-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CMZeRDoTXdKVq56d7ve6J5ddfvXr+2wjKPWjhW0JV4xplDuSM+p7ulGcfFrtQca+ k7otNqNxotJYgFbmJJ48Sg== 0000700841-97-000020.txt : 19971008 0000700841-97-000020.hdr.sgml : 19971008 ACCESSION NUMBER: 0000700841-97-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19971031 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971007 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000700841 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 951480559 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10245 FILM NUMBER: 97691605 BUSINESS ADDRESS: STREET 1: 2500 MCCLELLAN AVE STE 350 CITY: PENNSAUKEN STATE: NJ ZIP: 08109 BUSINESS PHONE: 6094861777 MAIL ADDRESS: STREET 1: 2500 MCCLELLAN AVENUE STREET 2: STE 350 CITY: PENNSAUKEN STATE: NJ ZIP: 08109-4613 8-K 1 8-K CURRENT REPORT 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) 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 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 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 CAMELOT CONTRACTORS LIMITED FINANCIAL STATEMENTS June 30, 1997 and 1996 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 CAMELOT CONTRACTORS LIMITED BALANCE SHEETS June 30, 1997 and 1996
ASSETS 1997 1996 ------------ -------- Current assets 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 = ========= = =========
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996 -------------- --------- Current liabilities 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 = ========= = =========
The accompanying notes are an integral part of these financial statements. - 3 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF INCOME Years Ended June 30, 1997 and 1996
1997 1996 --------- ----------- 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 = ======= = =======
The accompanying notes are an integral part of these financial statements. - 4 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Nine Months Ended July 31, 1997 and 1996
Common Stock Retained Shares Amount Earnings 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 ==================================== =========
The accompanying notes are an integral part of these financial statements. - 5 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF CASH FLOWS Years Ended June 30, 1997 and 1996
1997 1996 ----------------------- Cash flows from operating activities: 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 = ========= = =======
The accompanying notes are an integral part of these financial statements. - 6 - 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 $15,723, respectively. Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. - 7 - CAMELOT CONTRACTORS LIMITED NOTES TO FINANCIAL STATEMENTS June 30, 1997 and 1996 2. Income Taxes
The sources of the deferred tax liability and the tax effect of each is as follows: 1997 1996 -------------- --------- Accounts receivable ($ 344,348) ($ 457,768 ) Accounts payable 60,452 80,600 Accrued payroll 27,373 36,500 ------ ------ ($ 256,523) ($ 340,668 ) == ======= == =======
The provision for income taxes charged to operations consisted of the following as of June 30: 1997 1996 -------------- --------- Current 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 = ======= = =======
- 8 - 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:
Revenues for Trade Receivable the Year Ended Balance as of June 30, 1997 June 30, 1996 --------------- --------------- Customer A 2,931,607 255,293 Customer B 1,361,761 123,361
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:
1997 1996 -------------- --------- Interest $ 231 $ 13,474 = === = ====== Income taxes $ 364,702 $ 53,450 = ======= = ======
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 - CAMELOT CONTRACTORS LIMITED UNAUDITED FINANCIAL STATEMENTS July 31, 1997 and 1996 CAMELOT CONTRACTORS LIMITED BALANCE SHEETS July 31, 1997 and 1996 (Unaudited) ASSETS
1997 1996 ------------ -------- Current assets 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 = ========= = =========
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996 -------------- --------- Current liabilities 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 = ========= = =========
The accompanying notes are an integral part of these financial statements. - 1 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS Nine Months Ended July 31, 1997 and 1996 (Unaudited)
1997 1996 ----------------- ---------- 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 = ========= ==============
The accompanying notes are an integral part of these financial statements. - 2 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF INCOME Three Months Ended July 31, 1997 and 1996 (Unaudited)
1997 1996 ----------------- ---------- 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 = ======= = =======
The accompanying notes are an integral part of these financial statements. - 3 - CAMELOT CONTRACTORS LIMITED STATEMENTS OF CASH FLOWS Nine Months Ended July 31, 1997 and 1996 (Unaudited)
1997 1996 ----------------------- Cash flows from operating activities: 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 = ========= = =======
The accompanying notes are an integral part of these financial statements. - 4 - 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 - 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. RCM Technologies, Inc. Unaudited Proforma Balance Sheet July 31, 1997
RCM Camelot Adjustments & Proforma Technologies, Inc. Contractors, Limited Eliminations Combined Assets: 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 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
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME YEAR ENDED OCTOBER 31, 1996
Historical Historical Pro Forma ---------------------------------------------------------------------- RCM Progamming Camelot Technologies, Inc Alternatives of MN Contractors LTD (NOTE D ) Combined Adjustments Combined --------- -------- ----------- -------- 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 ========= ===== ========= === ========= 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.
