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<SEC-DOCUMENT>0000700841-02-000010.txt : 20020806
<SEC-HEADER>0000700841-02-000010.hdr.sgml : 20020806
<ACCEPTANCE-DATETIME>20020805112732
ACCESSION NUMBER:		0000700841-02-000010
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20020630
FILED AS OF DATE:		20020805

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			RCM TECHNOLOGIES INC
		CENTRAL INDEX KEY:			0000700841
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-HELP SUPPLY SERVICES [7363]
		IRS NUMBER:				951480559
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-10245
		FILM NUMBER:		02719281

	BUSINESS ADDRESS:	
		STREET 1:		2500 MCCLELLAN AVE STE 350
		CITY:			PENNSAUKEN
		STATE:			NJ
		ZIP:			08109
		BUSINESS PHONE:		6094861777

	MAIL ADDRESS:	
		STREET 1:		2500 MCCLELLAN AVENUE
		STREET 2:		STE 350
		CITY:			PENNSAUKEN
		STATE:			NJ
		ZIP:			08109-4613
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q63002.txt
<DESCRIPTION>FORM 10-Q JUNE 30, 2002
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


(Mark One)

[X]               QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2002

                                       OR

[ ]              TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to

                         Commission file number: 1-10245


                             RCM TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its Charter)


   Nevada                                         95-1480559
  (State of Incorporation)             (I.R.S. Employer Identification No.)


       2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613
               (Address of Principal Executive Offices) (Zip Code)


                                 (856) 486-1777
              (Registrant's Telephone Number, Including Area Code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES   X           NO
    -----            -----


Indicate the number of shares outstanding of the Registrant's class of common
stock, as of the latest practicable date.

Common Stock, $0.05 par value, 10,598,364 shares outstanding
   as of August 02, 2002.


<PAGE>

<TABLE>
<CAPTION>




                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES


    PART I - FINANCIAL INFORMATION
                                                                                                    Page
          Item 1 - Consolidated Financial Statements

<S>                                                   <C>                                            <C>
               Consolidated Balance Sheets as of June 30, 2002 (Unaudited)
                 and December 31, 2001                                                                3

               Unaudited Consolidated Statements of Income and Comprehensive Income
                 for the Six-Month Periods Ended June 30, 2002 and 2001                               5

               Unaudited Consolidated Statements of Income and Comprehensive Income
                 for the Three-Month Periods Ended June 30, 2002 and 2001                             6

               Unaudited Consolidated Statement of Changes in Shareholders'
                 Equity for the Six-Month Period Ended June 30, 2002                                  7

               Unaudited Consolidated Statements of Cash Flows for the Six-
                 Month Periods Ended June 30, 2002 and 2001                                           8

               Notes to Unaudited Consolidated Financial Statements                                  10


          Item 2 - Management's Discussion and Analysis of Financial Condition
                          and Results of Operations                                                  15

          Item 3 - Quantitative and Qualitative Disclosures About Market Risk                        23


    PART II - OTHER INFORMATION

          Item 4 - Submission of Matters to a Vote of Security Holders                               24

          Item 6 - Exhibits and Reports on Form 8-K                                                  24

          Signatures                                                                                 25

</TABLE>

                                       2


<PAGE>







ITEM 1.       CONSOLIDATED FINANCIAL STATEMENTS

                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       June 30, 2002 and December 31, 2001



                                     ASSETS
<TABLE>
<CAPTION>

                                                                               June 30,           December 31,
                                                                                 2002                 2001
                                                                            ---------------      ---------------

                                                                               (Unaudited)
Current assets
<S>                                                                            <C>                  <C>
   Cash and cash equivalents                                                   $ 1,917,799          $ 2,289,743
   Accounts receivable, net of allowance for doubtful accounts
      of $1,468,000 and $1,795,000, respectively                                36,302,720           41,174,828
   Income tax refund receivable (Note 2)                                        14,841,135            6,810,093
   Prepaid expenses and other current assets                                     2,684,107            2,968,612
   Deferred tax assets                                                             581,261            5,600,000
                                                                            ---------------      ---------------

      Total current assets                                                      56,327,022           58,843,276
                                                                            ---------------      ---------------




Property and equipment, at cost
   Equipment and leasehold improvements                                         10,557,150           11,131,750
   Less: accumulated depreciation and amortization                               3,984,745            4,282,985
                                                                            ---------------      ---------------


                                                                                 6,572,405            6,848,765
                                                                            ---------------      ---------------




Other assets
   Deposits                                                                        135,731              175,691
   Goodwill, net of accumulated amortization
      of  $10,478,200 and $10,478,600 respectively                              66,752,354           62,499,000
   Intangible assets, net of accumulated amortization
      of  $200,800 and $190,400 respectively                                       110,000              120,400
   Deferred tax assets                                                                                2,668,813
                                                                            ---------------      ---------------

                                                                                66,998,085           65,463,904
                                                                            ---------------      ---------------





      Total assets                                                            $129,897,512         $131,155,945
                                                                            ===============      ===============

</TABLE>
                                       3
              The accompanying notes are an integral part of these
                             financial statements.

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS - CONTINUED
                       June 30, 2002 and December 31, 2001


                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                              June 30,            December 31,
                                                                                2002                  2001
                                                                           ---------------       ---------------
                                                                              (Unaudited)
Current liabilities
<S>                                                                           <C>                   <C>
 Note payable                                                                 $24,900,000           $31,500,000
 Accounts payable and accrued expenses                                          7,345,233             8,653,876
 Accrued payroll                                                                4,972,271             5,137,336
 Payroll and withheld taxes                                                       613,794               375,784
 Income taxes payable                                                           4,455,725             2,199,149
                                                                           ---------------       ---------------

       Total current liabilities                                               42,287,023            47,866,145
                                                                           ---------------       ---------------


Shareholders' equity
    Preferred stock, $1.00 par value; 5,000,000 shares authorized;
       no shares issued or outstanding
    Common stock, $0.05 par value; 40,000,000 shares authorized; 10,598,364 and
       10,571,761 shares issued and outstanding
       at  June 30, 2002 and December 31, 2001, respectively                      529,918               528,588
    Accumulated other comprehensive loss                                  (       521,814)      (       484,283)
    Additional paid-in capital                                                 93,845,385            93,746,569
    Accumulated deficit                                                   (     6,243,000)      (    10,501,074)
                                                                           ---------------       ---------------

                                                                               87,610,489            83,289,800
                                                                           ---------------       ---------------






       Total liabilities and shareholders' equity                            $129,897,512          $131,155,945
                                                                           ===============       ===============
</TABLE>
                                       4

              The accompanying notes are an integral part of these
                             financial statements.

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                     Six Months Ended June 30, 2002 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                2002                  2001
                                                                           ----------------      ---------------

<S>                                                                            <C>                 <C>
Revenues                                                                       $89,815,361         $123,019,699

Cost of services                                                                65,501,011           88,469,679
                                                                           ----------------      ---------------

Gross profit                                                                    24,314,350           34,550,020
                                                                           ----------------      ---------------

Operating costs and expenses
   Selling, general and administrative                                          16,909,247           23,680,387
   Depreciation                                                                    609,515              493,670
   Amortization                                                                     10,362            3,366,554
                                                                           ----------------      ---------------
                                                                                17,529,124           27,540,611
                                                                           ----------------      ---------------

Operating income                                                                 6,785,226            7,009,409
                                                                           ----------------      ---------------

Other expenses (income)
   Interest expense, net of interest (income)                             (         31,096)           1,315,629
   Gain on foreign currency transactions                                  (          5,107)     (        10,149)
                                                                           ----------------      ---------------

                                                                          (         36,203)           1,305,480

                                                                           ----------------      ---------------

Income before income taxes                                                       6,821,429            5,703,929

Income taxes                                                                     2,563,355            3,200,869
                                                                           ----------------      ---------------

Net income                                                                       4,258,074            2,503,060

Other comprehensive loss
   Foreign currency translation adjustment                                (         37,531)     (       227,973)
                                                                           ----------------      ---------------


Comprehensive income                                                            $4,220,543          $ 2,275,087
                                                                           ================      ===============


Basic earnings per share                                                              $.40                 $.24
                                                                                      ====                 ====

Weighted average number of common
   shares outstanding                                                           10,572,146           10,499,651
                                                                                ==========           ==========

Diluted earnings per share                                                            $.40                 $.23
                                                                                      ====                 ====

Weighted average number of common
   and common equivalent shares outstanding                                     10,775,112           10,665,107
                                                                                ==========           ==========
</TABLE>

                                       5
              The accompanying notes are an integral part of these
                              financial statements.

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                    Three Months Ended June 30, 2002 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                2002                  2001
                                                                           ----------------      ---------------

<S>                                                                            <C>                  <C>
Revenues                                                                       $44,705,733          $58,365,909

Cost of services                                                                32,901,049           41,887,806
                                                                           ----------------      ---------------

Gross profit                                                                    11,804,684           16,478,103
                                                                           ----------------      ---------------

Operating costs and expenses
   Selling, general and administrative                                           8,413,017           11,236,560
   Depreciation                                                                    307,200              258,209
   Amortization                                                                      5,181            1,323,064
                                                                           ----------------      ---------------
                                                                                 8,725,398           12,817,833
                                                                           ----------------      ---------------

Operating income                                                                 3,079,286            3,660,270
                                                                           ----------------      ---------------

Other expenses (income)
   Interest expense, net of interest (income)                             (        299,049)             573,809
   Gain on foreign currency transactions                                  (          2,167)     (         6,089)
                                                                           ----------------      ---------------

                                                                          (        301,216)             567,720

                                                                           ----------------      ---------------

Income before income taxes                                                       3,380,502            3,092,550

Income taxes                                                                     1,267,015            1,740,434
                                                                           ----------------      ---------------

Net income                                                                       2,113,487            1,352,116

Other comprehensive loss
   Foreign currency translation adjustment                                (          1,540)     (       156,740)

                                                                           ----------------      ---------------

Comprehensive income                                                            $2,111,947           $1,195,376

                                                                           ================      ===============

Basic earnings per share                                                              $.20                 $.13
                                                                                      ====                 ====

Weighted average number of common
   shares outstanding                                                           10,572,527           10,499,651
                                                                                ==========           ==========

Diluted earnings per share                                                            $.20                 $.13
                                                                                      ====                 ====

Weighted average number of common
   and common equivalent shares outstanding                                     10,814,779           10,736,087
                                                                                ==========           ==========

</TABLE>
                                       6

              The accompanying notes are an integral part of these
                              financial statements.
<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                         Six Months Ended June 30, 2002
                                   (Unaudited)





