ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of May 2, 1996 among RCM
TECHNOLOGIES, INC., a Nevada corporation ("RCM"), Peter Kaminsky,
("Shareholder") and Norman Berson as escrow agent (the "Escrow Agent").
WHEREAS, RCM, Sort Acquisition Corp. ("Acquiror"), The Consortium of
Maryland, Inc. ("Acquiree") and Shareholder have previously entered into a
Merger Agreement dated as of April 23, 1996 (the "Merger Agreement"), providing
for the merger of Avquiree with and into Acquiror on the Closing Date (the
"Merger"); and
WHEREAS, the Merger Agreement provides in Section 2.3 for the
establishment of an escrow fund whereby 25% of the aggregate Merger Shares
received by Shareholder (the "Escrow Shares") shall upon the closing of the
Merger and upon receipt, if at all, by Shareholder thereafter, pursuant to the
Merger Agreement, be placed in escrow to secure the obligation of the
Shareholder for possible indemnification claims presented by RCM against
Shareholder under Section 10 of the Merger Agreement, in each case in the manner
and to the extent set forth herein and in the Merger Agreement.
NOW, THEREFORE, in consideration of RCM, Acquiror, Acquiree and
Shareholder entering into the Merger Agreement and of the mutual premises and
agreements herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
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 Merger
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 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 Merger Agreement and to any exhibits to
such Merger 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 Merger 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.
2. Appointment of Escrow Agent.
Norman Berson 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 its duties under this Agreement is subject to
the terms and conditions set forth at Section 7 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.
3. Establishment of Escrow Fund.
(a) Pursuant to Section 2.3 of the Merger Agreement Shareholder shall
(i) on the Closing Date, deposit with the Escrow Agent the stock certificates
evidencing 25% of the Merger Shares delivered at Closing, and (ii) upon receipt
thereafter, deposit with the Escrow Agent an additional 25% of the Merger Shares
received by Shareholder subsequent to the Closing Date pursuant to the Merger
Agreement (in the aggregate, the "Escrow Shares), all of which shall be
registered on the share transfer books of RCM in the name of the Shareholder who
owns such Escrow Shares comprising the Escrow Fund. If dividends are paid, or a
distribution is made, by RCM with respect to the Escrow Shares, in cash or in
property, such dividends or distributions shall also be held as a part of the
Escrow Fund. In the event of any stock splits, recapitalizations or other
adjustments to the capital stock of RCM, the resulting number of shares or other
securities which the Escrow Shares convert shall be deemed the Escrow Fund.
(b) By virtue of the Shareholder's execution of this Escrow Agreement,
the Shareholder has, without any further act, consented to: (i) the
establishment of this escrow pursuant to the Merger Agreement in the manner set
forth herein, and (ii) all of the other terms, conditions and limitations in
this Agreement.
4. Operation and Administration of the Escrow Fund.
(a) To the extent provided herein and in the Merger Agreement, the
Escrow Fund shall be established and thereafter applied to the payment of
indemnification claims asserted by RCM during the twenty-four (24) month period
following Closing ("Claims") for the benefit of RCM as provided in Section 10 of
the Merger Agreement.
(b) RCM shall make application to the Escrow Agent, with a copy to the
Shareholder (the "Application"), if it has incurred or suffered damages or
losses for damages or losses to which it is entitled to indemnification under
Section 10 of the Merger Agreement. The Application shall identify the amount of
the damages or losses (the "Claim Amount") and state that the Shareholder has
elected to apply the Claim Amount against the Escrow Shares.
(c) Unless the Escrow Agent is otherwise informed in writing by the
Shareholder within 20 days from the date of the Application, disputing the Claim
Amount or the application thereof against the Escrow Shares, then the Escrow
Agent shall release to RCM for cancellation that number of Escrow Shares as are
equal in "value" to the Claim Amount. For this purpose, the "value" of the
Escrow Shares shall be determined by the average closing price of the shares of
Common Stock of RCM 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 Claim Notice. Upon determination, the
Escrow Agent shall release the appropriate amount of Escrow Shares to RCM for
cancellation.
(d) If the Escrow Agent is notified that the Shareholder in good faith
contests the Claim Amount or the application of the Claim Amount against the
Escrow Shares, then, and in that event, the Escrow Agent shall be permitted to
submit the issues in dispute to arbitration in accordance with the provisions of
Section 13 of the Merger Agreement. Once these issues have been resolved in
accordance with the arbitration procedure set forth within the Merger Agreement
and if the resolution of the dispute is such that the Shareholder owes money to
RCM, then Shareholder shall have 10 days to satisfy such liability, and if such
liability is not timely satisfied, then in such event, the Escrow Agent shall
release to RCM for cancellation that number of Escrow Shares as are equal in
"value" to the amount of the Shareholder's liability determined in arbitration;
whereupon such Claim Amount shall be deemed satisfied in full by virtue of the
application of such Escrow Shares. For this purpose, the term "value" of the
Escrow Shares shall be determined in accordance with subparagraph (c) above.
5. Release of Escrow Shares; Termination.
(a) On the date that is twenty-four (24) months following the Closing
Date (the "Release Date"), the Escrow Agent shall continue to retain in escrow
subject to the terms of this Agreement any Escrow Shares that may, upon RCM's
reasonable estimate, be necessary to satisfy any pending, outstanding or
contested RCM Claims timely submitted pursuant to Section 10 of the Merger
Agreement executed on even date herewith. The balance of the Escrow Shares shall
be released to the Shareholder. The Escrow Shares retained pursuant to this
subparagraph shall remain subject to escrow until resolution of the matters
identified herein.
