-----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, J95LMlZKuKiAYQmP/CvZ3jyUNTI1YlBGV9pPZh/u88ojX/uiK3fPo2Sl6wKJ6ycC blTR2TCmu5AS/wnTD0Pn5g== 0000700841-98-000009.txt : 19980615 0000700841-98-000009.hdr.sgml : 19980615 ACCESSION NUMBER: 0000700841-98-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981031 ITEM INFORMATION: FILED AS OF DATE: 19980612 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: 98647426 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 June 12, 1998 (Date of earliest event reported) (January 4, 1998) 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 January 4, 1998, RCM Technologies, Inc. ("Registrant") acquired Northern Technical Services, Inc. ("NTS"), a Milwaukee, Wisconsin-based provider of information technology personnel and professional engineering staffing services. The acquisition was completed through a stock purchase transaction (the "NTS Purchase") pursuant to which NTS, through an exchange of all of its outstanding shares of stock with the Registrant became a wholly-owned subsidiary of the Registrant. The NTS Purchase consideration paid to the former shareholders of NTS consisted of $3.1 in million cash and $1.5 million of contingent consideration payable over two years upon NTS achieving certain base levels of operating income for each of the two twelve month periods following the NTS Purchase. An additional earn-out payment shall be made to the former shareholders at the end of each of the two twelve month periods following the NTS Purchase, to the extent that operating income exceeds these base levels. The Purchase has been accounted for under the purchase method of accounting. The source of cash utilized in the NTS Purchase was from the Registrant's revolving credit facility. The cost in excess of net assets acquired will be approximately $3.2 million. It is anticipated the cost in excess of net assets acquired will be amortized over a 40 year period. The Purchase consideration paid by the Registrant was determined by negotiations between and among the representatives of the Registrant and NTS. Following the NTS Purchase, the directors and executive officers of NTS consist of Leon Kopyt Chief Executive officer, Stanton Remer Chief Financial Officer, and Merle Cook (Chief Executive Officer of NTS prior to the Purchase). NTS's assets consist of primarily of contracts and office equipment. These assets were used in providing information technology and professional engineering personnel to businesses and institutions. The Registrant plans for NTS to continue such course of business under the Registrant's control. Prior to the NTS Purchase, no material relationship existed between NTS and the Registrant or any of its affiliates, any director or officer of the Registrant, or any associate of any such director or officer. On February 2, 1998, the Registrant acquired Global Technology Solutions, Inc. ("GTS"), a Sacramento, California-based provider of information technology staffing services. The acquisition was completed through a stock purchase transaction (the "GTS Purchase") pursuant to which GTS, through an exchange of all of its outstanding shares of stock with the Registrant became a wholly-owned subsidiary of the Registrant. The GTS Purchase consideration paid to the former shareholders of GTS consisted of $3.7 in million cash and $2.0 million of contingent consideration payable over two years upon GTS achieving certain base levels of operating income for each of the two twelve month periods following the GTS Purchase. An additional earn-out payment shall be made to the former shareholders at the end of each of the two twelve month periods following the GTS Purchase, to the extent that operating income exceeds these base levels. The GTS Purchase has been accounted for under the purchase method of accounting. The source of cash utilized in the GTS Purchase was from the Registrant's revolving credit facility. The cost in excess of net assets acquired will be approximately $4.5 million. It is anticipated the cost in excess of net assets acquired will be amortized over a 40 year period. The GTS Purchase consideration paid by the Registrant was determined by negotiations between and among the representatives of the Registrant and GTS. Following the GTS Purchase, the directors and executive officers of GTS consist of Leon Kopyt Chief Executive Officer, Stanton Remer Chief Financial Officer, and Murthy Venkat (General Manager of GTS prior to the GTS Purchase). GTS's assets consist primarily of contracts and office equipment. These assets were used in providing information technology and professional engineering personnel to businesses and institutions. The Registrant plans for GTS to continue such course of business under the Registrant's control. Prior to the GTS Purchase, no material relationship existed between GTS 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 businesses acquired Audited Balance Sheets November 30, 1997 December 31, 1997 Audited Statements of Income Year ended November 30, 1997 Year ended December 31, 1997 Audited Statement of Changes in Stockholders' Equity, Year ended November 30, 1997 Year ended December 31, 1997 Audited Statement of Cash Flows Year ended November 30, 1997 Year ended December 31, 1997 Notes to Financial Statements November 30, 1997 December 31, 1997 (b) Pro forma financial information Unaudited Pro Forma Condensed Combined Balance Sheet, October 31, 1997. UnauditedPro Forma Condensed Combined Statement of Income for the year ended October 31, 1997. (c) Exhibits (1) Stock Purchase Agreement (Northern Technical Services, Inc.), dated December 31, 1997 (2) Stock Purchase Agreement (Global Technology Solutions, Inc.), dated February 4, 1998 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 (Principal Accounting Officer), Treasurer and Director June 11, 1998 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined financial statements give effect to the acquisition of Northern Technical Services ("NTS") by RCM Technologies, Inc. ("RCM") pursuant to a purchase transaction that was completed on January 4, 1998 and the acquisition of Global Technology Solutions, Inc. ("GTS") on February 2, 1998. This pro forma information has been prepared utilizing the historical financial statements of RCM, NTS and GTS. 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 NTS and GTS which are incorporated within this Form 8-K. The pro forma financial data are provided for comparative purposes only and do 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 acquisitions. 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, 1997 assumes that the acquisitions of NTS and GTS had occurred on November 1, 1996 (combining the results for the year ended October 31, 1997 for RCM, and the twelve months ended November 30, 1997 for NTS and the twelve months ended December 31, 1997 for GTS). The unaudited pro forma condensed combined balance sheet at October 31, 1997 assumes that the acquisitions of NTS and GTS had occurred on October 31, 1997. Acquisition The consideration paid to the former shareholders of NTS consisted of $3.1 million in cash and $1.5 million of contingent consideration payable over two years upon NTS achieving certain base levels of operating income for each of the two twelve month periods following the NTS Purchase. An additional earn-out payment shall be made to the former shareholders NTS at the end of each of the two twelve month periods following the NTS Purchase, to the extent that operating income exceeds these base levels. The consideration paid to the former shareholders of GTS consisted of $3.7 in million cash and $2.0 million of contingent consideration payable over two years upon GTS achieving certain base levels of operating income for each of the two twelve month periods following the GTS Purchase. An additional earn-out payment shall be made to the former shareholders of GTS at the end of each of the two twelve month periods following the GTS Purchase, to the extent that operating income exceeds these base levels. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS- Continued Assumptions Purchase Price Allocation Although neither RCM, NTS nor GTS has complete information at this time as to the fair value of NTS's or GTS'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 the 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 Condensed Balance Sheet October 31, 1997
Historical RCM Northern Technical Global Technology Technologies, Inc. Services, inc. Solutions, Inc. Adjustments & Proforma October 31, 1997 November 30, 1997 December 31, 1997 Eliminations Combined Assets: Cash and cash equivalents $918,028 $1,375,237 $96,755 A & B ($6,825,000) $25,260 G (150,000) E & F (2,189,760) H 6,800,000 Accounts and notes receivable 24,850,304 1,281,615 1,256,201 27,388,120 Prepaid expenses & other current assets 673,265 12,357 19,184 704,806 Total current assets 26,441,597 2,669,209 1,372,140 28,118,186 Property and equipment-net 1,135,405 252,883 33,047 1,421,335 Intangible assets 26,411,445 0 0 A & B 6,825,000 33,386,445 G 150,000 Other Assets 94,149 724,089 61,980 880,218 Total $54,082,596 $3,646,181 $1,467,167 $4,610,240 $63,806,184 Liabilities and Shareholders' Equity: Current Liabilities Bank- line of credit $2,000,000 $100,000 H $6,800,000 $8,900,000 Other current liabilities 7,162,482 1,028,415 74,908 C & D 3,165,330 9,241,375 E & F (2,189,760) Total current liabilities 9,162,482 1,028,415 174,908 18,141,375 Long Term Liabilities 308,129 340,215 648,344 Shareholders' equity 44,611,985 2,277,551 1,292,259 C & D (3,165,330) 45,016,465 Total $54,082,596 $3,646,181 $1,467,167 $4,610,240 $63,806,184 ADJUSTMENTS (A) to record initial cash consideration for purchase Nothern Technical Services, Inc. ("NTS") $3,125,000 in exchange for all the shares of NTS (B) to record initial cash consideration for purchase Global Technology Solutions, Inc.. ("GTS") $3,700,000 in exchange for all the shares of GTS (C) to record tangible net worth, as defined due selling shareholders of NTS $1,955,449 (D) to record net working capital, as defined due selling shareholders of GTS $1,209,881 (E) to record initial payment of tangible net worth, as defined to selling shareholders of NTS $1,372,666 (F) to record initial payment of net working capital, as defined to selling shareholders of GTS $817,094 (G) to reflect estimated acquisition costs incurred $150,000 (H) to reflect funds borrowed for revolving line of credit to finance transactions $6,800,000
RCM TECHNOLOGIES, INC., UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME YEAR ENDED OCTOBER 31, 1997
Historical Historical Pro Forma ------------------------------------------------------------------------------------ RCM Northern Technical Global Technology Technologies, Inc. Services, Inc. Solutions, Inc. Combined October 31, 1997 November 30, 1997 December 31, 1997 Adjustments Combined Revenues $113,959,093 $12,569,583 $5,750,116 $132,278,792 $132,278,792 Cost and expenses Cost of services 86,832,348 9,479,033 4,037,818 100,349,199 100,349,199 Selling, general and administrative 18,068,899 2,520,649 684,072 21,273,620 (413,000)A 20,860,620 Interest expense (income) 184,645 (53,514) 251 131,382 544,000 C 675,382 Depreciation and amortization 572,279 104,580 6,127 682,986 174,375 B 857,361 Total 105,658,171 12,050,748 4,728,268 122,437,187 122,742,562 Income before taxes 8,300,922 518,835 1,021,848 9,841,605 9,536,230 Income taxes (benefit) 3,460,989 0 2,718 3,463,707 (128,258)D 3,981,395 645,945 E Income from continuing operations 4,839,933 518,835 1,019,130 6,377,898 5,554,835 Loss from discontinued operations (362,500) (362,500) (362,500) Net Income $4,477,433 $518,835 $1,019,130 $6,015,398 $5,192,335 Diluted earnings per share $0.70 $997.76 $10,191.30 $0.82 Shares used in computing earnings per share 6,361,571 520 100 6,361,571 NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME (A) to reflect reduction of expenses attributable to consolidation of administrative overhead 413,000 (B) to provide for amortization on excess purchase price over net assets acquired based an estimated life of 40 years 174,375 (C) to impute interest expense for acquistion debt 544,000 (D) to tax effect adjustments 128,258 (E) to tax effect S-Corporation earnings previously distributed to former shareholders 645,945