<TABLE>
<CAPTION>





                                                               Accumulated
                                                                 Other          Additional
                                      Common Stock           Comprehensive       Paid-in       Retained
                                      ------------
                                                                 Loss           Capital        Earnings          Total
                                   Shares       Amount

<S>              <C>              <C>            <C>             <C>           <C>            <C>              <C>
Balance, January 1, 2002          10,571,761     $528,588        ($484,283)    $93,746,569    ($10,501,074)    $83,289,800

Issuance of stock under
 stock purchase plan                  25,948        1,297                           98,084                          99,381

Exercise of stock options                655           33                              732
                                                                                                                       765

Translation adjustment                                         (    37,531)                                    (    37,531)

Net income                                                                                       4,358,074       4,258,074
                                                                                                 ---------       ---------

Balance, June 30, 2002            10,598,364     $529,918        ($521,814)    $93,845,385     ($6,243,000)    $87,610,489
                                  ==========     ========        ==========    ===========      ===========    ===========
</TABLE>












                                       7
              The accompanying notes are an integral part of these
                              financial statements.
<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Six Months Ended June 30, 2002 and 2001
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                                   2002               2001
                                                                              ---------------     --------------
Cash flows from operating activities:

<S>                                                                               <C>                <C>
    Net income                                                                    $4,258,074         $2,503,060
                                                                              ---------------     --------------



    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
         Depreciation and amortization                                               619,877          3,860,224
         Provision for losses on accounts receivable                         (       327,000)    (      156,000)
         Changes in assets and liabilities:
             Accounts receivable                                                   5,199,108         13,806,594
             Income tax refund receivable                                    (     8,031,043)         1,897,777
             Deferred tax asset                                                    7,687,553     (       34,131)
             Prepaid expenses and other current assets                       (       823,401)         1,330,922
             Accounts payable and accrued expenses                           (     2,241,976)           709,342
             Accrued payroll                                                 (       165,065)    (      628,280)
             Payroll and withheld taxes                                              238,010     (    1,039,850)
             Income taxes payable                                                  3,364,481     (      783,398)
                                                                              ---------------     --------------


    Total adjustments                                                              5,520,544         18,963,200
                                                                              ---------------     --------------



Net cash provided by operating activities                                         $9,778,618        $21,466,260
                                                                              ---------------     --------------

</TABLE>












                                       8


              The accompanying notes are an integral part of these
                              financial statements.
<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              Six Months Ended June 30, 2002 and 2001 - (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                   2002               2001
                                                                              ---------------     --------------
Cash flows from investing activities:
<S>                                                                          <C>   <C>           <C> <C>
    Property and equipment acquired                                          (     $ 338,346)    (   $1,103,777)
    Decrease in deposits                                                              39,960             12,244
    Purchase of acquired companies including
      contingent consideration, net of cash acquired                         (     3,314,791)    (    4,307,071)
                                                                              ---------------     --------------


    Net cash used in investing activities                                    (     3,613,177)    (    5,398,604)
                                                                              ---------------     --------------


Cash flows from financing activities:
    Sale of stock for employee stock purchase plan                                    99,381
    Repayments of note payable                                                                          133,239
    Exercise of stock options                                                            765
    Repayments of long-term debt                                             (     6,600,000)    (   12,400,000)
                                                                              ---------------     --------------

    Net cash provided by (used in) financing activities                      (     6,499,854)    (   12,266,761)
                                                                              ---------------     --------------


Effect of exchange rate changes on cash and cash equivalents                 (        37,531)    (      227,973)
                                                                              ---------------     --------------


(Decrease) increase in cash and cash equivalents                             (       371,944)         3,572,922

Cash and cash equivalents at beginning of period                                   2,289,743          3,170,658
                                                                              ---------------     --------------

Cash and cash equivalents at end of period                                        $1,917,799         $6,743,580
                                                                              ===============     ==============



Supplemental cash flow information:
    Cash paid for:
      Interest expense                                                              $501,796         $1,366,420
      Income taxes                                                                  $650,269         $1,700,388

</TABLE>






                                       9
              The accompanying notes are an integral part of these
                              financial statements.
<PAGE>





                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.   General

     The accompanying consolidated financial statements have been prepared by
     the Company pursuant to the rules and regulations of the Securities and
     Exchange Commission (SEC). This Quarterly Report on Form 10-Q should be
     read in conjunction with the Company's Annual Report on Form 10-K for the
     year ended December 31, 2001. Certain information and footnote disclosures
     which are normally included in financial statements prepared in accordance
     with generally accepted accounting principles have been condensed or
     omitted pursuant to SEC rules and regulations. The information reflects all
     normal and recurring adjustments which, in the opinion of management, are
     necessary for a fair presentation of the financial position of the Company,
     and its results of operations for the interim periods set forth herein. The
     results for the six months ended June 30, 2002 are not necessarily
     indicative of the results to be expected for the full year.

2.   Subsequent Event

     Subsequent to June 30, 2002, the Company received from the Internal Revenue
     Service an income tax refund in the amount of $14.8 million, inclusive of
     $535,000 of interest income. A portion of the proceeds was used for the
     repayment of borrowings under our note payable agreements (Note 4). The
     note payable amount outstanding was $10.0 million at August 2, 2002.

3.   Recent Accounting Pronouncements

     On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) 141, Business
     Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
     effective for all business combinations completed after June 30, 2001. SFAS
     142 is effective for fiscal years beginning after December 15, 2001;
     however, certain provisions of this Statement apply to goodwill and other
     intangible assets acquired between July 1, 2001 and the effective date of
     SFAS 142. Major provisions of these Statements and their effective dates
     for the Company are as follows: (1) all business combinations initiated
     after June 30, 2001 must use the purchase method of accounting. The pooling
     of interest method of accounting is prohibited except for transactions
     initiated before July 1, 2001, (2) intangible assets acquired in a business
     combination must be recorded separately from goodwill if they arise from
     contractual or other legal rights or are separable from the acquired entity
     and can be sold, transferred, licensed, rented or exchanged, either
     individually or as part of a related contract, asset or liability, (3)
     goodwill, as well as intangible assets with indefinite lives, acquired
     after June 30, 2001, will not be amortized. Effective January 1, 2002, all
     previously recognized goodwill and intangible assets with indefinite lives
     is no longer subject to amortization, (4) effective January 1, 2002,
     goodwill and intangible assets with indefinite lives will be tested for
     impairment annually and whenever there is an impairment indicator, (5) all
     acquired goodwill must be assigned to reporting units for purposes of
     impairment testing and segment reporting. The adoption of SFAS No. 142 had
     a significant impact on the results of operations of the Company for the
     six months and three months ended June 30, 2002 by eliminating amortization
     of goodwill.

     Under the provisions of SFAS No. 142, the Company is required to perform a
     transitional goodwill impairment test within six months of adopting the new
     standard and to test for impairment on at least an annual basis thereafter.
     For purposes of transitional impairment testing, the Company determined the
     fair value of its reporting units using discounted cash flow models and
     relative market multiples for comparable businesses. The Company compared
     the fair value of each of its reporting units to their respective carrying
     values, including related goodwill, which resulted in no impairment loss
     being recognized.



                                       10



<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


3.   Recent Accounting Pronouncements (Continued)

     In August 2001, the FASB issued SFAS 143, Accounting for Asset Retirement
     Obligations. SFAS 143 applies to all entities, including rate-regulated
     entities, that have legal obligations associated with the retirement of a
     tangible long-lived asset that result from acquisition, construction or
     development and (or) normal operations of the long-lived asset. The
     application of this Statement is not limited to certain specialized
     industries, such as the extractive or nuclear industries. A liability for
     an asset retirement obligation should be recognized if the obligation meets
     the definition of a liability and can be reasonably estimated. The initial
     recording should be at fair value. SFAS 143 is effective for financial
     statements issued for fiscal years beginning after June 15, 2002, with
     earlier application encouraged. The provisions of the Statement are not
     expected to have a material impact on the financial condition or results of
     operations of the Company.

     In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
     Disposal of Long-Lived Assets. SFAS 144 retains the existing requirements
     to recognize and measure the impairment of long-lived assets to be held and
     used or to be disposed of by sale. However, SFAS 144 makes changes to the
     scope and certain measurement requirements of existing accounting guidance.
     SFAS 144 also changes the requirements relating to reporting the effects of
     a disposal or discontinuation of a segment of a business. SFAS 144 is
     effective for financial statements issued for fiscal years beginning after
     December 15, 2001 and interim periods within those fiscal years. The
     adoption of this Statement did not have a significant impact on the
     financial condition or results of operations of the Company.

4.   Note Payable

     The Company and its subsidiaries entered into an amended and restated loan
     agreement on May 31, 2002 with Citizens Bank (successor to Mellon Bank
     N.A.), administrative agent for a syndicate of banks, which provides for a
     $40.0 million Revolving Credit Facility (the "Revolving Credit Facility")
     and a $7.5 million Term Loan Facility (the "Term Loan Facility"). The $7.5
     million outstanding balance under the Term Loan Facility was paid on July
     2, 2002 thereby canceling the Term Loan Facility. Availability under the
     Revolving Credit Facility is based on 80% of the aggregate amount of
     accounts receivable as to which not more than ninety days have elapsed
     since the date of the original invoice. Borrowings under the Revolving
     Credit Facility bear interest at one of two alternative rates, as selected
     by the Company. These alternatives are: LIBOR (London Interbank Offered
     Rate), plus applicable margin, or the agent bank's prime rate.

     All borrowings under the Revolving Credit Facility are collateralized by
     all of the assets of the Company and its subsidiaries and a pledge of the
     stock of its subsidiaries. The Revolving Credit Facility also contains
     various financial and non-financial covenants, such as restrictions on the
     Company's ability to pay dividends. The Revolving Credit Facility expires
     August 2004. The weighted average interest rates under the Revolving Credit
     Facility and Term Loan Facility for the six months ended June 30, 2002 and
     2001 were 3.89% and 5.69%, respectively. The amounts outstanding under the
     Revolving Credit Facility at June 30, 2002 and December 31, 2001 were $24.9
     million and $31.5 million, respectively. (Note 2)

5.   Interest (Expense) Income, Net
<TABLE>
<CAPTION>

     Interest (expense) income, net consisted of the following:

                                             Six Months Ended June 30,         Three Months Ended June 30,
                                           -------------------------------    -------------------------------

                                               2002             2001              2002             2001
                                           --------------   --------------    --------------   --------------

<S>                                          <C>            <C>                  <C>              <C>
    Interest expense                         ($538,082)     ($1,520,775)         ($249,738)       ($669,731)
    Interest income (Note 2)                   569,178          205,146            548,787           95,922

                                           --------------   --------------    --------------   --------------
                                             $  31,096      ($1,315,629)          $299,049        ($573,809)
                                           ==============   ==============    ==============   ==============
</TABLE>

                                       11

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


6.   Segment Information

     The Company has adopted SFAS 131, "Disclosures about Segments of an
     Enterprise and Related Information" ("SFAS 131"), which establishes
     standards for companies to report information about operating segments,
     geographic areas and major customers. The adoption of SFAS 131 has no
     effect on the Company's consolidated financial position, consolidated
     results of operations or liquidity.

