ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of September 25,
1997 among RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"),
XXXXXX XXXXXXX, XXXXXXX X. X'XXXXX and XXXXXXX X. XXXXXXX a/k/a
XXXXXXX X. XXXXXXX and AMARLY CORPORATION (the "Acquiree
Shareholders"), and XXXXXX X. XXXXXX as escrow agent (the "Escrow
Agent").
WHEREAS, RCM, Camelot Contractors Limited ("Acquiree"), and the
Acquiree Shareholders have previously entered into a Stock Purchase
Agreement dated as of September 25, 1997,(the "Stock Purchase
Agreement"), providing for the purchase of 100% of the outstanding
stock of Acquiree by RCM on the Closing Date (the "Acquisition");
and
WHEREAS, the Stock Purchase Agreement provides in Section
2.2(b) for the establishment of an escrow fund whereby shares of
the RCM Common Stock to be received by the Acquiree Shareholders
(the "Escrow Shares") shall upon the closing of the Acquisition be
placed in escrow to ensure compliance with the requirements of
Section 2.3(b) of the Stock Purchase Agreement; and
WHEREAS, the terms of the Stock Purchase Agreement are
incorporated herein by reference.
NOW, THEREFORE, in consideration of RCM and the Acquiree
Shareholders entering into the Stock Purchase Agreement and of the
mutual promises and agreements herein contained, the parties
hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions, Other Agreements.
(a) All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned to such
terms in the Stock Purchase Agreement. In addition, the term
"Escrow Fund" and references to the Escrow Shares when used at any
time shall mean all shares of common stock of RCM owned by the
Acquiree Shareholders held in escrow hereunder by the Escrow Agent.
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(b) It is expressly understood and agreed by the parties
hereto that all references in this Agreement to the Stock Purchase
Agreement and to any exhibits to such Stock Purchase Agreement are
for the convenience of the parties hereto other than the Escrow
Agent, and the Escrow Agent shall have no obligations or duties
with respect thereto other than the obligation to refer to the
Stock Purchase Agreement for the purpose of determining the
definitions of certain capitalized terms used herein and not
otherwise defined herein or to interpret any provisions of such
other agreements referred to in this Agreement for purposes of
implementation thereof.
SECTION 2. Appointment of Escrow Agent
Xxxxxx X. Xxxxxx hereby accepts his appointment as Escrow
Agent to serve in accordance with the terms, conditions and
provisions of this Agreement. The acceptance by the Escrow Agent
of his duties under this Agreement is subject to the terms and
conditions set forth at Section 6 hereafter, which the parties to
this Agreement hereby agree shall govern and control with respect
to the rights, duties, liabilities and immunities of the Escrow
Agent.
SECTION 3. Establishment of Escrow Fund.
(a) On the Closing Date, the Acquiree Shareholders
shall, pursuant to Section 2.2(a) of the Stock Purchase Agreement,
deposit with the Escrow Agent the stock certificates evidencing the
Escrow Shares endorsed in blank.
(b) By virtue of the execution of this Escrow Agreement,
the Acquiree Shareholders and RCM have, without any further act on
the part of any of them, consented to: (i) the establishment of
this escrow pursuant to the Stock Purchase Agreement in the manner
set forth herein, and (ii) all of the other terms, conditions and
limitations in this Agreement.
SECTION 4. Operation and Administration of the Escrow
Fund.
(a) To the extent provided herein and in the Stock
Purchase Agreement, the Escrow Fund is established to secure
compliance by Acquiree of Section 2.3(b) of the Stock Purchase
Agreement.
(b) Within thirty (30) days from the Closing Date RCM and
the Acquiree Shareholders shall cause to be prepared to their
mutual satisfaction an unaudited financial statement of Acquiree as
of the Closing Date (the "Closing Financial Statement"). If the
Closing Financial Statements reflects (a) cash of less than
$1,350,000 or (b) Tangible Net Worth of less than $2,300,000 then,
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to the extent of the greater of subsections (a) or (b) (the
"Shortfall"), within ten (10) days from the delivery of the Closing
Financial Statement, RCM may make application (the "Application")
to the Escrow Agent with a copy to the Acquiree Shareholders. The
Application shall identify the nature and amount of the Shortfall
and that number of Escrow Shares as are equal in "value" to be
released to RCM to satisfy the deficiency (the "Claim Amount").
(c) Unless any of the Acquiree Shareholders notifies the
Escrow Agent within ten (10) days from the date of the Application
that any of them in good faith contests the Claim Amount or the
application thereof against the Escrow Shares, then the Escrow
Agent shall release to RCM for cancellation the number of Escrow
Shares pro rata specified in the Application.
For purposes of this Section the "value" of the
Escrow Shares shall be determined by the average closing price of
RCM Common Stock as traded on the NASDAQ Stock Market or other
principal exchange upon which its shares are regularly traded for
the twenty (20) trading days immediately preceding the date of the
Application.
