Item 7. (c) Exhibits
STOCK PURCHASE AGREEMENT
AMONG
RCM TECHNOLOGIES, INC.
CAMELOT CONTRACTORS LIMITED
AND
THE SHAREHOLDERS OF
CAMELOT CONTRACTORS LIMITED
Dated as of September 25, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. PURCHASE AND SALE OF SHARES OF ACQUIREE 2
3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE
AND OTHERS 5
4. REPRESENTATIONS AND WARRANTIES OF RCM 14
5. COVENANTS OF THE PARTIES 16
6. THE CLOSING 20
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE
AND ACQUIREE SHAREHOLDERS 24
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM 25
9. INDEMNIFICATION 27
10. TERMINATION 29
11. NOTICES 30
12. MISCELLANEOUS 31
LIST OF SCHEDULES
2.4 List of persons eligible to receive
Additional Purchase Consideration
3.2(a) Financial Statements for the fiscal years ended June 30, 1997, June
30, 1996 and June
30, 1995
3.3 Undisclosed Liabilities of Acquiree
3.5 Accounts Receivable of Acquiree as of August
31, 1997
3.6 Material adverse changes
3.7 Litigation
3.9 Articles of Incorporation, Bylaws and
Amendments thereto of Acquiree
3.10 Tax information
3.11 All material Contracts and Agreements of
Acquiree
3.12 Liens, encumbrances and general description
of all real property in which Acquiree has
an ownership interest
3.13 Licenses, trademarks and trade names of
Acquiree
3.14 Consents to be obtained by Acquiree
3.15 Capitalization of Acquiree
3.18 Messrs. Xxxxxxx, X'Xxxxx and Xxxxxxx'
Obligation
3.19 Approvals required to be obtained by
Acquiree Shareholders
3.20 Number and names of employees and compensation of all directors and
officers of Acquiree - identifies all employee benefit plans
3.21 Compliance with environmental and
conservation laws
3.22 List of all insurance policies of Acquiree
3.23 List of all bank accounts maintained or for
the benefit of Acquiree
3.24 List of 10 largest customers of Acquiree,
based on dollar volume of income for Fiscal
1997
3.26 Internal Revenue Service correspondence re:
the Programmers
4.1 Articles of Incorporation and Bylaws of RCM
4.3 Consents to be obtained by RCM
LIST OF EXHIBITS
Exhibit "A" Registration Rights Agreement
Exhibit "B" X'Xxxxx Employment Agreement
Exhibit "C" Xxxxxxx Employment Agreement
Exhibit "D" Investor Representation Letter
Exhibit "E" Escrow Agreement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of this day of , 1997, by and among RCM TECHNOLOGIES, INC., a
Nevada corporation ("RCM"); CAMELOT CONTRACTORS LIMITED, a New Hampshire
corporation (the "Acquiree"); and those shareholders of Acquiree identified in
Section 1 of this Agreement (the "Acquiree Shareholders").
RECITALS:
WHEREAS, the Acquiree Shareholders own in the aggregate one
hundred percent (100%) of the issued and outstanding common stock of the
Acquiree (the "Acquiree Shares"); and
WHEREAS, the Acquiree Shareholders desire to sell the Acquiree
Shares and RCM desires to purchase the Acquiree Shares, each upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS.
(a) The foregoing RECITALS are true and correct, and are
incorporated herein and made a part hereof.
(b) For purposes of this Agreement, the terms set forth below
shall have the following meanings:
Acquiree . . . . . . . Camelot Contractors Limited,
a New Hampshire corporation.
Acquiree Shareholders. That entity and those individuals consisting of the
Amarly Corporation ("Amarly") and Xxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxxx X. X'Xxxxx
(X'Xxxxx") and Xxxxxxx X. Xxxxxxx also known as Xxxxxxx X. Xxxxxxx ("Xxxxxxx")
who in the aggregate own 100% of the outstanding capital stock of Acquiree.
Code . . . . . . . . . The Internal Revenue Code of 1986, as amended.
Closing . . . . . . .
The transaction of events set forth in Section 6 hereof.
Closing Date . . . . . The day on which the Closing is held as set forth in
Section 6 hereof.
Closing Balance Sheet. Unaudited balance sheet of the Acquiree as of the Closing
Date.
Effective Closing Date Commencement of business on August 4, 1997.
Escrow Shares . . . .
Share certificates in the names of the Acquiree Shareholders representing shares
of RCM Common Stock which as of the Closing Date have an aggregate valuation of
$500,000 (for this purpose "valuation" shall mean the average of the closing
price of the RCM Common Stock for the twenty trading days immediately preceding
the Closing Date (the "Escrow Shares")).
Exchange Act . . . . .
The Securities Exchange Act of 1934, as amended. Financial . . . . . . Unaudited
financial statements of Statements the Acquiree for the fiscal years ended June
30, 1997, June 30, 1996, and June 30, 1995 prepared in compliance with the
requirements of GAAP.
Interim Financial . . Unaudited financial statements of the Statements . . . . .
Acquiree for the interim period from July 1, 1997 through September 30, 1997.
GAAP . . . . . . . . Generally accepted accounting principles, consistently
applied.
Net Operating Income Subsequent to the Closing Date and (NOI) . . . . . . . .
with respect to the ongoing business formerly conducted by Acquiree gross
revenue (billed services at invoice value reduced by customer discounts, returns
and allowances) minus direct operating expenses, cost of sales and general and
administrative expenses (including the salaries of X'Xxxxx and Xxxxxxx) but
excluding (a) RCM Corporate Fees and (b) Federal and state income taxes.
RCM . . . . . . . . .
RCM Technologies, Inc., a Nevada corporation.
RCM Common Stock . . Common stock, $.05 par value per share, of RCM
RCM Corporate Fee . . All costs incurred by RCM not directly related to the
ongoing business conducted by Acquiree such as legal, accounting and SEC filing
fees.
SEC . . . . . . . . . The Securities and Exchange Commission.
Securities Act . . . The Securities Act of 1933, as amended.
Tangible Net Worth. . The amount by which all assets of Acquiree excluding
intangible assets, as that term is defined under GAAP, exceeds all of Acquiree's
liabilities.
2. PURCHASE AND SALE OF SHARES OF ACQUIREE.
2.1 Purchase and Sale of Shares of Acquiree.
Subject to the terms and conditions of this Agreement, on the
Closing Date, the Acquiree Shareholders will sell, convey, assign, transfer and
deliver the Acquiree Shares to RCM, and RCM shall purchase, acquire and accept
from the Acquiree Shareholders the Acquiree Shares, which shall constitute one
hundred percent (100%) of the outstanding capital stock of Acquiree.
2.2 Purchase Consideration.
(a) On the Closing Date, (i) Acquiree Shareholders shall deliver
to RCM certificates representing the Acquiree Shares; and (ii) RCM shall pay to
the Acquiree Shareholders the purchase consideration in the sum of $13,000,000
subject to adjustments as hereafter set forth (the "Purchase Consideration") as
follows:
$9,000,000 - by wire transfer of
immediately available
funds to bank accounts
designated by Acquiree
Shareholders;
$500,000 -By delivery by RCM of
the Escrow Shares to the
Acquiree Shareholders;
$3,500,000 Deferred consideration payable in three
equal annual instalments of $1,166,667 each within
sixty (60) days of the initial three anniversaries
of the Closing Date (the "Deferred Consideration")
provided that in the event the NOI of Acquiree is
less than $1,700,000 for any year in which a
payment is due (the "Shortfall") then the amount
of the installment payable for that year shall be
reduced $5.00 for each $1.00 of Shortfall. As used
herein the term "year" means the periods ending
12, 24 and 36 months, respectively, following the
last day of the month in which the Closing
occurred.
(b) At the Closing
Acquiree Shareholders shall deposit in escrow the Escrow Shares pursuant to the
Escrow Agreement attached hereto at Exhibit "E". The Escrow Shares shall be
deemed collateral to ensure that the provisions of Section 2.3(b) hereof are
complied with.
2.3 Adjustments To
Purchase Consideration.
(a) Pre-Closing Adjustments.
If the NOI of Acquiree for the period July 1, 1996 to June 30, 1997 (determined
after reducing the deduction for executive compensation from $288,000 to
$225,000) as reflected in Acquiree's Financial Statements is less than
$1,700,000, then the cash portion of the Purchase Consideration shall be reduced
$5.00 for each $1.00 that the NOI for the period specified is less than
$1,700,000.
