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STANDSTILL AND SHAREHOLDERS' AGREEMENT
This Agreement dated as of March 11, 1996, between each of the persons
identified on Schedule A hereto (the "Holders") and RCM Technologies, Inc., a
Nevada corporation (the "Company").
R E C I T A L S:
WHEREAS, the Company and Holders are parties to a Stock Purchase
Agreement dated as of March 1, 1996 (the "Stock Purchase Agreement") pursuant to
which the Company acquired 100% of the outstanding stock of The Consortium, a
New Jersey corporation (the "Acquiree");
WHEREAS, the Holders represent the former holders of 100% of
the outstanding capital stock of Acquiree;
WHEREAS, as a result of a closing under the Stock Purchase Agreement,
Holders acquired 6,500,000 shares of the Common Stock of the Company (the "RCM
Shares");
WHEREAS, the parties desire to set forth certain agreements concerning
the RCM Shares and other matters.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions
(a) "Acquiree" shall mean The Consortium, a New Jersey
corporation.
(b) "Company" shall mean RCM Technologies, Inc., a
Nevada corporation.
(c) "Holders" shall mean the former shareholders of The
Consortium all of whom received RCM Shares pursuant to the Stock Purchase
Agreement.
(d) "Stock Purchase Agreement" shall mean that agreement
entered into as of March 1, 1996, among the Company, the Holders and Acquiree.
(e) "Voting Securities" shall mean all classes of capital
stock of the Company which are then entitled to vote generally in the election
of directors of the Company.
Unless otherwise indicated herein, any capitalized terms utilized in
this Agreement shall have the meaning ascribed thereto in the Stock Purchase
Agreement.
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2. Covenants of Holders
(a) During the term identified in subparagraph (b) below:
(i) Each of the Holders shall vote all Voting
Securities owned by him in connection with the election of directors of the
Company for all of the nominees of a majority of the Board of Directors of the
Company and, unless the Company otherwise consents in writing, on all other
matters to be voted on by the holders of Voting Securities, in accordance with
the recommendation of the majority of the Board of Directors; provided that the
Voting Securities owned by Holders may be voted as such members determine in
their sole discretion on any Significant Event. As used herein, the term
"Significant Event" means any (A) sale of substantially all of the assets of the
Company; (B) acquisition of the Company by a third party through a merger
transaction in which the Company is the target company; or (C) transaction or
series of related transactions which results in the issuance and/or sale by the
Company of more than 20% of the outstanding capitalization on a fully diluted
basis, if that on a proforma basis, the proportionate net stockholders' equity
of the Holders after such proposed transaction would be diluted. The Holders, as
holders of Voting Securities, shall be present, in person or by proxy, at all
meetings of shareholders of the Company so that all Voting Securities
beneficially owned by them may be counted for the purpose of determining the
presence of a quorum at such meetings.
(ii) No Holder shall deposit any Voting Securities
in a voting trust or subject any Voting Securities to any arrangement or
agreement with respect to the voting of such Voting Securities, except in
connection with a transfer permitted under 2(a)(v)(D).
(iii) No Holder shall solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to the recommendation of the majority of
the Board of Directors of the Company with respect to any matter.
(iv) No Holder shall join a partnership, limited
partnership, limited liability company, limited liability partnership, syndicate
or other group or otherwise act in concert with any person, for the purpose of
acquiring, holding, voting or disposing of Voting Securities, or otherwise
become a "person" within the meaning of Section 13(d)(3) of the Exchange Act,
other than with other Holders.
