SECONDED AMENDED AND RESTATED
TERMINATION BENEFITS AGREEMENT
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SECOND AMENDED AND RESTATED TERMINATION BENEFITS AGREEMENT made this
18th day of March, 1997, effective as of December 30, 1993 (the "Effective
Date"), by and between RCM TECHNOLOGIES, INC., a Nevada corporation (the
"Company") and XXXX XXXXX (the "Executive").
RECITALS
A. The Executive has for several years served the Company as a key
executive officer and has helped guide the Company through many problems.
B. The Executive has been successful in converting a loss of $1 million
for the fiscal year ended 10/31/91 into a net profit of $1 million for the
fiscal year ended 10/31/93. He has negotiated a line of credit for the Company
with Mellon Bank on favorable terms and has arranged for acquisitions of
companies to strengthen the company's competitive position.
C. The Executive is expected to continue to make a major contribution
to the profitability, growth and financial strength of the Company.
D. The Company considers the continued services of the Executive to be
in the best interest of the Company and its shareholders and desires to assure
the continued service of the Executive on behalf of the Company on an objective
and impartial basis and without distraction or conflict of interest in the event
of an attempt to obtain control of the Company.
E. The Executive is willing to remain in the employ of the Company upon
the understanding that the Company will provide income security upon the terms
and subject to the conditions contained herein if the Executive's employment is
terminated voluntarily for good reason following a Change in Control of the
Company or involuntarily by the Company without "Good and Sufficient Cause" (as
defined in the Executive's Employment Agreement).
NOW, THEREFORE, in consideration of the mutual promises herein
contained and intending to be legally bound hereby, the parties agree as
follows:
1. Simultaneously with a "Change in Control of the Company", as that
term is defined herein (a "Change in Control"), the term of any Employment
Agreement then in force between the Company and the Executive (the "Employment
Agreement"), without any further action on the part of either party, shall be
deemed to have been extended for a term of five (5) years, commencing with the
date of the Change in Control, on the same terms and conditions as existed
immediately prior to the Change in Control (the "Extended Term").
2. During the Extended Term, the Executive may terminate his employment
at any time for "good reason". As used herein, the term "good reason" shall
mean:
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(i) A failure by the Company to comply with any material
provision of the Employment Agreement, which failure has not been cured within
ten (10) days after notice of noncompliance has been given by Executive to the
Company;
(ii) Without Executive's written consent, the assignment to
Executive of any duties inconsistent with Executive's duties, responsibilities
and status with the Company immediately prior to the Change in Control;
(iii) Any change in (a) Executive's reporting
responsibilities, title or office in effect immediately prior to the Change in
Control of the Company, or (b) a change in geographic location of where
Executive's position is based that would reasonably require a relocation of his
personal residence;
(iv) Any removal from or any failure to reelect Executive to
the highest ranking executive position in the Company except in connection with
a termination of employment for Good and Sufficient Cause, disability, death or
retirement or voluntary resignation or refusal to stand for re-election by
Executive;
(v) Any reduction by the Company in Executive's annual salary
in effect immediately prior to a Change in Control or as the same may be
increased from time to time; or
(vi) Any material reduction in the benefits provided to
Executive under any bonus, benefit or compensation plan, life insurance plan,
health and accident plan or disability plan in which Executive is participating
at the time of a Change in Control of the Company.
3. For purposes of this Agreement, a "Change in Control" shall be
determined in the manner established at Paragraph 7 hereafter. A Change in
Control shall mean a Change in Control of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A, as in
effect on the date hereof, promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided that, without limitation, such a
Change in Control shall be deemed to have occurred if:
(a) Any "Person" or "group of Persons" (as such terms are
defined hereafter), except for Executive, any affiliate of Executive, or any
group of Persons of which Executive is a participant, any employee benefit plan
of the Company or any subsidiary of the Company, or any entity holding voting
securities of the Company for or pursuant to the terms of any such plan (a
"Benefit Plan" or the "Benefit Plans"), is or becomes the "beneficial owner" (as
such term is defined hereafter), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities;
(b) There occurs a contested proxy solicitation of the
Company's shareholders with respect to the election of directors that results in
the contesting party electing one or more nominees to the Board of Directors;
(c) There occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company to another entity,
except to an entity controlled directly or indirectly by the Company, or a
merger, consolidation or other reorganization of the Company in which the
Company is not the surviving entity, or a plan of liquidation or dissolution of
the Company other than pursuant to bankruptcy or insolvency laws is adopted; or
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(d) During any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the directors
(inclusive of Executive) then still in office who were directors at the
beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred for purposes of this Agreement: (i) if a "Person" acquires or
becomes the beneficial owner of securities representing 20% or more of the
combined voting power of the Company's then outstanding securities pursuant to a
private placement transaction or underwritten public offering of the Company's
Common Stock where such issuance of securities by the Company is approved by a
vote of at least two-thirds of the directors inclusive of the Executive; (ii) if
a transaction identified in subparagraph 3(c) above occurs and is approved by a
vote of at least two-thirds of the directors inclusive of the Executive;
(iii) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Company to, or a merger, consolidation or
other reorganization involving the Company and, the Executive, alone or with
other officers of the Company, or any entity in which the Executive (alone or
with other officers) has, directly or indirectly, at least a 25% equity or
ownership interest; or (iv) in a transaction which includes the Executive as a
principal and control person and is otherwise commonly referred to as a
"management leveraged buy-out". For the purposes of subparagraph 3(a), a
"Person" shall not be deemed the beneficial owner of securities representing 20%
or more of the combined voting power of the Company's then outstanding
securities if that "Person" is an underwriter who has acquired shares for resale
in connection with an underwritten public offering of such shares.