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME Nine Months Ended July 31, 1997
Historical Pro Forma RCM Camelot Technologies, Inc. Contractors LTD Adjustments Combined 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 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 ======
EX-10 2 STOCK PURCHASE AGREEMENT 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 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 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 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 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] SCHEDULE 2.4 [List of persons eligible to receive Additional Purchase Consideration] Camelot Contractors Limited Employees Trust dated 9/23/97 SCHEDULE 3.2(a) [Unaudited Financial Statements for the fiscal years ended June 30, 1997, June 30, 1996 and June 30, 1995] SCHEDULE 3.3 [Undisclosed Liabilities of Acquiree] None SCHEDULE 3.5 [Accounts Receivable of Acquiree as of August 31, 1997] SCHEDULE 3.6 [Material adverse changes] None SCHEDULE 3.7 [Litigation] None except attached claim of David M. McNamara SCHEDULE 3.9 [Articles of Incorporation, Bylaws and Amendments thereto of Acquiree] SCHEDULE 3.10 [Tax information] None SCHEDULE 3.11 [All material Contracts and Agreements of Acquiree] SCHEDULE 3.12 {Liens, encumbrances and general description of all real property in which Acquiree has an ownership interest] None SCHEDULE 3.13 [Licenses, trademarks and trade names of Acquiree] None SCHEDULE 3.14 [Consents to be obtained by Acquiree] None 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 SCHEDULE 3.18 [Messrs. Trotman, O'Keefe and Stevens' Obligation] None SCHEDULE 3.19 [Approvals required to be obtained by Acquiree Shareholders] None SCHEDULE 3.20 [Number and names of employees and compensation of all directors and officers of Acquiree - identifies all employee benefit plans] SCHEDULE 3.21 [Compliance with environmental and conservation laws] None SCHEDULE 3.22 {List of all insurance policies of Acquiree] SCHEDULE 3.23 [List of all bank accounts maintained or for the benefit of Acquiree] SCHEDULE 3.24 [List of 10 largest customers of Acquiree, based on dollar volume of income for Fiscal 1997] SCHEDULE 3.26 [Internal Revenue Service correspondence re: the Programmers] SCHEDULE 4.1 [Articles of Incorporation and Bylaws of RCM] SCHEDULE 4.3 [Consents to be obtained by RCM] Mellon Bank EX-10 3 ESCROW AGREEMENT 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 (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 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 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 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 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 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 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 AMARLY CORPORATION By: Name: Title: ESCROW AGENT Street Address City, State, Zip Code Telephone No. Telefax No. [NSB\04257 CAMELOT ESCROW AGREEMENT] 9 EX-10 4 EMPLOYMENT AGREEMENT 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 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 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 (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 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 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 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 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 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 10 EX-10 5 EMPLOYMENT AGREEMENT 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 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 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 (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 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 (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 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 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 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 EX-10 6 REGISTRATION RIGHTS AGREEMENT 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 (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. 2 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 3 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 4 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 5 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. 6 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 7 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, 8 (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. 9 (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] 10 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 11 -----END PRIVACY-ENHANCED MESSAGE-----