indemnified to his reasonable satisfaction against the cost and
expense of such defense or initiation.
SECTION 7. 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 Acquiree Shareholders 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.
SECTION 8. 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.
The Acquiree Shareholders shall have no right to transfer or assign
their interest in the Escrow Shares in the Escrow Fund during such
period of time as such Escrow 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 Escrow Shares and the
Escrow Agent shall hold such transferee's shares and stock powers
in escrow subject to this Agreement.
SECTION 9. Notices.
All notices or other communications required or permitted
hereunder shall be sufficiently given if sent by certified mail,
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 RCM, 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
5
<PAGE>
with a copy to:
Norman S. Berson, Esquire
Fineman & Bach, P.C.
1608 Walnut Street
Philadelphia, PA 19103
Telephone Number: (215) 893-8710
Telecopy Number: (215) 893-8719
(ii) If to the Acquiree Shareholders, to:
Angela Trotman
18 Parrish Hill Drive
Nashua, NH 03063
Amarly Corporation
172 Amherst Road, Suite 21
Bedford, NH 03110
Michael D. O'Keefe
12 Cambridge Road
Bedford, NH 03110
Richard Serodio
5 Camelot Drive
Bedford, NH 03110
(iv) If to the Escrow Agent:
Norman S. Berson, Esquire
Fineman & Bach, P.C.
1608 Walnut Street
Philadelphia, PA 19103
SECTION 10. Parties in Interest.
This Agreement shall be governed by the laws of the state
of New Jersey and shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of each of the
parties hereto.
SECTION 11. 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 12. Severability.
In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and
6
<PAGE>
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 13. Resignation and Removal of Escrow Agent.
(a) The Escrow Agent may at any time resign as Escrow
Agent hereunder by giving written notice of his resignation to each
of the parties hereto, at their respective addresses set forth in
Section 9 of this Agreement, at least thirty (30) days prior to the
date specified for any 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 Acquiree Shareholders 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) days 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 14. 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 his duties, obligations or performance as Escrow Agent
hereunder, except as caused by his negligence or willful
misconduct, including without limitation the reasonable legal costs
and expenses of defending himself against any claim or liability in
connection with his performance hereunder. The terms of this
Section 14 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
Acquiree Shareholders 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
7
<PAGE>
event will the failure to give such notice affect the obligation of
RCM and the Acquiree Shareholders to indemnify the Escrow Agent
pursuant to this Section 14 unless the rights of RCM and the
Acquiree Shareholders shall have been materially impaired by such
failure. Each of RCM and the Acquiree Shareholders will be
entitled to participate at their own expense in the defense of any
suit or proceeding brought to enforce any such claim and, if they
so elect 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 Acquiree Shareholders.
IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed as of the date first written above.
RCM TECHNOLOGIES, INC.
By:
Name:
Title:
ANGELA TROTMAN
MICHAEL D. O'KEEFE
RICHARD E. SERODIO
[Signatures continued on next page]
8
<PAGE>
AMARLY CORPORATION
By:
Name:
Title:
ESCROW AGENT Street Address
City, State, Zip Code
Telephone No.
Telefax No.
[NSB\04257 CAMELOT ESCROW AGREEMENT]
9
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the ___ day of _______, 1997, by and
between CAMELOT CONTRACTORS LIMITED, a New Hampshire corporation,
(hereafter "Employer") and MICHAEL D. O'KEEFE (hereafter
"Employee").
In consideration of the mutual promises herein contained and
intending to be legally bound hereby, the parties agree as follows:
EMPLOYMENT:
1. Employer hereby employs Employee and employee accepts
employment upon the terms and conditions of this Agreement.
TERM:
2. The term of this Agreement shall be for three (3) years
commencing September 26, 1997 and terminating September 25, 2000.
DUTIES:
3. Employee shall devote his full time, attention and best
efforts to his duties as Vice President for Operations. Employee
shall at all times discharge his duties in consultation with and
under the supervision of the Chief Executive Officer of Employer.
Employer shall not engage in any business or perform any services
in any capacity whatsoever other than for Employer except with the
prior written approval of Employer. Employer hereby acknowledges
1
<PAGE>
that Employee is an officer and owner of MAS New Hampshire and
hereby consents to Employee's continued performance of such
supervisory services for said company as are appropriate and
necessary for an officer and owner, which services will not
interfere with the performance of employee's duties under this
Agreement.