     The Company uses earnings before interest and taxes (operating income) to
     measure segment profit. Segment operating income includes selling, general
     and administrative expenses directly attributable to that segment as well
     as charges for allocating corporate costs to each of the operating
     segments. The following tables reflect the results of the segments
     consistent with the Company's management system (in thousands):
<TABLE>
<CAPTION>

  Six Months Ended                  Information      Professional      Commercial
  June 30, 2002                      Technology      Engineering        Services         Corporate         Total
                                   ---------------   -------------    --------------    -------------   -------------


<S>                                       <C>             <C>               <C>                              <C>
  Revenue                                 $55,467         $23,497           $10,851                          $89,815

  Operating expenses (1)                   50,357          21,464            10,589                           82,410
                                   ---------------   -------------    --------------    -------------   -------------


  EBITDA (2)                                5,110           2,033               262                            7,405

  Depreciation                                385             190                34                              609

  Amortization of intangibles                  10               1                                                 11
                                   ---------------   -------------    --------------    -------------   -------------


  Operating income                         $4,715          $1,842             $ 228                           $6,785
                                   ===============   =============    ==============    =============   =============


  Total assets                            $86,420         $13,430            $6,314          $23,152        $129,316

  Capital expenditures                                                                          $338            $338
</TABLE>

<TABLE>
<CAPTION>

  Six Months Ended                  Information      Professional      Commercial
  June 30, 2001                      Technology      Engineering        Services         Corporate         Total
                                   ---------------   -------------    --------------    -------------   -------------


<S>                                       <C>             <C>               <C>                             <C>
  Revenue                                 $90,342         $20,249           $12,429                         $123,020

  Operating expenses (1)                   81,972          18,205            11,973                          112,150
                                   ---------------   -------------    --------------    -------------   -------------


  EBITDA (2)                                8,370           2,044               456                           10,870

  Depreciation                                369             102                23                              494

  Amortization of intangibles               3,022             327                18                            3,367
                                   ---------------   -------------    --------------    -------------   -------------


  Operating income                        $ 4,979          $1,615             $ 415                          $ 7,009
                                   ===============   =============    ==============    =============   =============


  Total assets                           $126,173         $17,346            $6,154         $ 19,478        $169,151

  Capital expenditures                       $379                                               $725         $ 1,104

</TABLE>

                                       12

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


6.   Segment Information - (Continued)
<TABLE>
<CAPTION>

  Three Months Ended                Information      Professional      Commercial
  June 30, 2002                      Technology      Engineering        Services         Corporate         Total
                                   ---------------   -------------    --------------    -------------   -------------


<S>                                       <C>             <C>                <C>                             <C>
  Revenue                                 $26,479         $12,602            $5,625                          $44,706

  Operating expenses (1)                   24,489          11,377             5,448                           41,304
                                   ---------------   -------------    --------------    -------------   -------------


  EBITDA (2)                                 1990           1,225               177                            3,392

  Depreciation                                191              99                17                              307

  Amortization of intangibles                   5               1                                                  6
                                   ---------------   -------------    --------------    -------------   -------------


  Operating income                         $1,794          $1,125             $ 160                           $3,079
                                   ===============   =============    ==============    =============   =============


  Total assets                            $86,420         $13,430            $6,314          $23,152        $129,316

  Capital expenditures                                                                          $206            $206
</TABLE>
<TABLE>
<CAPTION>


  Three Months Ended                Information      Professional      Commercial
  June 30, 2001                      Technology      Engineering        Services         Corporate         Total
                                   ---------------   -------------    --------------    -------------   -------------


<S>                                       <C>             <C>                <C>                             <C>
  Revenue                                 $41,768         $10,328            $6,270                          $58,366

  Operating expenses (1)                   38,191           8,884             6,050                           53,125
                                   ---------------   -------------    --------------    -------------   -------------


  EBITDA (2)                                3,577           1,444               220                            5,241

  Depreciation                                191              54                13                              258

  Amortization of intangibles               1,148             166                 9                            1,323
                                   ---------------   -------------    --------------    -------------   -------------


  Operating income                        $ 2,238          $1,224             $ 199                          $ 3,660
                                   ===============   =============    ==============    =============   =============


  Total assets                           $126,173         $17,346            $6,154         $ 19,478        $169,151

  Capital expenditures                       $221                                               $499            $720
</TABLE>


(1)  Operating expenses excludes depreciation and amortization.

(2)  EBITDA consists of earnings before interest income, interest expense, other
     non-operating income and expense, income taxes, depreciation and
     amortization. EBITDA is not a measure of financial performance under
     generally accepted accounting principles and should not be considered in
     isolation or as an alternative to net income as an indicator of a company's
     performance or to cash flows from operating activities as a measure of
     liquidity.


                                       13
<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


7.   Commitment

     On June 10, 2002, the Company entered into a Severance Agreement (the
     "Severance Agreement") with its Chief Executive Officer, Leon Kopyt. The
     agreement provides for certain payments to be made to Mr. Kopyt and for the
     continuation of Mr. Kopyt's employee benefits for a specified time after
     his service with the Company is terminated other than for Cause, as defined
     in the Severance Agreement. Amounts payable to Mr. Kopyt under the
     Severance Agreement would be offset and reduced by any amounts received by
     Mr. Kopyt after his termination of employment under his current employment
     and termination benefits agreements, which are supplemented and not
     superseded by the Severance Agreement. If Mr. Kopyt had been terminated as
     of June 30, 2002, then under the terms of the Severance Agreement, he would
     have been entitled to cash payments of approximately $1.2 million,
     inclusive of employee benefits.

8.   Contingencies

     The Company has received claims and notices of possible claims from various
     persons from whom the Company acquired stock or assets in four separate
     acquisitions that occurred during 1998 and 1999. Such claims and possible
     claims are not related to one another. These claims and possible claims
     relate to allegations of wrongful termination and failure of the Company to
     pay deferred consideration under the relevant acquisition agreements. In
     the opinion of management, the Company has meritorious defenses to such
     claims and possible claims and does not believe that the resolution of such
     claims and possible claims should have a material adverse effect on the
     Company, its financial position, its results of operations or its cash
     flows.

     In 1998, two former officers filed suit against the Company alleging
     wrongful termination of their employment, failure to make required
     severance payments and wrongful conduct by the Company in connection with
     the grant to the plaintiffs and non-vestiture of options to purchase the
     Company's common stock. The complaint also alleges that the Company
     wrongfully limited the number of shares of the Company's common stock that
     could be sold by the plaintiffs under a Registration Rights Agreement and
     contains various other claims. The complaint seeks damages of approximately
     $480,000, as well as additional unliquidated damages. The claims
     relating to wrongful termination of employment and wrongful conduct by the
     Company in connection with the grant of stock options to the plaintiffs
     have been resolved in binding arbitration. With respect to the Company's
     alleged wrongful limiting of the number of shares the plaintiffs could sell
     and one plaintiff's claim of entitlement to severance pay of $240,000, the
     Company is awaiting completion of discovery and the fixing of a trial date.
     The Company is also awaiting the court's ruling on its motion for summary
     judgment in its favor with respect to the plaintiffs' claims concerning the
     non-vestiture of their stock options. Substantial damages are being sought
     on the share-selling limitation and stock option claims; however, the
     alleged damages are subject to significant reduction by reason of their
     speculative nature and for having been avoidable losses. Management
     believes the suit is without merit and will continue to defend the claims
     vigorously.

9.   Use of Estimates

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the amounts
     reported in the financial statements. Actual results could differ from
     those estimates. Such estimates include the Company's estimates of reserves
     such as the allowance for doubtful accounts receivable.


                                       14

<PAGE>




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


Private Securities Litigation Reform Act Safe Harbor Statement


Certain statements included herein and in other Company reports and public
filings are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned that such forward-looking
statements, which may be identified by words such as "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and similar
expressions, are only predictions and are subject to risks and uncertainties
that could cause the Company's actual results and financial position to differ
materially. Such risks and uncertainties include, without limitation: (i)
unemployment and general economic conditions associated with the provision of
information technology and engineering services and solutions and placement of
temporary staffing personnel; (ii) the Company's ability to continue to attract,
train and retain personnel qualified to meet the requirements of its clients;
(iii) the Company's ability to identify appropriate acquisition candidates,
complete such acquisitions and successfully integrate acquired businesses; (iv)
uncertainties regarding pro forma financial information and the underlying
assumptions relating to acquisitions and acquired businesses; (v) uncertainties
regarding amounts of deferred consideration and earnout payments to become
payable to former shareholders of acquired businesses; (vi) possible adverse
effects on the market price of the Company's common stock due to the resale into
the market of significant amounts of common stock; (vii) the potential adverse
effect a decrease in the trading price of the Company's common stock would have
upon the Company's ability to acquire businesses through the issuance of its
securities; (viii) the Company's ability to obtain financing on satisfactory
terms; (ix) the reliance of the Company upon the continued service of its
executive officers; (x) the Company's ability to remain competitive in the
markets which it serves; (xi) the Company's ability to maintain its unemployment
insurance premiums and workers compensation premiums; (xii) the risk of claims
being made against the Company associated with providing temporary staffing
services; (xiii) the Company's ability to manage significant amounts of
information, and periodically expand and upgrade its information processing
capabilities; (xiv) the Company's ability to remain in compliance with federal
and state wage and hour laws and regulations; (xv) predictions as to the future
need for the Company's services; (xvi) uncertainties relating to the allocation
of costs and expenses to each of the Company's operating segments; and (xvii)
other economic, competitive and governmental factors affecting the Company's
operations, markets, products and services. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date made. The Company undertakes no obligation to publicly release the results
of any revision of these forward-looking statements to reflect these ends or
circumstances after the date they are made or to reflect the occurrence of
unanticipated events.