(b) Post Closing Adjustments.
(i) If the Closing
Balance Sheet shall reflect (a) cash of less than $1,350,000, or (b) Tangible
Net Worth of less than $2,300,000, then, to the extent of the greater of
subsections (a) or (b) of this section (b)(i), the portion of the Purchase
Consideration represented by the Escrow Shares and valued as described in
Section 1 hereof shall be reduced dollar for dollar for each dollar of such
deficiency and if the value of the Escrow Shares ($500,000) is insufficient to
cover this reduction in full then further offset shall be made against the
Deferred Consideration to the full extent of any such reduction;
(ii) If the Closing
Balance Sheet reflects Tangible Net Worth in excess of $2,350,000 then (a) if
the cash as reflected in such Closing Balance Sheet is in excess of $1,400,000,
then the cash portion of the Purchase Consideration shall be increased dollar
for dollar for each dollar by which the Tangible Net Worth exceeds $2,350,000
and such amount shall be paid with the cash available in excess of $1,400,000 at
the Closing, and in the event such cash in insufficient to satisfy the amount in
which the Tangible Net Worth exceeds $2,350,000 then this remaining amount not
satisfied by the cash in excess of $1,400,000 shall be paid from the proceeds of
the collection of Acquiree's accounts receivable during the period immediately
following the Closing; or (b) if the cash as reflected in such Closing Balance
Sheet is less than $1,400,000 then the cash portion of the Purchase
Consideration shall be increased dollar for dollar for each dollar by which the
Tangible Net Worth exceeds $2,350,000 and such amount shall be paid from the
proceeds of the collection of Acquiree's accounts receivable during the period
immediately following the Closing.
2.4 Additional Purchase
Consideration. If the NOI for any year in which an installment of Deferred
Consideration is due exceeds $1,700,000, then twenty-five percent (25%) of the
amount over and above and in excess of $1,700,000 shall, within sixty (60) days
of the end of such year, be paid as additional consideration to those persons
designated in Schedule 2.3 hereof in the proportions described in that Schedule.
2.5 Registration Rights.
Subject to the provisions of the Registration Rights Agreement, not later than
January 31, 1998 with respect to the Escrow Shares RCM shall prepare and file a
Registration Statement with the SEC and use its best efforts to as promptly as
possible have such Registration Statement declared effective for the purpose of
facilitating the public resale of the Escrow Shares.
3. REPRESENTATIONS AND WARRANTIES OF ACQUIREE AND THE
ACQUIREE SHAREHOLDERS. The Acquiree and the Acquiree Shareholders, jointly and
severally, as a material inducement to RCM to enter into this Agreement and
consummate the transactions contemplated hereby, make the following
representations and warranties to RCM which representations and warranties are
true and correct in all material respects at this date, and will be true and
correct in all material respects on the Closing Date as though made on and as of
such date.
3.1 Shareholders of
Acquiree. The Acquiree Shareholders are, and will be on the Closing Date, the
sole owners, of record and beneficially, of all the issued and outstanding
shares of the Acquiree's capital stock.
3.2 Financial Statements.
(a) The Financial Statements
for the fiscal years ended June 30, 1997, June 30, 1996 and June 30, 1995
("1997, 1996 and 1995 Financial Statements") have been attached as Schedule
3.2(a). The 1997, 1996 and 1995 Financial Statements and the financial
information contained therein present fairly the financial condition of the
Acquiree for the periods covered and have been prepared in accordance with GAAP.
(b) The Interim Financial
Statements and Closing Balance Sheet will be prepared on an unaudited basis and
delivered to RCM at or prior to Closing. The Interim Financial Statements and
Closing Financial Statements and the financial information contained therein
will present fairly the financial condition of the Acquiree for the interim
periods covered and will be prepared in accordance with GAAP.
(c) The books and records of
Acquiree, financial and other, are in all material respects complete and correct
and have been maintained in accordance with good business and accounting
practices.
(d) Audited financial
statements of Acquiree for the periods covered by the Financial Statements (the
"Audited Financial Statements") will be prepared at RCM's expense within
forty-five (45) days following the Closing. Such Audited Financial Statements
will not differ in any material respect from the Financial Statements to be
delivered to RCM prior to the Closing.
3.3 Undisclosed Liabilities. Acquiree does not have any
liabilities or obligations of any nature, fixed or contingent, that will not be
shown or otherwise provided for in the Financial Statements, except (a) as set
forth in Schedule 3.3, and (b) for liabilities and obligations arising
subsequent to the date of the Financial Statements in the ordinary course of
business, none of such liabilities referred to in this clause (b) will
individually or in the aggregate be materially adverse to the business or
financial condition of the Acquiree. There are no material loss contingencies
(as such term is used in Statement of Financial Accounting Standards No. 5 of
the Financial Accounting Standards Board) of the Acquiree that will not be
adequately provided for.
3.4 RCM Shares to Constitute Restricted Securities. The
Acquiree Shareholders represent and warrant: (a) that they have reviewed the
quarterly, annual and periodic reports of RCM, as filed by RCM with the SEC
pursuant to the Exchange Act, and that they have such knowledge and experience
in financial and business matters that they are capable of utilizing the
information set forth therein concerning RCM to evaluate the risks of investing
in the RCM Shares; (b) that they have been advised that the RCM Shares to be
issued to them by RCM constitute "restricted securities" as defined in Rule 144
promulgated under the Securities Act, and accordingly, have not been and will
not be registered under the Securities Act except as otherwise set forth in this
Agreement, and, therefore, they may not be able to sell or otherwise dispose of
such RCM Shares except if the RCM Shares are subject to an effective
registration statement filed with the SEC, in compliance with Rule 144 or
otherwise pursuant to an exemption from registration under the Securities Act;
(c) that the RCM Shares so issued are being acquired by them for their own
benefit and on their own behalf for investment purposes and not with a view to,
or for resale in connection with, a public offering or re-distribution thereof;
(d) that the RCM Shares so issued will not be resold (i) without registration
thereof under the Securities Act (unless in the opinion of counsel acceptable to
RCM, an exemption from such registration is available) or (ii) in violation of
any law; and (e) that the certificate or certificates representing the RCM
Shares to be issued will be imprinted with a legend in form and substance as
follows:
"THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION,
OR THE AVAILABILITY OF EXEMPTION
FROM REGISTRATION, UNDER THE
SECURITIES ACT OF 1933, AS
AMENDED, BASED ON AN OPINION
LETTER OF COUNSEL FOR THE COMPANY
OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE
COMMISSION."
and RCM is hereby authorized to notify its transfer agent of the status of the
Escrow Shares, and to take such other action including, but not limited to, the
placing of a "Stop Transfer" order on the books and records of RCM's transfer
agent to ensure compliance with the foregoing.
3.5 Accounts Receivable. Attached hereto as Schedule 3.5 is a
list of all accounts receivable of Acquiree as of August 31, 1997 and aging
schedule pertaining thereto. All of the accounts receivable of Acquiree now and
on the Closing Date, are bona fide accounts receivable of Acquiree representing
the sales price of (or other sums or fees receivable for or in respect of)
goods, merchandise, or services sold or performed by Acquiree in valid
transactions in the regular course of its business to or for the benefit of its
customers. Such accounts receivable, subject to reserves, if any, established
within the Financial Statements, are collectible in full and are not subject to
offset or counterclaim or otherwise in controversy.
3.6 Material Adverse Changes. Except as specifically stated in
Schedule 3.6 or as contemplated or required by this Agreement, from June 30,
1997 to the date of this Agreement, the business of the Acquiree has been
operated in the ordinary course and there has not been:
(a) Any materially adverse changes in the business,
condition (financial or otherwise), results of operations, properties, assets,
liabilities, earnings or net worth of the Acquiree for such period or at any
time during such period;
(b) Any material damage,
destruction or loss (whether or not covered by
insurance) affecting the Acquiree or its assets,
properties or business;
(c) Any cancellation or material breaches on any existing
contract of which Acquiree is a party that would have a material adverse effect
on the business of Acquiree;
(d) Any statute, rule, regulation or order adopted by any
governmental body, agency or authority that materially and adversely affects the
Acquiree or its business or financial condition;
(e) Any payment of bonuses or accrued salaries out of the
ordinary course of business or agreements to materially increase the rate or
terms of compensation payable or to become payable by Acquiree to its directors,
officers or key employees; provided, however, that this subsection shall not
restrict or limit the Acquiree in any way from hiring additional personnel who
are required for its operations; or
(f) Any other events or conditions of any character that may
reasonably be expected to have a materially adverse effect on the Acquiree or
its business or financial condition.
