LETTERHEAD OF RCM TECHNOLOGIES, INC.
February 25, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of RCM Technologies, Inc. (the "Company") which will be held at the
Philadelphia Marriott Hotel, 1201 Market Street, Philadelphia, Pennsylvania on
Friday, April 25, 1997 at 6:00 P.M. Your Board of Directors and management look
forward to personally greeting those stockholders able to attend.
At the Meeting, stockholders will be asked to elect two directors, to
ratify the appointment of Grant Thornton LLP as the Company's independent
auditors, and to consider such other matters as may properly come before the
Meeting or at any adjournment(s) thereof. These matters are discussed in greater
detail in the accompanying Proxy Statement.
Your Board of Directors recommends a vote FOR the election of directors,
and FOR the ratification of Grant Thornton LLP as the Company's independent
auditors.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the Meeting. You
are requested to sign, date and mail the enclosed proxy promptly.
We wish to thank our stockholders for their participation and support.
Sincerely,
Leon Kopyt
Chairman of the Board and
Chief Executive Officer
<PAGE>
RCM TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Meeting") of RCM TECHNOLOGIES, INC.
(the "Company") will be held on Friday, April 25, 1997 at 6:00 P.M., at the
Philadelphia Marriott Hotel, 1201 Market Street, Philadelphia, Pennsylvania, for
the following purposes:
1. To elect two (2) directors to serve until the expiration of their
respective terms and until their respective successors shall be elected and
qualified;
2. To ratify the appointment of Grant Thornton LLP as independent auditors
for the Company for the fiscal year ending October 31, 1997; and
3. To transact such other business as may properly come before the Meeting
or any postponement or adjournment thereof.
The Board of Directors has fixed February 24, 1997, as the record date for the
determination of stockholders entitled to vote at the Meeting. Only stockholders
of record at the close of business on that date will be entitled to notice of,
and to vote at, the Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES PERSONALLY,
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By order of the Board of Directors Leon Kopyt, Chief Executive Officer
February 25, 1997
<PAGE>
RCM TECHNOLOGIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
This Statement is furnished to Stockholders by the Board of Directors of RCM
Technologies, Inc. (the "Company") whose principal executive offices are located
at 2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109, in connection
with the solicitation of the accompanying proxy to be voted at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on April 25,
1997 at 6:00 P.M. at the Philadelphia Marriott Hotel, 1201 Market Street,
Philadelphia, Pennsylvania, and at any postponement or adjournment thereof. The
approximate date on which this Proxy Statement, the Notice of Meeting and
accompanying proxy are first being sent to stockholders is February 25, 1997.
Sending in a signed proxy will not affect the stockholder's right to attend the
Meeting and vote in person since the proxy is revocable. Any stockholder giving
a proxy has the power to revoke it by, among other methods, giving written
notice to Leon Kopyt, Chief Executive Officer of the Company, at any time before
the proxy is exercised.
The expense of the proxy solicitation will be borne by the Company. In addition
to solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or teletype by directors, officers or employees of the Company and its
subsidiaries who will receive no additional compensation therefor. The Company
is required to pay the reasonable expenses incurred by record holders of the
Company's Common Stock who are brokers, dealers, banks or voting trustees, or
their nominees, for mailing proxy material and annual shareholder reports to any
beneficial owners of Common Stock of the Company.
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Company's Common Stock, FOR each of the matters specified and in accordance with
the
<PAGE>
judgment of the persons voting the proxies on any matter that may properly be
brought before the Meeting.
Election of Directors will be by a plurality of the votes
of the holders of shares of common stock voting in person or by proxy at the
Meeting. Ratification of the appointment of the independent auditors shall be by
the affirmative vote of a majority of those shares voted at the Meeting. Under
Nevada law abstaining votes are deemed to be present for purposes of determining
whether a quorum is present at a meeting. On any matter voted upon, an
abstention will have the same effect as a negative vote.
The enclosed proxy confers discretionary authority to vote with respect to any
and all of the following matters that may come before the Meeting: (i) matters
which the Company does not know, a reasonable time before the proxy
solicitation, are to be presented at the Meeting; (ii) the election of any
person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; and (iii) matters incident to the conduct of the
Meeting. In connection with such matters, the persons named in the enclosed
proxy will vote in accordance with their best judgment.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The two persons listed below have been nominated by the Board of Directors to
serve as directors until the 2000 Annual Meeting of Stockholders. The directors
will be elected by a plurality of the votes of the holders of shares of Common
Stock meeting in person or represented by proxy at the Meeting. It is the
intention of the persons named in the accompanying proxy to vote each proxy
executed and returned by a stockholder for the election of the two nominees as
directors of the Company, unless authority to do so is withheld on such proxy.
All of the nominees are now directors of the Company. Should any candidate for
director become unavailable for any reason, such proxies will be voted for the
alternate candidate, if any, chosen by the Board of Directors. Each nominee has
consented to serve if elected and the Company has no reason to believe that any
of the nominees will be unable to serve.