(v) In addition to the limitations upon public
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resale contained in Section 2(c) of the Registration Rights Agreement executed
on even date herewith by and among the Company and the Holders (the
"Registration Rights Agreement"), no Holder shall, directly or indirectly, offer
or sell or transfer any Voting Securities except (A) to another Holder; (B) in
gift or other similar transactions not involving sales for consideration, to
family members or trusts, provided, however, that such family members (or
trustee) as a condition to such transfer agree in writing to be bound by the
terms of this Agreement as if they were a Holder; (C) in other transactions in
which Voting Securities are sold or transferred to any person or related group
of persons who would immediately thereafter, to the knowledge of any Holder,
own, or have the right to acquire Voting Securities representing no more than
one percent of the total combined voting power of all Voting Securities then
outstanding; or (D) as a result of any pledge or hypothecation to a financial
institution to secure a bona fide loan, or the foreclosure of any lien or
encumbrance which might be placed upon any Voting Securities (whether
voluntarily or involuntarily).
(b) The covenants identified in Section 2(a)(i)-(v) shall
continue in full force and effect until the earlier of (i) the date upon which
Leon Kopyt no longer serves as an officer of the Company; or (ii) six (6) months
following the date upon which both Messrs. Blaire and Meyers cease to be
employees of the Company (the "Termination Date"), provided, however, that the
Termination Date shall be deemed to occur on any such earlier date that the
employment of both of Messrs. Blaire and Meyers is terminated without cause.
3. Covenants Regarding Board Representation
(a) Effective April 15, 1996, the Company shall (i) increase
its Board of Directors from five (5) members to seven (7) members; (ii) appoint
Messrs. Blaire and Meyers to such openings as a Class C and Class A member,
respectively; and (iii) appoint Messrs. Blaire and Meyers to the Executive
Committee of the Board of Directors of the Company.
(b) The Company shall (i) continue to nominate Messrs. Blaire
and Meyers as management nominees for election to the Board of Directors upon
expiration of their respective terms and (ii) cause Messrs. Blaire and Meyers to
be appointed to the Executive Committee of the Board of Directors, for so long
as: (A) the Holders, in the aggregate, continue to own, directly or
beneficially, 50% or more of the RCM Shares (as adjusted by any stock splits,
recapitalization or other adjustments to the capital stock of the Company), and
(B) either of Messrs. Blaire or Meyers remain as a management level employee of
the Company; provided,
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however, that: (X) in the event only one of Messrs. Blaire or Meyers is a
management level employee, then only that individual shall be entitled to the
rights set forth in clauses (i) and (ii) hereof; and (Y) the provisions of
clause (B) above shall not be effective to abrogate the Company's obligations in
clauses (i) and (ii) above if the employment of either or both of Messrs. Blaire
and Meyers is terminated by the Company without cause; in which case the Company
shall remain obligated to undertake those actions identified in clauses (i) and
(ii) hereof for the remaining period of any employment agreements pursuant to
which Messrs. Blaire or Meyers were employed upon such termination.
4. Negative Covenant
The Company shall not undertake the corporate actions
described below without the written consent of either of Messrs.
Blaire or Meyers:
(a) the sale of all or substantially all of the assets
of the Company on a consolidated basis;
(b) the acquisition of the Company by a third party
through a merger transaction in which the Company is the target
Company; or
(c) a transaction or series of related transactions that
result in the issuance and/or sale by the Company of more than 20% of its
outstanding capital stock of the Company outstanding at that time, if, on a
proforma basis, the proportionate net stockholders' equity of the Holders
immediately after the completion of such proposed transaction would be diluted.
Notwithstanding the foregoing, no such written consent shall
be required if: (i) the Holders, in the aggregate, own, directly or
beneficially, less than 50% of the RCM Shares (subject to adjustment for stock
splits, recapitalization or other adjustments to the capital stock of the
Company); or (ii) neither Messrs. Blaire nor Meyers, nor their designees
continue to serve on the Board of Directors of the Company; or (iii) the
Holders, in the aggregate, own beneficially less than 15% of the outstanding
capital stock of the Company.