(b) Once all of the Escrow Shares have been either released to RCM for
cancellation or returned to the Shareholder, 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.
6. Fees and Expenses of Escrow Agent.
The Escrow Agent shall be entitled to reimbursement of all reasonable
out-of-pocket expenses incurred by the Escrow Agent in connection with the
performance of his functions hereunder, including reasonable fees and
disbursements of counsel. The responsibility for payment of reimbursements to
the Escrow Agent shall be assumed by RCM.
7. 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 cancellation and forfeiture of 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) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall have received instructions, claims or
demands from any party hereto which, in its reasonable opinion, conflict with
any of the provisions of this Agreement or with instructions, claims or demands
of any other party hereto, the Escrow Agent shall refrain from taking any action
and its sole obligation shall be to keep safely all property held in escrow
hereunder until it shall be directed otherwise in writing by all of the
surviving parties hereto or by a final order or judgment of an arbitration panel
or court of competent jurisdiction, or an award of an arbitrator pursuant to an
arbitration conducted pursuant to Section 13 of the Merger Agreement.
(f) 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.
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
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; and
provided further that the interest of the Shareholder may not be adversely
affected without the written consent of the Shareholder. The failure of the
Shareholder to object to a modification of this Agreement, shall not act as a
waiver of the right of the Shareholder to object to that modification at a later
date.
9. Voting of Escrow Shares.
All rights to vote the Escrow Shares while they are part of the Escrow
Fund shall be retained by the Shareholder. The Shareholder shall not have any
right to transfer or assign their 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 RCM Shares and the Escrow Agent shall hold such transferee's
shares and stock powers in escrow subject to this Agreement.
10. Notices.
Any notices or other communications required or permitted hereunder
shall be sufficiently given if sent by certified mail, postage prepaid and
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 the Company, to:
Mr. Leon Kopyt
Chief Executive Officer
RCM Technologies, Inc.
2500 McClellan Avenue, Suite 350
Pennsauken, New Jersey 08109-4613
Telephone Number: (609) 486-1777
Telecopy Number: (609) 488-8833
with a copy to:
Stephen M. Cohen, Esquire
Buchanan Ingersoll, P.C.
Two Logan Square
18th and Arch Streets, 12th Floor
Philadelphia, PA 19103
Telephone Number: (215) 665-3873
Telecopy Number: (215) 569-2066
(ii) If to the Shareholder:
Peter Kaminsky
3812 Wingleaf Ct.
Rockville,MD 20853
with a copy to:
Steven Leventhal, Esq.
Air Rights Center
601N, North Tower
7315 Wisconsin Avenue
Bethesda, MD 20814
Telephone Number: (301) 656-5800
Telecopy Number: (301) 656-3400
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.
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.
13. Governing Law.
This Agreement shall be governed by and construed and interpreted in
accordance with the law of the Commonwealth of Pennsylvania applicable to
contracts executed and to be performed entirely within said Commonwealth.
14. 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.
15. Consent to Limited Jurisdiction.
The Escrow Agent hereby agrees that any legal action or proceeding with
respect to disputes arising out of this Agreement not otherwise subject to
arbitration under Section 13 of the Merger Agreement may be brought in the
courts of the Commonwealth of Pennsylvania or of the United States of America
for the Eastern District of Pennsylvania, and, by execution and delivery of this
Agreement, the Escrow Agent irrevocably accepts for itself and in respect of the
property held by it as Escrow Agent hereunder the jurisdiction of the aforesaid
courts, it being understood and agreed that such consent to jurisdiction is for
the sole and limited purpose of resolving disputes under this Agreement and
shall in no way be deemed to be a general and unconditional consent to the
jurisdiction of the aforesaid courts.
16. 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 11 of this Agreement, at least
thirty (30) days prior to the date specified for 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 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) day 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.
17. Indemnification. Except for the expenses in Section 6 of this Agreement, RCM
and the 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 17 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 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 to indemnify the Escrow Agent pursuant to this Section 17
unless the rights of RCM and Shareholder shall have been materially impaired by
such failure. Each of RCM and the 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 Shareholder shall be
liable for any counsel fees or other expenses incurred by the Escrow Agent after
the date that RCM or the Shareholder shall have so elected to assume the defense
and control of any such suit or proceeding. In addition, neither RCM nor the
Shareholder shall be liable for any settlement of any such suit, proceeding or
claim without the prior written consent of RCM and the Shareholder.
Notwithstanding the foregoing, the Shareholder shall only be liable for an
amount under this Section 17 up to, but no greater than Three Thousand Dollars
($3,000), however, where the Shareholder is determined to be at fault for the
amount incurred by the Escrow Agent, then RCM and the Shareholder shall be
jointly and severally liable for such amount incurred by the Escrow Agent, with
no such limitation on the amount which Shareholder may be liable.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the date first written above.
ATTEST: RCM TECHNOLOGIES, INC.
By:____________________________ By:
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Name:
Title:
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Peter Kaminsky
Escrow Agent:
___________________________ 1608 Walnut Street
Norman Berson 19th Floor
Philadelphia, PA 19103
Telephone: (215) 893-9300
Facsimile: (215) 893-8719