EX-10 2 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT AMONG RCM TECHNOLOGIES, INC. NORTHERN TECHNICAL SERVICES, INC AND THE SHAREHOLDERS OF NORTHERN TECHNICAL SERVICES, INC TABLE OF CONTENTS Page 1. DEFINITIONS....................................................... 1 2. PURCHASE AND SALE OF SHARES OF ACQUIREE........................... 4 3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND THE ACQUIREE SHAREHOLDERS..................................... 6 4. REPRESENTATIONS AND WARRANTIES OF RCM.............................14 5. COVENANTS OF THE PARTIES...................................... ...16 6. THE CLOSING.......................................................21 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF . . . . . . . . . ........ 24 ACQUIREE AND ACQUIREE SHAREHOLDERS 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM. . . . . . . ........ 25 9. INDEMNIFICATION................................................ ..26 10. TERMINATION. . . . . . . . . . . . . . . . . . . . . . .... .... 29 11. ARBITRATION................................................. .....30 12. NOTICES...........................................................30 13. MISCELLANEOUS.....................................................32 LIST OF SCHEDULES 2.4 List of persons eligible to receive Additional Purchase Consideration 3.2(a) Financial Statements for the fiscal years ended November 30, 1996, November 30, 1995 and November 31, 1994 3.2(c) Payroll accruals not reflected in Financial Statements 3.3 Undisclosed Liabilities of Acquiree 3.4 Accounts Receivable of Acquiree as of the Closing Date 3.5 Material adverse changes 3.6 Litigation 3.8 Articles of Incorporation, Bylaws and Amendments thereto of Acquiree 3.10 All material Contracts and Agreements of Acquiree 3.11 Liens, encumbrances and general description of all real property in which Acquiree has an ownership interest 3.12 Licenses, trademarks and trade names of Acquiree 3.13 Consents to be obtained by Acquiree 3.14 Capitalization of Acquiree 3.17 Obligations of Messrs. Cook, Lillund, Kust, Ryan and Ms. Yeko. 3.18 Approvals required to be obtained by Acquiree Shareholders 3.19 Number and names of employees and compensation of all directors and officers of Acquiree - identifies all employee benefit plans 3.20 Compliance with environmental and conservation laws 3.21 List of all insurance policies of Acquiree 3.22 List of all bank accounts maintained or for the benefit of Acquiree 3.23 List of 10 largest customers of Acquiree, based on dollar volume of income for the twelve month period ended November 30, 1997 4.1 Articles of Incorporation and Bylaws of RCM 4.3 Consents to be obtained by RCM LIST OF EXHIBITS Exhibit "A" Employment Agreement with Merle F. Cook Exhibit "B" Employment Agreement with Gayle Yeko Exhibit "C" Employment Agreement with Warren Lillund Exhibit "D" Employment Agreement with Jerry Kust Exhibit "E" Employment Agreement with Peter Ryan Exhibit "F" Escrow Agreement Exhibit "G" Opinion of counsel for Northern Technical Services, Inc. Exhibit "H" Opinion of counsel for RCM Technologies, Inc. STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of this 31st day of December, 1997, by and among RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"); NORTHERN TECHNICAL SERVICES, INC, a Wisconsin corporation (the "Acquiree"); and those shareholders of Acquiree identified in Article 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 . . . . . . . Northern Technical Services, Inc., a Wisconsin corporation. Acquiree Shareholders. Those individuals and entities consisting of Merle Cook, Gayle Yeko, Warren Lillund, Jerry Kust and Peter Ryan who in the aggregate own 100% of the outstanding capital stock of Northern Technical Services, Inc. 1 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 Article 6 hereof. Closing Date . . . . . Unaudited balance sheet of the Balance Sheet Acquiree as of the Closing Date prepared in accordance with the requirements of GAAP and in accordance with the books and records of Acquiree. Closing Net. . . . . . Operating income of Acquiree for the Operating Income period December 1, 1996 to November 30, 1997 as reflected in Acquiree's financial statement prepared in accordance with the requirements of GAAP and in accordance with the books and records of Acquiree before (i) federal and state income taxes; (ii) salary and fringe benefits for Cook; (iii) all professional fees; (iv) non-recurring losses associated with shut-down of in-house operations; (v) charitable contributions made by Acquiree; and (vi) accrued severance. Cook . . . . . . . . . Merle F. Cook Financial . . . . . . Unaudited financial statements of Statements the Acquiree for the fiscal years ended November 30, 1996, November 30, 1995, and November 30, 1994 prepared in accordance with the requirements of GAAP. Fiscal Year. . . . . . Unaudited Balance Sheet of Acquiree Balance Sheet as of November 30, 1997 prepared in accordance with GAAP and in accordance with the books and records of Acquiree Interim Financial . . Unaudited financial statements of the Statements Acquiree for the months of December, 1996 through November, 1997 prepared in accordance with the requirements 2 of GAAP and in accordance with the books and records of Acquiree. GAAP . . . . . . . . Generally accepted accounting principles, consistently applied. Net Operating Income Subsequent to the Closing Date and (NOI) . . . . . . . . with respect to the ongoing business of the 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, but excluding (a) RCM Corporate Fees provided, however, all costs incurred by RCM for performance of administrative functions for Acquiree (including, without limitation, costs associated with accounting and payroll functions) which (i) are directly related to the ongoing business conducted by Acquiree and (ii) have the effect of reducing the NOI of Acquiree shall be allocated to Acquiree in amounts reasonably consistent with the historical costs incurred by Acquiree in connection with such administrative functions; (b) Federal and state income taxes; (c) acquisition amortization, interest expenses relating to the acquisition or expenses associated with the acquisition of the Acquiree by RCM. RCM . . . . . . . . . RCM Technologies, Inc., a Nevada corporation. RCM Corporate Fees. . All costs incurred by RCM not directly related to the ongoing business conducted by Acquiree including but not limited to, accounting and SEC filing fees and corporate headquarters personnel salaries. SEC . . . . . . . . . The Securities and Exchange Commission. 3 S Termination Date. . The date upon which the termination of the S Corporation status of Acquiree is deemed effective for federal tax purposes. Tangible Net Worth. . The amount by which all assets of Acquiree, less furniture, fixtures and equipment net of accumulated depreciation and any intangible assets, 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. 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 in the percentages set opposite each Acquiree Shareholder's names on Schedule 2.4 hereof (the "Shareholder Percentage"), the purchase consideration in the sum of $4,625,000, subject to adjustment as hereafter set forth, plus an amount equal to the Tangible Net Worth of Acquiree on the Closing Date as set forth in Section 2.3 hereof, subject to adjustments as hereafter set forth (the "Purchase Consideration") as follows: $3,125,000 - by wire transfer of immediately available funds to bank accounts designated by Acquiree Shareholders; $1,500,000 - deferred consideration payable in two equal annual installments of $750,000 each in accordance with Section 2.4 hereof. 2.3 Payment of Tangible Net Worth. On or before the Closing Date, Acquiree Shareholders shall deliver to RCM the Fiscal Year Balance Sheet. For the purpose of determining Acquiree's Tangible Net Worth, within thirty (30) days of the Closing Date, RCM and Acquiree Shareholders shall cause to be prepared to their mutual satisfaction the Closing Date 4 Balance Sheet. Acquiree's Tangible Net Worth as reflected in the Closing Date Balance Sheet will not differ in any material respect from the Tangible Net Worth as reflected in the Fiscal Year Balance Sheet. At the Closing RCM will pay to Acquiree Shareholders by wire transfer of immediately available funds an amount equal to the the actual cash balance of Acquiree minus all outstanding checks. Thereafter RCM, as agent for Acquiree, shall use best efforts to promptly and fully collect all of Acquiree's accounts receivable as they exist on the Closing Date Balance Sheet and, after deducting an amount sufficient to pay all of Acquiree's liabilities as reflected in the Closing Date Balance Sheet, deposit the amount remaining into escrow pursuant to the Escrow Agreement attached hereto as Exhibit "F". 2.4 Deferred Consideration and Additional Purchase Consideration. (a) Report. Prior to February 28, 1999 and 2000, RCM shall prepare and deliver to Acquiree Shareholders a report ("Report") setting forth (i) the NOI of Acquiree for the year ended December 31, 1998 or December 31, 1999, whichever is applicable, and (ii) the amount of Deferred Consideration required to be paid to Acquiree Shareholders pursuant to Section 2.2. Each Report shall be prepared in accordance with GAAP and in accordance with the books and records of the Acquiree and fairly present the results of operations of the Acquiree for such year. (b) Payment of Deferred Consideration. On the tenth business day after each Report is delivered to the Acquiree Shareholders (or, if there is a dispute regarding any aspect of the Report, after such dispute is finally resolved), RCM shall deliver the applicable portion of the Deferred Consideration to the Acquiree Shareholders according to the Shareholder Percentages; provided, however, that in the event the NOI of Acquiree (as finally determined by agreement of the parties or pursuant to Section 2.4(d) hereof) is less than $1,000,000 for the applicable year, then the amount of the Deferred Consideration payable to Acquiree Shareholders for such year shall be reduced by $5.00 for each $1.00 that the NOI of Acquiree is less than $1,000,000. (c) Additional Purchase Consideration. If the NOI for any year in which an installment of Deferred Consideration is due exceeds $1,000,000, (as finally determined pursuant to this Section 2.4) then twenty-five percent (25%) of the amount over and above and in excess of $1,000,000 shall be accrued as additional consideration and be paid to the Acquiree Shareholders according to the Shareholder Percentages at the same time as the payment of the Deferred Consideration under Section 2.4(b) hereof. (d) Dispute Resolution. In the event of a dispute or disagreement relating to (i) any Report, (ii) the NOI of Acquiree for any applicable year, or (iii) the amount of Deferred 5 Consideration payable to the Acquiree Shareholders in any applicable year that RCM and the Acquiree Shareholders are unable to mutually resolve within 15 days after written objections to such Report are delivered to RCM, either party may elect to have all such disputes or disagreements resolved by an accounting firm of nationally recognized standing ("Third Accounting Firm") to be mutually selected by RCM and Acquiree Shareholders or, if no agreement is reached on such Third Accounting Firm, then by RCM's Accountants and Acquiree Shareholders' independent accountants. The Third Accounting Firm shall make a final and binding resolution of the Deferred Consideration earned during the applicable year. The Third Accounting Firm shall be instructed to use every reasonable effort to perform its services within 15 days of submission of the Report to it and, in any case, as soon as practicable after such submission. The fees and expenses for the services of the Third Accounting Firm shall be paid by RCM unless the amount of the Deferred Consideration required pursuant to Section 2.2 for the applicable year, as determined by the Third Accounting Firm, is less than $10,000 greater than the amount set forth in the Report for such year, in which case the fees and expenses for the services of the Third Accounting Firm shall be paid equally by RCM and the Acquiree Shareholders. 3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND THE ACQUIREE SHAREHOLDERS. The Acquiree and Acquiree Shareholders as a material inducement to RCM to enter into this Agreement and consummate the transactions contemplated hereby, make the following representations and warranties to RCM (except that Peter Ryan and Jerry Kust make the representations and warranties contained in Sections 3.1, 3.9, 3.16, 3.17 and 3.18 only, and make no other representations and warranties contained in this Article 3)which representations and warranties are true and correct in all material respects on 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. All of the following representations and warranties of Acquiree and Acquiree Shareholders are qualified by matters which, individually or in the aggregate with respect to such representation or warranty, would not have a material adverse effect on the business or financial condition of Acquiree as a whole. An item contained in any of the Schedules to this Agreement is deemed disclosed with respect to all representations and warranties. Disclosure of items that are not strictly called for by the Agreement shall not imply that such information is material or that the inclusion establishes or implies a standard of materiality. 