ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of January 7, 1997 among
RCM TECHNOLOGIES, INC., a Nevada corporation ("RCM"), THE XXXXX XXXXX AND XXXX
XXXXXX-XXXXX TRUST (the "Acquiree Shareholder") and CATALYST FINANCIAL GROUP,
INC. d/b/a LINGATE FINANCIAL GROUP as escrow agent (the "Escrow Agent").
WHEREAS, RCM, Acquiree, the Acquiree Shareholder and the remaining
shareholder of Acquiree have previously entered into a Stock Purchase Agreement
dated as of January 7, 1997, 1996 (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 a portion of the Acquiree Shares
consisting of in the case of The Xxxxx Xxxxx and Xxxx Xxxxxx-Xxxxx Trust 170
shares of the Common Stock of Acquiree (the "Escrow Shares") shall upon the
closing of the Acquisition be placed in escrow to secure the obligation of RCM
to pay the Trust Note which constitute a part of the deferred portion of the
Purchase Consideration under Section 2.3 of the Stock Purchase Agreement; and
WHEREAS, the principal amount of the Trust Note is subject to
adjustment as set forth in Section 2.3(a) to 2.3(e) inclusive of the Stock
Purchase Agreement; and
WHEREAS, the terms of the Stock Purchase Agreement and the Trust Note
are incorporated herein by reference.
NOW, THEREFORE, in consideration of RCM, Acquiree and Acquiree
Shareholder entering into the Stock Purchase Agreement and of the
mutual promises and agreements hereby 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
Acquiree owned by Acquiree Shareholder held in escrow hereunder by the Escrow
Agent.
(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
Catalyst Financial Group, Inc. d/b/a Lingate Financial Group hereby
accepts its appointment as Escrow Agent to serve in accordance with the terms,
conditions and provisions of this Agreement. The acceptance by the Escrow Agent
of its 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, Acquiree Shareholder shall, pursuant
to Section 2.2(b) of the Stock Purchase Agreement, deposit with the Escrow Agent
the stock certificates evidencing the Escrow Shares (which consist of 170 shares
of Acquiree's Common Stock) endorsed in blank.
(b) By virtue of the Acquiree Shareholder's execution of this
Escrow Agreement, the Acquiree Shareholder has, without any further act on the
part of the Acquiree Shareholder, 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 the obligation of RCM
hereunder and under the Trust Note, the Stock Purchase Agreement, any Exhibit or
Schedule thereto and any document executed or delivered in connection therewith.
(b) Upon the occurrence of an Event of Default as defined in
the Trust Note, and failure to cure the same within any applicable cure period,
the Acquiree Shareholder may declare the entire unpaid principal balance of the
Trust Note together with interest at the default rate specified in the Note and
all sums accrued pursuant to Section 2.4 of the Stock Purchase Agreement and all
other sums due under such Note immediately due and payable.
(c) Upon the occurrence of an Event of Default as defined in
the Trust Note, or in the event Acquiree and/or RCM should breach any of the
representations, conditions or covenants made herein and failure to cure the
same within any applicable cure period, or in the event RCM become insolvent or
unable to pay debts as they mature, or makes an assignment for the benefit of
creditors, or any proceeding is instituted by or against RCM alleging that it is
insolvent or unable to pay debts as they mature, or RCM commences proceedings
for dissolution or liquidation, then Acquiree Shareholder may make application
to Escrow Agent with a copy to RCM (the "Application") for release to Acquiree
Shareholder of the Escrow Shares, said Application to specify the default(s). In
the event of a breach or default as specified in this paragraph, RCM shall pay
all costs and expenses of Acquiree Shareholder, including reasonable attorney
fees, incurred by Acquiree Shareholder in the enforcement of its rights
hereunder.
(d) Unless the Escrow Agent is otherwise notified in writing
within 20 days from the date of the Application that RCM disputes the
Application, then the Escrow Agent shall release the Escrow Shares to the
Acquiree Shareholder. Such notice shall be in the form of an affidavit executed
by an officer of RCM who has firsthand knowledge of same stating the exact
grounds for disputing the Application.
(e) Following release of the Escrow Shares to Acquiree
Shareholder such Acquiree Shareholder shall have with respect to the Escrow
Shares all the rights of a secured party under the Minnesota Uniform Commercial
Code including the right, following ten (10) days written notice to Acquiree, to
sell the Escrow Shares at a public or private sale in a commercially reasonable
manner.
(f) If the Escrow Agent is notified that RCM in good faith
contests the Application 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 parties hereto 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.
(g) Once the Escrow Shares have been either released to the
Acquiree Shareholder 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 its services except
for reimbursement of reasonable out-of-pocket expenses incurred by the Escrow
Agent in connection with the performance of its 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. If a suit
is commenced the Escrow Agent may impose a charge of $_____ per hour for the
time spent directly on the matter.