                                       15



<PAGE>






                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)

Overview

RCM Technologies is a premier provider of business and technology solutions
designed to enhance and maximize the performance of its customers through the
adaptation and deployment of advanced information technology and engineering
services. RCM is an innovative leader in the design, development and delivery of
these services to various industries. RCM's offices are located throughout North
America, including many major metropolitan centers. The Company provides a
diversified and extensive range of service offerings and deliverables. Its
portfolio of Information Technology services includes e-Business, Enterprise
Management, Enterprise Application Integration and Supply Chain. RCM's
Engineering services focus on Engineering Design, Technical Support, and Project
Management and Implementation. The Company's Commercial Services business unit
provides Healthcare contract professionals as well as Clerical and Light
Industrial temporary personnel. The Company provides its services to clients in
banking and finance, healthcare, insurance, aerospace, pharmaceutical,
telecommunications, utility, technology, manufacturing, distribution and
government sectors. The Company believes that the breadth of services fosters
long-term client relationships, affords cross-selling opportunities and
minimizes the Company's dependence on any single technology or industry sector.

RCM sells and delivers its services through a network of branch offices located
in selected regions throughout North America. The Company has executed a
regional strategy to better leverage its consulting services offering. The
Company centrally manages its Solutions practices to maximize the potential for
sales and marketing of those services.

Many of the Company's clients are facing challenging economic times. This is
creating uncertainty in their ability to pursue technology projects, which had
previously been considered a competitive imperative. Many clients have laid off
portions of their own permanent staff and greatly reduced the demand for
consulting services in attempts to maintain profitability. This has had a direct
impact on RCM's revenues.

Management believes that most companies have recognized the importance of the
Internet and information management technologies to competing in today's
business climate. However, the uncertain economic environment has curtailed many
companies' motivation for rapid adoption of many technological enhancements. The
process of designing, developing and implementing software solutions has become
increasingly complex. Management believes that many companies today are focused
on return on investment analysis in prioritizing the initiatives they undertake.
This has had the effect of delaying or totally negating spending on many
emerging new solutions, which management formally anticipated.

Nonetheless, IT managers must integrate and manage computing environments
consisting of multiple computing platforms, operating systems, databases and
networking protocols, and must implement packaged software applications to
support existing business objectives. Companies also need to continually keep
pace with new developments, which often render existing equipment and internal
skills obsolete. Consequently, business drivers cause IT managers to support
increasingly complex systems and applications of significant strategic value,
while working under budgetary, personnel and expertise constraints. This has
given rise to increasing demand for outsourcing. Clients are increasingly
evaluating the potential for outsourcing business critical applications and
entire business functions.

                                       16

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)

Overview (Continued)

The Company presently realizes revenues from client engagements that range from
the placement of contract and temporary technical consultants to project
assignments that entail the delivery of end-to-end solutions. These services are
primarily provided to the client at hourly rates that are established for each
of the Company's consultants based upon their skill level, experience and the
type of work performed. The Company also provides project management and
consulting work which are billed either by an agreed upon fixed fee or hourly
rates, or a combination of both. The billing rates and profit margins for
project management and solutions work are higher than those for professional
consulting services. The Company has an ongoing effort to expand its sales of
higher margin solution and project management services.

The majority of the Company's services are provided under purchase orders.
Contracts are utilized on more of the complex assignments where the engagements
are for longer terms or where precise documentation on the nature and scope of
the assignment is necessary. Contracts, although they normally relate to
longer-term and more complex engagements, generally do not obligate the customer
to purchase a minimum level of services and are generally terminable by the
customer on 60 to 90 days' notice. Revenues are recognized when services are
provided.

Costs of services consist primarily of salaries and compensation-related
expenses for billable consultants, including payroll taxes, employee benefits
and insurances. Selling, general and administrative expenses consist primarily
of salaries and benefits of personnel responsible for business development,
recruiting, operating activities and training, and include corporate overhead
expenses. Corporate overhead expenses relate to salaries and benefits of
personnel responsible for corporate activities, including the Company's
acquisition program and corporate marketing, administrative and reporting
responsibilities. The Company records these expenses when incurred. Depreciation
relates primarily to the fixed assets of the Company. Amortization in 2002
relates principally to the goodwill resulting from the Company's acquisitions.
These acquisitions have been accounted for under the purchase method of
accounting for financial reporting purposes and have created goodwill. See
Footnote 3 to financial statements.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations
are based upon the Company's consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities at the date of the Company's financial
statements. Actual results may differ from these estimates under different
assumptions or conditions.

Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions. The Company
believes that its critical accounting policies include those described below.

Accounts Receivable

The Company performs ongoing credit evaluations of its customers and adjusts
credit limits based on payment history and the customer's current credit
worthiness, as determined by a review of their current credit information. The
Company continuously monitors collections and payments from its customers and
maintains a provision for estimated credit losses based on historical experience
and any specific customer collection issues that have been identified. While
such credit losses have historically been within the Company's expectations and
the provisions established, the Company cannot guarantee that it will continue
to experience the same credit loss rates that it has in the past.


                                       17

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)


Goodwill and intangibles

Pursuant to the adoption of SFAS 142, the Company changed its accounting policy
related to goodwill and intangible assets, effective January 1, 2002. Goodwill
and indefinite-lived intangible assets are no longer amortized but are subject
to periodic impairment assessment. The transitional impairment testing for such
assets was completed during the second quarter of 2002 and as of December 31,
2001, the transition date, there was no impairment to such assets. In accordance
with SFAS 142, the Company will be subject to a 2002 annual impairment test, as
well as, impairment tests each year thereafter. The Company cannot guarantee
that there will not be impairments in subsequent quarters in 2002 or in
subsequent years.

In addition, the Company recognizes contingent consideration from past
acquisitions, which are based on earn-out agreements, as additional goodwill
when earned. The Company cannot guarantee that earn-out provisions will be met.

Revenue Recognition on Long-Term Contracts

When the performance of a contract will extend beyond a 12-month period, revenue
and related costs are recognized on the percentage-of-completion method of
accounting. Profits expected to be realized on such contracts are based on total
estimated sales for the contract compared to total estimated costs at completion
of the contract. These estimates are reviewed periodically throughout the lives
of the contracts, and adjustments to profits resulting from such revisions are
made cumulative to the date of the change. Estimated losses on long-term
contracts are recorded in the period in which the losses become known.

If the Company does not accurately estimate the total sales and related costs on
such contracts, or if the Company is unsuccessful in the ultimate collection of
associated contract claims, the estimated gross margins may be impacted or
losses may need to be recognized in future periods. Any such resulting
reductions in margins or contract losses could be material to the Company's
results of operations and financial position.

                                       18

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)

<TABLE>
<CAPTION>

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001

A summary of operating results for the six months ended June 30, 2002 and 2001
is as follows (in thousands, except for earnings per share data):

                                                                    2002                             2001
                                                          -------------------------         ------------------------
                                                                         % of                            % of
                                                           Amount        Revenue           Amount        Revenue

<S>                                                        <C>             <C>            <C>              <C>
Revenues                                                   $89,815         100.0%          $123,020        100.0  %
Cost of services                                            65,501          72.9             88,470         71.9
                                                          ---------         ----          ---------         ----
Gross profit                                                24,314          27.1             34,550         28.1
                                                          --------          ----          ---------         ----

Selling, general and administrative                         16,909          18.8             23,680         19.3
Depreciation                                                   609            .7                494           .4
                                                          --------        ------          ---------       ------
                                                            17,518          19.5             24,174         19.7
                                                          --------          ----          ---------         ----

Income before other income (expense),
  income taxes, and amortization of intangibles              6,796           7.6             10,376          8.4
Other (expense) income                                          36                        (   1,305)      (  1.1  )
                                                          --------          ----           --------          ---

Income before income taxes
  and amortization of intangibles                            6,832           7.6              9,070          7.4
Income taxes                                                 2,568           2.9              3,751          3.0
                                                          --------           ---          ---------          ---
Income before amortization of intangibles                    4,264           4.7              5,319          4.4
Amortization of intangibles, net of income tax benefits          6                            2,816          2.4
                                                          --------           ---          ---------          ---
Net income                                                $  4,258           4.7%         $   2,503          2.0  %
                                                          ========           ===          =========          ===

                                                            2002                              2001
                                                          ----------                        ---------
Earnings per share:
Basic:
     Income before amortization of intangibles                $.40                             $.52
     Amortization  of intangibles                                                               .28
                                                              ----                            -----
     Net income                                               $.40                             $.24
                                                              ====                             ====
Diluted:
     Income before amortization of intangibles                $.40                             $.51
     Amortization  of intangibles                                                               .28
                                                              ----                            -----
     Net income                                               $.40                             $.23
                                                              ====                             ====
</TABLE>


Revenues. Revenues decreased 27.0%, or $33.2 million, for the six months ended
June 30, 2002 as compared to the same period in the prior year (the "comparable
prior year period"). The revenue decline was primarily attributable to softness
in the Information Technology ("IT") sector. Management attributes this softness
to overall economic conditions as well as hesitancy by customers to launch new
capital spending programs.

Cost of Services. Cost of services decreased 26.0%, or $23.0 million, for the
six months ended June 30, 2002 as compared to the comparable prior year period.
This decrease was primarily due to a decrease in salaries and compensation
associated with decreased revenues experienced during the six months ended June
30, 2002. Cost of services as a percentage of revenues increased to 72.9% for
the six months ended June 30, 2002 from 71.9% for the comparable prior year
period. This increase was primarily attributable to an increase of the Company's
revenues being derived from Professional Engineering services, which have
historically had lower gross profit margins.

                                       19

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)


Six Months Ended June 30, 2002 Compared to
    Six Months Ended June 30, 2001 - (Continued)

Selling, General and Administrative. Selling, general and administrative
expenses decreased 28.6%, or $6.8 million, for the six months ended June 30,
2002 as compared to the comparable prior year period. This decrease was
primarily attributable to a reduction in revenues, a corresponding reduction in
related variable costs, and cost cutting initiatives. SGA expenses as a
percentage of revenues were 18.8% for the six months ended June 30, 2002 as
compared to 19.3% for the comparable prior year period.

Depreciation. Depreciation increased 23.3%, or $115,000, for the six months
ended June 30, 2002 as compared to the comparable prior year period. This
increase was primarily due to the depreciation and amortization of
infrastructure and leasehold improvements incurred since June 30, 2001.

Other Expense. Other expense consists principally of interest expense, net of
interest income. For the six months ended June 30, 2002, actual interest expense
of $538,000 was offset by $569,000 of interest income, which was principally
earned from an income tax refund claim with the Internal Revenue Service.
Interest expense, net decreased $1.3 million for the six months ended June 30,
2002 as compared to the comparable prior year period. This decrease was
primarily due to the cash derived from operating activities, which was used to
reduce interest bearing debt as well as the aforementioned interest income
earned on the income tax refund.