3.7 Litigation. Except as set forth in Schedule 3.7, there are no
actions, suits, claims, investigations or legal, administrative or arbitration
proceedings pending or threatened against the Acquiree, whether at law or in
equity, or before or by any federal, state, municipal, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
or any basis for any such action, suit, claim, investigation or proceeding.
3.8 Compliance: Governmental Authorizations. The Acquiree has
complied in all material respects with all federal, state, local or foreign
laws, ordinances, regulations and orders applicable to its business, including
without limitation, federal and state securities, banking collection and
consumer protection laws and regulations that, if not complied with, would
materially and adversely affect its businesses. The Acquiree has all federal,
state, local and foreign governmental licenses and permits necessary for the
conduct of its business. Such licenses and permits are in full force and effect.
Neither the Acquiree nor Acquiree Shareholders know of any violations of any
such licenses or permits. No proceedings are pending or threatened to revoke or
limit the use of such licenses or permits that would have an adverse effect on
the business of Acquiree.
3.9 Due Organization. The Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Hampshire; it is qualified to do business and in good standing in each state
where its properties are owned, leased or operated, or the business conducted,
by them require such qualification except where failure to so qualify would not
have a material adverse effect on its financial condition, properties, business
or results of operations. The Acquiree has the power to own its properties and
assets and to carry on its business as now presently conducted. True and
complete copies of the Articles of Incorporation and Bylaws of Acquiree,
including any amendments thereto, have been attached as Schedule 3.9.
3.10 Taxes. Except as disclosed on Schedule 3.10, all (a)
federal, state, local or foreign tax returns (collectively, the "Returns")
required to be filed with respect to the properties, assets, operations, income
and net worth of Acquiree have been timely filed or appropriate extensions have
been obtained and such Returns are true, correct and complete; and (b) taxes and
governmental charges, including, without limitation, any interest and penalties
(collectively "Taxes") due pursuant to such Returns have been paid or adequate
provision therefor has been made on the Financial Statements. Except as
disclosed on Schedule 3.10, there are no outstanding agreements or waivers
extending the statutory period of limitation concerning any tax liability of
Acquiree, no examination of any Return of Acquiree is currently in progress and
no governmental authority has, within the last three (3) years, notified
Acquiree or Acquiree Shareholders of any tax claim, investigation or proceeding.
All monies required to be collected or withheld by the Acquiree for income
taxes, social security or other payroll taxes have been collected or withheld,
and either paid to the appropriate governmental agencies, set aside in accounts
for such purpose, or accrued, reserved against and entered upon the books of the
Acquiree and the Acquiree is not liable for any taxes or penalties for failure
to comply with any of the foregoing. Set forth on Schedule 3.10 is a list of all
actions which have a material effect on the calculation of Taxes payable or with
respect to the income, deductions, credits, allowances or assets of the
Acquiree. The Acquiree has not made, is not obligated to make, and will not, as
a result of the transactions contemplated hereby, make or become obligated to
make any "excess parachute payment" within the meaning of Section 280G of the
Code (determined without regard to subsection (b)(4) thereof).
3.11 Agreements. Schedule 3.11 contains a true and complete list
of all material contracts, agreements, mortgages, obligations, arrangements,
restrictions and other instruments to which the Acquiree is a party or by which
the Acquiree or its assets may be bound. True and correct copies of all items
set forth on Schedule 3.11 have been or will have been made available to RCM
prior to the date hereof. No event has occurred that (whether with or without
notice or lapse of time) would constitute a material default by the Acquiree
under any of the contracts of agreements set forth in Schedule 3.11. Neither the
Acquiree nor the Acquiree Shareholders have knowledge of any material default by
the other parties to such contracts or agreements.
3.12 Title to Property and Related Matters. The Acquiree has, and
at the time of the Closing will have, good and marketable title to all of its
properties, interests in properties and assets, real, personal and mixed, owned
by it at the date of this Agreement or acquired by it after the date of this
Agreement, of any kind or character, free and clear of any liens or
encumbrances, except (i) those set forth in Schedule 3.12, and (ii) liens for
current taxes not yet delinquent. Schedule 3.12 also contains a general
description of all real property in which Acquiree has an ownership interest.
Except as set forth in said Schedule 3.12 and except for matters that may arise
in the ordinary course of business, the assets of the Acquiree are in good
operating condition and repair, reasonable wear and tear excepted. There does
not exist any condition that materially interferes with the use thereof in the
ordinary course of the business of the Acquiree.
3.13 Licenses; Trademarks; Trade Names. Except as set forth on
Schedule 3.13, the Acquiree does not have, nor does it own or use in its
business any licenses, trademarks, trade names, service marks, copyrights,
patents or any applications for any of the foregoing that relate to its
business.
3.14 Due Authorization. This Agreement has been duly authorized,
executed and delivered by the Acquiree and constitutes a valid and binding
agreement of the Acquiree, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with any of
the provisions hereof, will violate in any material respect any order, writ,
injunction or decree of any court or governmental authority, or violate or
conflict with in any material respect or constitute a default under (or give
rise to any right of termination, cancellation or acceleration under), any
provisions of the Acquiree's Articles of Incorporation or Bylaws, the terms or
conditions or provisions of any note, bond, lease, mortgage, obligation,
agreement, arrangement or restriction of any kind to which the Acquiree is a
party or by which the Acquiree or its properties may be bound, or violate in any
material respect any statute, law, rule or regulation applicable to the
Acquiree, except that the consents disclosed on Schedule 3.14 will be required
pursuant to the terms of those scheduled agreements. No consent or approval by
any governmental authority is required in connection with the execution and
delivery by the Acquiree of this Agreement or the consummation of the
transactions contemplated hereby.
3.15 Capitalization. The authorized capitalization of the
Acquiree consists of 300 shares of no par value Common Stock of which 200 shares
are issued and outstanding as of the date of this Agreement; the Acquiree Shares
have been duly authorized, validly issued, and are fully paid and
non-assessable, and were issued in compliance with applicable federal and state
securities laws and regulations. Except as set forth on Schedule 3.15, there are
no outstanding or presently authorized securities, warrants, preemptive rights,
subscription rights, options or related commitments or agreements of any nature
to issue any of the Acquiree's securities. Schedule 3.15 sets forth the share
ownership and respective percentage of each of the Acquiree Shareholders.
3.16. Brokerage Fees. Except for Xxxxxx X. Xxxxx, whose fees
shall be paid by Acquiree Shareholders, the Acquiree has not incurred, and will
not incur, any liability for brokerage or finder's fees or similar charges in
connection with the transactions contained within this Agreement.
3.17 Share Ownership. The Acquiree Shares to be surrendered at
the Closing by the Acquiree Shareholders will be owned of record and
beneficially by the Acquiree Shareholders, free and clear of all liens and
encumbrances of any kind and nature. There are no agreements (other than this
Agreement) to sell, pledge, assign or otherwise transfer such securities.
3.18 The Acquiree Shareholders' Obligation. This Agreement
constitutes the valid and legally binding obligation of the Acquiree
Shareholders. Except as set forth on Schedule 3.18, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute in any material respect a violation of or
default under, or conflict in any material respect with, any judgment, decree,
statute or regulation of any governmental authority applicable to the Acquiree
Shareholders or any contract, commitment, agreement or restriction of any kind
to which any of the Acquiree Shareholders are a party or by which any of the
Acquiree Shareholders are bound.
3.19 Approvals Required. Except as set forth on Schedule 3.19 or
as contemplated or as required by this Agreement, no approval, authorization,
consent, order or other action of, or filing with, any person, firm or
corporation or any court, administrative agency or other governmental authority
is required in connection with the execution and delivery by the Acquiree
Shareholders of this Agreement or the consummation by them of the transactions
described herein, except to the extent that the Acquiree Shareholders may be
required to file reports in accordance with relevant regulations under federal
and state securities laws upon execution of this Agreement and/or consummation
of the transactions contemplated hereby.