Nominees For Election To The Board Of Directors
<TABLE>
<CAPTION>
Age as of Term
Class A Directors Director since February 24, 1997 Expires
- ----------------- -------------- ----------------- -------
<S> <C> <C> <C>
Norman S. Berson 1987 70 2000
Barry S. Meyers 1996 56 2000
</TABLE>
Mr. Berson has been a shareholder in the law firm of Fineman & Bach, P.C.,
of Philadelphia, Pennsylvania, and its predecessors since 1981. The Company has
retained Fineman & Bach, P.C. to represent it on various legal matters. From
1967 to 1982, Mr. Berson was a member of the House of Representatives of the
Commonwealth of Pennsylvania. Mr. Berson has been a director of the Company
since 1987.
Mr. Meyers was appointed the Chief Operating Officer on March 29, 1996.
Prior to its acquisition by the Company on March 11, 1996, Mr. Meyers was a
founder of The Consortium and served as its President since its inception in
1975. Prior to founding The Consortium, Mr. Meyers was New
<PAGE>
York Branch Manager for Information Data Services. Before that, he was
Regional Director of Sales and Systems for nine years with ITT Data Services. He
was also a Communications Consultant with AT&T. Mr. Meyers holds a B.A. in
Psychology from Hunter College, and has completed graduate course work in Data
Processing and Business Administration. Mr. Meyers has been a director of the
Company since 1996.
Directors Not Currently Subject To Re-Election
<TABLE>
<CAPTION>
Age as of Term
Class B Directors Director since February 24, 1997 Expires
- ----------------- -------------- ----------------- -------
<S> <C> <C> <C>
Robert B. Kerr 1994 54 1998
Woodrow B. Moats, Jr. 1994 64 1998
</TABLE>
Mr. Kerr is a founder and partner of Everingham & Kerr, Inc., a merger and
acquisition consulting firm located in Haddon Heights, New Jersey which provides
professional intermediary services and other consulting services to small and
middle market manufacturing, distribution and service businesses. From 1974 to
1987, Mr. Kerr was Vice President-Sales, for Shieldalloy Corporation, a
specialty metals producer. Mr. Kerr received a B.S. in Mechanical Engineering
and a B.A. in Arts and Sciences from Pennsylvania State University in 1965 and
an M.B.A. in Management from Wayne State University in 1970. Mr. Kerr has been a
Director of the Company since 1994.
Mr. Moats is President of W.B. Moats & Associates, Berwyn, Pennsylvania, a
marketing communications organization specializing in business to business
marketing. From 1975 to 1980 he was Senior Vice President - Corporate Marketing
and Public Relations of National Railway Utilization Corporation. Mr. Moats is a
graduate of the University of Miami, Florida as a marketing major specializing
in advertising. Mr. Moats has been a Director of the Company since 1994.
<TABLE>
<CAPTION>
Age as of Term
Class C Directors Director since February 24, 1997 Expires
- ----------------- -------------- ----------------- -------
<S> <C> <C> <C>
Leon Kopyt 1991 50 1999
Stanton Remer 1992 45 1999
Martin Blaire 1996 55 1999
</TABLE>
<PAGE>
Mr. Kopyt was appointed President and Chief Executive Officer on January
23, 1992 and from May 1, 1990 to that date served as Chief Operating Officer of
the Company. His prior positions with the Company were that of Chief Financial
Officer and Treasurer. Mr. Kopyt's prior experience includes serving as the
President and Chief Executive Officer of a transportation and defense products
manufacturing company. Mr. Kopyt holds a B.S. degree in Electrical Engineering
and has attended M.B.A. course work. Mr. Kopyt has been a Director of the
Company since 1991.
Mr. Remer was appointed Chief Financial Officer and Treasurer on May 19,
1994. Mr. Remer is a Certified Public Accountant with an M.B.A. in Finance from
Temple University and a B.S. in Textile Science from the Philadelphia College of
Textiles & Science. Mr. Remer has a diverse accounting and financial background.
Prior experiences include Chief Financial Officer for Sterling Supply
Corporation (1991-1992) and Managing Partner of a regional accounting firm
(1983-1991). Mr. Remer has been a Director of the Company since 1992.
Mr. Blaire was appointed the Executive Vice President on March 29, 1996.
Prior to its acquisition by the Company on March 11, 1996, Mr. Blaire was a
founder of The Consortium and Executive Vice President, Secretary and Treasurer
since its inception in 1975. Prior to founding The Consortium, Mr. Blaire was a
Branch Manager for Stromberg Datagraphix, a General Dynamics subsidiary that
manufacturers and sells computer output microfilm. He also held the position of
District Sales Manager for ITT Data Services. His previous experience was
heavily involved in accounting and finance. Mr. Blaire holds a B.B.A. in
Accounting from the University of Miami, Florida. Mr. Blaire has been a Director
of the Company since 1996.
EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company as of February 24, 1997
who will serve until the next annual meeting of stockholders or until their
successors are elected or appointed and qualified:
<PAGE>
Name Age Position
Leon Kopyt 50 Chairman, Chief Executive Officer and Director
Barry S. Meyers 56 Chief Operating Officer, Executive Vice President
and Director
Martin Blaire 55 Executive Vice President and Director
Stanton Remer 45 Chief Financial Officer, Treasurer, Secretary and
Director
Peter R. Kaminsky 57 Senior Vice President
For a summary of the business experience of Messrs.Kopyt, Meyers, Blaire
and Remer, see "Proposal 1 - Election of Directors."