(d) If Acquiree's Closing Financial Statement reflects
Tangible Net Worth equal to or in excess of $2,300,000, then,
within ten (10) days from the delivery of the Closing Financial
Statement, any of the Acquiree Shareholders may make a written
request, with a copy to RCM requesting the release of the entire
number of Escrow Shares to them. Unless RCM notifies the Escrow
Agent within ten (10) days from the date of such request that it
contests such request, then the Escrow Agent shall release to the
Acquiree Shareholders the entire number of Escrow Shares.
If RCM or the Acquiree Shareholders contest any
Application or requests submitted hereunder then, and in that
event, the Escrow Agent may (i) retain the Escrow Shares pending
receipt of a written agreement relating thereto signed by the
Acquiree Shareholders and RCM or a court order relating thereto, or
(ii) the Escrow Agent may commence suit in a court of competent
jurisdiction and deposit the Escrow Shares in such proceeding or in
a similar proceeding brought by the parties.
(e) Once the Escrow Shares have been either released to
the Acquiree Shareholders or delivered to RCM, the provisions of
this Escrow Agreement shall no longer be of any force and effect
and this Escrow Agreement shall be deemed to have terminated.
SECTION 5. Fees and Expenses of Escrow Agent.
The Escrow Agent will impose no charge for his services
except for reimbursement of reasonable out-of-pocket expenses
incurred by the Escrow Agent in connection with the performance of
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his functions hereunder, including reasonable fees and
disbursements of counsel. The responsibility for payment of fees
and reimbursements to the Escrow Agent shall be assumed by RCM.
SECTION 6. Duties and Liabilities of the Escrow Agent.
(a) The Escrow Agent shall act hereunder as depositary
only, and he shall not be responsible or liable in any manner
whatsoever for any determinations regarding the release or refusal
to release from escrow the Escrow Shares to be made pursuant to
Section 4 hereof. It is agreed that the duties and obligations of
the Escrow Agent are those herein specifically provided and no
other. Except as otherwise specifically provided in this
Agreement, the Escrow Agent shall not have any liability under, nor
duty to inquire into, the terms and provisions of any agreement or
instrument, other than this Agreement. The duties of the Escrow
Agent are ministerial in nature, and the Escrow Agent shall not
incur any liability whatsoever other than for his own willful
misconduct or gross negligence.
(b) The Escrow Agent shall not incur any liability for
following the instructions herein contained or expressly provided
for, or written instructions given by RCM and the Acquiree
Shareholders. The Escrow Agent shall not have any responsibility
for the genuineness or validity of any document or other material
presented to or deposited with him nor shall he have any liability
for any action taken, suffered or omitted in accordance with any
written instructions or certificates given to him hereunder and
believed by him in good faith to be what it purports to be and to
be signed by the proper party or parties, nor for retaining the
Escrow Fund in the absence of instructions to the contrary.
(c) The Escrow Agent shall not be liable for any error
of judgment, or for any act done or step taken or omitted by him in
good faith, or for any mistake of fact or law, or for anything
which he may do or refrain from doing in connection with this
Agreement, except his own gross negligence or willful misconduct.
(d) The Escrow agent may consult with, and obtain the
advice of, legal counsel selected by him in the event of any
question as to any of the provisions hereof or his duties
hereunder, and the Escrow Agent shall incur no liability and shall
be fully protected for any action taken, suffered or omitted by him
in good faith in accordance with the advice of such counsel,
provided that the Escrow Agent shall have used reasonable care in
the selection of such counsel.
(e) The Escrow Agent shall not be required to institute
legal proceedings of any kind and shall not be required to initiate
or defend any legal proceedings which may be instituted against him
in respect of the subject matter of this Agreement, provided that
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the Escrow Agent shall at all times take such action as is
reasonably necessary to keep safely all property held in escrow
hereunder. If the Escrow Agent does elect to so act or is required
to so act in order to keep safely all property held in escrow
hereunder, the Escrow Agent will do so only to the extent that he
is indemnified to his reasonable satisfaction against the cost and
expense of such defense or initiation.
SECTION 7. Amendment.
This Agreement may be amended, modified or rescinded by
and upon written notice to the Escrow Agent given by RCM, on the
one hand, and the Acquiree Shareholders on the other hand; provided
that the rights, duties, liabilities, indemnities and immunities of
the Escrow Agent hereunder may not be adversely affected at any
time without the written consent of the Escrow Agent.
SECTION 8. Voting of Escrow Shares.
All rights to vote the Escrow Shares while they are part
of the Escrow Fund shall be retained by the Acquiree Shareholders.
The Acquiree Shareholders shall have no right to transfer or assign
their interest in the Escrow Shares in the Escrow Fund during such
period of time as such Escrow Shares remain a part of the Escrow
Fund unless RCM shall first have consented thereto in writing and
provided that any such transferee shall deliver to the Escrow Agent
a duly signed stock power covering such Escrow Shares and the
Escrow Agent shall hold such transferee's shares and stock powers
in escrow subject to this Agreement.