3.20 Employee; Benefit Plans.
(a) Schedule 3.20 sets forth the number and names of the
employees of Acquiree and the total 1996 compensation to each of the directors,
officers and employees of Acquiree.
(b) Except as disclosed on Schedule 3.20, Acquiree does not
have any "employee benefit plans" (as such term is defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Schedule 3.20 identifies all programs, including, without limitation, any
pension plans, health and welfare plans, life, disability, medical, dental or
hospitalization insurance plans, sick-leave, vacation accrual or holiday plans,
bonus, savings, profit-sharing or other similar benefit plans, deferred
compensation, stock option, stock ownership and stock purchase plans covering
employees or former employees of Acquiree. Except as disclosed on Schedule 3.20,
each such plan or program has been operated substantially in accordance with its
terms and, to the extent applicable, ERISA and the Code. Acquiree does not
sponsor or contribute to, nor have they ever sponsored or been required to
contribute to, any "multiemployer plan" as such terms is defined in Section
3(37) of ERISA.
(c) Except as disclosed on Schedule 3.20, Acquiree does not
have any written contracts, or oral contracts, including any employment,
management, agency or consulting contracts, with respect to any of its current
or retired employees.
(d) Except as disclosed on Schedule 3.20, Acquiree is not a
party to any collective bargaining agreement and there are no union
organizational activities or efforts to effect a representation election pending
or threatened.
(e) Except as disclosed on Schedule 3.20, Acquiree has
complied in all material respects with all applicable laws relating to the
employment of labor, including the provisions thereof relating to benefits
required to be provided under Part VI of Subtitle B of Title I of ERISA or
Section 4980B(f) of the Code (collectively, "COBRA"), wages, hours, working
conditions, employee benefit plans and the payment of withholding and social
security taxes.
3.21 Environmental Matters. Except as set forth in Schedule 3.21
to the best of Acquiree's knowledge Acquiree is in compliance with all laws,
rules and regulations relating to environmental protection and conservation
(including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act and the Superfund Amendments and Reauthorization
Act of 1986, as amended and all applicable state laws pertaining to the
environment), and neither Acquiree or Acquiree Shareholders have received any
notification of any asserted present or past failure to so comply with such
laws, rules or regulations. To the best of Acquiree's knowledge, Acquiree has
obtained and is in compliance with all permits, licenses and other
authorizations required under federal, state and local laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
(collectively "Environmental Requirements"). To the best of Acquiree's knowledge
there are no circumstances which may interfere with or prevent continued
compliance, or which may give rise to any liability, or otherwise form the basis
of any claim, or investigation under Environmental Requirements, relating to the
operation of Acquiree's business. For the purpose of this Section, "hazardous
substances" shall include (1) hazardous substances as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and regulations thereunder, and (2) any substance for which state or
local laws require the clean-up, removal or other special handling of such
materials or imposing liability based upon improper handling thereof.
3.22 Insurance. Schedule 3.22 contains a list of all policies of
liability, environmental, crime, fidelity, life, fire, workers' compensation,
health, director and officer liability and all other forms of insurance
currently in effect and owned or held by Acquiree, and identifies for each such
policy, the underwriter, policy number, coverage type, premium, expiration date
and deductible. All of the insurance policies listed on Schedule 3.22 are
outstanding and in full force and effect and all premiums required to be paid
with respect to such policies are currently paid.
3.23 Bank Accounts. Schedule 3.23
contains a list of all bank accounts maintained by, or
for the benefit of, Acquiree.
3.24 Customers. Set forth on Schedule 3.24 is a list of the ten
(10) largest customers of Acquiree based on the dollar volume of income
generated by that customer for Fiscal 1997. No such customer has terminated or,
to Acquiree's knowledge, is presently threatening to terminate its relationship
with Acquiree.
3.25 Approval. The Board of Directors of the Acquiree have
approved the execution of this Agreement and the transactions contemplated
hereby.
3.26 Programmers. With respect to the Acquiree's computer
programmers, system analysts and consultants (the "Programmers"), the Acquiree
has evaluated and classified the Programmers as independent contractors or
employees in accordance with Internal Revenue Service regulations. Acquiree has
maintained, monitored, continues to maintain and monitor the Programmers who are
independent contractors to assure compliance with Internal Revenue Service
regulations. Attached as Schedule 3.26 is correspondence from the Internal
Revenue Service verifying the correctness of Acquiree's classification of the
Programmers.
3.27 Due Organization of Amarly. Amarly is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Hampshire.
3.28 Due Authorization of Amarly. This Agreement has been duly
authorized, executed, and delivered by Amarly, and constitutes a legal, valid,
and binding obligation of Amarly, enforceable in accordance with its terms
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with any of
the provisions hereof, will violate in any material respect any order, writ,
injunction or decree of any court or governmental authority, or violate or
conflict with in any material respect or constitute a default under (or give
rise to any right of termination, cancellation or acceleration under), any
provisions of Amarly's Articles of Incorporation or Bylaws, the terms or
conditions or provisions of any note, bond, lease, mortgage, obligation,
agreement, arrangement or restriction of any kind to which Amarly is a party or
by which Amarly or its properties may be bound, or violate in any material
respect any statute, law, rule or regulation applicable to Amarly.
4. REPRESENTATIONS AND WARRANTIES OF RCM. As a material inducement to
the Acquiree and the Acquiree Shareholders to enter into this Agreement and
consummate the transactions contemplated hereby, RCM does hereby make the
following representations and warranties to the Acquire and the Acquiree
Shareholders, which representations and warranties are true and correct in all
material respects at this date, and will be true and correct in all material
respects on the Closing Date as though made on and as of such date.
4.1 Due Organization of RCM. RCM is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, is
qualified to do business and is in good standing in each state where the
properties owned, leased or operated, or the business conducted, by it require
such qualification except where failure to so qualify would not have a material
adverse effect on the financial condition, properties, business or results of
operations of RCM. RCM has the corporate power and authority to own its property
and assets and to carry on its business as now presently conducted. True,
correct and complete copies of the Articles of Incorporation and Bylaws of RCM,
including any amendments thereto, are attached hereto as Schedule 4.1.
4.2 Compliance; Governmental Authorizations. To the best of its
knowledge, RCM has complied in all material respects with all federal, state,
local or foreign laws, ordinances, regulations and orders applicable to its
business, including without limitation, federal and state securities, banking
collection and consumer protection laws and regulations that, if not complied
with, would materially and adversely affect its businesses. RCM has all federal,
state, local and foreign governmental licenses and permits necessary for the
conduct of its business. Such licenses and permits are in full force and effect.
RCM does not know of any violations of any such licenses or permits. To the
knowledge of RCM, no proceedings are pending or threatened to revoke or limit
the use of such licenses or permits that would have an adverse effect on the
business of RCM.
4.3 Due Authorization. This Agreement has been duly authorized,
executed, and delivered by RCM, and constitutes a legal, valid, and binding
obligation of RCM, enforceable in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and
other similar laws relating to, limiting or affecting the enforcement of
creditors rights generally or by the application of equitable principles.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, nor compliance with any of the provisions
hereof, will violate in any material respect any order, writ, injunction or
decree of any court or governmental authority, or violate or conflict with in
any material respect or constitute a default under (or give rise to any right of
termination, cancellation or acceleration under), any provisions of RCM's
Articles of Incorporation or Bylaws, the terms or conditions or provisions of
any note, bond, lease, mortgage, obligation, agreement, arrangement or
restriction of any kind to which the Acquiree is a party or by which RCM or its
properties may be bound, or violate in any material respect any statute, law,
rule or regulation applicable to RCM, except that the consents disclosed on
Schedule 4.3 will be required pursuant to the terms of those scheduled
agreements. No consent or approval by any governmental authority is required in
connection with the execution and delivery by RCM of this Agreement or the
consummation of the transactions contemplated hereby.
4.4 RCM Shares. The RCM Shares to be delivered to the Acquiree
Shareholders at Closing will be validly and legally issued, free and clear of
all liens, encumbrances, transfer fees and preemptive rights and will be fully
paid and non-assessable. The RCM Shares will, however, constitute "restricted
securities" as defined in Rule 144 promulgated under the Securities Act until
such time as a Registration Statement is filed pursuant to Section 2.5 hereof
and declared effective.
4.5 Brokerage Fees. Except for Xxxxxx X. Xxxxx whose fees shall
be paid by Acquiree Shareholders, RCM has not incurred, and will not incur, any
liability for brokerage or finder's fees or similar charges in connection with
the transactions contained within this Agreement.