SECTION 6. Duties and Liabilities of the Escrow Agent.
(a) The Escrow Agent shall act hereunder as depositary only,
and it shall not be responsible or liable in any manner whatever 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 its
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 the parties hereto. The Escrow Agent shall not
have any responsibility for the genuineness or validity of any document or other
material presented to or deposited with it nor shall it have any liability for
any action taken, suffered or omitted in accordance with any written
instructions or certificates given to it hereunder and believed by it 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 it in good faith, or
for any mistake of fact or law, or for anything which it may do or refrain from
doing in connection with this Agreement, except its own gross negligence or
willful misconduct.
(d) The Escrow agent may consult with, and obtain the advice
of, legal counsel selected by it in the event of any question as to any of the
provisions hereof or its duties hereunder, and the Escrow Agent shall incur no
liability and shall be fully protected for any action taken, suffered or omitted
by it 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 it in respect of the subject
matter of this Agreement, provided that 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 it is indemnified to its reasonable
satisfaction against the cost and expense of such defense or initiation.
SECTION 7. Representations.
During such time as the Escrow Shares are being held by Escrow Agent
pursuant to this Agreement, neither Acquiree nor RCM shall take, or permit
Acquiree to take, any of the following actions:
(a) Acquiree shall not be dissolved nor liquidated, in whole or in
part, nor shall any business of Acquiree be transferred to any subsidiary
corporation nor shall Acquiree merge or consolidate with any other corporation.
(b) Acquiree shall not sell or otherwise transfer any of its
assets or any of its businesses or lines of business except in the
ordinary course of business.
(c) RCM shall not transfer, or attempt to transfer, any of the Escrow
Shares to any other person or entity or encumber or create any lien upon or
charge against the Escrow Shares or any portion thereof.
(d) Acquiree shall not increase or decease its authorized or
outstanding capital stock nor issue any shares of its capital stock
to any other person or entity (including RCM).
(e) Acquiree shall not grant any stock options, warrants or
subscriptions with respect to its stock and shall declare no dividends or other
distribution with respect thereto which is payable in stock of Acquiree.
(f) Acquiree shall not change its registered name or use a
name other than its registered name.
SECTION 8. 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 Shareholder, 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 9. Voting of Escrow Shares.
So long as no Event of Default has occurred all rights to vote
the Escrow Shares while they are part of the Escrow Fund shall be retained by
RCM. The Acquiree Shareholder shall have no right to transfer or assign her
interest in the Escrow Shares in the Escrow Fund during such period of time as
such 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 10. 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
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 Shareholder, to:
The Xxxxx Xxxxx and Xxxx Xxxxxx-Xxxxx Trust
with a copy to:
Xxxxx Xxxxxxxx, Esquire
Xxxxxxxx 0, Xxxxx 000
0000 Xxxxxx Xxxxx
Xx. Xxxxx Xxxx, XX 00000.
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
SECTION 11. Parties in Interest.
This Agreement shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of each of the parties hereto.
SECTION 12. 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 13. Severability.
In case any provision in this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality and 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 14. Resignation and Removal of Escrow Agent.
(a) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving written notice of its 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 Shareholder 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 15. Indemnification.
RCM and the Acquiree Shareholder, 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 its duties, obligations or performance as
Escrow Agent hereunder, except as caused by its negligence or willful
misconduct, including without limitation the reasonable legal costs and expenses
of defending itself against any claim or liability in connection with its
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
Shareholder 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 event will the
failure to give such notice affect the obligation of RCM and the Acquiree
Shareholder to indemnify the Escrow Agent pursuant to this Section 14 unless the
rights of RCM and the Acquiree Shareholder shall have been materially impaired
by such failure. Each of RCM and the Acquiree Shareholder will be entitled to
participate at its own expense in the defense of any suit or proceeding brought
to enforce any such claim and, if it so elects in writing, may assume the entire
defense and control of any such suit or proceeding. Neither RCM nor the Acquiree
Shareholder shall be liable for any counsel fees or other expenses incurred by
the Escrow Agent after the date that RCM or the Acquiree Shareholder shall have
so elected to assume the defense and control of any such suit or proceeding. In
addition, neither RCM nor the Acquiree Shareholder shall be liable for any
settlement of any such suit, proceeding or claim without the prior written
consent of RCM and the Acquiree Shareholder.
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:
THE XXXXX XXXXX AND XXXX
XXXXXX-XXXXX TRUST
By:
XXXXX XXXXXXXX, Special
Independent Trustee
Escrow Agent
[NSB\04257PAM.ES2]