3.1 Shareholders of Acquiree. The Acquiree Shareholders are the sole owners, of record and beneficially, of all the issued and outstanding shares of the Acquiree's capital stock. 6 3.2 Financial Statements. (a) The Financial Statements for the fiscal years ended November 30, 1996, November 30, 1995 and November 30, 1994 ("1996, 1995 and 1994 Financial Statements") have been attached as Schedule 3.2(a). The 1996, 1995 and 1994 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 the Fiscal Year Balance Sheet will be prepared on an unaudited basis and delivered to RCM at or prior to Closing. The Interim Financial Statements and the Fiscal Year Balance Sheet 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 and in accordance with the books and records of Acquiree. (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, and, except as disclosed on Schedule 3.2(c), the financial records reflect all payroll accruals including but not limited to vacations, holidays, sick pay and bonuses. 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 Accounts Receivable. Attached hereto as Schedule 3.4 is a list of all accounts receivable of Acquiree as of the Closing Date and aging schedule pertaining thereto. All of the accounts receivable of Acquiree reflected on Schedule 3.4 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. 7 3.5 Material Adverse Changes. Except as specifically stated in Schedule 3.5 or as contemplated or required by this Agreement, from November 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; or (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. 3.6 Litigation. Except as set forth in Schedule 3.6, there are no actions, suits, claims, investigations or legal, administrative or arbitration proceedings pending or, to the actual knowledge of Acquiree Shareholders, 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, to the actual knowledge of Acquiree Shareholders, any basis for any such action, suit, claim, investigation or proceeding. 3.7 Compliance: Governmental Authorizations. To the actual knowledge of Acquiree Shareholders, 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 8 permits are in full force and effect. Neither the Acquiree nor the Acquiree Shareholders know of any violations of any such licenses or permits. To the actual knowledge of Acquiree Shareholders 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. 3.8 Due Organization. The Acquiree is a corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin; it is qualified to do business and in good standing in each state where the properties owned, leased or operated, or the business conducted, by it require such qualification except where failure to so qualify would not have a material adverse effect on 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 3.8. 3.9 Taxes. Except as disclosed on Schedule 3.9, 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 in all material respects; 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 3.9, 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. To the actual knowledge of Acquiree Shareholders 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. The Acquiree is not and will not be liable for any taxes imposed under Code Sections 1374 or 1375 and has been an S Corporation from June 1, 1989 to the S Termination Date. Acquiree Shareholders will be responsible for filing the short period S return ending on the S Termination Date, which return shall be reported on the closing of the books method as set forth in Code Section 1362(e)(3) and the Acquiree shall comply with any necessary requirements for making such election. The Acquiree has not made, is not obligated to make, and will not, as a result of the 9 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). 3.10 Agreements. Schedule 3.10 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 3.10 have been or will have been made available to RCM prior to the date hereof. No event has occurred that (whether with or without notice or lapse of time) would constitute a material default by the Acquiree under any of the contracts or agreements set forth in Schedule 3.10. Neither the Acquiree nor the Acquiree Shareholders have knowledge of any material default by the other parties to such contracts or agreements. 3.11 Title to Property and Related Matters. The Acquiree has and at the time of Closing will have good and marketable title to all of its 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 3.11; (ii) liens for current taxes not yet delinquent; and (iii) liens or encumbrances which do not materially impair the use, occupancy or value of the assets and properties of the Acquiree or otherwise materially impair business operations. Except as set forth in said Schedule 3.11 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. 3.12 Licenses; Trademarks; Trade Names. Except as set forth on Schedule 3.12, 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. 3.13 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 10 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 or agreement 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 3.13 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. 3.14 Capitalization. The authorized capitalization of the Acquiree consists of 4,000,000 shares of Class A common stock, $.01 par value, and 1,000,000 shares of Class B common stock, $.01 par value of which 2,732 shares of Class A and 50,000 shares of Class B 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, except as provided by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, and were issued in compliance with applicable federal and state securities laws and regulations. Except as set forth on Schedule 3.14, 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 3.14 sets forth the share ownership and respective percentage of each of the Acquiree Shareholders. 3.15. Brokerage Fees. Except for Resource Financial Corp., whose fees shall be paid by Acquiree, 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. 3.16 Share Ownership. The Acquiree Shares 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. 3.17 Obligation of the Acquiree Shareholders. This Agreement constitutes the valid and legally binding obligation of the Acquiree Shareholders. Except as set forth on Schedule 3.17, 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 11 the Acquiree Shareholders or any contract, commitment, agreement or restriction of any kind to which any of the Acquiree Shareholders is a party or by which any of the Acquiree Shareholders is bound. 3.18 Approvals Required. Except as set forth on Schedule 3.18 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 any of 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. 3.19 Employee; Benefit Plans. (a) Schedule 3.19 sets forth the number and names of the employees of Acquiree and the total 1996 compensation to each of the directors, officers and permanent employees of Acquiree. (b) Except as disclosed on Schedule 3.19, 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 3.19 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 3.19, 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 has it ever sponsored or been required to contribute to, any "multiemployer plan" as such term is defined in Section 3(37) of ERISA. (c) Except as disclosed on Schedule 3.19, to the actual knowledge of Acquiree Shareholders, 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 3.19, Acquiree is not a party to any collective bargaining agreement and, to the actual knowledge of Acquiree Shareholders, there are no union organizational activities or efforts to effect a representation election pending or threatened. 12 (e) Except as disclosed on Schedule 3.19, 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. 3.20 Environmental Matters. Except as set forth in Schedule 3.20 to the actual knowledge of Acquiree Shareholders Acquiree is in compliance with all laws, rules and regulations relating to environmental protection and conservation (including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act and the Superfund Amendments and Reauthorization Act of 1986, as amended and all applicable state laws pertaining to the environment), and neither Acquiree or Acquiree Shareholders have received any notification of any asserted present or past failure to so comply with such laws, rules or regulations. Acquiree has obtained and is in compliance with all permits, licenses and other authorizations required under federal, state and local laws relating to 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 actual knowledge of Acquiree Shareholders 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. 3.21 Insurance. Schedule 3.21 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 3.21 are outstanding and in full force and effect and all premiums required to be paid with respect to such policies are currently paid. 13 3.22 Bank Accounts. Schedule 3.22 contains a list of all bank accounts maintained by, or for the benefit of, Acquiree. 3.23 Customers. Set forth on Schedule 3.23 is a list of the ten (10) largest customers of Acquiree based on the dollar volume of income generated by that customer for the twelve month period ended November 30, 1997. No such customer has terminated or, to Acquiree's knowledge, is presently threatening to terminate its relationship with Acquiree. 3.24 Approval. The shareholders of the Acquiree have unanimously approved the execution of this Agreement and the transactions contemplated hereby. 3.25 Contractors. With respect to the Acquiree's contractors, consultants and other independent personnel (the "Contractors"), the Acquiree has evaluated and classified the Contractors as independent contractors or employees in accordance with Internal Revenue Service regulations. Acquiree has maintained, monitored, continues to maintain and monitor those Contractors who are independent contractors to assure compliance with Internal Revenue Service regulations. 3.26 Tax and Accounting Treatment of Acquiree. Acquiree's election to be treated as an S Corporation pursuant to the Code was filed with Internal Revenue Service on June 1, 1989 and with the State of Wisconsin on June 1, 1989 and will terminate on the Closing Date. 3.27 Minimum Closing Net Operating Income. The Closing Net Operating Income of Acquiree shall be not less than $900,000. 4. REPRESENTATIONS AND WARRANTIES OF RCM. As a material inducement to the Acquiree and the Acquiree Shareholders to enter into this Agreement and consummate the transactions contemplated hereby, RCM does hereby make the following representations and warranties to the Acquiree and the Acquiree Shareholders, which representations and warranties are true and correct in all material 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; it 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, 14 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 or agreement of any kind to which RCM 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 Brokerage Fees. Except for Resource Financial Corp., whose fees shall be paid by Acquiree, 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. 4.5 Approval. The Board of Directors of RCM has approved the execution of this Agreement and the transactions contemplated hereby. 15 4.6 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. Any reference in this Section 5 to RCM shall be deemed a reference to RCM and each of its subsidiaries. 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 Confidentiality. (a) Confidentiality of RCM-Related Information. With respect to information concerning RCM that is made available to Acquiree or Acquiree Shareholders in connection with the transactions contemplated by this Agreement, Acquiree and Acquiree Shareholders agree that they shall hold such information in strict confidence, shall not use such information except for the sole purpose of evaluating the transactions contemplated by this Agreement and shall not disseminate or disclose any of such information other than to representatives who need to know such information for the sole purpose of evaluating the transactions to be undertaken pursuant to this Agreement (each of whom shall be informed in writing by Acquiree of the confidential nature of such information and directed by Acquiree to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Article 10, Acquiree and Acquiree Shareholders shall immediately return all such information, all copies thereof and all information prepared by Acquiree based upon the same, upon RCM's request; provided, however, that one copy of all such material may be retained by Acquiree's outside legal counsel for purposes only of resolving any disputes under this Agreement. The above 16 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 in connection with the transactions contemplated by this Agreement, 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 contemplated by 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 RCM to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Article 10, RCM shall immediately return 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 RCM; (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); 5.3 Nondisclosure. Neither RCM, nor Acquiree nor Acquiree Shareholders shall disclose to the public or to any third party any 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 17 under this Agreement, in which event the contents of any proposed disclosure shall be discussed with the other party before release. 