5. Termination of Prior Shareholders Agreements - Release of
Acquiree
(a) The execution of this Agreement by the Holders shall
constitute the formal termination of any and all prior shareholders
agreements or arrangements in their former capacity as holders of
the common stock of Acquiree, including, but not limited to: (i)
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Employee Shareholder Agreement dated July 6, 1995 between Acquiree and Alexander
Valcic; (ii) Employee Shareholder Agreement dated June 29, 1995 between Acquiree
and Howard Ross; (iii) Employee Shareholder Agreement dated June 30, 1995
between Acquiree and Marie Wolfson; and (iv) Shareholders Agreement dated
September 25, 1992 between Acquiree, Martin L. Blaire and Barry S. Meyers, all
as amended or supplemented from time to time.
(b) Each of the Holders, individually, do hereby remise,
release and forever discharge Acquiree, as well as each of its directors and
officers (the "Releasees") of and from any and all manner of actions, causes of
action, suits, debts, accounts, bonds, covenants, agreements, understandings,
contracts, controversies, judgments, damages, claims, liabilities and demands of
any kind or nature whatsoever, at law or in equity, including but not limited to
those matters arising under any and all Shareholders Agreements or similar
arrangements with Acquiree, whether such be presently known or unknown, which
against any of the Releasees the Holders ever had, now have or hereafter can
have or may claim to have for or by reason of any cause, matter or thing
whatsoever, from the beginning of the world to the date hereof; provided,
however, notwithstanding the foregoing, the Holders do not release the Acquiree
from its obligations to indemnify and hold harmless each Holder, under the
Certificate of Incorporation of Acquiree (as amended) or as otherwise
contemplated by the New Jersey Business Corporation Act, for any liabilities
incurred by them in their capacity as an officer and/or director of the
Acquiree.
6. Restrictive Covenants
(a) In recognition of their continued employment with Acquiree
following the Closing under the Stock Purchase Agreement, each of Alexander
Valcic, Howard Ross and Marie Wolfson (in the aggregate, the "Non-Executive
Employee") do hereby agree to comply with the restrictive covenants set forth in
subparagraph 6(a)(i) and (ii), for the one (1) year period following the
termination of such Non-Executive Employee, if a termination of such
Non-Executive Employee occurs within the two (2) year period following the
Closing. In the event a Non-Executive Employee is not terminated within the two
(2) year period following Closing, then such Non Executive Employee and the
Company shall conduct negotiations in good faith to determine an appropriate
non-competition period for the Non-executive Employee.
(i) The Non-Executive Employee shall not engage,
directly or indirectly, whether as owner, partner, joint venturer, shareholder,
director, employee, agent, consultant, advisor, officer or otherwise, in any
other business or enterprise which is in direct competition with the Company;
provided, however, that (i)
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with respect to Alexander Valcic, such non-competition shall only apply to the
computer consulting industry and the business of the permanent placement of
computer personnel in the greater New York metropolitan area and (ii) with
respect to Howard Ross, such non competition shall only apply to the placement
of general temporary personnel in the greater New York metropolitan area.
(ii) The Non-Executive Employee shall not as owner,
partner, joint venturer, shareholder, director, employee, agent, consultant,
advisor, officer or otherwise, directly or indirectly: (A) engage in business
with, solicit the business of, contract with, or otherwise do business with, or
cause any entity with which the Non-Executive Employee is associated to engage,
solicit, contract or otherwise do business with, in respect of business which is
in direct or indirect competition with the business then conducted by the
Company, any persons or entities who, at the time of such termination are, or at
any time within the period of six (6) months prior to such termination were, a
party to an engagement letter or agreement with, or who were otherwise clients
of the Company, or (B) employ as an employee, engage as an independent
contractor, or otherwise retain or solicit, or seek to so employ, engage or
retain, any person who is at such time, or was during any portion of the six (6)
months prior to the termination of the Non Executive Employee's employment by
the Company, an employee of, or an independent contractor for the Company.
Notwithstanding the foregoing, however, each of the Non-Executive Employees may
make passive investments of not more that 5% of the total issued and outstanding
securities of any corporation which competes with the Company and whose
securities are regularly traded on any national securities exchange or in the
over-the-counter market.