4.6 Approval. The Board of Directors of RCM have approved the
execution of this Agreement and the transactions contemplated hereby.
4.7 No Approvals Required. No approval, authorization, consent,
order or other action of, or filing with, any person, firm or corporation or any
court, administrative agency or other governmental authority is required in
connection with the execution and delivery by RCM of this Agreement or the
consummation by it of the transactions described herein, except to the extent
that the parties may be required to file reports in accordance with relevant
regulations under federal and state securities laws.
5. COVENANTS OF THE PARTIES.
5.1 Disclosure Documents.
(a) RCM shall supply to Acquiree the necessary information
in writing, or cause the necessary information to be supplied in writing,
relating to RCM for inclusion in any document(s) to be delivered to Acquiree
Shareholders in connection with seeking their approval of the transactions
contemplated by this Agreement.
(b) Acquiree shall supply to RCM the necessary information
in writing, or cause the necessary information to be supplied in writing,
relating to Acquiree for inclusion in any documents or reports to be filed with
the SEC or any regulatory agency in connection with the transactions
contemplated by this Agreement.
5.2 Access to Information. At all times prior to the Closing Date
or the earlier termination of this Agreement in accordance with the provisions
of Section 10, each of the parties hereto shall provide to the other parties
(and the other parties' authorized representatives) full access during normal
business hours to the premises, properties, books, records, assets, liabilities,
operations, contracts, personnel, financial information and other data and
information of or relating to such party (including without limitation all
written proprietary and trade secret information and documents, and other
written information and documents relating to intellectual property rights and
matters), and will cooperate with the other party in conducting its due
diligence investigation of such party.
5.3 Confidentiality.
(a) Confidentiality of RCM-Related Information. With respect
to information concerning RCM that is made available to Acquiree or Acquiree
Shareholders pursuant to the provisions of Section 5.2, Acquiree and the
Acquiree Shareholders agree that they shall hold such information in strict
confidence, shall not use such information except for the sole purpose of
evaluating the transactions contemplated by this Agreement and shall not
disseminate or disclose any of such information other than to representatives
who need to know such information for the sole purpose of evaluating the
transactions to be undertaken pursuant to this Agreement (each of whom shall be
informed in writing by Acquiree of the confidential nature of such information
and directed by Acquiree to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Section 10, Acquiree and
the Acquiree Shareholders shall immediately return all such information, all
copies thereof and all information prepared by Acquiree based upon the same,
upon RCM's request; provided, however, that one copy of all such material may be
retained by Acquiree's outside legal counsel for purposes only of resolving any
disputes under this Agreement. The above limitations on use, dissemination and
disclosure shall not apply to information that (i) is learned by Acquiree or the
Acquiree Shareholders from a third party entitled to disclose it; (ii) became
known publicly other than through Acquiree or the Acquiree Shareholders or any
party who received the same through Acquiree or the Acquiree Shareholders; (iii)
is required by law or court order to be disclosed by Acquiree or the Acquiree
Shareholders (after notice and opportunity to oppose such disclosure); or (iv)
is disclosed with the express prior written consent thereto of RCM. Acquiree or
the Acquiree Shareholders shall undertake all necessary steps to ensure that the
secrecy and confidentiality of such information will be maintained in accordance
with the provisions of this subparagraph (a).
(b) Confidentiality of Acquiree-Related Information. With
respect to information concerning Acquiree that is made available to RCM
pursuant to the provisions of Section 5.2, RCM agrees that it shall hold such
information in strict confidence, shall not use such information except for the
sole purpose of evaluating the transactions to be undertaken pursuant to this
Agreement and shall not disseminate or disclose any of such information other
than to their directors, officers, employees, shareholders, affiliates, agents
and representatives who need to know such information for the sole purpose of
evaluating the transactions to be undertaken pursuant to this Agreement (each of
whom shall be informed in writing by RCM of the confidential nature of such
information and directed by such party to treat such information
confidentially). If this Agreement is terminated pursuant to the provisions of
Section 10, RCM agrees to return immediately all such information, all copies
thereof and all information prepared by it based upon the same, upon Acquiree's
request; provided, however, that one copy of all such material may be retained
by RCM's outside legal counsel for purposes only of resolving any disputes under
this Agreement. The above limitations on use, dissemination and disclosure shall
not apply to information that (i) is learned by RCM from a third party entitled
to disclose it; (ii) became known publicly other than through RCM or any party
who received the same through either of them; (iii) is required by law or court
order to be disclosed by RCM (after notice and opportunity to oppose such
disclosure); or (iv) is disclosed with the express prior written consent thereto
of Acquiree. RCM shall undertake all necessary steps to ensure that the secrecy
and confidentiality of such information will be maintained in accordance with
the provisions of this subparagraph (b);
5.4 Nondisclosure. Neither RCM nor Acquiree nor the Acquiree
Shareholders shall disclose to the public or to any third party the existence of
this Agreement or the transactions contemplated hereby or any other material
non-public information concerning or relating to the other parties hereto, other
than with the express prior written consent of the other parties hereto, except
as may be required by applicable securities laws as they pertain to public
companies, law or court order or to enforce the rights of such disclosing party
under this Agreement, in which event the contents of any proposed disclosure
shall be discussed with the other party before release; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, any party
hereto may disclose this Agreement to any of its directors, officers, employees,
shareholders, affiliates, agents and representatives who need to know such
information for the sole purpose of evaluating the transactions contemplated by
this Agreement, to any party whose consent is required in connection with this
Agreement; or any regulatory body where such disclosure is required under
federal or state law.
5.5 Consents. RCM and Acquiree shall cooperate and use their best
efforts to obtain, prior to the Closing Date, all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts as are necessary for the consummation of the
transactions contemplated by this Agreement.
5.6 Filings. RCM and Acquiree shall, as promptly as practicable,
make any required filings, and RCM and Acquiree shall promptly make any other
required submissions, under any law, statute, order, rule or regulation with
respect to the transactions contemplated by this Agreement and the related
transactions and shall cooperate with each other with respect to the foregoing.
5.7 All Reasonable Efforts. Subject to the terms and conditions
of this Agreement and to the fiduciary duties and obligations of the board of
directors of Acquiree and RCM, each of the parties to this Agreement shall use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations, or to remove any injunctions or other impediments or
delays, legal or otherwise, as soon as reasonably practicable, to consummate the
transactions contemplated by this Agreement.
5.8 Notification of Certain Matters. Except with respect to the
actions contemplated by this Agreement, Acquiree shall give prompt notice to
RCM, and RCM shall give prompt notice to Acquiree, of (a) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which would
cause any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing Date, and (b) any
material failure of Acquiree, on the one hand, or RCM, on the other hand, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however, the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available to the party receiving such notice under this
Agreement.
5.9 Discharge of Bonuses. Any and all accrued bonuses or other
compensation over and above historic compensation levels which may be due and
owing to the Acquiree Shareholders shall be discharged and Acquiree released
from such obligations on or before the Closing Date.
5.10 Documents at Closing. Each party to this Agreement agrees to
execute and deliver on the Closing Date those documents identified in Section
6.2.
5.11 Interim Operations of RCM and Acquiree. Except as
contemplated by this Agreement, including any Exhibits and Schedules hereto, or
to the extent that the parties shall otherwise consent in writing or as
otherwise identified in Schedule 3.6 during the period from the date of this
Agreement and continuing until the Closing Date, each of RCM and Acquiree shall
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent with such business, use all reasonable efforts to preserve intact
their present organizations of such business, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it and they shall not take
any action, or fail to take any action, that is reasonably likely to result in
any of their respective representations and warranties set forth in this
Agreement becoming untrue as though such representations and warranties are made
as of and on the Closing Date.
5.12 Prohibition on Trading in RCM Stock. The Acquiree and the
Acquiree Shareholders acknowledge that the United States Securities Laws
prohibit any person who has received material non-public information concerning
the matters which are the subject matter of this Agreement from purchasing or
selling the securities of RCM, or from communicating such information to any
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities of RCM. Accordingly, the
Acquiree Shareholders agree that they will not purchase or sell any securities
of RCM, or communicate such material non-public information to any other person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell securities of RCM, until no earlier than 72 hours
following the filing of a Current Report on Form 8-K with the SEC announcing the
Closing pursuant to this Agreement.