5.4 Non-Competition. (a) As a material inducement for RCM to enter into this Agreement Cook agrees that he will not, for a period of four (4) years following the Closing Date (the "Restricted Period") within a radius of two hundred fifty (250) miles of Milwaukee, Wisconsin, directly or indirectly, whether as employee, owner, partner, agent, director, officer or shareholder, engage in the business of contract or temporary staffing of technical personnel. As used herein "technical personnel" means information technology, engineering and manufacturing professional personnel. Without limiting the generality of the foregoing Cook shall not do any of the following: (i) Solicit, divert, accept business of contract or temporary staffing of technical personnel from any client of Acquiree who is or was a client during the term of Cook's affiliation with Acquiree, including all clients directly or indirectly produced or generated by Cook. (ii) Solicit, induce or contract with any of the Acquiree's employees to leave Acquiree or to work for Cook or any company with which Cook is connected. (iii) Solicit, divert or take away any of Acquiree's sources of business of contract or temporary staffing of technical personnel. (b) The provisions of this Section shall be construed as an agreement independent of any other provision of this Agreement and the existence of any claim or cause of action by Cook against Acquiree whether arising out of this Agreement or otherwise shall not constitute a defense to the enforcement by Acquiree of the provisions of this paragraph. (c) Cook agrees that a violation of any of the provisions of Section 5.4(a) hereof will cause irreparable damage to Acquiree the exact amount of which it will be impossible to ascertain and, for that reason, Cook agrees that Acquiree shall be entitled to injunctive relief restraining any violation of this Section 5.4(c) hereof by any Acquiree Shareholder and any person, firm or corporation associated with him, such right to be cumulative and in addition to all other remedies available to Acquiree by reason of such violation. 5.5 Consents. RCM and Acquiree shall cooperate and use their best efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts as are necessary 18 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, prior to, or following the Closing Date and through the duration of the survival period of the representations and warranties under this Agreement, 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 Bonuses and Fees. Except as set forth on Schedule 5.9 any and all accrued bonuses or other compensation over and above historic compensation levels which may be due and owing to the Acquiree Shareholders and fees owing to Resource Financial Corp. 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 Loss of "S" Corporation Status. Upon completion of the transactions contemplated by this Agreement Acquiree Shareholders will be responsible for the payment and filing of any 19 final tax returns or other obligations incurred in connection with the period of time during which Acquiree was an "S" Corporation. 5.12 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 3.5 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. 5.13 Prohibition on Trading in RCM Stock. The Acquiree and Acquiree Shareholders acknowledge that the United States Securities Laws prohibit any person who has received material non-public information concerning the matters which are the subject matter of this Agreement from purchasing or selling the securities of RCM, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of RCM. Accordingly, the Acquiree Shareholders agree that they will not purchase or sell any securities of RCM, or communicate such material non-public information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of RCM, until no earlier than 72 hours following the filing of a Current Report on Form 8-K with the SEC announcing the Closing pursuant to this Agreement. 5.14 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 Shareholders 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 the Acquiree Shareholders, and 20 shall be paid to RCM within ten (10) days thereafter or, at the option of RCM, shall be subject to indemnification provided for in Article 7 hereafter. 5.15 Conduct of Acquiree's Business Following The Closing Date. RCM agrees that, for a period of two (2) years following the Closing Date, and provided Acquiree's performance is consistent with the business plan jointly developed by Acquiree and RCM, it will: (a) not change in any material respect the business operations of Acquiree, and (b) the Acquiree Shareholders will continue to run the day-to-day business operations of the Acquiree in accordance with the business plan and pursuant to the terms of their respective Employment Agreements. 5.16 Litigation Expenses. Acquiree Shareholders shall promptly pay all counsel fees and expenses through all appeals and all adverse awards, judgments or verdicts and all interest and costs relating thereto arising out of or relating to the pending litigation entitled Williams and Ward vs. Northern Technical Services, Inc. and Mueller vs. Northern Technical Services, Inc. 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 Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin, at 1:30 p.m. local time on January 6, 1998 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 at the commencement of business on January 5, 1998. 6.2 Transactions at Closing. On the Closing Date, the following transactions occurred, 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) A certificate of Acquiree's Secretary 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. 21 (ii) stock certificates representing the Acquiree Shares being surrendered hereunder, duly endorsed with stock powers attached in blank; (iii) 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; (iv) a certificate of Status for the Acquiree from the Department of Financial Institutions of the State of Wisconsin, 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) an Employment Agreement described in Exhibit "A" signed by Merle F. Cook and Acquiree; (ix) an Employment Agreement described in Exhibit "B" signed by Gayle Yeko and Acquiree; (x) an Employment Agreement described in Exhibit "C") signed by Warren Lillund and Acquiree; (xi) an Employment Agreement in the form of Exhibit "D" signed by Jerry Kust and Acquiree; (xii) an Employment Agreement described in Exhibit "E" signed by Peter Ryan and Acquiree; (xiii) an Escrow Agreement described in Exhibit "F" signed by Merle F. Cook, Gayle Yeko and Warren Lillund; (xiv) resignations of all officers and directors of Acquiree; 22 (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 for Acquiree and Acquiree Shareholders in the form attached hereto as Exhibit "G"; (xviii) any document associated with the transactions contemplated by Section 5.12 of this Agreement; (xix) evidence satisfactory to counsel for RCM that all agreements affecting the transferability of the stock of Acquiree or the rights and duties of the Acquiree Shareholders or the employment by Acquiree of the Acquiree Shareholders have been terminated; (b) RCM will deliver or cause to be delivered to the Acquiree and the Acquiree Shareholders: (i) the cash portion of the Purchase Consideration in the amount of $3,125,000 delivered pursuant to Section 2.2 hereof plus the actual cash balance of Acquiree pursuant to Section 2.3 hereof; (ii) a certificate of RCM's Secretary to the effect that all representations and warranties made by RCM under this Agreement are true and correct as of 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 for RCM in the form attached hereto as Exhibit "H"; (vi) an Employment Agreement described in Exhibit "A" signed by Merle F. Cook and Acquiree; (vii) an Employment Agreement described in Exhibit "B" signed by Gayle Yeko and Acquiree; 23 (viii) an Employment Agreement described in Exhibit "C" signed by Warren Lillund and Acquiree; (ix) an Employment Agreement described in Exhibit "D" signed by Jerry Kust and Acquiree; (x) an Employment Agreement described in Exhibit "E" signed by Peter Ryan and Acquiree; (xi) an Escrow Agreement described in Exhibit "F: signed by RCM; (xii) such documents as may be needed to accomplish the Closing under the corporate laws of the state of incorporation of RCM and Acquiree; and (xiii) 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 hereby. 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 Acquiree Shareholders. 24 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 or its subsidiary shall have executed Employment Agreements with Acquiree Shareholders and Tim Harke, Mark Shupe and Greg Lawler. 7.9 All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filing 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. 7.10 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 shareholders of the Acquiree shall have unanimously 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. 25 8.3 The Acquiree and the Acquiree Shareholders shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing. 8.4 The Acquiree shall have delivered all of the Schedules required herein, and copies of the documents referred to therein, to RCM and such Schedules and documents shall have been reasonably acceptable to RCM. 8.5 There shall be delivered to RCM an officer's certificate of the Acquiree to the effect that all of the representations and warranties of the Acquiree set forth herein are true and complete in all material respects as of the Closing Date, and that the Acquiree has complied in all material respects with its covenants and agreements set forth herein that are required to be complied with by the Closing Date and there shall be delivered to RCM certificates signed by 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 obtained the approval of its principal lender of this Agreement and the transactions contemplated hereby. 8.7 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 to 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. 8.8 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. 8.9 The Acquiree Shareholders and Tim Harke, Mark Shupe and Greg Lawler shall each have executed an Employment Agreement with RCM or its subsidiary. 8.10 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). 8.11 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. 26 9. INDEMNIFICATION. 9.1 Acquiree Shareholders. Acquiree Shareholders (except Peter Ryan and Jerry Kust) shall indemnify, defend and hold RCM harmless, each according to his or her Shareholder Percentages except that, for purposes of this Article 9, the Shareholder Percentages applicable to Peter Ryan and Jerry Kust shall instead be applicable to Cook, 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 breach of warranty, or breach of any covenant of 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 Survival. All covenants, agreements, representations and warranties contained in this Agreement or in the Schedules annexed hereto or in any other documents shall survive the Closing for a period of two (2) years except for covenants, representations and warranties relating to Taxes or made fraudulently which shall survive indefinitely. 9.4 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 27 be promptly settled or prosecuted to a final conclusion in such a manner as to minimize any risk of additional 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 Article 10 hereof. (c) Cooperation of Parties. If either party chooses to defend or participate in the defense of any Claim, 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. 9.5 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 escrow fund pursuant to the terms and conditions of the Escrow Agreement then, to the extent the escrow fund is insufficient to cover such Claims, against amounts payable as Deferred Consideration, and, to the extent the escrow fund and the Deferred Consideration is insufficient to cover such Claims then against amounts payable as Additional Purchase Consideration. 9.6 Minimum for Indemnification. Acquiree Shareholders shall not be required to make any indemnification payments under Section 9.4 except to the extent that the cumulative amount of all Claims actually incurred by RCM exceeds the sum of $25,000 in which case RCM shall be entitled to indemnification for the entire amount of all claims. Claims relating to Taxes and for representations and warranties made fraudulently shall be subject to full indemnification irrespective of the $25,000 minimum. 