COMPENSATION:
4. For all services to be rendered by Employee hereunder,
Employer shall pay to Employee a salary of $112,500.00 per year to
be paid in accordance with the general payroll practices of
Employer from time to time in effect.
VACATIONS:
5. (a) Employee shall receive three (3) weeks of paid
vacation in each calendar year commencing January 1, 1998.
Vacation pay shall be non-cumulative and to the extent not taken
shall not be compensated.
HOLIDAYS:
(b) Employee shall be entitled to those holidays allowed
for by Company policy.
ILLNESS:
(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
2
<PAGE>
non-cumulative and, to the extent not used, shall not be
compensated.
DISABILITY:
(d) If Employee is prevented from performing his duties
by reason of verifiable physical or mental illness or incapacity
for a continuous period of sixty (60) days, then Employer, in
addition to the remedy provided for in subparagraph (c) hereof, may
on fifteen (15) days prior written notice, terminate Employee's
employment.
TERMINATION:
6. (a) Notwithstanding any other provision hereof, this
Agreement shall terminate immediately upon the death of Employee or
Employee's discharge by Employer upon good and sufficient cause.
In the event of Employee's death while an Employee in good standing
with Employer, said Employer shall 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 one
(1) month after the date of death, payable weekly.
(b) "Good and sufficient cause" shall include, but not
be limited to:
(i) dishonesty detrimental to the best
interests of Employer;
(ii) continuing inattention to or neglect of
the duties to be performed by Employee
which inattention is not the result of
illness;
3
<PAGE>
(iii) willful disloyalty to Employer; or
(iv) violation of any of the provisions of
paragraph 3 hereof.
(c) If Employer determines that Employee's conduct
constitutes good and sufficient cause for termination under either
(ii) or (v) of subparagraph (b) above, Employer shall notify
Employee of its determination and give Employee an opportunity to
dispute the adverse determination or to cure the conduct which has
given rise to the determination.
(d) If Employee is terminated for good and sufficient
cause then all compensation, bonuses and benefits accrued to the
termination date shall be paid to Employee and thereupon all
obligations of Employer to the Employee shall cease.
EXPENSES:
7. During the term of this Agreement, 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.
MEDICAL INSURANCE:
8. During the term of this Agreement, Employer shall include
Employee in the medical insurance coverage provided for employees
of Employer.
DISCLOSURE OF INFORMATION:
9. Employee will not, during or at any time after
termination of employment hereunder, without authorization of
4
<PAGE>
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 or its affiliates.
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.
NON-COMPETITION:
10. Employee agrees that he will not, during the term of his
employment and for a period of five (5) years following the
termination thereof for whatsoever reason, voluntary or
involuntary, (the "Restricted Period") in any county in which
Employer has conducted business directly or indirectly, whether as
employee, owner, partner, agent, director, officer or shareholder
engage in a business that is competitive with the business
conducted by Employer and, without limiting the generality of the
foregoing do any of the following:
(a) Solicit, divert, accept business from or otherwise
take away any client of Employer who is or was a client during the
5
<PAGE>
term of employment, including all clients directly or indirectly
produced or generated by Employee.
(b) 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.
(c) Solicit, divert or take away any of Employer's
sources of business.
Notwithstanding the foregoing it shall not be a
violation of this paragraph 10 for Employee to provide services as
an officer and to have an ownership interest in MAS New Hampshire
("MAS") provided that during the period of Employee's ownership MAS
is exclusively engaged in the permanent placement of personnel and
does not engage in any contract staffing activities.
The provisions of this paragraph 10 shall be
construed as an agreement independent of any other provision of
this Agreement and the existence of any claim or cause of action of
Employee against Employer whether arising out of this Agreement or
otherwise shall not constitute a defense to the enforcement by
Employer of the provisions of this paragraph.
REMEDIES:
11. Employee agrees that a violation of any of the provisions
of paragraphs 9 and 10 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
paragraphs 9 and 10 hereof by Employee and any person, firm or
6
<PAGE>
corporation associated with him, such right to be cumulative and in
addition to all other remedies available to Employer by reason of
such violation.
BONUS; STOCK OPTIONS
12. During the term of his employment, Employee shall be a
participant in such bonus, stock option and similar benefit
programs as are maintained from time to time by Employer and
available to executive level employees of Employer or its parent.