5.13 Independent Contractors. If, with respect to any period
prior to the Closing, any governmental authority (i) challenges the status as
independent contractors of any of Acquiree's contractors; or (ii) asserts the
applicability to Acquiree's employees or contractors of statutes, ordinances or
regulations regulating the wages, working conditions and hours of employment of
such individuals, then after any final determination (with Acquiree having the
right to control and pay the costs and counsel fees in connection with any
agency examination or determination) any payroll or other taxes and any interest
or penalties attributable thereto and any liability for additional employment
compensation and any fines or penalties connected therewith shall be the
obligation of Acquiree and the Acquiree Shareholders, and shall be paid to RCM
within ten (10) days thereafter or, at the option of RCM, shall be subject to
indemnification provided for in Section 9 hereafter.
6. THE CLOSING.
6.1. The Closing. The closing ("Closing") of the purchase and
sale and other transactions contemplated by this Agreement shall take place (a)
at the offices of Xxxxxxx & Bach, P.C., 0000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxxxx, XX 00000, 10:00 a.m. local time on September 25, 1997, or (b) at
such other time and place and on such other date as RCM and Acquiree or Acquiree
Shareholders shall agree. The date of the Closing is referred to herein as the
"Closing Date".
(a) Notwithstanding the actual date of the Closing the
purchase and sale and other transactions contemplated by this Agreement shall be
deemed to have occurred on the Effective Date.
6.2 Transactions at Closing. On the Closing Date, the following
transactions shall occur, all of such transactions being deemed to occur
simultaneously:
(a) the Acquiree and the Acquiree Shareholders will deliver,
or cause to be delivered, to RCM the following:
(i) stock certificates
representing the Acquiree Shares being surrendered
hereunder, duly endorsed with stock powers attached in
blank;
(ii) all corporate records of
the Acquiree, including without limitation corporate minute books (which shall
contain copies of the Articles of Incorporation and Bylaws, as amended to the
Closing Date), stock books, stock transfer books, corporate seals; and such
other corporate books and records as may reasonably be requested by RCM and its
counsel;
(iii) a certificate executed
by the Acquiree and the Acquiree Shareholders to the effect that all
representations and warranties made by the Acquiree and the Acquiree
Shareholders under this Agreement are true and correct as of the Closing Date,
as though originally given to RCM on said date;
(iv) a certificate of
existence for the Acquiree from the Secretary of the State of New Hampshire,
dated at or about the Closing Date, to the effect that such corporation is in
good standing under the laws of such state;
(v) an incumbency certificate
for the Acquiree signed by all of the officers thereof
dated at or about the Closing Date;
(vi) certified Articles of
Incorporation of the Acquiree dated at or about the Closing Date and a copy of
the Bylaws of the Acquiree certified by the Secretary of the Acquiree dated at
or about the Closing Date;
(vii) certified resolutions
from the Secretary of the Acquiree dated at or about
the Closing Date authorizing the transactions
contemplated under this Agreement;
(viii) the Registration
Rights Agreement described in Exhibit "A" signed by
each of the Acquiree Shareholders;
(ix) the Escrow Agreement
signed by the Acquiree Shareholders and RCM;
(x) an Employment Agreement
described in Exhibit "B" signed by Xxxxxxx X. X'Xxxxx
and RCM;
(xi) an Employment Agreement
described in Exhibit "C" signed by Xxxxxxx X. Xxxxxxx
and RCM;
(xii) an Investor
Representation Letter described in Exhibit "D" signed
by each of the Acquiree Shareholders;
(xiii) an Employment
Agreement substantially in the form of Exhibits "B" and "C" signed by RCM and
such Employees of Acquiree as are selected by RCM;
(xiv) resignations of all
officers and directors of Acquiree, following which
Xxxx Xxxxx shall be elected by RCM as the sole
director of Acquiree;
(xv) such documents as may be
needed to accomplish the Closing under the corporate
laws of the states of incorporation of RCM and
Acquiree;
(xvi) such other instruments,
documents and certificates, if any, as are required to be delivered pursuant to
the provisions of this Agreement or that may be reasonably requested in
furtherance of the provisions of this Agreement;
(xvii) an opinion of counsel
in form and substance satisfactory to RCM;
(xviii) a certificate of
existence for Amarly from the Secretary of State of New Hampshire dated at or
about the Closing Date to the effect that such corporation is in good standing
under the laws of such state;
(xix) an incumbency
certificate for Amarly signed by all the officers
thereof dated at or about the Closing Date;
(xx) certified resolutions
from the Secretary of Amarly dated at or about the Closing date authorizing the
transactions contemplated under this Agreement.
(b) RCM will deliver or cause to be delivered to the
Acquiree and the Acquiree Shareholders:
(i) a certificate or
certificates of RCM Common Stock which represent the RCM Shares. The certificate
or certificates of RCM Common Stock which represent the RCM Shares shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION,
OR THE AVAILABILITY OF EXEMPTION
FROM REGISTRATION, UNDER THE
SECURITIES ACT OF 1933, AS
AMENDED, BASED ON AN OPINION
LETTER OF COUNSEL FOR THE COMPANY
OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE
COMMISSION."
(ii) a certificate of RCM's
Secretary to the effect that all representations and warranties of RCM under
this Agreement are reaffirmed on the Closing Date, as though originally given to
the Acquiree and the Acquiree Shareholders on said date;
(iii) certificate from the
Secretary of State of Nevada dated at or about the Closing Date that RCM is in
good standing under the laws of said state;
(iv) certified resolution of
the Secretary of RCM dated at or about the Closing
Date authorizing the transactions contemplated under
this Agreement;
(v) an opinion of counsel in
form and substance satisfactory to the Acquiree and
the Acquiree Shareholders;
(vi) the Registration Rights
Agreement described in Exhibit "A" signed by each of
the Acquiree Shareholders;
(vii) the Escrow Agreement
signed by the Acquiree Shareholders and RCM;
(viii) an Employment
Agreement described in Exhibit "B" signed by Xxxxxxx
X. X'Xxxxx and RCM;
(ix) an Employment Agreement
described in Exhibit "C" signed by Xxxxxxx X. Xxxxxxx
and RCM;
(x) an Employment Agreement
substantially in the form of Exhibits "B" and "C"
signed by RCM and such employees of Acquiree as are
selected by RCM;
(xi) such documents as may be
needed to accomplish the Closing under the corporate
laws of the state of incorporation of RCM and Acquiree;
(xii) such other
instruments, documents and certificates, if any, as are required to be delivered
pursuant to the provisions of this Agreement, or that may be reasonably
requested in furtherance of the provisions of this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIREE AND THE ACQUIREE
SHAREHOLDERS. All obligations of the Acquiree and the Acquiree Shareholders
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date (unless otherwise stated herein), of each of the following conditions, any
one or all of which may be waived by the Acquiree or the Acquiree Shareholders:
7.1 The Board of Directors of RCM shall have approved the
execution of this Agreement and the transactions contemplated thereby.
7.2 The representations and warranties made by or on behalf of
RCM contained in this Agreement or in any certificate or document delivered to
the Acquiree or the Acquiree Shareholders pursuant to the provisions hereof at
the Closing Date shall be true in all respects at and as of the time of the
Closing Date as though such representations and warranties were made at and as
of such time.
7.3 RCM shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
7.4 RCM shall have delivered all of the Schedules required
herein, and copies of the documents referred to therein, to the Acquiree and
such Schedules and documents shall have been reasonably acceptable to Acquiree
and the Acquiree Shareholders.
7.5 There shall be delivered to the Acquiree and the Acquiree
Shareholders an officer's certificate of RCM to the effect that all of the
representations and warranties of RCM set forth herein are true and complete in
all material respects as of the Closing Date, and that RCM has complied in all
material respects with its covenants and agreements set forth herein that are
required to be complied with by the Closing Date.
7.6 No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Closing and the other
transactions contemplated by this Agreement.
7.7 RCM shall have obtained the approval of its principal lender
of this Agreement and the transactions contemplated hereby.
7.8 RCM shall have executed an Employment Agreement with each of
Messrs. X'Xxxxx and Xxxxxxx and such other employees of Acquiree as may be
selected by RCM substantially in form and substance similar to that attached
hereto as Exhibits "B" and "C", respectively.