Income Tax. Income tax expense decreased 31.5%, or $1.2 million, for the six
months ended June 30, 2002 as compared to the comparable prior year period. This
decrease was attributable to a lower level of income before taxes for the six
months ended June 30, 2002 compared to the comparable prior year period.

Amortization of Intangibles. Amortization of intangibles for the six months
ended June 30, 2002 and 2001 was net of income tax benefit of $4,000 and
$550,000, respectively. Amortization of intangibles decreased 99.8%, or $2.8
million for the six months ended June 30, 2002 as compared to the comparable
prior year period. On July 20, 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) 142, Goodwill
and Intangible Assets. SFAS 142 is effective for all fiscal periods beginning
after December 15, 2001. In accordance with SFAS 142, for the six months ended
June 30, 2002, all previously recognized goodwill and intangible assets with
indefinite lives was no longer subject to amortization.


                                       20

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)

<TABLE>
<CAPTION>

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

A summary of operating results for the three months ended June 30, 2002 and 2001
is as follows (in thousands, except for earnings per share data):

                                                                   2002                              2001
                                                          ------------------------          -----------------------
                                                                         % of                            % of
                                                           Amount        Revenue           Amount        Revenue

<S>                                                       <C>              <C>              <C>          <C>
Revenues                                                  $ 44,706         100.0%           $58,366      100.0%
Cost of services                                            32,901          73.6             41,888       71.8
                                                          --------          ----          ---------       ----
Gross profit                                                11,805          26.4             16,478       28.2
                                                          --------          ----          ---------       ----

Selling, general and administrative                          8,413          18.8             11,237       19.3
Depreciation                                                   307            .7                258         .4
                                                          --------        ------          ---------      -----
                                                             8,720          19.5             11,495       19.7
                                                          --------          ----          ---------       ----

Income before other income (expense),
  income taxes and amortization of goodwill                  3,085           6.9              4,983        8.5
Other (expense) income                                         301            .7          (     568)       1.0
                                                          --------          ----          ---------  ---------

Income before income taxes
  and amortization of intangibles                            3,386           7.6              4,415        7.6
     Income taxes                                            1,270           2.9              1,894        3.3
                                                          --------           ---          ---------        ---
Income before amortization of intangibles                    2,116           4.7              2,521        4.3
Amortization of intangibles, net of income tax benefits          3                            1,169        2.0
                                                          --------           ---          ---------        ---
Net income                                                $  2,113           4.7%         $   1,352       2.3%
                                                          ========           ===          ==========       ===


                                                            2002                             2001
                                                          ---------                         --------
Earnings per share:
Basic:
     Income before amortization of intangibles                $.20                           $.26
     Amortization of intangibles                                                              .13
                                                              ----                          -----
     Net income                                               $.20                           $.13
                                                              ====                           ====
Diluted:
     Income before amortization of intangibles                $.20                           $.25
     Amortization of intangibles                                                              .12
                                                              ----                          -----
     Net income                                               $.20                           $.13
                                                              ====                           ====
</TABLE>

Revenues. Revenues decreased 23.4%, or $13.6 million, for the three months ended
June 30, 2002 as compared to the same period in the prior year (the "comparable
prior year period"). Revenue decline was primarily attributable to softness in
the Information Technology ("IT") sector. Management attributes this softness to
overall economic conditions as well as hesitancy by customers to launch new
capital spending programs.


                                       21

<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)


Three Months Ended June 30, 2002 Compared to
   Three Months Ended June 30, 2001 - (Continued)

Cost of Services. Cost of services decreased 21.4%, or $9.0 million, for the
three months ended June 30, 2002 as compared to the comparable prior year
period. This decrease was primarily due to a decrease in salaries and
compensation associated with decreased revenues experienced during the three
months ended June 30, 2002. Cost of services as a percentage of revenues
increased to 73.6% for the three months ended June 30, 2002 from 71.8% for the
comparable prior year period. This increase was primarily attributable to an
increase of the Company's revenues being derived from Professional Engineering
services.

Selling, General and Administrative. Selling, general and administrative
expenses decreased 25.1%, or $2.8 million, for the three months ended June 30,
2002 as compared to the comparable prior year period. This decrease was
primarily attributable to a reduction in revenues and a corresponding reduction
in the related variable costs and cost cutting initiatives. SGA expenses, as a
percentage of revenues was 18.8% for the three months ended June 30, 2002 as
compared to 19.3% for the comparable prior year period.

Depreciation. Depreciation increased 19.0%, or $49,000, for the three months
ended June 30, 2002 as compared to the comparable prior year period. This
increase was primarily due to the depreciation and amortization infrastructure
and leasehold improvements incurred since June 30, 2001.

Other Expense. Other expense consists principally of interest expense, net of
interest income. For the three months ended June 30, 2002, actual interest
expense of $250,000 was offset by $549,000 of interest income, which was
principally earned from an income tax refund claim with the Internal Revenue
Service. Interest expense, net decreased $873,000 for the three months ended
June 30, 2002 as compared to the comparable prior year period. This decrease was
primarily due to the cash derived from operating activities, which was used to
reduce interest bearing debt as well as the aforementioned interest income
earned on the income tax refund.

Income Tax. Income tax expense decreased 32.9%, or $624,000, for the three
months ended June 30, 2002 as compared to the comparable prior year period. This
decrease was attributable to a lower level of income before taxes for the three
months ended June 30, 2002 compared to the comparable prior year period.

Amortization of Intangibles. Amortization of intangibles for the three months
ended June 30, 2002 and 2001 was net of income tax benefit of $2,000 and
$154,000, respectively. Amortization of intangibles decreased 99.7%, or $1.1
million for the three months ended June 30, 2002 as compared to the comparable
prior year period. On July 20, 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) 142, Goodwill
and Intangible Assets. SFAS is effective for all fiscal periods beginning after
December 15, 2001. In accordance with SFAS 142, for the three months ended June
30, 2002, all previously recognized goodwill and intangible assets with
indefinite lives was no longer subject to amortization.

Liquidity and Capital Resources

Operating activities provided $9.8 million of cash for the six months ended June
30, 2002 as compared to operating activities providing $21.5 million of cash for
the six months ended June 30, 2001. The decrease in cash provided by operating
activities was primarily attributable to decreases in accounts receivable,
deferred tax asset, and increases in payroll and withheld taxes and income taxes
payable, which was partially offset by an increase in income tax receivable,
prepaid expenses and other current assets and by decreases in accounts payable
and accrued expenses, and accrued payroll.

                                       22


<PAGE>


                     RCM TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Management's Discussion and Analysis of
           Financial Condition and Results of Operations - (Continued)


Liquidity and Capital Resources - (Continued)

Investing activities used $3.6 million for the six months ended June 30, 2002 as
compared to $5.4 million for the comparable prior period. The reduction in the
use of cash for investing activities for the six months ended June 30, 2002 as
compared to the comparable prior period was primarily attributable to a
reduction in property and equipment expenditures and acquisition and deferred
consideration payments.

Financing activities (principally debt reduction activities) used $6.5 million
for the six months ended June 30, 2002 as compared to financing activities using
$12.3 million for the comparable prior period.

       The Company and its subsidiaries entered into an amended and restated
loan agreement on May 31, 2002 with Citizens Bank (successor to Mellon Bank
N.A.), administrative agent for a syndicate of banks, which provides for a $40.0
million Revolving Credit Facility (the "Revolving Credit Facility") and a $7.5
million Term Loan Facility ("Term Loan Facility"). The $7.5 million outstanding
balance under the Term Loan Facility was paid on July 2, 2002 thereby canceling
the Term Loan Facility. Availability under the Revolving Credit Facility is
based on 80% of the aggregate amount of accounts receivable as to which not more
than ninety days have elapsed since the date of the original invoice. Borrowings
under the Facilities bear interest at one of two alternative rates, as selected
by the Company. These alternatives are: LIBOR (London Interbank Offered Rate),
plus applicable margin, or the agent bank's prime rate.

All borrowings under the Facilities are collateralized by all of the assets of
the Company and its subsidiaries and a pledge of the stock of its subsidiaries.
The Facilities also contain various financial and non-financial covenants, such
as restrictions on the Company's ability to pay dividends. The Facilities expire
August 2004. The weighted average interest rates for the six months ended June
30, 2002 and 2001 were 3.89% and 5.69%, respectively. The amounts outstanding
under the Revolving Credit Facility at June 30, 2002 and December 31, 2001 were
$24.9 million and $31.5 million, respectively. (Note 2)

The Company anticipates that its primary uses of capital in future periods will
be for working capital purposes. Funding for any future acquisitions will be
derived from one or more of the Revolving Credit Facility, funds generated
through operations, or future financing transactions.

The Company's business strategy is to achieve growth both internally through
operations and externally through strategic acquisitions. The Company from time
to time engages in discussions with potential acquisition candidates. As the
size of the Company and its financial resources increase, however, acquisition
opportunities requiring significant commitments of capital may arise. In order
to pursue such opportunities, the Company may be required to incur debt or issue
potentially dilutive securities in the future. No assurance can be given as to
the Company's future acquisition and expansion opportunities or how such
opportunities will be financed.

The Company does not currently have material commitments for capital
expenditures and does not anticipate entering into any such commitments during
the next twelve months. The Company's current commitments consist primarily of
lease obligations for office space. The Company believes that its capital
resources are sufficient to meet its present obligations and those to be
incurred in the normal course of business for the next twelve months.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the Company's exposure to market risk
since its Annual Report on Form 10-K for the year ended December 31, 2001.


                                       23
<PAGE>

                                     PART II

                                OTHER INFORMATION


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company held its Annual Meeting of Shareholders on June 20, 2002.

         The following actions were taken:

              1.) The following directors were elected to serve as Class C
                  directors on the Board of Directors, and shall serve terms
                  expiring at the Company's Annual Meeting in 2005, and until
                  their respective successors shall be elected and qualified.
                  Tabulated voting results were as follows:

                  Leon Kopyt    (Class C)     (For 9,649,887;  Withheld 534,794)
                  Stanton Remer (Class C)     (For 9,649,887;  Withheld 534,794)

                  Each of the Class A directors of the Company, Norman Berson
                  and Brian Delle Donne, will continue to serve on the Board of
                  Directors for a term expiring at the Company's Annual Meeting
                  in 2003, and until his successor has been elected and
                  qualified.

                  The Class B directors of the Company, Robert B. Kerr and David
                  Gilfor, will continue to serve on the Board of Directors for a
                  term expiring at the Company's Annual Meeting in 2004, and
                  until his successor has been elected and qualified.

              2.)     Approval of Grant Thornton LLP as the independent auditing
                      firm for the Company for the fiscal year ending December
                      31, 2002.