28 9.7 Cumulative Liability. The cumulative liability of the Acquiree Shareholders (excluding Claims relating to Taxes and representations and warranties made fraudulently which shall not be subject to any limit) under this Article 9 shall not exceed the sum of $1,000,000 for Claims made prior to the first anniversary of the Closing Date and $750,000 for Claims made prior to the second anniversary of the Closing Date. 9.8 Indemnification For Pending Litigation. In addition to the foregoing the Acquiree Shareholders shall defend, indemnify and hold RCM harmless from and against all loss, liabilities, damages, punitive damages, counsel fees and expenses through all appeals, interest, judgments and verdicts relating to or arising out of the pending litigation entitled Williams and Ward vs. Northern Technical Services, Inc. and Mueller vs. Northern Technical Services, Inc. The foregoing undertaking shall not be subject to the time limits contained in Section 9.3 hereof or the minimum or maximum amount of Claims that may be asserted as contained in Section 9.6 and 9.7. Any amounts for which RCM is entitled to indemnification under this Section 9.8 shall be subject to RCM's right of set off as described in Section 9.5 hereof. Acquiree Shareholders agree that no settlement or other voluntary termination of the case of Williams and Ward vs. Northern Technical Services, Inc. shall occur unless as part of such settlement or termination RCM receives a document in recordable form terminating all outstanding Financing Statements wherein the plaintiffs are the secured parties and Acquiree is the debtor. 10. TERMINATION. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing Date: (a) by mutual written consent of RCM and Acquiree; (b) by either 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 29 order, decree or filing or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable. (c) If any party hereto shall default in the observance or in the due and timely performance of any of the Covenants of the parties contained in Section 5 of this Agreement, the non-defaulting party may, upon written notice, terminate this Agreement and in that event, the defaulting party shall indemnify, hold harmless and assume full and complete responsibility for any and all expenses of the non-defaulting party incurred in this transaction, without prejudice to its or their rights and remedies available under law, including the right to recover expenses, costs and other damages. Notwithstanding the foregoing, the non-defaulting party may elect to waive such breach by the defaulting party and proceed with the Closing, thereby waiving any right to damages as a result of such breach. 11. 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 Milwaukee, Wisconsin. 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 losing party in the arbitration shall pay the fees and expenses of the impartial arbitrator. 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 30 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 12.2 If to the Acquiree Shareholders, to: Merle Cook 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 Gayle Yeko 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 Warren Lillund 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 Jerry Kust 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 Peter Ryan 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 With a copy to: Benjamin F. Garmer, III Foley & Lardner 777 East Wisconsin Avenue Milwaukee, WI 53202 Telephone No. (414) 297-5675 Telecopy No. (414) 297-4900 31 12.3 If to the Acquiree, to: Northern Technical Services, Inc. 8899 North 60th Street Milwaukee, WI 53223-2213 Telephone No. (414) 362-8899 Telecopy No. (414) 362-8880 With a copy to: Benjamin F. Garmer, III Foley & Lardner 777 East Wisconsin Avenue Milwaukee, WI 53202 Telephone No. (414) 297-5675 Telecopy No. (414) 297-4900 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 two (2) years except for covenants, representations and warranties relating to Taxes or made fraudulently which shall survive indefinitely. All covenants and agreements by or on behalf of the parties hereto that are contained or incorporated in this Agreement shall bind and enure to the 32 benefit of the successors and permitted 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 Wisconsin. 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 33 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 and year first above written. RCM TECHNOLOGIES, INC. ATTEST: By: By: Name: Title: NORTHERN TECHNICAL SERVICES, INC. ATTEST: By: By: Name: Merle F. Cook Title: President {Signatures continued on next page] 34 MERLE COOK GAYLE YEKO WARREN LILLUND JERRY KUST PETER RYAN EX-10 3 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT AMONG RCM TECHNOLOGIES, INC. GLOBAL TECHNOLOGY SOLUTIONS INC. AND THE SHAREHOLDER OF GLOBAL TECHNOLOGY SOLUTIONS INC. TABLE OF CONTENTS Page 1. DEFINITIONS.................................................. 1 2. PURCHASE AND SALE OF SHARES OF ACQUIREE...................... 3 3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND OTHERS................................................... 5 4. REPRESENTATIONS AND WARRANTIES OF RCM........................13 5. COVENANTS OF THE PARTIES.....................................15 6. THE CLOSING..................................................21 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND ACQUIREE SHAREHOLDER.....................................23 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM...................24 9. INDEMNIFICATION..............................................26 10. ARBITRATION..................................................28 11. TERMINATION..................................................28 12. NOTICES.................................................. ...29 13. MISCELLANEOUS............................................. ..30 LIST OF SCHEDULES 2.4 List of persons eligible to receive Additional Purchase Consideration 3.2(a) Financial Statements for the fiscal years ended December 31, 1997, December 31, 1996 and December 31, 1995 3.2(b) Interim Financial Statements for the period January 1, 1998 through February 28, 1998 3.3 Undisclosed Liabilities of Acquiree 3.4 Accounts Receivable of Acquiree as of __________________ 3.5 Material adverse changes 3.5(e) Extraordinary bonuses or salaries 3.6 Litigation 3.8 Articles of Incorporation, Bylaws and Amendments thereto of Acquiree 3.9 Tax information 3.10 All material Contracts and Agreements of Acquiree 3.11 Liens, encumbrances and general description of all real property in which Acquiree has an ownership interest 3.12 Licenses, trademarks and trade names of Acquiree 3.13 Consents to be obtained by Acquiree 3.14 Capitalization of Acquiree 3.17 Parandhaman's Obligation 3.18 Approvals required to be obtained by Acquiree Shareholder 3.19 Number and names of employees and compensation of all directors and officers of Acquiree - identifies all employee benefit plans 3.20 Compliance with environmental and conservation laws 3.21 List of all insurance policies of Acquiree 3.22 List of all bank accounts maintained or for the benefit of Acquiree 3.23 List of 10 largest customers of Acquiree, based on dollar volume of income for the twelve month period ended December 31, 1997 3.30 Agreements to be terminated 4.1 Articles of Incorporation and Bylaws of RCM 4.3 Consents to be obtained by RCM 5.10 Bonuses and Fees LIST OF EXHIBITS Exhibit "A" Employment Agreement with _________________ Exhibit "B" Employment Agreement with ____________________ Exhibit "C" Opinion of counsel for Global Technology Solutions Inc. Exhibit "D" Opinion of counsel for RCM Technologies, Inc. STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of this day of , 1998, by and among RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"); GLOBAL TECHNOLOGY SOLUTIONS INC, a California corporation, doing business as GLOBAL SOLUTIONS (the "Acquiree"); and GOPAL PARANDHAMAN (the "Acquiree Shareholder"). RECITALS: WHEREAS, the Acquiree Shareholder owns in the aggregate one hundred percent (100%) of the issued and outstanding common stock of the Acquiree (the "Acquiree Shares"); and WHEREAS, the Acquiree Shareholder desires 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:
Accounts Receivable. . all of Acquiree's accounts At Closing receivable as of the Closing Date not outstanding for more than sixty (60) days Acquiree . . . . . . . Global Technology Solutions Inc. a California corporation. Cash Balance . . . . . Acquiree's actual cash balance at 1 At Closing the Closing Date minus all bank debt and all outstanding checks. 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. Net Working Capital. . Unaudited balance sheet of the Balance Sheet Acquiree as of March 31, 1998 prepared in accordance with the requirements of GAAP containing all accruals including but not limited to all payroll accruals (bonuses, commissions, vacations and sick pay) and all tax liability resulting from the change from the cash to the accrual method of accounting. Closing Net. . . . . . Operating income of Acquiree for the Operating Income period January 1, 1997 to December 1, 1997 as reflected in Acquiree's financial statement prepared in accordance with the requirements of GAAP before federal and state taxes or interest expense or interest income. Effective Date . . . . March 2, 1996 Effective Date . . . . Unaudited balance sheet of Acquiree Balance Sheet as of the Effective Date prepared in accordance with GAAP containing all accruals including but not limited to all payroll accruals (bonuses, commissions, vacations and sick pay) and all tax liability resulting from the change from the cash to the accrual method of accounting. Financial . . . . . . Unaudited financial statements of Statements the Acquiree for the fiscal years ended December 31, 1997, December 31, 1996, and December 31, 1995 prepared in accordance with the requirements of GAAP. Interim Financial . . Unaudited financial statements of the 2 Statements Acquiree for the interim period from January 1, 1998 through February 28, 1998 prepared in accordance with the requirements of GAAP. 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 cost of sales, all operating expenses directly attributable to Acquiree and general and administrative expenses, but excluding (a) RCM Corporate Fees; (b) Federal and state income taxes; (c) goodwill amortization; and (d) acquisition interest expense. Net Working Capital . The amount by which all realizable current assets of Acquiree, including accounts receivable but excluding all fixed assets and intangible assets as those terms are defined under GAAP, exceeds all of Acquiree's liabilities. Parandhaman . . . . . Gopal Parandhaman RCM . . . . . . . . . RCM Technologies, Inc., a Nevada corporation. RCM Corporate Fees. . 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. 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 Shareholder will sell, convey, assign, transfer and deliver the Acquiree Shares to RCM, and RCM 3 shall purchase, acquire and accept from the Acquiree Shareholder the Acquiree Shares, which shall constitute one hundred percent (100%) of the outstanding capital stock of Acquiree. 2.2 Purchase Consideration.
On the Closing Date, (i) Acquiree Shareholder shall deliver to RCM certificates representing the Acquiree Shares; and (ii) RCM shall pay to the Acquiree Shareholder the purchase consideration in the sum of $5,700,000 plus an amount equal to the Net Working Capital of Acquiree as determined in accordance with Section 2.3 hereof, subject to adjustments as hereafter set forth (the "Purchase Consideration") as follows: $3,700,000 - by wire transfer of immediately available funds to bank accounts designated by Acquiree Shareholder; $300,000 - post closing consideration payable within sixty (60) days following the close of any four (4) month period occurring during initial two years following the Closing Date during which the aggregate NOI of Acquiree's ongoing operations equals or exceeds $333,000 (the "Post Closing Consideration"); $1,700,000 - deferred consideration payable in two (2) equal annual instalments of $850,000 each within sixty (60) days following March 31, 1999 and March 31, 2000 (the "Deferred Consideration") provided that in the event the NOI of Acquiree is less than $1,000,000 for any year in which a payment is due (the "Shortfall") then the amount of the installment payable for the first year following the Closing shall be reduced by $4.00 for each $1.00 of Shortfall, and shall be reduced by $3.00 for each $1.00 of Shortfall for the second year following the Closing Date. As used herein the term "year" means the years ending March 31, 1999 and 2000. Net Working Capital - by wire transfer in accordance with Section 2.3 hereof.