7.9 RCM and Acquiree Shareholders shall have executed a
Registration Rights Agreement substantially in form and substance similar to
that attached hereto as Exhibit "A".
7.10 RCM and the Acquiree Shareholders shall have executed the
Escrow Agreement substantially in form and substance similar to that attached
hereto as Exhibit "E".
7.11 Acquiree Shareholders shall have completed prior to the
Closing Date, to their satisfaction, a due diligence review of the financial
condition, results of operations, properties, assets, liabilities, business or
prospects of RCM.
7.12 All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal state and local governmental authorities and
agencies, as are required of RCM under this Agreement, applicable law or any
applicable contract or agreement (all as contemplated by this Agreement) to
complete the Closing shall have been secured.
7.13 There shall have occurred no material adverse change to the
business, operations, assets, management, regulatory environment and business
prospects of RCM.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RCM. All obligations of RCM
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions, any one or all of which may be waived
in writing by RCM:
8.1 The Board of Directors of each of the Acquiree and Amarly
shall have approved the execution of this Agreement and the transactions
contemplated hereby.
8.2 The representations and warranties made by the Acquiree and
the Acquiree Shareholders contained in this Agreement or in any certificate or
document delivered to RCM pursuant to the provisions hereof at the Closing Date
shall be true in all respects at and as of the time of the Closing Date as
though such representations and warranties were made at and as of such time.
8.3 The Acquiree and the Acquiree Shareholders shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by
them prior to or at the Closing.
8.4 The Acquiree shall have delivered all of the Schedules
required herein, and copies of the documents referred to therein, to RCM and
such Schedules and documents shall have been reasonably acceptable to RCM.
8.5 There shall be delivered to RCM an officer's certificate of
each of the Acquiree and Amarly to the effect that all of the representations
and warranties of the Acquiree and Amarly set forth herein are true and complete
in all material respects as of the Closing Date, and that the Acquiree and
Amarly have complied in all material respects with its covenants and agreements
set forth herein that are required to be complied with by the Closing Date and
there shall be delivered to RCM certificates signed by the Acquiree Shareholders
to the effect that the representations and warranties of each made within this
Agreement are true and correct in all material respects.
8.6 RCM shall have completed prior to the Closing Date, to its
satisfaction, a due diligence review of the financial condition, results of
operations, properties, assets, liabilities, business or prospects of the
Acquiree.
8.7 RCM shall have obtained the approval of its principal lender
of this Agreement and the transactions contemplated thereby.
8.8 All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal state and local governmental authorities and
agencies, as are required of Acquiree or the Acquiree Shareholders under this
Agreement, applicable law or any applicable contract or agreement (all as
contemplated by this Agreement) to complete the Closing shall have been secured.
8.9 No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Closing and the other
transactions contemplated by this Agreement.
8.10 Acquiree Shareholders shall have executed a Registration
Rights Agreement substantially in form and substance similar to that attached
hereto as Exhibit "A".
8.11 Messrs. X'Xxxxx and Xxxxxxx and such other employees of
Acquiree as may be selected by RCM shall each have executed an Employment
Agreement substantially in form and substance similar to that attached hereto as
Exhibits "B" and "C", respectively.
8.12 Acquiree Shareholders shall have executed an Investor
Representation Letter substantially in form and substance similar to that
attached hereto as Exhibit "D".
8.13 Acquiree and the Acquiree Shareholders shall take all
actions necessary to effect the resignation of all of the current directors and
officers of Acquiree in the manner identified in Section 6.2(a)(xiv).
8.14 Except as contemplated or as required by this Agreement,
there shall have occurred no material adverse change to the business,
operations, assets, management, regulatory environment and business prospects of
Acquiree.
8.15 RCM and the Acquiree Shareholders shall have executed an
Escrow Agreement substantially in form and substance similar to that attached
hereto as Exhibit "E".
9. INDEMNIFICATION.
9.1 Acquiree Shareholders. The Acquiree Shareholders, jointly and
severally shall indemnify, defend and hold harmless RCM from and against any and
all demands, claims, actions or causes of action, judgments, assessments,
losses, liabilities, damages or penalties and reasonable attorneys' fees and
related disbursements (collectively, "Claims") incurred by RCM which arise out
of or result from a misrepresentation, breach of warranty, or breach of any
covenant of Acquiree or Acquiree Shareholders contained herein or in the
Schedules annexed hereto or in any other documents or instruments furnished by
the Acquiree or the Acquiree Shareholders pursuant hereto or in connection with
the transactions contemplated hereby or thereby.
9.2 RCM. RCM shall indemnify, defend and hold harmless Acquiree
and Acquiree Shareholders from and against any and all Claims incurred by the
Acquiree and/or any Acquiree Shareholder which arise out of or result from
misrepresentation, breach of warranty or breach of any covenant of RCM contained
herein or in the Schedules annexed hereto or in any other documents or
instruments furnished by RCM pursuant hereto or in connection with the
transactions contemplated hereby or thereby.
9.3 Methods of Asserting Claims for Indemnification. All claims
for indemnification under this Agreement shall be asserted as follows:
(a) Third Party Claims. In the event that any Claim for
which a party (the "Indemnitee") would be entitled to indemnification under this
Agreement is asserted against or sought to be collected from the Indemnitee by a
third party the Indemnitee shall promptly notify the other party (the
"Indemnitor") of such Claim, specifying the nature thereof, the applicable
provision in this Agreement or other instrument under which the Claim arises,
and the amount or the estimated amount thereof (the "Claim Notice"). The
Indemnitor shall have 30 days (or, if shorter, a period to a date not less than
10 days prior to when a responsive pleading or other document is required to be
filed but in no event less than 10 days from delivery or mailing of the Claim
Notice) (the "Notice Period") to notify the Indemnitee (i) whether or not it
disputes the Claim and (ii) if liability hereunder is not disputed, whether or
not it desires to defend the Indemnitee. If the Indemnitor elects to defend by
appropriate proceedings, such proceedings shall be promptly settled or
prosecuted to a final conclusion in such a manner as to avoid any risk of damage
to the Indemnitee; and all costs and expenses of such proceedings and the amount
of any judgment shall be paid by the Indemnitor.
If the Indemnitee desires to participate in, but not
control, any such defense or settlement, it may do so at its sole cost and
expense. If the Indemnitor has disputed the Claim, as provided above, and shall
not defend such Claim, the Indemnitee shall have the right to control the
defense or settlement of such Claim, in its sole discretion, and shall be
reimbursed by the Indemnitor for its reasonable costs and expenses of such
defense if it shall thereafter be found that such Claim was subject to
indemnification by the Indemnitor hereunder.
(b) Non-Third Party Claims. In the event that the Indemnitee
should have a Claim for indemnification hereunder which does not involve a Claim
being asserted against it or sought to be collected by a third party, the
Indemnitee shall promptly send a Claim Notice with respect to such Claim to the
Indemnitor. If the Indemnitor does not notify the Indemnitee within the Notice
Period that it disputes such Claim, the Indemnitor shall pay the amount thereof
to the Indemnitee. If the Indemnitor disputes the amount of such Claim, the
controversy in question shall be submitted to arbitration pursuant to Section 10
hereof.
(c) Cooperation of Parties. If either party chooses to
defend or participate in the defense of any liability, it shall have the right
to receive from the other party, subject to any restriction of applicable law or
that may be necessary to preserve the privilege of attorney-client
communications, any books, records or other documents within such other party's
control that are necessary or appropriate for such defense.
9.4 Right of Set Off. The amount of any Claims as to which RCM is
entitled to indemnification hereunder may be set off by RCM first against the
Deferred Consideration and, to the extent the amount of such Deferred
Compensation is insufficient to cover such Claims, then against amounts
remaining payable as Additional Purchase Consideration.
10. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by RCM, one by the Acquiree Shareholders, and the third by the said
two arbitrators, or, if they cannot agree, then the third arbitrator shall be
appointed by the American Arbitration Association. The third arbitrator shall be
chairman of the panel and shall be impartial. The arbitration shall take place
in Philadelphia, Pennsylvania. The decision of a majority of the arbitrators
shall be conclusively binding upon the parties and final, and such decision
shall be enforceable as a judgment in any court of competent jurisdiction. Each
party shall pay the fees and expenses of the arbitrator appointed by it, its
counsel and its witnesses. The parties shall share equally the fees and expenses
of the impartial arbitrator.