ARBITRATION:
13. Except for controversies relating to Sections 9 and 10
hereof which are subject to the provisions of Section 11 hereof, 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 Philadelphia, Pennsylvania. 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
7
<PAGE>
counsel and its witnesses. The parties shall share equally the
fees and expenses of the impartial arbitrator.
NOTICES:
14. 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: Michael D. O'Keefe
12 Cambridge Road
Bedford, NH 03110
IF TO EMPLOYER: Camelot Contractors Limited
c/o RCM Technologies, Inc.
2500 McClellan Avenue
Pennsauken, NJ 08109
Attention: Leon Kopyt
BINDING EFFECT:
15. 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.
INTEGRATION-AMENDMENT:
16. This Agreement contains the entire agreement between the
parties hereto, with respect to the transactions contemplated
herein and supersedes all previous representations, 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 of the parties hereto.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CAMELOT CONTRACTORS LIMITED
BY:
MICHAEL D. O'KEEFE
[NSB\04257 CAMELOT.EMPLOYMENT 1 O'KEEFE]
9
<PAGE>
10
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the ___ day of _______, 1997, by and
between CAMELOT CONTRACTORS LIMITED, a New Hampshire corporation,
(hereafter "Employer") and RICHARD E. SERODIO also known as RICHARD
E. STEVENS (hereafter "Employee").
In consideration of the mutual promises herein contained and
intending to be legally bound hereby, the parties agree as follows:
EMPLOYMENT:
1. Employer hereby employs Employee and employee accepts
employment upon the terms and conditions of this Agreement.
TERM:
2. The term of this Agreement shall be for three (3) years
commencing September 26, 1997 and terminating September 25, 2000.
DUTIES:
3. Employee shall devote his full time, attention and best
efforts to his duties as Vice President for Marketing. Employee
shall at all times discharge his duties in consultation with and
under the supervision of the Chief Executive Officer of Employer.
Employer shall not engage in any business or perform any services
in any capacity whatsoever other than for Employer except with the
prior written approval of Employer. Employer hereby acknowledges
that Employee is an officer and owner of MAS New Hampshire and
hereby consents to Employee's continued performance of such
supervisory services for said company as are appropriate and
necessary for an officer and owner, which services will not
1
<PAGE>
interfere with the performance of Employee's duties under this
Agreement.
COMPENSATION:
4. For all services to be rendered by Employee hereunder,
Employer shall pay to Employee a salary of $112,500.00 per year to
be paid in accordance with the general payroll practices of
Employer from time to time in effect.
VACATIONS:
5. (a) Employee shall receive three (3) weeks of paid
vacation in each calendar year commencing January 1, 1998.
Vacation pay shall be non-cumulative and to the extent not taken
shall not be compensated.
HOLIDAYS:
(b) Employee shall be entitled to those holidays allowed
for by Company policy.
ILLNESS:
(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
compensated.
DISABILITY:
(d) If Employee is prevented from performing his duties
by reason of verifiable physical or mental illness or incapacity
2
<PAGE>
for a continuous period of sixty (60) days, then Employer, in
addition to the remedy provided for in subparagraph (c) hereof, may
on fifteen (15) days prior written notice, terminate Employee's
employment.
TERMINATION:
6. (a) Notwithstanding any other provision hereof, this
Agreement shall terminate immediately upon the death of Employee or
Employee's discharge by Employer upon good and sufficient cause.
In the event of Employee's death while an Employee in good standing
with Employer, said Employer shall 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 one
(1) month after the date of death, payable weekly.
(b) "Good and sufficient cause" shall include, but not
be limited to:
(i) dishonesty detrimental to the best
interests of Employer;
(ii) continuing inattention to or neglect of
the duties to be performed by Employee
which inattention is not the result of
illness;
(iii) willful disloyalty to Employer; or
(iv) violation of any of the provisions of
paragraph 3 hereof.
(c) If Employer determines that Employee's conduct
constitutes good and sufficient cause for termination under either
3
<PAGE>
(ii) or (v) of subparagraph (b) above, Employer shall notify
Employee of its determination and give Employee an opportunity to
dispute the adverse determination or to cure the conduct which has
given rise to the determination.
(d) If Employee is terminated for good and sufficient
cause then all compensation, bonuses and benefits accrued to the
termination date shall be paid to Employee and thereupon all
obligations of Employer to the Employee shall cease.