4 2.3 Payment of Net Working Capital. To the extent that the Cash Balance At Closing is positive, then at the Closing RCM will pay to Acquiree Shareholder by wire transfer of immediately available funds an amount equal to the Cash Balance At Closing. Such payment will be deducted from the Net Working Capital proceeds. Within sixty (60) days of the Closing Date, RCM and the Acquiree Shareholder will cause to be prepared to their mutual satisfaction the Net Working Capital Balance Sheet. Thereafter RCM, as agent for Acquiree, shall use best efforts to promptly and fully collect all of Acquiree's accounts receivable and other current assets as they are reflected in the Net Working Capital Balance Sheet. RCM shall cause to be paid to the Acquiree Shareholder as additional Purchase Consideration by wire transfer to bank accounts designated by him the amount of the accounts receivable and other current assets actually collected less Acquiree's liabilities as set forth on the Net Working Capital Balance Sheet. Subject to RCM's due diligence RCM will advance to Acquiree on the Closing Date a sum equal to fifty percent (50%) of the Accounts Receivable At Closing. To the extent the Cash Balance At Closing is negative the advance on the Accounts Receivable At Closing shall be offset by such amount. In any case the remaining Accounts Receivable At Closing not advanced must equal or exceed 1.5 times all unpaid liabilities. Such advance shall be deducted from the Net Working Capital proceeds. 2.4 Additional Purchase Consideration. If the NOI for any year in which an installment of Deferred Consideration is due exceeds $1,000,000, then twenty-five percent (25%) of the amount over and above and in excess of $1,000,000 shall be accrued as additional consideration and, within sixty (60) days of the end of such year, be paid as additional consideration to those persons designated in Schedule 2.4 hereof in the proportions described in that Schedule. 2.5 Deferred Consideration. In any year in which an installment of Deferred Consideration is due, the Acquiree Shareholder and his authorized representatives, at his expense, during normal business hours, shall have the right to audit the financial records of Acquiree to verify the calculation of NOI and any Shortfall. For each year in which an installment of Deferred Consideration is due, RCM will furnish the Acquiree Shareholder with year end financial statements for Acquiree. 3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND THE ACQUIREE Shareholder. The Acquiree and the Acquiree Shareholder, 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 on 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. 5 3.1 Shareholder of Acquiree. The Acquiree Shareholder is, and will be on the Closing Date, the sole owner, 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 December 31, 1997, December 31, 1996 and December 31, 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) RCM and the Acquiree Shareholder will cause to be prepared to their mutual satisfaction the Effective Date Balance Sheet and the Net Working Capital Balance Sheet as defined in Section 1 hereof which will be prepared on an unaudited basis in accordance with GAAP and delivered to RCM promptly following the Closing. The Effective Date Balance Sheet and the Net Working Capital Balance Sheet as defined in Section 1 hereof and the financial information contained therein will present fairly the financial condition of the Acquiree for the periods covered. (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. 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 Accounts Receivable. Attached hereto as Schedule 3.4 is a list of all accounts receivable of Acquiree as of _________ __, 1998 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 6 reserves, if any, established within the Financial Statements, are collectible in full and are not subject to offset or counterclaim or otherwise in controversy. 3.5 Material Adverse Changes. Except as specifically stated in Schedule 3.5 or as contemplated or required by this Agreement, from January 1, 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; or (e) Except as set forth in Schedule 3.5(e) there has not been 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. 3.6 Litigation. Except as set forth in Schedule 3.6, there are no actions, suits, claims, investigations or legal, administrative or arbitration proceedings pending or, to the actual knowledge of Acquiree Shareholder, 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, to the actual knowledge of Acquiree Shareholder, any basis for any such action, suit, claim, investigation or proceeding. 3.7 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 7 laws and regulations that, if not complied with, would materially and adversely affect its businesses. The Acquiree has all federal, state, local and foreign governmental licenses and permits necessary for the conduct of its business. Such licenses and permits are in full force and effect. Neither the Acquiree nor the Acquiree Shareholder 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. 3.8 Due Organization. The Acquiree is a corporation duly organized, validly existing and in good standing under the laws of the State of California; it is qualified to do business and in good standing in each state where the properties owned, leased or operated, or the business conducted, by it require such qualification except where failure to so qualify would not have a material adverse effect on 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 3.8. 3.9 (a) Taxes. Except as disclosed on Schedule 3.9, 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 in all material respects; 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 3.9, 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 Shareholder 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 3.9 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 8 of the Code (determined without regard to subsection (b)(4) thereof). Acquiree Shareholder will be responsible for filing on behalf of Acquiree the short period S corporation tax return for the period ended ______________, 1998. Simultaneously with the filing of the short period S corporation return Acquiree Shareholder will cause to be filed an Application For Change In Accounting Method (IRS Form 3115) to change Acquiree's method of accounting from cash to accrual. Any tax liability arising from the change in accounting method over and above the amount shown for this liability on the Closing Date Balance Sheet shall be the obligation of the Acquiree Shareholder. (b) Tax Election. Acquiree and RCM shall jointly make an election under Section 338(h)(10) of the Code (and any corresponding election under state or local tax law) (collectively a "Section 338(h)(10) Election"). Acquiree and RCM shall (i) take, and cooperate with each other to take, all actions necessary and appropriate (including filing such forms, returns, elections, schedules and other documents as may be required) to effect and preserve a timely Section 338(h)(10) Election in accordance with Section 338 of the Code and the Temporary Regulations thereunder or any successor provisions, and execute and deliver all such required documents including IRS Form 8023 at the Closing); and (ii) Acquiree and RCM shall report the sale of the Acquiree Shares pursuant to this Agreement consistent with Section 338(h)(10) and shall take no position contrary thereto or inconsistent therewith in any tax return, and discussion with or proceeding before any taxing authority, or otherwise. RCM and Acquiree Shareholder shall, within sixty (60) days after the date on which the Tax Election is filed, jointly prepare an allocation of the "adjusted grossed-up basis" (as defined in Treasury Regulation 1.338(b)-1 among Acquiree's assets in accordance with Section 338 of the Code and the Treasure Regulations thereunder (the "Allocation") consistent with the Effective Date Balance Sheet and providing, if necessary, for adjustments to take into account the payment of Post Closing Consideration, Deferred Consideration and Additional Deferred Consideration pursuant to Sections 2.2 and 2.4 hereof. All such adjustments on account of the payment of Post Closing Consideration, Deferred Consideration and Additional Deferred Consideration shall increase on a dollar for dollar basis the amount allocated to goodwill. The parties agree to adopt and abide by the Allocation in all federal and state tax filings and to take no positions inconsistent therewith. Any tax liability arising from the filing of the Section 338(h)(10) Election shall be the obligation of the Acquiree Shareholder. 3.10 Agreements. Schedule 3.10 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 3.10 have been or will have been made available 9 to RCM prior to the date hereof. No event has occurred that (whether with or without notice or lapse of time) would constitute a material default by the Acquiree under any of the contracts or agreements set forth in Schedule 3.10. Neither the Acquiree nor the Acquiree Shareholder have knowledge of any material default by the other parties to such contracts or agreements. 3.11 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, 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 3.11, and (ii) liens for current taxes not yet delinquent. Schedule 3.11 also contains a general description of all real property in which Acquiree has an ownership interest. Except as set forth in said Schedule 3.11 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. 3.12 Licenses; Trademarks; Trade Names. Except as set forth on Schedule 3.12, 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. 3.13 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 or agreement 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 3.13 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 10 by the Acquiree of this Agreement or the consummation of the transactions contemplated hereby. 3.14 Capitalization. The authorized capitalization of the Acquiree consists of 1,000 shares of no par value Common Stock of which 1,000 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 3.14, 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 3.14 sets forth the share ownership and respective percentage of each of the Acquiree Shareholder. 3.15. Brokerage Fees. Except for Delhi And Dublin Ventures, Inc., whose fees shall be paid by Acquiree as disclosed on Schedule 5.10, 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. 3.16 Share Ownership. The Acquiree Shares will be owned of record and beneficially by the Acquiree Shareholder, 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. 3.17 Obligation of the Acquiree Shareholder. This Agreement constitutes the valid and legally binding obligation of the Acquiree Shareholder. Except as set forth on Schedule 3.17, 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 Shareholder or any contract, commitment, agreement or restriction of any kind to which the Acquiree Shareholder is a party or by which the Acquiree Shareholder is bound. 3.18 Approvals Required. Except as set forth on Schedule 3.18 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 Shareholder of this Agreement or the consummation by them of the transactions described herein, except to the extent that Acquiree Shareholder may be required to file reports in accordance with relevant regulations under federal and state securities laws upon 11 execution of this Agreement and/or consummation of the transactions contemplated hereby. 3.19 Employee; Benefit Plans. (a) Schedule 3.19 sets forth the number and names of the employees of Acquiree and the total 1997 compensation to each of the directors, officers and employees of Acquiree. (b) Except as disclosed on Schedule 3.19, 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 3.19 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 3.19, 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 has it ever sponsored or been required to contribute to, any "multiemployer plan" as such term is defined in Section 3(37) of ERISA. (c) Except as disclosed on Schedule 3.19 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 3.19, 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 3.19, 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. 3.20 Environmental Matters. Except as set forth in Schedule 3.20 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 12 Acquiree or Acquiree Shareholder have received any notification of any asserted present or past failure to so comply with such laws, rules or regulations. Acquiree has obtained and is in compliance with all permits, licenses and other authorizations required under federal, state and local laws relating to 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"). 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. 3.21 Insurance. Schedule 3.21 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 3.21 are outstanding and in full force and effect and all premiums required to be paid with respect to such policies are currently paid. 3.22 Bank Accounts. Schedule 3.22 contains a list of all bank accounts maintained by, or for the benefit of, Acquiree. 3.23 Customers. Set forth on Schedule 3.23 is a list of the ten (10) largest customers of Acquiree based on the dollar volume of income generated by that customer for the twelve month period ended December 31, 1997. No such customer has terminated or, to Acquiree's knowledge, is presently threatening to terminate its relationship with Acquiree. 3.24 Approval. The Board of Directors of the Acquiree has approved the execution of this Agreement and the transactions contemplated hereby. 3.25 Contractors. With respect to the Acquiree's contractors, consultants and other independent personnel (the "Contractors"), the Acquiree has evaluated and classified the Contractors as independent contractors or employees in accordance 13 with Internal Revenue Service regulations. Acquiree has maintained, monitored, continues to maintain and monitor those Contractors who are independent contractors to assure compliance with Internal Revenue Service regulations. 3.25 Termination of Agreements. Schedule 3.30 contains a list of all Agreements between the Acquiree on the one hand and its Shareholder on the other. All such Agreements have been terminated absolutely at or prior to the Closing Date without any liability on the part of Acquiree. 4. REPRESENTATIONS AND WARRANTIES OF RCM. As a material inducement to the Acquiree and the Acquiree Shareholder to enter into this Agreement and consummate the transactions contemplated hereby, RCM does hereby make the following representations and warranties to the Acquiree and the Acquiree Shareholder, 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; it 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. 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. 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 14 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 or agreement of any kind to which RCM 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 Brokerage Fees. Except for Delhi And Dublin Ventures, Inc. whose fees shall be paid by Acquiree, 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. 4.5 Approval. The Board of Directors of RCM has approved the execution of this Agreement and the transactions contemplated hereby. 4.6 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 Shareholder in connection with seeking their approval of the transactions contemplated by this Agreement. 15 (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 11, each of the parties hereto shall provide to the other parties (and the other parties' authorized representatives) full access during normal business hours to the premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to such party (including without limitation all written proprietary and trade secret information and documents, and other written information and documents relating to intellectual property rights and matters), and will cooperate with the other party in conducting its due diligence investigation of such party. 