                      Votes For - 9,720,122; Votes Against - 448,144;
                      Abstentions - 16,415


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

10.      Amended  and  Restated  Loan and  Security  Agreement
         dated  May 31,  2002  between  RCM  Technologies,  Inc.  and All of Its
         Subsidiaries with Citizens Bank of Pennsylvania,
          as Administrative Agent and Arranger.

10a.     Severance Agreement dated June 10, 2002 between RCM Technologies, Inc.
         and Leon Kopyt.

10b.     Exhibit A To Severance Agreement General Release.

99.1     Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
          To Section 906 Of The Sarbanes-Oxley Act Of 2002.

99.2     Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
          To Section 906 Of The Sarbanes-Oxley Act Of 2002.


         (b)  Reports on Form 8-K

              None

                                       24

<PAGE>



                                    RCM TECHNOLOGIES, INC.

                                    SIGNATURES



     Pursuant to the requirements of the Securities Exchange Act of 1934, the
     Registrant has duly caused this report to be signed on its behalf by the
     undersigned, thereunto duly authorized.





                                     RCM Technologies, Inc.





           Date: August 05, 2002     By:/s/ Stanton Remer
                                     --- ------- -----
                                     Stanton Remer
                                     Chief Financial Officer,
                                     Treasurer, Secretary and Director
                                    (Principal Financial Officer and
                                     Duly Authorized Officer of the Registrant)


                                       25





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>amendedloanagr53102.txt
<DESCRIPTION>AM. AND RESTATED LOAN AND SEC. AGR.  MAY31, 2002
<TEXT>
                                                          i















                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




               RCM Technologies, Inc. and All of Its Subsidiaries

                                      with

       Citizens Bank of Pennsylvania, as Administrative Agent and Arranger

                                       and

              Each of the Financial Institutions Now and Hereafter
                 Shown on the Signature Pages Hereof as Lenders



                            Dated as of May 31, 2002

<PAGE>



                                       vii

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


                                                                                                                 PAGE


<S>     <C>                                                                                                      <C>
 SECTION 1. DEFINITIONS AND INTERPRETATION........................................................................2

         1.1      Terms Defined...................................................................................2
         1.2      Accounting Principles..........................................................................15



SECTION 2. CREDIT FACILITIES.....................................................................................15

         2.1      Availability of Loans and Letters of Credit - Description:.....................................15

         2.2      Advances, Conversions, Renewals and Payments:..................................................21

         2.3      Interest.......................................................................................24

         2.4      Additional Interest Provisions.................................................................26

         2.5      Fees...........................................................................................27

         2.6      Prepayments....................................................................................28

         2.7      Use of Proceeds:...............................................................................29

         2.8      Indemnity/Loss of Margin.......................................................................30

         2.9      Capital Adequacy:..............................................................................30


SECTION 3. COLLATERAL............................................................................................31

         3.1      Description:...................................................................................31

         3.2      Lien Documents:................................................................................32

         3.3      Other Actions: ................................................................................32

         3.4      Searches:......................................................................................33

         3.5      Landlord's Waivers:............................................................................33

         3.6      Filing Security Agreement:.....................................................................33

         3.7      Power of Attorney:.............................................................................33

         3.8      Verifications:.................................................................................34



SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES..........................................................34

         4.1      Resolutions, Opinions, and Other Documents::...................................................34

         4.2      Absence of Certain Events:.....................................................................35

         4.3      Warranties and Representations at Closing:.....................................................35

         4.4      Compliance with this Agreement:................................................................35

         4.5      Officer's Certificate:.........................................................................35

         4.6      Closing:.......................................................................................36

         4.7      Non-Waiver of Rights:..........................................................................36


SECTION 5. REPRESENTATIONS AND WARRANTIES........................................................................36

         5.1      Corporate Organization and Validity............................................................36

         5.2      Places of Business:............................................................................37

         5.3      Pending Litigation:............................................................................37

         5.4      Title to Properties:...........................................................................37

         5.5      Governmental Consent:..........................................................................37

         5.6      Taxes:.........................................................................................37

         5.7      Financial Statements:..........................................................................38

         5.8      Full Disclosure:...............................................................................38

         5.9      Subsidiaries:..................................................................................38

         5.10     Guarantees, Contracts, etc:....................................................................38

         5.11     Government Regulations, etc:...................................................................38

         5.12     Business Interruptions:........................................................................39

         5.13     Names:.........................................................................................40

         5.14     Other Associations:............................................................................40

         5.15     Environmental Matters:.........................................................................40

         5.16     Regulation O:..................................................................................41

         5.17     Capital Stock:.................................................................................41

         5.18     Solvency:......................................................................................41

         5.19     Patents, Trademarks, Etc:......................................................................41

         5.20     Investment Company:............................................................................41

         5.21     Location of Customer Lists:....................................................................42
         5.22.....Offering, Syndication, Etc.....................................................................42
         5.23.....Government Contracts.......................................................................... 42
         5.24.....Canadian Operations........................................................................... 42


SECTION 6. AFFIRMATIVE COVENANTS.................................................................................42

         6.1      Payment of Taxes and Claims:...................................................................42

         6.2      Maintenance of Properties and Corporate Existence:.............................................42

         6.3      Business Conducted:............................................................................44

         6.4      Litigation:....................................................................................44

         6.5      Taxes:.........................................................................................44

         6.6      Bank Accounts:.................................................................................46

         6.7      Employee Benefit Plans:........................................................................46

         6.8      Warranties for Future Advances:................................................................47

         6.9      Financial Covenants:...........................................................................47

         6.10     Financial and Business Information:............................................................48

         6.11     Officers' and Accountant's Certificates:.......................................................49

         6.12     Inspection:....................................................................................50

         6.13     Tax Returns and Reports........................................................................50

         6.14     Acquisitions:..................................................................................50

         6.15     Information to Participant:....................................................................51

         6.16     Material Adverse Developments:.................................................................51

         6.17     Name Changes, Places of Business:..............................................................51

         6.18     Change in Control or Chief Executive Officer:..................................................51

         6.19     Canadian Collateral............................................................................51
         6.20     Dissolution of Management Systems, Integrators, Inc. and Solutions Through Data-Processing,
                  Inc............................................................................................52


SECTION 7. NEGATIVE COVENANTS....................................................................................52

         7.1      Merger, Consolidation, Dissolution or Liquidation..............................................52

         7.2      Acquisitions:..................................................................................52

         7.3      Liens and Encumbrances:........................................................................52

         7.4      Transactions With Affiliates or Subsidiaries...................................................53

         7.5      Guarantees:....................................................................................53

         7.6      Distributions, Redemptions and Other Indebtedness:.............................................54

         7.7      Loans and Investments:.........................................................................54

         7.8      Use of Lenders' or the Agent's Name:...........................................................54

         7.9      Miscellaneous Covenants:.......................................................................54

         7.10     Change of Ownership Interests:.................................................................54


SECTION 8. DEFAULT...............................................................................................54

         8.1      Events of Default:.............................................................................54

         8.2      Cure -.........................................................................................57

         8.3      Rights and Remedies on Default:................................................................57

         8.4      Nature of Remedies:............................................................................58

         8.5      Set-Off:.......................................................................................58


SECTION 9. AGENT.................................................................................................58

         9.1      Appointment and Authorization..................................................................58

         9.2      General Immunity...............................................................................58

         9.3      Consultation with Counsel......................................................................59

         9.4      Documents......................................................................................59

         9.5      Rights as a Lender.............................................................................59

         9.6      Responsibility of Agent........................................................................59

         9.7      Collections and Disbursements..................................................................60

         9.8      Indemnification................................................................................61

         9.9      Expenses.......................................................................................61

         9.10     No Reliance....................................................................................61

         9.11     Reporting......................................................................................62

         9.12     Removal of Agent...............................................................................62

         9.13     Action on Instructions of Lenders..............................................................62

         9.14     Several Obligations............................................................................62

         9.15     Consent of Lenders to Agent's Rights...........................................................62

         9.16     Participations and Assignments:................................................................63



SECTION 10. MISCELLANEOUS........................................................................................64

         10.1     GOVERNING LAW:.................................................................................64

         10.2     Integrated Agreement:..........................................................................64

         10.3     Waiver:........................................................................................64

         10.4     Time:..........................................................................................65

         10.5     Expenses of Agent and Lenders:.................................................................65

         10.6     Brokerage:.....................................................................................65

         10.7     Notices:.......................................................................................66

         10.8     Joint and Several..............................................................................67

         10.9     Headings.......................................................................................67

         10.10    Survival:......................................................................................67

         10.11    Successors and Assigns:........................................................................67

         10.12    Duplicate Originals:...........................................................................67

         10.13    Modification:..................................................................................67

         10.14  Third Parties:...................................................................................67

         10.15    Discharge of Taxes, The Borrowers' Obligations, Etc.:..........................................67

         10.16    Withholding and Other Tax Liabilities:.........................................................68

         10.17    CONSENT TO JURISDICTION:.......................................................................68

         10.18    Waiver of Jury Trial:..........................................................................68


</TABLE>





<PAGE>


                                  EXHIBIT LIST



Exhibit 1..................--       Form of Borrowing Authorization
Exhibit 2.1                --       Form of Revolving Credit Note
Exhibit 2.1(r)             --       Form of Term Note
Exhibit 5.1                --       The Borrower's States of Qualifications
Exhibit 5.2                --       Places of Business
Exhibit 5.3                --       Judgments, Proceedings, Litigation and
                                     Orders
Exhibit 5.4                --       Existing Liens and Claims
Exhibit 5.5                --       Required consents, approvals and filings
Exhibit 5.7                --       Tax Identification Number
Exhibit 5.9                --       Subsidiaries and Affiliates
Exhibit 5.10               --       Existing Guaranties, Investments and
                                      Borrowings, Leases and Employment
                                       Agreements
Exhibit 5.11               --       Employee Benefit Plans
Exhibit 5.12               --       Business Interruptions
Exhibit 5.13(a)   --       Schedule of Names
Exhibit 5.13(b)   --       Trademarks, Patents and Copyrights
Exhibit 5.14               --       Other Associations
Exhibit 5.15               --       Environmental Disclosure
Exhibit 5.17               --       Capital Stock
Exhibit 5.19               --       Required Licenses
Exhibit 6.10(a)(vii)       --       Borrowing Base Certificate
Exhibit 6.11               --       Compliance Certificate


<PAGE>


                                    SCHEDULES



Schedule A        --       Schedule of Lenders

Schedule B        --       Address of Lenders






<PAGE>





                                                          8

                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


         This Amended and Restated Loan and Security Agreement ("Agreement") is
dated as of the 31st day of May, 2002, by and among RCM TECHNOLOGIES, INC.,
("RCM") and ALL OF ITS SUBSIDIARIES (collectively, the "Borrower"), CITIZENS
BANK OF PENNSYLVANIA (formerly known as Mellon Bank, N.A.), a Pennsylvania state
chartered bank, in its capacity as administrative agent and arranger (the
"Agent"), and CITIZENS BANK OF PENNSYLVANIA (formerly known as Mellon Bank,
N.A.) ("Citizens"), and SUNTRUST BANK (formerly known as SUNTRUST BANK ATLANTA),
in its capacity as documentation agent and lender ("Suntrust") and FLEET
NATIONAL BANK in its capacity as syndication agent and lender ("Fleet",
collectively with Suntrust, the "Others") (Citizens and Others individually each
being a "Lender" and collectively referred to as "Lenders").