Peter R. Kaminsky became a Senior Vice President on May 1, 1996. After
service in the U.S. Army during the Vietnam Era, Mr. Kaminsky received his B.S.
in Science from American University where he also completed graduate courses in
Information Systems. From 1965 to 1974, Mr. Kaminsky was Assistant to the
President of a subsidiary of the Equitable Life Assurance Society where his
responsibilities included management recruitment, acquisitions, marketing
literature development and public relations. Mr. Kaminsky was one of three
founders of The Consortium (New Jersey) in 1974. In 1985, Mr. Kaminsky founded
The Consortium of Maryland, Inc. which was acquired by the Company in 1996.
<PAGE>
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended October 31, 1996, there were four (4) formal
meetings of the Board of Directors. Numerous other actions were undertaken by
consent resolutions. The Board of Directors has designated from among its
members an executive Committee, which consists of Messrs. Kopyt, Remer, Meyers
and Blaire; a Compensation Committee, which consists of Messrs. Moats and Kerr;
and an Audit Committee, which consists of Messrs. Kerr and Berson. The Executive
Committee, which has the authority of the Board of Directors to manage the
business of the Company between formal meetings of the full Board, held six (6)
meetings during the fiscal year. The Compensation Committee, which reviews and
recommends salaries for officers and administers the Company's various stock
option plans, held three (3) meetings during the fiscal year. The Audit
Committee, which reviews the Company's financial and accounting practices and
controls, held three (3) meeting during the fiscal year.
Directors who are in the employ of the Company do not receive any directors'
fees. Directors who are non-salaried received $750.00 for each director's
meeting they attend and $300.00 for each special committee meeting or special
assignment. Special assignments are duties performed by Board members in
addition to regularly assigned tasks as Board members. Mr. Berson waived all
fees related to his service on the Board. Fineman & Bach, P.C. of which Mr.
Berson is a shareholder, rendered legal services to the Company during 1996.
Report of the Compensation Committee
GENERAL. The Company's executive compensation program is administered by
the Compensation Committee of the Board of Directors of the Company (the
"Committee"), which is comprised of two independent directors, Robert B. Kerr
and Woodrow B. Moats, Jr. The Committee has oversight responsibility for the
implementation of executive compensation and the executive benefit programs of
the Company. The primary functions of the Committee include: (i) review, approve
and determine, in its discretion, the annual salary, bonus and other benefits,
direct and indirect, of the chief executive officer, other management directors,
all executive officers and designated other members of senior management; (ii)
review and submit to the full Board, recommendations concerning amendments to
existing or the proposed adoption of any new stock option plans; (iii)
negotiate, review, approve and determine, in its discretion, the adoption of any
compensatory plans, arrangements or agreements between the Company and any of
the chief executive officer, other management directors, all executive officers,
and designated
<PAGE>
other members of senior management (collectively, the "Key Executives") or any
amendments thereto; and (iv) establish and periodically review the Company's
policies in the area of management perquisites.
GOALS. In determining the amount and composition of executive compensation for
the Key Executives and administering the various stock option plans, the
Committee is guided by the following goals:
1 . Attract, motivate and retain the Key Executives necessary to the
Company's success by providing an executive compensation program comparable to
that offered by companies with which the Company competes for such Key
Executives;
2. Afford the Key Executives an opportunity to acquire or increase their
proprietary interest in the Company through the grant of options, stock
appreciation rights, and restricted stock awards to align the interests of the
Key Executives more closely with that of the overall goals of the Company; and
3. Insuring that a substantial portion of the Key Executives' compensation is
variable and is tied to quantifiable short-term goals (annual performance) and
long-term measures (stock-based incentives awards) of the Company's performance.
These principles are implemented through the Committee's application of several
factors which are considered in establishing the components of the Key
Executives' compensation package. As a general rule, the Company attempts to
structure a Key Executives' compensation package through the use of essentially
three elements: (i) a base salary which reflects individual performance and is
designed primarily to be competitive with salary levels of similar companies
with which the Company competes; (ii) annual discretionary bonuses, if any, tied
to the Company's achievement of performance goals; and (iii) long-term
incentives in the form of stock options or other Company securities which
strengthen the mutuality of interest between the Key Executives and the
Company's stockholders. Additional factors are also taken into consideration,
but to a lesser extent. The Committee may, in its discretion, apply entirely
different factors, particularly different measures of financial performance, in
recommending and/or setting executive compensation for future fiscal years, but
all compensation decisions will be designed to further the general goals as
indicated
<PAGE>
above.
Base Salary. As a general matter, the Company attempts to establish base
salaries for each of its Key Executives based upon their individual performance
and contribution to the organization, as measured against executives of
comparable position in similar industries and companies. Many of the Company's
Key Executives, however, are employed under employment agreements that were
established in connection with certain of the Company's more recent acquisition
transactions. Accordingly, these arrangements were negotiated in the context of
an acquisition transaction and are generally based upon the executive's level of
compensation prior to the acquisition.