5.3 Confidentiality. (a) Confidentiality of RCM-Related Information. With respect to information concerning RCM that is made available to Acquiree or Acquiree Shareholder pursuant to the provisions of Section 5.2, Acquiree and Acquiree Shareholder agree that they shall hold such information in strict confidence, shall not use such information except for the sole purpose of evaluating the transactions contemplated by this Agreement and shall not disseminate or disclose any of such information other than to representatives who need to know such information for the sole purpose of evaluating the transactions to be undertaken pursuant to this Agreement (each of whom shall be informed in writing by Acquiree of the confidential nature of such information and directed by Acquiree to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Section 11, Acquiree and Acquiree Shareholder 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 Shareholder from a third party entitled to disclose it; (ii) became known publicly other than through Acquiree or the Acquiree Shareholder or any party who received the same through Acquiree or the Acquiree Shareholder; (iii) is required by law or court order to be disclosed by Acquiree or the Acquiree Shareholder (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 16 Shareholder 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 contemplated by 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 RCM to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Section 11, RCM shall immediately return 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 RCM; (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 Acquiree Shareholder 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 17 connection with this Agreement; or any regulatory body where such disclosure is required under federal or state law. 5.5 Non-Competition. (a) As a material inducement for RCM to enter into this Agreement Parandhaman agrees that he will not, for the period during which Deferred Consideration is payable to Acquiree Shareholder and for a period of two (2) years following the payment of the last installment of Deferred Consideration to Acquiree Shareholder (the "Restricted Period") within the counties of __________________, California, directly or indirectly, whether as employee, owner, partner, agent, director, officer or shareholder, engage in the business of contract or temporary staffing of technical personnel. As used herein "technical personnel" means information technology, engineering and manufacturing professional personnel. Without limiting the generality of the foregoing Parandhaman shall not do any of the following: (i) Solicit, divert, accept business of contract or temporary staffing of technical personnel from any client of Acquiree who is or was a client during the term of Parandhaman's employment, including all clients directly or indirectly produced or generated by Parandhaman. (ii) Solicit, induce or contract with any of the Acquiree's employees to leave Acquiree or to work for Parandhaman or any company with which Parandhaman is connected. (iii) Solicit, divert or take away any of Acquiree's sources of business of contract or temporary staffing of technical personnel. (b) Parandhaman will not at any time without the authorization of RCM 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 RCM or its affiliates. Trade secrets and confidential information shall mean information disclosed to Parandhaman or known by him as a consequence of his relationship with Acquiree 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 RCM and all technical information relating to products or systems developed or being developed by RCM and all planned system improvements or changes. (c) The provisions of this Section 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 Parandhaman against Acquiree whether arising out of this Agreement 18 or otherwise shall not constitute a defense to the enforcement by Acquiree of the provisions of this paragraph. (d) Parandhaman agrees that a violation of any of the provisions of this Section 5.5(a) hereof will cause irreparable damage to Acquiree the exact amount of which it will be impossible to ascertain and, for that reason, Parandhaman agrees that Acquiree shall be entitled to injunctive relief restraining any violation of this Section 5.5(a) hereof by Parandhaman and any person, firm or corporation associated with him, such right to be cumulative and in addition to all other remedies available to Acquiree by reason of such violation. 5.6 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. 5.7 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. 5.8 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. 5.9 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. 19 5.10 Bonuses and Fees. Except as set forth on Schedule 5.10 any and all accrued bonuses or other compensation over and above historic compensation levels which may be due and owing to the Acquiree Shareholder and fees owing to Delhi And Dublin Ventures, Inc. shall be discharged and Acquiree released from such obligations on or before the Closing Date. 5.11 Documents at Closing. Each party to this Agreement agrees to execute and deliver on the Closing Date those documents identified in Section 6.2. 5.12 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 3.5 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. 5.13 Prohibition on Trading in RCM Stock. The Acquiree and Acquiree Shareholder 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 Shareholder agrees that he 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. 5.14 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 20 regulations regulating the wages, working conditions and hours of employment of such individuals, then after any final determination (with Acquiree Shareholder 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 the Acquiree Shareholder, 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. 5.15 Revocation of S Corporation Election. Prior to the Closing Acquiree shall take any and all actions necessary to revoke its election to be treated as an S Corporation pursuant to the Code. 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, 1:30 p.m. local time on __________, 1998, or (b) at such other time and place and on such other date as RCM and Acquiree or Acquiree Shareholder 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 Shareholder 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 Shareholder to the effect that all representations 21 and warranties made by the Acquiree and the Acquiree Shareholder 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 good standing for the Acquiree from the Secretary of the State of California, 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) an Employment Agreement described in Exhibit "A" signed by _______________ and Acquiree; (ix) an Employment Agreement described in Exhibit "B) signed by ____________________ and Acquiree; (x) an Employment Agreement substantially in the form of Exhibit "A" signed by Acquiree and such Employees of Acquiree as are selected by RCM; (xi) resignations of all officers and directors of Acquiree; (xii) evidence satisfactory to RCM of the termination of the Agreements described in Schedule 3.30 hereof. (xiii) such documents as may be needed to accomplish the Closing under the corporate laws of the states of incorporation of RCM and Acquiree; (xiv) 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; (xv) an opinion of counsel for Acquiree and Acquiree Shareholder in the form attached hereto as Exhibit "C"; (xvi) an election under Section 338(h) of the Internal Revenue Code executed by Acquiree. 22 (xvii) any documentation associated with the transactions contemplated by Section 5.15 of this Agreement. (b) RCM will deliver or cause to be delivered to the Acquiree and the Acquiree Shareholder: (i) a certificate of RCM's Secretary to the effect that all representations and warranties made by RCM under this Agreement are true and correct as of the Closing Date, as though originally given to the Acquiree and the Acquiree Shareholder on said date; (ii) 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; (iii) certified resolution of the Secretary of RCM dated at or about the Closing Date authorizing the transactions contemplated under this Agreement; (iv) an opinion of counsel for RCM in the form attached hereto as Exhibit "D". (v) an Employment Agreement described in Exhibit "A" signed by ______________ and Acquiree; (vi) an Employment Agreement described in Exhibit "B" signed by _____________ and Acquiree; (vii) an Employment Agreement substantially in the form of Exhibits "A" signed by RCM and such employees of Acquiree as are selected by RCM; (viii) such documents as may be needed to accomplish the Closing under the corporate laws of the state of incorporation of RCM and Acquiree; (ix) 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; and (x) An election under Section 338(h) of the Internal Revenue Code executed by RCM. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND THE ACQUIREE SHAREHOLDER. All obligations of the Acquiree and the Acquiree Shareholder 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 Shareholder: 23 7.1 The Board of Directors of RCM shall have approved the execution of this Agreement and the transactions contemplated hereby. 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 Shareholder 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 Acquiree Shareholder. 7.5 There shall be delivered to the Acquiree and the Acquiree Shareholder 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 _____________ and such other employees of Acquiree as may be selected by RCM substantially in form and substance similar to that attached hereto as Exhibit "A, respectively. 7.9 Acquiree Shareholder 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. 7.10 All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filings with, and 24 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. 7.11 There shall have occurred no material adverse change to the business, operations, assets, management, regulatory environment and business prospects of RCM. 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM. All obligations of RCM under this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions, any one or all of which may be waived in writing by RCM: 8.1 The Board of Directors of the Acquiree 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 Shareholder 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 Shareholder shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing. 8.4 The Acquiree shall have delivered all of the Schedules required herein, and copies of the documents referred to therein, to RCM and such Schedules and documents shall have been reasonably acceptable to RCM. 8.5 There shall be delivered to RCM an officer's certificate of the Acquiree to the effect that all of the representations and warranties of the Acquiree set forth herein are true and complete in all material respects as of the Closing Date, and that the Acquiree has complied in all material respects with its covenants and agreements set forth herein that are required to be complied with by the Closing Date and there shall be delivered to RCM certificates signed by the Acquiree Shareholder 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. 25 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 Shareholder 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's Closing Net Operating Income shall not be less than $1,000,000. 8.11 Such 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 "A". 8.12 Acquiree and the Acquiree Shareholder 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)(xi). 8.13 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. 9. INDEMNIFICATION. 9.1 Acquiree Shareholder. The Acquiree Shareholder 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 the Acquiree Shareholder contained herein or in the Schedules annexed hereto or in any other documents or instruments furnished by the Acquiree or the Acquiree Shareholder pursuant hereto or in connection with the transactions contemplated hereby or thereby. 26 9.2 RCM. RCM shall indemnify, defend and hold harmless Acquiree and Acquiree Shareholder 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 minimize any risk of additional 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 27 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. 9.6 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 and/or the Post Closing 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 Shareholder, 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 either of RCM and Acquiree: (i) if the Closing shall not have occurred by the Closing Date unless such date is extended by the mutual written agreement of RCM and Acquiree, and in such event, only until the date the Closing Date has been so extended; provided, however, that the right to terminate this Agreement under this Section 11(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted 28 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 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 Shareholder, to: 29 Gopal Parandhaman 9341 Tenabo Court Sacramento, CA 95827 12.3 If to the Acquiree, to: Global Technology Solutions Inc. 9323 Tech Center Drive Suite 1000 Sacramento, CA 95826 With a copy to: 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. All covenants and agreements by or on behalf of the parties hereto that are contained or incorporated in 30 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 31 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 and year first above written. RCM TECHNOLOGIES, INC. ATTEST: By: By: Name: Title: GLOBAL TECHNOLOGY SOLUTIONS INC. ATTEST: By: By: Name: Title: GOPAL PARANDHAMAN 32 33 EX-99.2O 4 FINANCIAL STATEMENTS NORTHERN TECHNICAL SERVICES, INC. Financial Statements November 30, 1997 NORTHERN TECHNICAL SERVICES, INC. TABLE OF CONTENTS - -----------------------------------------------------------------------
Page AUDITOR'S REPORT 1 FINANCIAL STATEMENTS YEAR ENDED NOVEMBER 30, 1997 Balance Sheets 2 Statement of Income 3 Statement of Stockholders' Equity 4 Statement of Cash Flows 5 Notes to Financial Statements 6-7
Frank B. Morris Certified Public Accountant 20 Montgomery Ave. Unit F Bala Cynwyd, PA 19004 Tel: 610-667-6337 Fax: 610-667-3465 INDEPENDENT AUDITOR'S REPORT Board of Directors Northern Technical Services, Inc. I have audited the accompanying balance sheet of Northern Technical Services, Inc. as of November 30, 1997, and the related statement of income, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. 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 Northern Technical Services, Inc. as of November 30, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Frank B. Morris, CPA May 8, 1998 Bala Cynwyd, PA 1 NORTHERN TECHNICAL SERVICES, INC. BALANCE SHEET NOVEMBER 30, 1997 - ------------------------------------------------------------------
ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,375,237 Trade receivables 1,281,615 Prepaid expenses 12,357 ------ Total current assets 2,669,209 FURNITURE AND EQUIPMENT, AT COST: Furniture and equipment 710,194 Less accumulated depreciation 457,311 252,883 OTHER ASSETS: Deposits 23,268 Cash surrender value of officer's life insurance 700,821 ------- 724,089 TOTAL $ 3,646,181 = ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 46,910 Accrued salaries 382,622 Accrued payroll taxes and other withholdings 106,763 Other accrued expenses 123,927 Dividends payable 368,193 ------- Total current liabilities 1,028,415 DEFERRED COMPENSATION 340,215 SHAREHOLDERS' EQUITY: Common stock: Class A, $.01 par value; authorized 4,000,000 shares; issued and outstanding 1,968 shares 20 Class B, $.01 par value; authorized 1,000,000 shares; issued and outstanding 50,000 shares 500 Additional paid-in capital 74,296 Retained earnings 2,202,735 --------- 2,277,551 TOTAL $ 3,646,181 = =========
See notes to financial statements. 2 NORTHERN TECHNICAL SERVICES, INC.