Subparagraph 3(a) above to the contrary notwithstanding, a Change in
Control shall not be deemed to have occurred if a Person becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
solely as the result of an acquisition by the Company or any subsidiary of the
Company of voting securities of the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such person to 20% or more of the combined voting power of the
Company's then outstanding securities, provided, however, that if a Person
becomes the beneficial owner of 20% or more of the combined voting power of the
Company's then outstanding securities by reason of shares purchased by the
Company or any subsidiary of the Company and shall, after such share purchases
by the Company or a subsidiary of the Company, become the beneficial owner,
directly or indirectly, of any additional voting securities of the Company, then
a Change in Control shall be deemed to have occurred with respect to such Person
under subparagraph 3(a) above. Notwithstanding the foregoing, in no event shall
a Change in Control be deemed to occur under subparagraph 3(a) above with
respect to the Benefit Plans.
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For the purposes of this paragraph 3, the terms "Person,"
"group of Persons", "beneficial owner" and "beneficial ownership" shall have the
meanings ascribed thereto under Sections 13(d) and 14(d) and Rule 13d
promulgated under the Securities Exchange Act.
4. Any termination of Executive's employment by the Company or by
Executive shall be communicated by written notice of termination to the other
party. For purposes of this Agreement, a "notice of termination" shall mean a
dated notice which shall (i) indicate the specific termination provision in the
Employment Agreement relied upon; (ii) set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated; (iii) specify a date of
termination, which shall be not less than thirty nor more than ninety (90) days
after such notice of termination. In the case of termination by the Company of
Executive's employment for "Good and Sufficient Cause" pursuant to paragraph 4
of the Employment Agreement, the notice of termination may specify a date of
termination as of the date such notice of termination is given and (iv) notice
of termination shall be given in the manner specified in Section 14 of the
Employment Agreement.
5. If during the Extended Term following a Change in Control,
Executive, terminates his Employment for good reason as described in
subparagraphs (i) to (vi) of paragraph 2 hereof, or if Executive is terminated
by the Company for other than "Good and Sufficient Cause", then, in lieu of any
further salary payments to Executive for periods subsequent to the date of
termination:
(a) The Company shall pay as a liquidated amount to Executive
within thirty (30) days of such termination, a lump sum cash payment which is
equal to the remainder of any further salary and ascertainable bonus payments
that would have become due to Executive during the remainder of the Extended
Term; calculating the amount of such salary based upon the Executive's current
gross salary (for federal income tax purposes) and ascertainable bonus based
upon the bonus that was received by Executive during the Company's most recently
completed fiscal year;
(b) All options held by Executive, to the extent not vested
pursuant to the terms of any plan or agreement governing such option, shall
become fully vested and exercisable;
(c) The exercise price of the option to purchase 500,000
shares granted to Executive under the Company's 1996 Executive Stock Plan (the
"Options") shall be reset (if the resulting exercise price is lower than the
exercise price then in effect) to the lower of (x) the exercise price of the
Options; and (y) fifty (50%) percent of the market value of the Company's Common
Stock. For the purposes hereof, the term "market value of the Common Stock"
shall mean the simple average of the closing prices of the Company's Common
Stock on the principal exchange or quotation system upon which the Company's
Common Stock is regularly traded for the trading days during the sixty (60)
calendar days preceding the date the Executive terminates his employment for
good reason as described in subparagraphs (i) to (vi) of paragraph 2 hereof, or
the date Executive is terminated by the Company for other than "Good and
Sufficient Cause");
(d) The Company shall continue to pay or make available to
Executive for a period of two (2) years after the date of termination, all
Company benefits including all health,
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disability and life insurance plans provided by or through the Company,
including those provided in the Employment Agreement;
(e) If Executive is terminated by the Company for other than
"Good and Sufficient Cause", the "Non-Disclosure/Non-Competition" restrictions
contained within paragraph 8 of the Employment Agreement and the "Remedies"
associated therewith contained within paragraph 9 of the Employment Agreement
shall be null and void and unenforceable and inapplicable as to the Executive;
and
(f) The Company, within sixty (60) days of Executive's date of
termination, shall (i) pay to Executive an additional amount sufficient to
satisfy all of Executive's current or prospective liability to any taxing
authority for excise taxes, penalties or any other taxes assessed in excess of
normal income taxes imposed on salaries, incurred by reason of all benefits
provided to Executive under this Agreement and (ii) cause the Company's
independent auditors to determine, within sixty (60) days, the amount to be paid
to Executive pursuant to subparagraph 5(a) and this subparagraph 5(f) above,
providing a copy to Executive of the auditors' detailed determination.