Annual Incentive Compensation. As a general matter, the Company attempts to
award bonuses on a discretionary basis based upon what the Committee views as
extraordinary contributions to the organization when measured against the
Company's achievement of certain performance goals. Since many of the Company's
Key Executives are employed under fixed rate employment agreements, awards of
incentive compensation have not been material to the Company. During fiscal
1996, the only bonus granted was to Leon Kopyt for $50,900, pursuant to his
employment agreement. No other incentive bonuses were granted to Key Executives
during fiscal 1996.
Long-Term Incentives. The Committee intends to periodically consider the grant
of stock options or other Company securities to certain of its Key Executives.
The grants are designed to align the interests of each Key Executive with those
of the stockholders and provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
business. Each grant is intended to permit the Key Executive to acquire shares
of the Company's common stock at a fixed price per share (typically, the market
price on the grant date) over a specified period of time (typically up to ten
years), thus providing a return to the Key Executive only if the market price of
the shares appreciates over the option term. The size of the option grant to
each Key Executive would be set to achieve a potential percentage ownership
stake in the Company that the Committee deems appropriate in order to create a
meaningful opportunity for stock ownership based upon the individual's current
position with the Company, but also takes into account the individual's
potential for future responsibility over the option term, the individual's
personal performance in recent periods and the individual's current holdings of
the Company's stock and options. 11,720 options were granted to Leon Kopyt in
fiscal 1996.
<PAGE>
Compensation of Chief Executive Officer
Leon Kopyt is the Chairman of the Board and Chief Executive Officer of the
Company. Mr. Kopyt's compensation is determined pursuant to the goals and
principles described above and by the terms of his employment agreement.
Following the review of the Company's performance during fiscal 1996, the
Committee concluded that it was in the best interest of the Company to provide
Mr. Kopyt with a significant incentive to remain the Company's Chairman and
Chief Executive Officer on a long-term basis without being subject to the risks
associated with a change of control transaction. Accordingly, effective as of
November 30, 1996, the Company amended and restated an existing termination
benefits agreement dated December 1993 with Mr. Kopyt. See "EXECUTIVE
COMPENSATION - Change in Control Arrangements." The Committee believes that Mr.
Kopyt's compensation and other arrangements with the Company fairly compensate
him for his vision and leadership in developing the Company, overseeing the
successful acquisition and integration of several temporary staffing service
companies and generally guiding the Company to achieve its goals and objectives.
Executive Compensation Policy
The Committee believes the Company's executive compensation program has
enabled the Company to attract, motivate and retain Key Executives by providing
competitive total compensation opportunity based on performance. Competitive
based salaries that reflect each individual's level of responsibility and annual
variable performance-based incentive awards are important elements of the
Company's cash compensation policy. The Committee also believes that grant of
options under the Company's various stock option plans not only aligns interests
of the Key Executives with shareholders but creates a competitive advantage for
the Company as well. The Committee believes the Company's executive compensation
program strikes an appropriate balance between short and long-term performance
objectives. The Committee believes that the overall compensation package of the
Company's Key Executives is consistent with the Committee's stated goals and
objectives.
Compensation Committee of the Board of Directors
Robert B. Kerr
Woodrow B. Moats, Jr.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the
Company's principal executive officers for the fiscal year ended October 31,
1996. Further, the Company was not a party to any plans or arrangements
providing cash or non-cash forms of compensation to its principal executive
officers, other than as listed below.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options/SARs (#) Compensation($)
Leon Kopyt
<S> <C> <C> <C> <C> <C>
President and CEO, 1996 $291,923 $50,900 11,720(*) $12,068(1)
(Principal Executive 1995 $249,161 $26,300 40,300 $11,062(1)
Officer) 1994 $209,955 $40,500 30,000 $ 9,262(1)
Barry S. Meyers
Executive Vice
President, COO 1996 $159,351(2) $ 9,047(1)
Stanton Remer
CFO, Treasurer,
Secretary 1996 $120,000 $ 2,544(1)
(Principal Accounting 1995 $100,000 10,000 $ 2,345(1)
Officer) 1994 $ 80,000 10,000 $ 2,334(1)
Martin Blaire
Executive Vice
President 1996 $159,351(2) $ 8,468(1)
Peter R. Kaminsky
Senior Vice
President 1996 $100,000(2) $ 5,000(1)
</TABLE>
(1) Represents premiums paid for life and disability insurance.
(2) Reflects compensation for partial year employment.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realized
Value of Assumed
Rates of Stock Price
Appreciation for
Individual Grants Option Term
---------------------------------------- ------------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or
Option/SARs Employees in Base Price Expiration
Name Granted(#)(1) Fiscal Year ($/Sh) Date 5% 10%
- ---- ------------- ----------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Leon Kopyt 11,720(*) 37.7% $5.00 3/1/06 $36,853 $93,393
</TABLE>
(1) Options are exercisable one year from the date of the grant. Shares
received upon exercise of the option may not be sold for at least one
year from the date of exercise.