STATEMENT OF INCOME YEAR ENDED NOVEMBER 30, 1997 - --------------------------------------------------------------------- Revenues $ 12,569,583 Direct expense 9,479,033 Gross profit 3,090,550 Operating expense 2,625,229 Income from operations 465,321 Other income - Investment income 53,514 ------ Net income $ 518,835 = =======
See notes to financial statements. 3 NORTHERN TECHNICAL SERVICES, INC. STATEMENT OF STOCKHOLDERS' EQUITY YEAR ENDED NOVEMBER 30, 1997 - -----------------------------------------------------------------------
Additional Common Stock Paid-in Retained Shares Amount Shares Amount Capital Earnings Balance, beginning of year 1,968 $ 20 50,000 $ 500 $ 44,763 $ 2,302,350 Capital contribution 29,533 Dividends declared ( 618,450) Net Income 518,835 Balance, end of year 1,968 $ 20 50,000 $ 500 $ 74,296 $ 2,202,735 ===== ===== ====== ====== ========= ===========
See notes to financial statements. 4 NORTHERN TECHNICAL SERVICES, INC. STATEMENT OF CASH FLOWS YEAR ENDED NOVEMBER 30, 1997 - -----------------------------------------------------------------------
OPERATING ACTIVITIES: Net income $ 518,835 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 104,580 Changes in assets and liabilities: Receivables ( 153,064) Prepaid expenses 28,341 Accounts payable ( 21,990) Accrued payroll taxes 6,955 Accrued wages and bonus 52,041 Deferred compensation 24,833 Other accrued expenses 87,952 ------ Net cash provided by operating activities 648,483 ------- INVESTING ACTIVITIES: Increase in cash surrender value of life insurance ( 94,894) Additions to furniture and equipment ( 203,716) Decrease in deposits 79,895 ------ Net cash used in investing activities ( 218,715) ------- FINANCING ACTIVITIES: Capital contributions 29,533 Dividends paid ( 304,823) ------- Net cash used in financing activities ( 275,290) ------- NET INCREASE IN CASH 154,478 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,220,759 --------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,375,237 = =========
See notes to financial statements. 5 NORTHERN TECHNICAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 - ---------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Furniture and Equipment - Furniture and equipment are recorded at cost. Maintenance and repairs are charged to operations as incurred and renewals and betterments are capitalized. Depreciation is calculated over the estimated useful lives by accelerated methods. Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Estimates - 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. 2. DEFERRED COMPENSATION AGREEMENT The Company has a deferred compensation agreement with a stockholder/officer. The obligation under this agreement is being accrued over the remaining working life of the stockholder/officer. Expense related to this agreement was $24,833 for the year ended November 30, 1997. 3. S CORPORATION ELECTION The Company and its Stockholders have elected for Federal and State income tax purposes to be treated as a S Corporation under provisions of the Internal Revenue Code. Accordingly the Company's taxable income is includable in the individual tax returns of its stockholders and no provision for income taxes is included in the accompanying financial statements. 4. RELATED PARTY TRANSACTIONS The Company leases it office facility in Milwaukee from its majority stockholder. The lease calls for monthly payments of $7,800 to January, 1998. Under terms of the lease the Company is responsible for real estate taxes, insurance, maintenance and utilities related to the facility. The total for the year ended November 30, 1997 was $93,600. 6 NORTHERN TECHNICAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOVEMBER 30, 1997 - ----------------------------------------------------------------------------- 5. STOCKHOLDERS' EQUITY The holders of the Class A common stock have the right to vote as a separate class in electing 25% of the authorized Board of Directors. The Company has entered into stock repurchase agreements with its Class A stockholders. Under the terms of the agreements the Company has first right of refusal to purchase all of the Class A common stock and is obligated to purchase these shares upon termination or death of the stockholders. The purchase price of the stock is based on an agreed upon formula. The Company is obligated to purchase shares tendered to it at the price determined by the agreement in the event that 50% of the combined voting power of the then outstanding voting securities is acquired by someone other than the members of the Control Group (as defined in the agreement). 6. EMPLOYEE BENEFITS The Company has employment contracts with certain shareholders covering wages, benefits and severance. Under terms of the agreements the shareholders are entitled to receive salary continuation after termination of employment subject to giving notice to the Company. The Company has a defined contribution retirement plan (401(k)) for all employees meeting eligibility requirements. The employee may contribute up to 20% of wages (subject to federal limitations). The Company makes matching contributions of 25% up to the first 5% of wages contributed. All participants are 100% vested. Expense related to the plan for the year ended November 30, 1997 was approximately $34,000. 7. LEASES The Company leases its office facilities in Green Bay and Mosinee under operating lease agreements that expire in May, 1999 and December, 2000 respectively. In addition the Company leases computer and transportation equipment under operating leases expiring January, 1997 to March, 1999. Aggregate minimum rental commitments at November 30, 1997 are as follows: 1998 - $54,000, 1999 - $59,000, 2000 - $50,242, 2001 - $8,400. 7 EX-99.20 5 FINANCIAL STATEMENTS GLOBAL TECHNOLOGY SOLUTIONS, INC. FINANCIAL STATEMENTS December 31, 1997 Frank B. Morris Certified Public Accountant 20 Montgomery Ave. Unit F Bala Cynwyd, PA 19004 Tel: 610-667-6337 Fax: 610-667-3465 INDEPENDENT AUDITOR'S REPORT Board of Directors Global Technology Solutions, Inc. I have audited the accompanying balance sheets of Global Technology Solutions, Inc. as of December 31, 1997, and the related statements of income, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. 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 Global Technology Solutions, Inc. as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Frank B. Morris, CPA May 6, 1998 Bala Cynwyd, PA
Global Technology Solutions, Inc. BALANCE SHEETS December 31, 1997 ASSETS Current assets Cash and cash equivalents $ 96,755 Trade receivables 1,256,201 Prepaid expenses 19,184 ------ Total current assets 1,372,140 Equipment Equipment 49,397 Furniture and fixtures 16,350 Net equipment 33,047 Other assets Deposits 7,590 Advances 54,390 61,980 $ 1,467,167 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Note payable - bank $ 100,000 Accounts payable 74,908 ------ Total current liabilities 174,908 Shareholders' equity Common stock of no par value; authorized 1,000 shares, issued and outstanding 100 shares 42,800 Retained earnings 1,249,459 --------- Total stockholders' equity 1,292,259 $ 1,467,167
The accompanying notes are an integral part of these financial statements. - 3 -
GLOBAL TECHNOLOGY SOLUTIONS, INC. STATEMENTS OF INCOME Year Ended December 31, 1997 Net sales $ 5,750,116 Direct costs 4,037,818 Gross profit 1,712,298 Selling, general and administrative 690,199 Income from operations 1,022,099 Other income (expense) Interest income 4,482 Interest expense ( 4,733 ) ----- ( 251 ) --- Income before income taxes 1,021,848 Income taxes 2,718 Net income $ 1,019,130 = =========
The accompanying notes are an integral part of these financial statements. - 4 -
GLOBAL TECHNOLOGY SOLUTIONS, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Year Ended December 31, 1997 Common Stock Retained Shares Amount Earnings Balance, beginning of year 100 $ 42,800 $ 872,175 Shareholder distributions ( 641,846 ) Net income 1,019,130 Balance, end of year 100 $ 42,800 $ 1,249,459 ==================================== =========
The accompanying notes are an integral part of these financial statements. - 5 - GLOBAL TECHNOLOGY SOLUTIONS, INC. STATEMENT OF CASH FLOWS Year Ended December 31, 1997
Cash flows from operating activities: Net income $ 1,019,130 - --------- Adjustments to reconcile net income to net cash provided by operating activities Depreciation 6,127 Increase in trade receivables ( 557,629) Increase in accounts payable and accrued expenses 240,280 Net cash provided by operating activities 707,908 Cash flows from investing activities Increase in deposits ( 4,590) Increase in advances ( 25,487) ------ Net cash used in investing activities ( 30,077) ------ Cash flows from financing activities Shareholder distributions ( 641,846) Principal payments on notes payable ( 23,623) ------ Net cash used by financing activities 665,469 ------- Net increase in cash 12,362 Cash, beginning of year 84,393 Cash, end of year $ 96,755 = ======
The accompanying notes are an integral part of these financial statements. - 6 - GLOBAL TECHNOLOGY SOLUTIONS, INC. NOTES TO FINANCIAL STATEMENTS December 31, 1997 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 the year ended December 31, 1997 $6,127. S Corporation Election The Company and its Stockholders have elected for Federal and State income tax purposes to be treated as a S Corporation under provisions of the Internal Revenue Code. Accordingly the Company's taxable income is includable in the individual tax returns of its stockholders and no provision for income taxes is included in the accompanying financial statements. - 7 - GLOBAL TECHNOLOGY SOLUTIONS, INC. NOTES TO FINANCIAL STATEMENTS December 31, 1997 2. Total Rental Expense The Company rents office space under the terms of an operating lease. The lease provides for a monthly rental of $2,000 and expires June, 1999. The total rental expense included in the income statement for the year ended December 31, 1997 was $25,375. 3. Cash Flow Information Cash paid for interest and income taxes was as follows: Interest $ 4,733 = ===== Income taxes $ 2,718 = ===== 4. 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. 5. Subsequent Events On February 2, 1998, the shareholders of the Company sold all of the outstanding shares of the Company. - 8 - -----END PRIVACY-ENHANCED MESSAGE-----