(b) At all times, both during and after the Non Executive
Employee is a stockholder of the Company, such Non Executive Employee shall be
deemed to be in a fiduciary capacity for the benefit of the Company, and not use
or disclose to any third party, any trade secret, information, knowledge or data
not generally known to, or easily obtainable by, the public which the
Non-Executive Employee may have learned, discovered, developed, conceived,
originated or prepared during or as a result of the Non Executive Employee's
relationship with the Company, with respect to the operations, business,
affairs, products, technologies or services of the Company.
(c) If in any proceeding, a Court shall refuse to enforce any
covenant in this Paragraph 6 because such covenant covers too extensive a
geographic area or too long a period of time or for any other reason, any such
covenant shall be deemed amended to the extent (but only to the extent) required
by law, and shall be enforced as amended.
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(d) In the event a Non-Executive Employee violates any of the
covenants in this Paragraph 6, the Company shall be deemed to have suffered
irreparable harm, and shall be entitled to seek and obtain equitable relief in
the form of temporary restraining orders and preliminary injunctions to enforce
said covenants. In such event, such Non-Executive Employee hereby waives the
claim or defense that an adequate remedy exists at law and shall not advance in
any such action or proceeding the claim or defense that such remedy at law
exists. Such remedy shall be in addition to any other remedy available at law or
in equity. Furthermore, in the event of such breach, such Non-Executive Employee
shall be liable for all of the costs and expenses, including, but not limited to
reasonable legal fees, in obtaining such equitable relief.
7. Right of First Refusal
(a) In the event that a Holder proposes to dispose in a
privately negotiated transaction effectuated other than (i) by means of a public
resale, (ii) to another Holder or (iii) to a family member, any or all of the
RCM Shares ("Selling Shares") then owned by such Holder (the "Selling Holder"),
then the Selling Holder shall provide written notice to the Company of his
intention (the "Selling Notice") to dispose of his Selling Shares. The Selling
Notice shall contain the terms upon which such proposed disposition shall occur,
including the amount and price per share of the Selling Shares. Upon receipt of
the Selling Notice, the Company shall have the option for a period of eleven
(11) calendar days (the "Option Period") to purchase the Selling Shares offered
in the Selling Notice on the same terms and conditions set forth therein. The
Selling Holder, upon the earlier of receiving written notification from the
Company that it elects not to purchase the Selling Shares or the expiration of
the Option Period, may dispose of all, but not less than all, of the Selling
Shares identified in the Selling Notice, on the same terms and conditions as are
set forth in the Selling Notice. In the event the Selling Holder intends to
dispose of the Selling Shares on terms different from those presented to the
Company in the Selling Notice, or the Selling Holder does not dispose of the
Selling Shares within ninety (90) calendar days from the date of receipt by the
Company of the Selling Notice, then the Selling Shares shall once again be
subject to all of the terms and provisions of this Section 7.
(b) In the event that a Holder proposes to dispose of the
Selling Shares in an open market transaction, the Selling Holder shall provide a
Selling Notice to the Company. Upon receipt of the Selling Notice, the Company
shall have the option for one (1) calendar day to purchase the Selling Shares
offered in the Selling Notice upon the terms and conditions set forth therein.
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8. Preemptive Rights
If RCM issues any Voting Securities for cash (other than
pursuant to employee stock option plans or in an underwritten public offering),
then the Acquiree Shareholders shall have the right to purchase, on the same
terms as such issuance, that number of Voting Securities so that the Acquiree
Shareholders own the same percentage of the Company's Voting Securities as they
owned immediately prior to such issuance.
9. Miscellaneous
(a) The Holders, on one hand, and the Company, on the other
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any Court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they maybe entitled at
law or in equity.