EXPENSES:
7. During the term of this Agreement, 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.
MEDICAL INSURANCE:
8. During the term of this Agreement, Employer shall include
Employee in the medical insurance coverage provided for employees
of Employer.
DISCLOSURE OF INFORMATION:
9. 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 or its affiliates.
Trade secrets and confidential information shall mean information
4
<PAGE>
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.
NON-COMPETITION:
10. Employee agrees that he will not, during the term of his
employment and for a period of five (5) years following the
termination thereof for whatsoever reason, voluntary or
involuntary, (the "Restricted Period") in any county in which
Employer has conducted business directly or indirectly, whether as
employee, owner, partner, agent, director, officer or shareholder
engage in a business that is competitive with the business
conducted by Employer and, without limiting the generality of the
foregoing do any of the following:
(a) Solicit, divert, accept business from or otherwise
take away any client of Employer who is or was a client during the
term of employment, including all clients directly or indirectly
produced or generated by Employee.
(b) 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.
5
<PAGE>
(c) Solicit, divert or take away any of Employer's
sources of business.
Notwithstanding the foregoing it shall not be a
violation of this paragraph 10 for Employee to provide services as
an officer and to have an ownership interest in MAS New Hampshire
("MAS") provided that during the period of Employee's ownership MAS
is exclusively engaged in the permanent placement of personnel and
does not engage in any contract staffing activities.
The provisions of this paragraph 10 shall be
construed as an agreement independent of any other provision of
this Agreement and the existence of any claim or cause of action of
Employee against Employer whether arising out of this Agreement or
otherwise shall not constitute a defense to the enforcement by
Employer of the provisions of this paragraph.
REMEDIES:
11. Employee agrees that a violation of any of the provisions
of paragraphs 9 and 10 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
paragraphs 9 and 10 hereof 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.
6
<PAGE>
BONUS; STOCK OPTIONS
12. During the term of his employment, Employee shall be a
participant in such bonus, stock option and similar benefit
programs as are maintained from time to time by Employer and
available to executive level employees of Employer or its parent.
ARBITRATION:
13. Except for controversies relating to Sections 9 and 10
hereof which are subject to the provisions of Section 11 hereof, 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 Philadelphia, Pennsylvania. 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.
7
<PAGE>
NOTICES:
14. 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: Richard E. SERODIO a/k/a/
Richard E. Stevens
5 Camelot Drive
Bedford, NJ 3110
IF TO EMPLOYER: Camelot Contractors Limited
c/o RCM Technologies, Inc.
2500 McClellan Avenue
Pennsauken, NJ 08109
Attention: Leon Kopyt
BINDING EFFECT:
15. 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.
INTEGRATION-AMENDMENT:
16. This Agreement contains the entire agreement between the
parties hereto, with respect to the transactions contemplated
herein and supersedes all previous representations, 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 of the parties hereto.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CAMELOT CONTRACTORS LIMITED
BY:
RICHARD E. STEVENS
RICHARD E. SERODIO
[NSB\04257 CAMELOT.EMPLOYMENT 2 STEVENS]
9
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of __________, 1997 by
and among RCM Technologies, Inc., a Nevada corporation (the "Company"), and the
Shareholders of Camelot Contractors Limited, a New Hampshire corporation, as
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 September 25, 1997 (the "Stock Purchase Agreement")
pursuant to which the Company acquired 100% of the outstanding stock of Camelot
Contractors Limited (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 agree as follows:
AGREEMENT
1. Definitions.
(a) "Acquisition" shall mean the Acquisition by the Company of
100% of the outstanding stock of Camelot Contractors Limited pursuant to the
terms of the Stock Purchase Agreement entered into on September 25, 1997.
(b) "Closing" shall mean that date upon which a closing of the
Acquisition occurs.
(c) "Company" shall mean RCM Technologies, Inc.
1
<PAGE>
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934.