6. The Executive shall not be required to mitigate the amount of any
payment provided for under this Agreement by asking for other employment and
none of these payments may be reduced by any future salary that Executive may
earn.
7. A Change in Control shall be determined within the reasonable
discretion of the Executive who shall within 90 days of such determination
provide written notice (the "Notice") to the Company identifying the Change in
Control, and, if possible, providing reference to the Item or Items constituting
the Change in Control identified in subparagraphs 3(a)-3(d) above. The Company
shall have 15 days in which to respond in writing. This response shall indicate
whether or not the Company adopts or disputes the conclusions set forth within
the Notice, and if the Company disputes the Notice, the Company's response shall
indicate with specificity the basis and grounds for such objection. In the
absence of a timely response, the Company shall be deemed to have adopted the
conclusions set forth within the Notice. The conclusions of the Executive set
forth within the Notice shall be deemed conclusive evidence of a Change in
Control. The Company shall bear the burden of proof of establishing that a
Change in Control has not occurred.
8. The Executive is aware that upon Notice of the occurrence of a
Change in Control, the Board of Directors or a shareholder of the Company may
then cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the Company
to institute, or may institute litigation seeking to have this Agreement
declared unenforceable, or may take or attempt to take other action to deny
Executive the benefits intended under this Agreement. In these circumstances,
the purpose of this Agreement could be frustrated. It is the intent of the
Company that Executive not be required to incur the expenses associated with the
enforcement of any rights under this Agreement by litigation or other legal
action, nor be bound to negotiate any settlement of any rights hereunder,
because the cost and expense of such legal action or settlement would
substantially detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if following a Notice
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relative to a Change in Control it should appear to Executive that the Company
has failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or other legal
action designed to deny, diminish or to recover from Executive the benefits
intended to be provided to Executive, then the Company irrevocably authorizes
Executive to retain counsel of Executive's choice, at the expense of the Company
as provided in this paragraph 8, to represent Executive in connection with the
initiation or defense of any litigation or other legal action, whether such
action is by or against the Company or any director, officer, shareholder, or
other person affiliated with the Company, in any jurisdiction. Notwithstanding
any existing or prior attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to Executive entering into an
attorney-client relationship with such counsel, and in that connection the
Company and Executive agree that a confidential relationship shall exist between
Executive and such counsel. The reasonable fees and expenses of counsel selected
from time to time by Executive as hereinabove provided shall be paid in advance
or reimbursed to Executive, at the election of the Executive, by the Company on
a regular, periodic basis upon presentation by Executive of a statement or
statements or customary retainer letter prepared by such counsel in accordance
with its customary practices, up to a maximum aggregate amount of $500,000. Any
legal expenses incurred by the Company by reason of any dispute between the
parties as to enforceability of or the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be the sole
responsibility of the Company, and the Company shall not take any action to seek
reimbursement from Executive for such expense.
9. This Agreement is the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior or contemporaneous
negotiations or understandings relating hereto, including a Termination Benefits
Agreement dated December 30, 1993, a First Amendment to Termination Benefits
Agreement dated March 1, 1996 and an Amended and Restated Termination Benefits
Agreement dated November 30 1996. This Agreement may be altered or amended only
by a writing signed by the parties hereto.
10. This Agreement shall be construed in accordance with the laws of
Pennsylvania and shall be binding upon and inure to the benefit of the parties
hereto, their heirs, administrators, successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this amendment the
day and year first above written.
RCM TECHNOLOGIES, INC.
BY:
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ATTEST:
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XXXX XXXXX
APPROVED:
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XXXXXXX X. XXXXX, XX.
Chairman Compensation Committee
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