(b) If requested in writing by the Company, the Holders shall
present or cause to present promptly all certificates representing Voting
Securities now owned or hereafter acquired by members of the Holder Group for
the placement thereon of the following legend, which will remain thereon as long
as such Voting Securities are subject to the restrictions contained in this
Agreement, and which will be in addition to any legend that denotes the
securities as "restricted securities" under the Securities Act of 1933, as
amended;
"The securities represented by this certificate are subject to
the provisions of an agreement dated as of March 1, 1996
between RCM Technologies, Inc. and the persons identified in
such agreement and may not be sold or transferred except in
accordance therewith. A copy of said agreement is on file at
the offices of the corporate secretary of RCM Technologies,
Inc."
The Company may enter a stop transfer order with the transfer
agent or agents of Voting Securities against the transfer of Voting Securities
except in compliance with the requirements of this Agreement. The Company agrees
to remove promptly any stop transfer order with respect to, and issue promptly
an legend and certificates in substitution for, certificates of any Voting
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Securities that are no longer subject to the restrictions contained in this
Agreement.
(c) As used herein, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act and the term "person"
shall mean any individual, partnership, corporation, trust, limited liability
company, or other entity.
(d) This Agreement contains the entire understanding of the
parties with respect to the transaction contemplated hereby and the Agreement
maybe terminated only by an agreement in writing executed by the parties hereto.
(e) Descriptive headings are for the convenience only
and shall not control or affect the meaning or construction or any
provision of this Agreement.
(f) For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto, and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
(g) All notices (including a Selling Notice), consents, and
requests, instructions, approvals and other communications provided for herein
and all legal processing in regard hereto shall be valid if given, made or
served, if in writing and delivered personally, by facsimile, or sent by
registered mail, postage prepaid
(i) If to the Company, to:
Mr. Leon Kopyt
Chief Executive Officer
RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, New Jersey 08109-4613
with a courtesy copy to;
Stephen M. Cohen, Esq.
Clark Ladner Fortenbaugh & Young
One Commerce Square
2005 Market Street
Philadelphia, Pennsylvania 19103
Telephone Number: (215) 241-1800
Telecopy Number: (215) 241-1857
(ii) If to the Holders, to:
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Martin Blaire
Lewis Road
Irvington Road, NY 10533
Barry Meyers
384 Highview Terrace
Ridgewood, NJ 07450
Howard Ross
1260 Westover Road
Stamford, CT 06902
Marie Wolfson
210 Marc Boulevard
Boonton, NJ 07005
Alexander Valcic
412 East 55th Street
New York, NY 10022
with a courtesy copy to;
Joshua B. Gillon, Esquire
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
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New York, New York 10019
Telephone Number: (212) 956-1500
Telecopy Number: (212) 956-3252
Any such notices shall be effective (i) when delivered in person or sent by
telecopy, (ii) one business day after being sent by overnight delivery or (iii)
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.
(h) From and after the Termination Date or earlier termination
of this Agreement, the covenants of the parties set forth herein shall be of no
further force and effect and the parties shall be under no further obligation
with respect thereto.
(i) This Agreement shall be governed by construed and forced
in accordance with the laws of the State of New Jersey applicable to contracts
made and to be performed therein.
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IN WITNESS WHEREOF, the Holders and the Company have caused this
Agreement to be duly executed, in the case of accompanied by its respective
officers, each of who is duly authorized, all as of the day and year first above
written.
RCM TECHNOLOGIES, INC.
ATTEST
By: By:
Secretary Name:
Title:
THE HOLDERS:
Martin Blaire
Barry Meyers
Howard Ross
Marie Wolfson
Alexander Valcic
For the purpose of consenting to, and joining with the provisions of
Paragraph 5(a) hereof:
THE CONSORTIUM
ATTEST
By:________________________ By:________________________
Secretary Name:________________
Title:_______________
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SCHEDULE A
Martin Blaire
Barry Meyers
Howard Ross
Marie Wolfson
Alexander Valcic
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