<TABLE>
<CAPTION>
OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
Number of
Securities
Underlying
Exercised Value of Unexercised
Options/SARs In-the-Money
at FY-End (#) Options/SARs at
Shares Shares FY-End ($)
Acquired on Exercisable/ Exercisable/
Name Exercise(#) Value Realized ($) Unexercisable Unexercisable
- ---- ----------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Leon Kopyt 0 0 92,300/ $658,128/
11,720(*) $ 53,443
Stanton Remer 0 0 30,000/ $199,225
0
- -----------------------
</TABLE>
(*) Subsequent to the fiscal year end, the Board of Directors of the
Company adopted the Company's 1996 Executive Stock Plan which provides
for the issuance of Options, SAR's and Restricted Stock to qualifying
individuals. On November 21, 1996, Mr. Kopyt was granted 500,000
Options (of which 375,000 Options are not currently exercisable and are
subject to certain performance criteria). See "Stock Option Plans."
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Details of number of shares and value of unexercised "in the money" options
follows:
Name # Shares Option Price Price 10/31/96 Per Share Total Value
- ---- -------- ------------ -------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Leon Kopyt 104,020 $1.09 - $5.00 $9.56 $4.56 - $8.47 $711,571
Stanton Remer 30,000 $2.66 - $3.44 $9.56 $6.12 - $6.90 $199,225
</TABLE>
Director Compensation
Members of the Board of Directors who are nonsalaried receive $750 for each
Directors meeting they attend and $300 for each special committee meeting or
special assignment. The following table sets forth amounts payable to members of
the Board of Directors for the fiscal year ended October 31, 1996
<TABLE>
<CAPTION>
Board of Directors Special
Director Meetings Assignments (a)
<S> <C> <C>
Leon Kopyt -- --
Barry S. Meyers -- --
Martin Blaire -- --
Stanton Remer -- --
Norman S. Berson (b) -- --
Robert B. Kerr $ 3,000 --
Woodrow B. Moats, Jr. 3,000 $ 4,060
-------- -------
$ 6,000 $ 4,060
======= =======
</TABLE>
(a) Special assignments are duties performed by Board Members in addition
to regularly assigned tasks as Board Members.
(b) Mr. Berson does not receive fees for Directors or Committee meetings.
Executive Employment Agreements
The Company has employment agreements with each of Messrs. Kopyt, Meyers,
Blaire and Kaminsky which provide each executive officer with a base salary,
vacation time and other standard benefits. Each of the employment agreements
provide for terms of employment as identified below and are terminable upon the
death of the executive officer or if the executive officer is discharged for
"good and sufficient cause." The employment agreements also include standard
non-disclosure/non-competition provisions governing the conduct of the executive
officer during and after employment.
<PAGE>
Name Term
Barry S. Meyers March 11, 1996 to March 11, 1998 Martin Blaire March 11, 1996 to
March 11, 1998 Peter Kaminsky May 2, 1996 to May 2, 1998 Leon Kopyt March 1,
1996 to February 28, 1999 (*)
-----------------------
(*) The employment agreement is for a period of three years and contains
provisions for the automatic extension of his employment for additional
periods of one year.
In addition to base salary, certain of the employment agreements
provide for additional payments. Messrs. Blaire and Meyers' employment
agreements provide that each is to receive severance payments upon the earlier
of the expiration of their employment term or the date they are otherwise
terminated without "good and sufficient cause." In such an event, the individual
shall be entitled to continue to receive a salary at the level of his existing
salary for a period of one (1) year. Additionally, under Mr. Kopyt's employment
agreement, he is to receive a bonus based on the consolidated operating profits
before taxes for each fiscal year as follow: (i) up to $750,000 - 3% bonus; (ii)
over $750,000 and up to $1,500,000 - 2% bonus; and (iii) in excess of $1,500,000
- - 1% bonus. The bonus earned for fiscal 1996 amounted to $50,900.
Change in Control Arrangements
In December 1993, the Company entered into a termination benefits
agreements with Leon Kopyt. This Agreement, as amended and restated, effective
November 30, 1996, automatically extends the term of his employment following a
"change in control" for a period of five (5) years (the "Extended Term"). During
the Extended Term, the executive may terminate his employment for "good reason"
in the event of, among other things: (i) any change in executive's reporting
responsibilities and title; (ii) any change in the terms of executive's
employment; and (iii) any change in corporate strategy, direction of the
business or standing in the industry which in the executive's discretion renders
his continued employment by the Company inconsistent with his employment goals
and objectives.
Upon a termination for "good reason": (i) the Company shall pay to executive a
lump sum cash payment equal to the remaining salary and bonus otherwise due
during the Extended Term; (ii) the exercise price of any stock option held by
the executive shall be reduced to $.01 per share; and (iii) the Company shall
pay to executive an additional amount sufficient to pay any excise or other
taxes incurred (in excess of ordinary income taxes) by him by virtue of any of
the foregoing.