11. Termination. This Agreement may be
terminated and the transactions contemplated by this
Agreement may be abandoned at any time prior to the
Closing Date:
(a) by mutual written consent of RCM
and Acquiree;
(b) by any of RCM and Acquiree:
(i) if the Closing shall not
have occurred by the Closing Date unless such date is extended by the mutual
written agreement of RCM and Acquiree, and in such event, only until the date
the Closing Date has been so extended; provided, however, that the right to
terminate this Agreement under this Section 10(b)(i) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing Date to occur on or
before that date; or
(ii) if any court of
competent jurisdiction, or any governmental body, regulatory or administrative
agency or commission having appropriate jurisdiction shall have issued an order,
decree or filing or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) If any party hereto shall default in the observance or
in the due and timely performance of any of the Covenants of the parties
contained in Section 5 of this Agreement, the non-defaulting party may, upon
written notice, terminate this Agreement and in that event, the defaulting party
shall indemnify, hold harmless and assume full and complete responsibility for
any and all expenses of the non-defaulting party incurred in this transaction,
without prejudice to its or their rights and remedies available under law,
including the right to recover expenses, costs and other damages.
Notwithstanding the foregoing, the non- defaulting party may elect to waive such
breach by the defaulting party and proceed with the Closing, thereby waiving any
right to damages as a result of such breach.
12. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered in person or sent by overnight delivery, confirmed telecopy
or prepaid first class registered or certified mail, return receipt requested,
to the following addresses, or such other addresses as are given to the other
parties to this Agreement in the manner set forth herein:
12.1 If to RCM, to:
Xx. Xxxx Xxxxx
Chief Executive Officer
RCM Technologies, Inc.
0000 XxXxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx
00000-0000
With a courtesy copy to:
Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx & Xxxx, P.C.
0000 Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxxxxx, XX 00000
Telephone No. (215)
893-8710
Telecopy No. (215)
893-8719
12.2 If to the Acquiree
Shareholders, to:
Xxxxxx Xxxxxxx
00 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxxx X. X'Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx
0 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
12.3 If to Amarly Corporation, to:
Amarly Corporation
000 Xxxxxxx Xxxx, Xxxxx
00
Xxxxxxx, XX 00000
12.4 If to the Acquiree, to:
Camelot Contractors
Limited
000 Xxxxx 000, Xxxx 0
Xxxxxxx, Xxx Xxxxxxxxx
00000
Any such notices shall be effective when delivered in person or sent by
telecopy, one business day after being sent by overnight delivery or three
business days after being sent by registered or certified mail. Any of the
foregoing addresses may be changed by giving notice of such change in the
foregoing manner, except that notices for changes of address shall be effective
only upon receipt.
13. MISCELLANEOUS.
13.1 Further Assurances. At any time, and from time to time,
after the Closing Date, each party will execute such additional instruments and
take such further action as may be reasonably required by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
13.2 Nature of Representations and Warranties. All of the
parties hereto are executing and carrying out the provisions of this Agreement
in reliance on the representations, warranties, covenants and agreements
contained in this Agreement or at the Closing of the transactions herein
provided for, and any investigation that they might have made or any other
representations, warranties, covenants, agreements, promises or information,
written or oral, made by the other party or parties or any other person shall
not be deemed a waiver of any breach of any such representation, warranty,
covenant or agreement.
13.3 Survival of Representations. All covenants, agreements,
representations and warranties made herein shall survive the Closing Date for a
period of three (3) years from the Closing Date, except such survival period
shall be unlimited where there is evidence of bad faith, fraud or wanton
misconduct. All covenants and agreements by or on behalf of the parties hereto
that are contained or incorporated in this Agreement shall bind and inure to the
benefit of the successors and assigns of all parties hereto.
13.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
It supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
13.5 Amendment. This Agreement may not be amended,
supplemented or modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any such amendment,
supplement or modification is sought.
13.6 Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties.
13.7 Choice of Law. This Agreement shall be interpreted,
construed and enforced in accordance with the laws of the State of New Jersey.
13.8 Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.9 Number and Gender, Words used in this Agreement,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context indicated is appropriate.
13.10 Construction. The parties hereto and their respective
legal counsel participated in the preparation of this Agreement, therefore, this
Agreement shall be construed neither against nor in favor of any of the parties
hereto, but rather in accordance with the fair meaning thereof.
13.11 Effect of Waiver. The failure of any party at any time
or times to require performance of any provision of this Agreement will in no
manner affect the right to enforce the same. The waiver by any party of any
breach of any provision of this Agreement will not be construed to be a waiver
by any such party of any succeeding breach of that provision or a waiver by such
party of any breach of any other provision.
13.12 Severability. The invalidity, illegality or
unenforceability of any provision or provisions of this Agreement will not
affect any other provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or unenforceability of a portion
of any provision of this Agreement affect the balance of such provision. In the
event that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
13.13 Binding Nature. This Agreement will be binding upon
and will inure to the benefit of any successor or successors of the parties
hereto.
13.14 No Third-Party Beneficiaries. No person shall be
deemed to possess any third-party beneficiary right pursuant to this Agreement.
It is the intent of the parties hereto that no direct benefit to any third party
is intended or implied by the execution of this Agreement.
13.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
13.16 Facsimile Signature. This Agreement may be executed
and accepted by facsimile signature and any such signature shall be of the same
force and effect as an original signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day first above written.
RCM
TECHNOLOGIES, INC.
ATTEST:
By:
By:
Name:
Title:
CAMELOT
CONTRACTORS LIMITED
ATTEST:
By:
By:
Name:
Title:
AMARLY
CORPORATION
ATTEST:
By:
By:
Name:
Title:
XXXXXX XXXXXXX
XXXXXXX X. X'XXXXX
[Signatures continued on next page]
XXXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX
[NSB\RCM CAMELOT AGREEMENT]
SCHEDULE 2.4
[List of persons
eligible to receive
Additional Purchase
Consideration]
Camelot Contractors Limited Employees Trust dated
9/23/97
SCHEDULE 3.2(a)
[Unaudited Financial Statements for the fiscal years ended June 30,
1997, June 30, 1996 and June 30, 1995]
SCHEDULE 3.3
[Undisclosed Liabilities of Acquiree]
None
SCHEDULE 3.5
[Accounts Receivable of Acquiree
as of August 31, 1997]
SCHEDULE 3.6
[Material adverse changes]
None
SCHEDULE 3.7
[Litigation]
None except attached claim of Xxxxx X. XxXxxxxx
SCHEDULE 3.9
[Articles of Incorporation, Bylaws
and Amendments thereto of Acquiree]
SCHEDULE 3.10
[Tax information]
None
SCHEDULE 3.11
[All material Contracts and
Agreements of Acquiree]
SCHEDULE 3.12
{Liens, encumbrances and general
description of all real property in
which Acquiree has an ownership interest]
None
SCHEDULE 3.13
[Licenses, trademarks and trade names of Acquiree]
None
SCHEDULE 3.14
[Consents to be obtained by Acquiree]
None
SCHEDULE 3.15
[Capitalization of Acquiree]
Xxxxxx Xxxxxxx - 66 2/3 shares
Xxxxxxx X. Xxxxxxx -
16 2/3 shares
Xxxxxxx X. X'Xxxxx
- 16 2/3 shares
Amarly Corporation
- 100 shares
SCHEDULE 3.18
[Messrs. Xxxxxxx, X'Xxxxx and Xxxxxxx' Obligation]
None
SCHEDULE 3.19
[Approvals required to be obtained
by Acquiree Shareholders]
None
SCHEDULE 3.20
[Number and names of employees and
compensation of all directors and
officers of Acquiree -
identifies all employee benefit plans]
SCHEDULE 3.21
[Compliance with environmental
and conservation laws]
None
SCHEDULE 3.22
{List of all insurance policies of Acquiree]
SCHEDULE 3.23
[List of all bank accounts maintained or
for the benefit of Acquiree]
SCHEDULE 3.24
[List of 10 largest customers of Acquiree,
based on dollar volume of income for Fiscal 1997]
SCHEDULE 3.26
[Internal Revenue Service
correspondence re: the Programmers]
SCHEDULE 4.1
[Articles of Incorporation and Bylaws of RCM]
SCHEDULE 4.3
[Consents to be obtained by RCM]
Mellon Bank