                                   BACKGROUND

         The Borrower, the Agent, Citizens, the Lenders, Wachovia Bank
("Wachovia"), and Bank of America, N.A. (formerly known as Bank of America
National Trust and Savings Association) ("Bank of America" together, with
Wachovia, the "Retiring Lenders") are presently parties to a certain Loan and
Security Agreement dated August 19, 1998 (as the same has been amended and
modified prior to the date hereof, the "Original Loan Agreement").

A. Pursuant to the terms and provisions of the Original Loan Agreement, the
Lenders and the Retiring Lenders made available to the Borrower a revolving line
of credit in the aggregate amount of $75,000,000.00 (the "Original Revolving
Credit Facility").

B. The Borrower has requested that the Lenders and the Retiring Lenders agree to
amend and restate the Original Loan Agreement in its entirety to, among other
things, (1) amend the Original Revolving Credit Facility to provide for a
revolving credit facility having a maximum limit of $40,000,000.00 (including a
sublimit of $5,000,000.00 under such revolving credit facility for the issuance
of trade and standby letters of credit), and a $7,500,000.00 term loan facility,
and (2) delete all references to the Retiring Lenders.

         D. The Borrower and the Lenders are entering into this Agreement for
the purpose of amending and restating in its entirety the Original Loan
Agreement so that, following the date hereof, all of the loans heretofore
extended by the Lenders to the Borrower pursuant to the Original Loan Agreement
and/or hereafter extended by the Lenders to the Borrower shall be governed by
the terms and provisions of this Agreement and the other Loan Documents (as such
term is defined hereinafter).

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:


SECTION 1.         DEFINITIONS AND INTERPRETATION

1.1      Terms Defined:

         As used in this Agreement, the following terms have the following
respective meanings:

                  Account - Any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.

                  Account Debtor - Any Person obligated on any Account owing to
the Borrower.

                  Acquisition - Any acquisition by any Borrower of all or a
substantial portion of the Capital Stock, assets and/or properties of another
Person, or a business line of another Person, whether by purchase, merger or
otherwise.

                  Additional Net Restructuring Charge - A one-time deduction of
goodwill taken by RCM during its fiscal year ended December 31, 2001, up to an
amount not to exceed $35,000,000.00.

                  Adjusted Net Income - The sum of (i) Net Income, (ii) the net
loss (expressed as a positive number), if any, arising solely from Permitted
Asset or Stock Sales up to an amount, which when added to other net loses
previously recognized under this subparagraph (ii), does not exceed
$5,000,000.00 in the aggregate, and (iii) other extraordinary non-cash,
non-recurring charges approved by the Majority Lenders, which approval will not
be unreasonably withheld. (In no event shall any charge related to goodwill
taken by the Borrower after December 31, 2001 be considered as an adjustment to
Adjusted Net Income).

                  Advance(s)  - Any monies  advanced  or credit  extended
 to the  Borrower by any Lender  under the  Revolving  Credit Facility.

                  Affiliate - Any entity which directly or indirectly through
one or more intermediaries controls or is controlled by or is under common
control with the Borrower, which control may be by ownership, contract, or
otherwise.

                  Agreement - This Amended and Restated Loan and Security
Agreement, as it may hereafter be amended, supplemented or replaced from time to
time.

                  Applicable LIBOR Rate Margin -The amount to be added to the
applicable LIBOR Rate to determine the applicable LIBOR Based Rate for all
amounts outstanding under the Loans which bear interest at the LIBOR Based Rate,
which amount shall be determined in accordance with the ratio of the Borrower's
Total Funded Debt to EBITDA as set forth in the following matrix:



<PAGE>


                           Total Funded              Applicable
                           Debt to EBITDA            LIBOR Rate Margin
                           => 2.25x                                 250 b.p.
                           => 1.75x but < 2.25x                     225 b.p.
                           => 1.25x but < 1.75x                     200 b.p.
                           < 1.25x                                  175 b.p.

The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the
Applicable LIBOR Rate Margin referred to above that will be in effect for the
period commencing on such date until delivery of documents which do comply.
Nothing contained in this definition shall be construed, in any fashion, as
altering or superseding the rights of the Agent and the Lenders, following the
occurrence of an Event of Default hereunder (including, without limitation, as a
result of a breach by the Borrower of any the applicable financial covenants set
forth herein) to charge interest on any Loan outstanding hereunder at the
Default Rate.

                  Applicable Prime Rate Margin -The amount to be added to the
applicable Prime Rate to determine the applicable Prime Based Rate for all
amounts outstanding under the Loans which bear interest at the Prime Based Rate,
which amount shall be determined in accordance with the ratio of the Borrower's
Total Funded Debt to EBITDA as set forth in the following matrix:

                           Total Funded                       Applicable
                           Debt to EBITDA                 Prime Rate Margin
                           => 2.25x                                  25 b.p.
                           => 1.75x but < 2.25x                       0 b.p.
                           => 1.25x but < 1.75x                       0 b.p.
                           < 1.25x                                    0 b.p.

The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the
Applicable Prime Rate Margin referred to above that will be in effect for the
period commencing on such date until delivery of documents which do comply.
Nothing contained in this definition shall be construed, in any fashion, as
altering or superseding the rights of the Agent and the Lenders, following the
occurrence of an Event of Default hereunder (including, without limitation, as a
result of a breach by the Borrower of any the applicable financial covenants set
forth herein) to charge interest on any Loan outstanding hereunder at the
Default Rate.

                  Authorized Officer - Any officer or employee of the Borrower
authorized by the Borrower to request Advances or the issuance of Letters of
Credit as set forth in a Borrowing Authorization.

                  Borrowing Authorization - A document, in the form of Exhibit 1
attached hereto and made part hereof, signed and delivered to the Agent by an
Authorized Officer of the Borrower.

                  Borrowing Base - As of any date, an amount equal to eighty
percent (80%) of the aggregate amount of the Borrower's Eligible Accounts on
such date.

                  Business Day - Any day that is not a Saturday or Sunday or day
on which the Agent or any Lender is required or permitted to close, provided,
however, that solely with respect to LIBOR Rate Loans requested by the Borrower,
such day shall also be a day on which the Agent is able to determine the LIBOR
Rate for such requested LIBOR Rate Loan.

                  Capital Expenditures - Any expenditure that would be
classified as a capital expenditure on a statement of cash flow of the Borrower
prepared in accordance with GAAP, consistently applied but excluding any
expenditure incurred in connection with a Permitted Acquisition.

                  Capital Stock - as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
convertible into such shares, interests, participations, rights or other equity.

                  Citizens - Citizens Bank of Pennsylvania in its capacity as a
Lender.

                  Compliance Certificate - As defined in Section 6.11.

                  Closing - As defined in Section 4.6.

                  Closing Date - As defined in Section 4.6.

                  Collateral - As defined in Section 3.1.

                  Credit Facility - The lending arrangements, the Term Loan and
all Advances established and/or extended pursuant to this Agreement, and all
Letter of Credit Outstandings.

                  Default Rate - As defined in Section 2.4(c).

                  Distribution -

         (1)      Dividends or other distributions of any kind
                   on the Capital Stock of the Borrower; or

                  (2) The redemption, repurchase or acquisition of such Capital
Stock or of warrants, rights or other options to purchase such Capital Stock.

                  Drawing Date - As defined in Section 2.1(g).

                  EBITDA - The sum of (i) Net Income before interest, taxes,
depreciation and amortization, (ii) Additional Net Restructuring Charge, (iii)
any net loss if any (expressed as a positive number) arising solely from
Permitted Asset or Stock Sales up to an amount, which when added to other net
losses previously recognized under this subparagraph (iii), does not exceed
$5,000,000.00 in the aggregate, and (iv) other non-cash charges approved by the
Majority Lenders, which approval will not be unreasonably withheld. (In no event
shall any charge related to goodwill taken by the Borrower after December 31,
2001 be considered as an adjustment to EBITDA).

                  Eligible Accounts - shall mean Accounts which are and at all
times continue to meet the following conditions:

                  (a) The Account duly complies with all applicable laws,
whether Federal, state or local, including but not limited to usury laws, the
Federal Truth in Lending Act, the Federal Consumer Credit Protection Act, the
Fair Credit Billing Act, and Regulation Z of the Board of Governors of the
Federal Reserve System;

                  (b) The Account was not originated in or subject to the laws
of a jurisdiction whose laws would make the Account or the grant of the security
interest in the Account to the Agent and/or the Lenders unlawful, invalid or
unenforceable;

                  (c) The Account was originated by the Borrower in connection
with the sale of goods or the rendering of services by the Borrower in the
ordinary course of business under an enforceable contract, and such sale has
been consummated and such goods have been delivered or such services have been
rendered so that the performance of such contract has been completed by the
Borrower and by all parties other than the Account Debtor;

                  (d) The Account is evidenced by a written invoice or other
documentation, all of which are in form and substance satisfactory to the Agent
in its sole reasonable discretion (including any contract from which such
Account arises);

                  (e) The Account does not arise out of a contract with, or
order from, an Account Debtor that, by its terms, forbids or makes void or
unenforceable the grant of the security interest by the Borrower to the Agent
and/or the Lenders in and to the Account arising with respect thereto;

                  (f) The title of the Borrower to the Account and, except as to
the Account Debtor, to any related goods is absolute and is not subject to any
Lien, except Liens in favor of the Agent and/or the Lenders;

                  (g)      The Account provides for payment in United States
                            or Canadian Dollars by the Account Debtor;

                  (h)      The Account shall have amounts owing that are not
                            less than the amounts represented by the Borrower;

                  (i) The portion of the Account for which income has not yet
been earned or which constitutes unearned discount, service charges or deferred
interest shall be ineligible;

                  (j)      The Account shall be eligible only to the
        extent that it is not subject to any defense,  claim of reduction,
           counterclaim, set-off;