<PAGE>
For the purpose of this agreement, a "change of control" shall be deemed to
occur if: (i) a person or group of persons become the beneficial owners of 20%
or more of the Company's voting stock; (ii) there occurs a contested proxy
solicitation of the Company's shareholders that results in the contesting party
obtaining the ability to vote 20% or more of the Company's voting stock; (iii) a
sale, exchange or disposition of substantially all of the assets of the Company,
or a merger, consolidation or reorganization of the Company; (iv) during any
period of two consecutive years there is a change in the majority of the Board
of Directors; or (v) if executive no longer serves as Chairman of the Company's
Board of Directors. Exceptions to the "change of control" rules apply in the
event of certain private placements, public offerings and other share issuances
approved by the Board of Directors.
Had there been a change in control as of January 1, 1997, and had he elected to
terminate his employment immediately thereafter, Mr. Kopyt would have been
entitled to a payment of $2,950,000.
Compensation Pursuant to Plans
Employee Benefit Plans
The Company maintains 401(k) plans as of October 31, 1996 for the benefit of
eligible employees. The 401(k) plan is a profit-sharing plan, including a cash
or deferred arrangement pursuant to Section 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code"), sponsored by the Company for purposes of
providing eligible employees an opportunity to defer compensation and have such
deferred amounts contributed to the 401(k) plan on a pre-tax basis, subject to
certain limitations. The Company may, at the discretion of the Board of
Directors, make contributions of cash to match deferrals of compensation by
participants.
The Company made no contributions of cash to the 401(k) plans to match deferrals
of compensation by participants in the fiscal years ending October 31, 1996,
1995, or 1994. Amounts contributed to the 401(k) plans by executive officers
during the fiscal years ended October 31, 1996, 1995 and 1994 were $13,380,
$11,035, and $0, respectively. The amounts contributed by all employee
participants, excluding officers, during the period November 1, 1993 to October
31, 1996 totaled $798,436.
Stock Option Plans
<PAGE>
The Company believes that a key component to the compensation of its
executive officers should be through stock options. Stock options utilized by
the Company for this purpose have been designed to provide an incentive to these
employees by allowing them to directly participate in any increase in the
long-term value of the Company. This incentive is intended to reward, motivate
and retain the services of executive employees. Stock options are allocated to
both executive and non-executive employees on an annual basis by the
Compensation Committee.
On February 27, 1986, the shareholders of the Company approved the RCM
Technologies, Inc. 1986 Incentive Stock Option Plan ("1986 Plan") which
authorized the issuance not later than October 30, 1995 of up to 60,000 shares
of Common Stock to officers, directors and key employees of the Company and its
subsidiaries. No options remain available for issuance under the 1986 Plan.
On April 23, 1992, the shareholders of the Company approved the RCM
Technologies, Inc. 1992 Incentive Stock Option Plan ("1992 Plan") which
authorized the issuance not later than February 13, 2002 of up to 100,000 shares
of Common Stock to officers, directors and key employees of the Company and its
subsidiaries. The 1986 and 1992 Plans contain substantially the same terms.
Options under the 1986 and 1992 Plans are intended to be incentive stock options
pursuant to Section 422A of the Code. The option terms for the 1986 and 1992
Plans cannot exceed ten years and the exercise price cannot be less than 100% of
the fair market value of the shares at the time of grant. Three hundred (300)
options remain available for issuance under the 1992 Plan.
On May 19, 1994, the shareholders approved the RCM Technologies, Inc. 1994
Nonemployee Directors Stock Option Plan ("1994 Plan") as a means of recruiting
and retaining nonemployee directors of the Company. There are 80,000 shares of
Common Stock authorized under this Plan for issuance no later than July 19,
2004. All director stock options are granted at fair market value at the date of
grant. The exercise of options granted is contingent upon service as a director
for a period of one year. If the optionee ceases to be a director of the
Company, any option granted shall terminate. Ten thousand (10,000) options
remain available for issuance under the 1994 Plan.
On August 15, 1996, the Board of Directors approved the RCM Technologies,
Inc. 1996 Executive Stock Plan ("Executive Stock Plan") which authorized the
issuance not later than August 15, 2006 of up to 750,000 shares of the Company's
Common Stock, and which amount was later increased to 1,250,000 shares. Under
its terms, key management employees of the Company and its subsidiaries and
members of the Board of Directors of the Company and its subsidiaries are
<PAGE>
eligible to acquire or increase their proprietary interest in the Company by the
grant to such individual of stock options, stock appreciation rights and awards
of restricted common stock.
The Executive Stock Plan is administered by the Compensation Committee (the
"Compensation Committee") which is appointed by the Board of Directors of the
Company and consists solely of two or more "non-employee directors" as defined
in Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934 (the "Exchange
Act"). On November 21, 1996, the Company issued 500,000 options to its Chief
Executive Officer at an exercise price of $7.25. Of these, 125,000 are currently
exercisable and the remainder are subject to conditions to vesting relating to
certain performance criteria. Seven hundred and fifty thousand (750,000) options
remain available for issuance under the Executive Stock Plan.
Collectively, the 1986 Plan, 1992 Plan, 1994 Plan and the Executive Stock Plan
shall be referred to as the "Plans."
The Compensation Committee employs no particular set of mechanical criteria in
awarding stock options under the Plans. Rather, it evaluates a series of factors
including: (i) the overall performance of the Company for the fiscal year in
question; (ii) the performance of the individual in question; (iii) the
anticipated contribution by the individual to the Company on an overall basis;
(iv) the historical level of compensation of the individual; (v) the level of
compensation of similarly situated executives in the Company's history; and (vi)
that level of combination of cash compensation and stock options that would be
required from a competitive point of view to retain the services of a valued
executive officer.