(e) "Holders shall mean the former shareholders of Camelot
Contractors Limited (identified on the signature page hereof) who have 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
additional shares of Common Stock or other equity securities of the Company
issued or issuable after the date hereof in respect of any such securities (or
other equity securities issued in respect thereof) by way of a stock dividend or
stock split, in connection with a combination, exchange, reorganization,
recapitalization or reclassification of Company securities, or pursuant to a
merger, division, consolidation or other similar business transaction or
combination involving the Company; provided that: as to any particular
Restricted Stock, such securities shall cease to constitute Restricted Stock (i)
when a registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of thereunder, or (ii) when and to the extent such securities are
permitted to be distributed pursuant to Rule 144 (or any successor provision to
such Rule) under the Securities Act or are otherwise freely transferable to the
public without further registration under the Securities Act, or (iii) when such
securities shall have ceased to be outstanding and, in the case of clause (ii),
the Company shall, if requested by the Holder or Holders thereof, have delivered
to such Holder or Holders the written opinion of independent counsel to the
Company to such effect.
(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 Merger Agreement.
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2. Shelf Registration.
(a) RCM shall prepare and file, not later than January 31,
1998, 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. 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 the Holders in a
registration, each underwriter (as defined in the Securities Act) if any,
managing the offering of the securities thereunder, each person who controls the
Holders 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 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.
3. Registration Procedures. The Company shall:
(a) prepare and file with the Commission a Registration
Statement with respect to the Restricted Stock and use its best efforts to cause
such Registration Statement to become effective as promptly as possible and to
remain effective until all the Restricted Stock has been sold pursuant thereto;
(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 (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
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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 jurisdiction as the Holder 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;
(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
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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 5, the term
"Registration Expenses" shall mean: all expenses incurred by the Company in
complying with paragraph 2 of this Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, "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 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 paragraph 2 of this Agreement. All Selling Expenses in connection
with any Registration Statement filed pursuant to paragraph 2 of this Agreement
shall be borne by the participating 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
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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. Obligation of Company.
Notwithstanding anything to the contrary contained herein, the
Company's obligation in paragraph 2 above shall extend only to the inclusion of
the Restricted Stock in a registration statement filed under the Securities Act.
The Company shall have no obligation to assure the terms and conditions of
distribution, to obtain a commitment from an underwriter relative to the sale of
the Restricted Stock or to otherwise assume any responsibility for the manner,
price or terms of the distribution of the Restricted Stock.
7. 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.
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8. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted
by law, each Holder of Restricted Stock, its officers and directors and each
person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished to the Company by
such Holder for use therein or by such Holder's failure to deliver a copy of the
registration statement or prospectus or an amendments or supplements thereto
after the Company has furnished such Holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company shall
provide reasonable and customary indemnification to such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders of Restricted Stock.
(b) In connection with any registration statement in which a
Holder of Restricted Stock is participating, each such Holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished by such Holder; provided that the obligation to indemnify shall be
individual, not joint and several, for each Holder and shall be limited to the
net amount of proceeds received by such Holder from the sale of Restricted Stock
pursuant to such registration statement.
(c) Any person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party) and (ii) unless
in such indemnified party's reasonable judgment a conflict of
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interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director on controlling
person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
9. 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,
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(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 No.: (609) 486-1777
Telecopy No. : (609) 488-8833
With a copy to:
Norman S. Berson, Esquire
Fineman & Bach, P.C.
1608 Walnut Street
19th Floor
Philadelphia, PA 19103
Telephone No.: (215) 893-8710
Telecopy No. : (215) 893-8719
(ii) If to the Holders, to
Angela Trotman
18 Parrish Hill Drive
Nashua, NH 03063
Amarly Corporation
172 Amherst Road, Suite 21
Bedford, NH 03110
Michael D. O'Keefe
12 Cambridge Road
Bedford NH 03110
Richard E. Serodio
5 Camelot Drive
Bedford, NH 03110
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 thereof.
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(g) Restrictions on Transfer. Notwithstanding anything to the
contrary contained in this Agreement, none of the rights granted to the Holder
shall be assignable or transferable by such Holder without the written consent
of the Company, nor shall any of such rights inure to the benefit of any
transferee, assignee or subsequent holder of record of the Restricted Stock.
(h) 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.
RCM TECHNOLOGIES, INC.
By:
Name:
Title:
ANGELA TROTMAN
AMARLY CORPORATION
By:
Name:
Title:
MICHAEL D. O'KEEFE
RICHARD E. SERODIO
RICHARD E. STEVENS
[NSB\CAMELOT REGISTRATION RIGHTS AGREEMENT]
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SCHEDULE A
List of Shareholders of Camelot Contractors Limited
Angela Trotman
Amarly Corporation
Michael D. O'Keefe
Richard E. Serodio
a/k/a Richard E. Stevens
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