SECTION 9. Notices.
All notices or other communications required or permitted
hereunder shall be sufficiently given if sent by certified mail,
return receipt requested, or by hand delivery or by telecopy
(promptly confirmed by delivery of an original copy of such notice
or communication):
(i) If to RCM, to:
Xx. Xxxx Xxxxx
Chief Executive Officer
RCM Technologies, Inc.
0000 XxXxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
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with a copy to:
Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx & Bach, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(ii) If to the Acquiree Shareholders, to:
Xxxxxx Xxxxxxx
00 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Amarly Corporation
000 Xxxxxxx Xxxx, Xxxxx 00
Xxxxxxx, XX 00000
Xxxxxxx X. X'Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx
0 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
(iv) If to the Escrow Agent:
Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx & Bach, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
SECTION 10. Parties in Interest.
This Agreement shall be governed by the laws of the state
of New Jersey and shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of each of the
parties hereto.
SECTION 11. Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 12. Severability.
In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and
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enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby, unless the provisions held
invalid shall substantially impair the benefits of the remaining
portions of this Agreement.
SECTION 13. Resignation and Removal of Escrow Agent.
(a) The Escrow Agent may at any time resign as Escrow
Agent hereunder by giving written notice of his resignation to each
of the parties hereto, at their respective addresses set forth in
Section 9 of this Agreement, at least thirty (30) days prior to the
date specified for any such resignation to take effect. The Escrow
Agent may be removed at any time by an instrument or concurrent
instruments in writing delivered to the Escrow Agent and signed by
each of the parties hereto (other than the Escrow Agent).
(b) If at any time the Escrow Agent shall resign or
shall be removed in accordance with the provisions of clause (a)
above, RCM and the Acquiree Shareholders shall use their respective
best efforts to jointly appoint a successor escrow agent under this
Agreement. In the event of the resignation or removal of the
Escrow Agent, if no appointment of a successor escrow agent shall
have been made pursuant to the preceding sentence within the thirty
(30) days period referred to in the first sentence of paragraph (a)
above, then the retiring Escrow Agent may apply to any court of
competent jurisdiction to appoint a successor escrow agent. Such
court may thereupon, after such notice, if any, as such court may
deem proper and prescribe, appoint a successor escrow agent
hereunder.
SECTION 14. Indemnification.
RCM and the Acquiree Shareholders, jointly and severally
agree to indemnify, defend and hold the Escrow Agent harmless from
and against any and all loss, damage, liability and expense that
may be incurred by the Escrow Agent arising out of or in connection
with his duties, obligations or performance as Escrow Agent
hereunder, except as caused by his negligence or willful
misconduct, including without limitation the reasonable legal costs
and expenses of defending himself against any claim or liability in
connection with his performance hereunder. The terms of this
Section 14 shall survive the termination of this Agreement and,
with respect to claims arising in connection with the Escrow
Agent's duties while acting as such, the resignation or removal of
the Escrow Agent. The Escrow Agent agrees to notify RCM and the
Acquiree Shareholders in writing of the written assertion of a
claim against the Escrow Agent or of any suit or proceeding
commenced against the Escrow Agent promptly after the Escrow Agent
has received any such written assertion of a claim or has been
served with the summons or other legal process, in each case giving
information as to the nature and basis of the claim, but in no
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event will the failure to give such notice affect the obligation of
RCM and the Acquiree Shareholders to indemnify the Escrow Agent
pursuant to this Section 14 unless the rights of RCM and the
Acquiree Shareholders shall have been materially impaired by such
failure. Each of RCM and the Acquiree Shareholders will be
entitled to participate at their own expense in the defense of any
suit or proceeding brought to enforce any such claim and, if they
so elect in writing, may assume the entire defense and control of
any such suit or proceeding. Neither RCM nor the Acquiree
Shareholders shall be liable for any counsel fees or other expenses
incurred by the Escrow Agent after the date that RCM or the
Acquiree Shareholders shall have so elected to assume the defense
and control of any such suit or proceeding. In addition, neither
RCM nor the Acquiree Shareholders shall be liable for any
settlement of any such suit, proceeding or claim without the prior
written consent of RCM and the Acquiree Shareholders.
IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed as of the date first written above.
RCM TECHNOLOGIES, INC.
By:
Name:
Title:
XXXXXX XXXXXXX
XXXXXXX X. X'XXXXX
XXXXXXX X. XXXXXXX
[Signatures continued on next page]
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AMARLY CORPORATION
By:
Name:
Title:
ESCROW AGENT Street Address
City, State, Zip Code
Telephone No.
Telefax No.
[NSB\04257 CAMELOT ESCROW AGREEMENT]
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