Comparison of Five-Year Cumulative Total Returns
The following graph compares the performance of the Company's Common Stock
with the performance of the Standard & Poor's 500 Composite Stock Price Index
("S&P 500 Index") and a peer group index by measuring the changes in common
stock prices from October 31, 1991, plus assumed reinvested dividends. The
Securities and Exchange Commission's rules require, if a published peer group
does not exist, that a company create a peer group index with which to compare
its stock performance by selecting a group of companies in lines of business
similar to its own. The Company has found no published peer group which
accurately mirrors the Company's business. Accordingly, the Company has created
a special peer group index that includes companies in the principal lines of
business in which the Company does business. The common stocks of the following
companies have been included in the Peer Group Index: American Consolidated
Growth Corp.; Consolidated Technology Group Ltd.; Digital Solutions, Inc.;
Hospital Staffing Services, Inc.; Joule, Inc.; Personnel Management, Inc.;
Solomon Page Group Ltd.; and Winston Resources, Inc. The chart assumes that $100
was invested on October 31, 1991 in the Company's Common Stock,
<PAGE>
the S&P 500 Index and the Peer Group Index, and that all dividends were
reinvested. In addition, the graph weighs the peer group on the basis of its
respective market capitalization, measured at the beginning of each relevant
time period.
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
Total Return Analysis
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/91 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96
RCM Technologies, Inc. $100 $17.50 $36.80 $36.80 $38.60 $108.10
Peer Group $100 $40.80 $30.80 $23.80 $14.90 $20.40
Nasdaq Composite (US) $100 $112.80 $145.30 $146.10 $196.70 $232.10
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table sets forth, as of the Record Date, information with respect
to the securities holdings of all persons which the company, by virtue of
filings with the Securities and Exchange Commission, has reason to believe may
be deemed the beneficial owner of more than 5% of the Company's Common Stock and
the number of shares of the Company's Common Stock owned by each director or
nominee for director of the Company, and all directors and officers of the
Company as a group. Unless otherwise indicated, each person set forth below has
sole voting and investment power on the shares reported. In addition, a person
is deemed to have beneficial ownership of the shares that such person has the
right to acquire within sixty (60) days after the Record Date.
<PAGE>
Number Percentage
Directors and Officers of Shares(1) of Class(2)
Leon Kopyt(3)
447 Waring Street
Philadelphia, PA 19116 880,745 16.2%
Barry S. Meyers
384 Highview Terrace
Ridgewood, NJ 07450 607,468 12.6%
Martin Blaire
32 Lewis Road
Irvington, NY 10535 607,468 12.6%
Stanton Remer(5)
113 Beverly Road
Wynnwood, PA 19090 34,000 *
Peter R. Kaminsky
7315 Wisconsin Avenue
Bethesda, MD 20814 56,327 1.2%
Norman S. Berson(4)
2421 Spruce Street
Philadelphia, PA 19103 20,000 *
Robert B. Kerr(6)
115 White Horse Pike
Haddon Heights, NJ 08035 20,000 *
Woodrow B. Moats, Jr.(6)
745 Old State Road
Berwyn, PA 19312 20,000 *
<PAGE>
Limeport Investments, LLC(7)
1760 Market Street, 12th Floor
Philadelphia, PA 19101 276,625 5.7%
Mr. and Mrs. Philip J. Hempleman
& Sanford B. Prater
c/o Ardsley Advisory Partners
646 Steamboat Road
Greenwich, CT 06830 472,500 9.5%
All Directors and Officers
as a group (8 persons) 2,246,008 40.7%
*Represents less than 1% of the Company's outstanding Common Stock.
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations promulgated under the Exchange Act and, accordingly,
may include securities owned by or for, among others, the spouse and/or
minor children of an individual and any other relative who has the same
home as such individual, as well as other securities as to which the
individual has or shares voting or investment power or which each
person has the right to acquire within 60 days through the exercise of
options, or otherwise. Beneficial ownership may be disclaimed as to
certain of the securities. Percentage of ownership is based upon
4,816,676 shares of Common Stock outstanding as of February 24, 1997.
(2) 62,800 shares of Common Stock held in treasury were deducted from the
total Common Stock outstanding at February 24, 1997 when computing the
percentage of Common Stock.
(3) Includes 604,020 options (386,720 of which are not presently
exercisable) under the Company's Plans and includes 276,625 shares held
by Limeport Investments, LLC over which Mr. Kopyt has voting power
solely with regard to the election of directors of the Company.
(4) Includes 20,000 options (10,000 of which are not presently exercisable)
under the Company's Plans.
(5) Includes 30,000 options exercisable options under the Company's Plans
and includes 4,000 Class C Common Stock Warrants at an exercise price
of $3.00 per share.
<PAGE>
(6) Includes 20,000 options (16,000 of which are not presently
exercisable under the Company's Plans.
(7) Limeport Investments, LLC has granted voting rights over these
shares to Leon Kopyt with respect to the election of
directors. On all other matters, voting rights have been
retained by Limeport Investments, LLC.
Certain Voting Arrangements
1. On February 5, 1996, the Company issued and sold 276,625 shares of
Common Stock to Limeport Investments, LLC ("Limeport") in a private placement
transaction. In conjunction with this transaction, Limeport granted Mr. Kopyt an
irrevocable proxy entitling him to vote such shares solely in connection with
the election of directors of the Company, at any regular or special meeting of
the stockholders.
2. Effective August 31, 1995, the Company completed the acquisition of Cataract,
Inc. ("Cataract") pursuant to a Merger Agreement dated July 31, 1995 (the
"Cataract Merger Agreement"). Pursuant to the terms of the Cataract Merger
Agreement, the former Cataract shareholders pledged until November 30, 1998,
approximately 312,311 shares of the Company's common stock ("Cataract Shares")
they received as part of the merger consideration, in order to guarantee certain
performance criteria of Cataract established in the Cataract Merger Agreement.
Following the expiration of the pledge period, the Cataract Shares are to be
placed in a voting trust until the earlier of: (i) the public or private sale of
such shares in open market transactions to unaffiliated third parties; or (ii)
the resignation or removal from office of Leon Kopyt, currently Chief Executive
Officer and President of the Company. Notwithstanding the above, one-third of
the Cataract Shares shall be released from trust commencing August 31, 2000, and
thereafter an additional one-third of the Cataract Shares shall be released from
trust upon each of August 31, 2001 and August 31, 2002. During the period in
which the Cataract Shares are subject to pledge and the voting trust, the
Cataract Shares are to be voted by the Company's Board of Directors on behalf of
the former shareholders of Cataract.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Berson, a Director of the Company, is a shareholder in the law firm
of Fineman & Bach, P.C., which serves as counsel to the Company. The Company
paid legal fees of $65,887 during 1996 to Fineman & Bach, P.C.
<PAGE>
The Company has adopted a policy which requires that all transactions with
affiliates of the Company be approved by a majority of the disinterested
Directors of the Company and be on terms no less favorable to the Company than
can be obtained from unaffiliated persons. There have been no transactions in
excess of $60,000 with affiliates during the fiscal years ended October 31,
1996, 1995 or 1994, except as set forth above.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires directors
and certain officers of the Company, as well as persons who own more than 10% of
a registered class of the Company's equity securities ("Reporting Persons"), to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. The Company believes that all Reporting
Persons have timely complied with all filing requirements applicable to them.
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Grant Thornton LLP, independent certified
public accountants, as independent auditors of the Company for the fiscal year
ending October 31, 1997. Representatives of Grant Thornton LLP are expected to
be present at the Meeting to respond to appropriate questions.
Vote Required for Approval
The affirmative vote of a majority of the shares present in person or by proxy
is required for ratification of Grant Thornton LLP as the Company's independent
auditors for the fiscal year ending October 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
1997 FISCAL YEAR.
OTHER MATTERS
<PAGE>
The Board of Directors does not know of any other matter which is
intended to be brought before the Meeting, but if such matter is presented, the
persons named in the enclosed proxy intend to vote the same according to their
best judgment.
The enclosed proxy may be revoked by a later-dated proxy, by giving notice to
the Secretary of the Company in writing prior to the meeting or by personal
notification at the Meeting prior to the voting.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Company without additional compensation. The Company will
reimburse brokers and other persons holding stock in their names or in the names
of nominees for their expenses incurred in sending proxy material to principals
or obtaining their proxies.
1997 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1997 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's 1997 proxy statement,
they must be received by the Company at its principal office in Pennsauken, New
Jersey, on or before October 28, 1997.
By order of the Board of Directors
Leon Kopyt, Chief Executive Officer
<PAGE>
RCM TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors The undersigned
hereby appoints Leon Kopyt and Stanton Remer and each of them Proxies with power
to appoint a substitute and hereby authorizes them to represent and to vote all
shares of Common Stock of RCM Technologies, Inc. held of record by the
undersigned on February 17, 1997 at the Annual Meeting of Stockholders of RCM
Technologies, Inc. to be held on April 25, 1997 and at any adjournments thereof,
and to vote as directed on the reverse side of this form and, in their
discretion, upon such other matters not specified as may properly come before
said meeting.
1. Proposal 1 -
Election of Directors
Nominees: Norman S. Berson and Barry S. Meyers
FOR all nominees listed above, except vote withheld from the following
nominee(s):
__________________________________
WITHHELD
The Board of Directors recommends a vote FOR Proposal 1
2. Proposal 2 -
Ratification of Grant Thornton LLP as the Company's independent
auditors for the 1997 Fiscal Year.
FOR AGAINST ABSTAIN
The Board of Directors recommends a vote FOR Proposal 2
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN, IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED, FOR THE ELECTION OF DIRECTORS AND FOR APPROVAL OF THE
RATIFICATION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS FOR
THE COMPANY.
The undersigned hereby acknowledges receipt of the notice of Annual Meeting
nd Proxy Statement.
PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.
NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
_________________________________________
Signature
_________________________________________
Date