                  (k) The goods, the sale of which gave rise to the Account,
were shipped or delivered or provided to the Account Debtor on an absolute sale
basis and not on a bill and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis, or on the basis of any other
similar terms making the Account Debtor's payment obligations conditional;

                  (l) The Account Debtor has not returned, rejected or refused
to retain, or otherwise notified the Borrower of any dispute concerning, or
claimed nonconformity of, any of the goods from the sale of which the Account
arose;

                  (m)      All rights and remedies of the Borrower under the
                            Account are freely assignable by the Borrower;

                  (n) The Account has not been outstanding for more than ninety
(90) days past the invoice date (other than for a Permitted Delayed Account, in
which case has not been outstanding for more than one hundred twenty (120) days
past the invoice date) and is not subject to "dating" terms;

                  (o) The Account shall be ineligible if 50% or more of the
accounts of the related Account Debtor and its affiliates are more than ninety
(90) days past due from the date of original invoice therefor (other than a
Permitted Delayed Account, in which case has not been outstanding for more than
one hundred twenty (120) days past the invoice date);

                  (p)      The Account shall be  ineligible to the extent
         that the aggregate  amount of all the accounts of the Account
Debtor and its affiliates exceed 10% of all of the Borrower's Accounts;

                  (q) The Borrower have not received any note, trade acceptance,
draft, chattel paper or other instrument with respect to, or in payment of, the
Account, unless, if any such instrument has been received, the Borrower
immediately notifies the Agent and, at the Agent's request, endorse or assign
and deliver such instrument to the Agent, for the benefit of the Lenders
hereunder;

                  (r) The Borrower has not received any notice of (i) the death
of the Account Debtor, if an individual, or of a partner or member thereof if a
partnership or a limited liability company, (ii) the filing by or against the
Account Debtor of any proceeding in bankruptcy, receivership, insolvency,
reorganization, liquidation, conservatorship or any similar proceeding, or (iii)
any assignment by the Account Debtor for the benefit of creditors. Upon receipt
by the Borrower of any such notice, it will give the Agent prompt written notice
thereof;

                  (s)      The Account Debtor is not an Affiliate;

                  (t) The Account shall be ineligible if the related Account
Debtor is domiciled in any country other than the United States of America or
the Province of Ontario, Canada, or a Province of Canada which has adopted and
has in effect legislation similar to the Personal Property Security Act
(Ontario), unless such Account is supported by a documentary letter of credit,
duly assigned to and in the possession of the Agent, from a financial
institution reasonably acceptable to the Agent and the terms and conditions of
which are reasonably acceptable to the Agent;

                  (u) If the Account Debtor is an Official Body and following a
request to Borrower by the Agent to do so (which such request may be made by the
Agent at any time in its sole discretion), the Account shall be ineligible until
the Borrower has taken all actions deemed necessary by the Agent in order to
further protect the Agent's and the Lenders' security interest therein,
including but not limited to any notices or filings required under the
Assignment of Claims Act of 1940, as amended, or any other applicable law; and

                  (v) The Agent has not reasonably deemed such Account
ineligible because of uncertainty about the creditworthiness of the Account
Debtor (including, without limitation, unsatisfactory past experiences of the
Borrower, the Agent or any Lender with the Account Debtor or unsatisfactory
reputation of the Account Debtor) or because the Agent otherwise makes a
reasonable determination that the collateral value of the Account to the Lenders
is impaired or that the Agent's and/or the Lenders' ability to realize such
value is insecure.

In the case of any dispute about whether an Account is or has ceased to be an
Eligible Account, the sole reasonable determination of the Agent shall be final
and binding.

                  ERISA - The Employee Retirement Income Security Act of 1974,
as the same may be amended, from time to time.

                  Event of Default - As defined in Section 8.1.

                  Existing Additional Deferred Consideration Payments - Deferred
and/or contingent cash consideration paid by the Borrower on or before December
31, 2003 (or payable on or before December 31, 2003 and paid within 120 days of
its due date), up to an amount not to exceed $12,000,000.00 in the aggregate, in
connection with any Acquisition closed prior to July 1, 2001, including without
limitation (i) fixed pre-set amounts paid as a result of the achievement of a
defined level of earnings by the acquired business following the closing of such
Acquisition, and (ii) additional amounts paid following closing which arise as a
result of earnings achieved by the acquired business in excess of defined
levels. (In no event shall payments made in consideration of consulting
services, agreements-not-to-compete or similar arrangements be considered
Existing Additional Deferred Consideration Payments).

                  Expenses - As defined in Section 10.5.

                  Extension Fee - As defined in Section 2.5(a).

                  Federal Funds Rate - For any day, the weighted average of the
rates on overnight federal funds transactions with member banks of the Federal
Reserve System arranged by federal funds brokers as published by the Federal
Reserve Bank of New York for such day, or if such day is not a Business Day, for
the next preceding Business Day (or, if such rate is not so published for any
such day, the average rate charged to the Agent on such day on such transactions
as reasonably determined by the Agent).

                  Frontage Fee - As defined in Section 2.5(d).

                  Fixed Charge Ratio - EBITDA divided by: the sum of interest
expense plus income taxes paid plus scheduled principal payments (excluding any
principal payments required under the Term Notes) plus Capital Expenditures plus
Distributions paid.

                  GAAP - Generally accepted accounting principles applied in a
manner consistent with the most recent audited financial statements of the
Borrower referred to in Section 5.7 herein.

                  Good Business Day - Any Business Day when banks in
Philadelphia, Pennsylvania, New York, New York and London, England are open for
business.

                  Governmental Acts - As defined in Section 2.1(o).

                  Income Tax Benefit - The net amount by which the Borrower's
Federal and State income tax obligations are reduced as a result of the Borrower
deducting all or a portion of the Additional Net Restructuring Charge on its
Federal and State income tax returns for its taxable year ended December 31,
2001, and by giving effect to the net tax effect of any adjustments increasing
or decreasing such deduction subsequent to its taxable year ended December 31,
2001.

                  Insolvency Proceeding - with respect to any Person, (a) any
case, action or proceeding with respect to such Person (and, if filed against
such Person, is not dismissed within 60 days) (i) before any court or any other
Official Body under any bankruptcy, insolvency, reorganization or other similar
law now or hereafter in effect, or (ii) for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar
official) of such Person or otherwise relating to liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors, or other,
similar arrangement in respect of such Person's creditors generally or any
substantial portion of its creditors; undertaken under any law.

                  Intercompany  Notes - All notes,  instruments,
 entries or other  evidence  of any  indebtedness  between  any of the
Borrowers.

                  Interest Coverage - EBITDA divided by interest expense.

                  Inventory - As defined in the UCC.

                  IRS - As defined in Section 6.7.

                  Letter of Credit - As defined in Section 2.1(e) hereof.

                  Letter of Credit Applicable Margin - The amount determined in
accordance with the ratio of the Borrower's Total Funded Debt to EBITDA as set
forth in the following matrix:

                           Total Funded                       Letter of Credit
                           Debt to EBITDA            Applicable Margin
                           => 2.25x                  2.50% per annum
                           => 1.75x but < 2.25x               2.25% per annum
                           => 1.25x but < 1.75x               2.00% per annum
                           < 1.25x                   1.75% per annum

The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the Letter
of Credit Applicable Margin referred to above that will be in effect for the
period commencing on such date.

                  Letter of Credit Borrowing - An extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made and shall not have been converted into a Prime Based Rate
Loan under Section 2.1(g).

                  Letter of Credit Fee - As defined in Section 2.5(d) hereof.

                  Letter of Credit Outstandings - At any time the sum of (i) the
aggregate undrawn face amount of all then outstanding Letters of Credit, and
(ii) the aggregate amount of all unpaid and then outstanding Reimbursement
Obligations.

                  Liabilities - All liabilities of every kind as would be shown
on a balance sheet of the Borrower prepared in accordance with GAAP.

                  LIBOR Based Rate - The LIBOR Rate plus the Applicable LIBOR
Rate Margin.

                  LIBOR Based Rate Loan - That portion of the Loans on which
interest accrues at the LIBOR Based Rate.

                  LIBOR Interest Period - Section 2.3(b)(ii).

                  LIBOR Rate - An annual rate of interest determined by the
Agent as being the rate available to the Agent at approximately 11:00 a.m.
London time in the London Interbank Market, as referenced by Reuters Screen
"LIBO", in accordance with the usual practice in such market, for the LIBOR
Interest Period elected by the Borrower, in effect two Good Business Days prior
to the funding date for a requested LIBOR Based Rate Loan (including those
requested in connection with the conversion of a Prime Rate Loan to a LIBOR
Based Rate Loan in accordance with Section 2.3 hereof), or for a LIBOR Based
Rate Loan which the Borrower has elected to continue as a LIBOR Based Rate Loan
beyond the expiration of the then current LIBOR Interest Period with respect
thereto, for deposits of dollars in amounts equal (as nearly as may be
estimated) to the amount of the LIBOR Based Rate Loan which shall then be loaned
by the Lenders to the Borrower as of the time of such determination, as such
rate may be adjusted by the reserve percentage applicable during the LIBOR
Interest Period in effect (or if more than one such percentage shall be
applicable, the daily average of such percentages for those days in such LIBOR
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the applicable reserve
requirement (including without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Agent with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities" as such term is
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time, having a term equal to such LIBOR Interest
Period ("Eurocurrency Reserve Requirement"), as reasonably applied to loans of
this type generally by the asset based loan department of the Agent. Such
adjustment shall be effectuated by calculating, and the LIBOR Rate shall be
equal to, the quotient of (i) the offered rate divided by (ii) one minus the
Eurocurrency Reserve Requirement.

                  LIBOR Rate Option - As defined in Section 2.3(b).

                  Lien - Any security interest or lien of any kind or nature in
property securing an obligation owed to, or a claim of any kind or nature in
Property by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, regulation or contract, and
including, but not limited to, a security interest or lien arising from an
encumbrance, pledge, conditional sale or trust receipt, a capitalized lease,
consignment or bailment for security purposes, a trust, or an assignment, or as
a result of the issuance of any execution or distraint process against the
Borrower. The term "Lien" shall include without limitation, reservations,
exceptions, covenants, conditions, restrictions, leases and other encumbrances
affecting Property other than those which would not materially interfere with
the Borrower's use of the Property and would not materially detract from the
value of the Property. For the purposes of this Agreement, the Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.

                  Line Reduction - As defined in Section 2.1(d).

                  Loans - Collectively, the unpaid balance of all Advances under
the Revolving Credit Facility, the unpaid balance of the Term Loan and all
Letter of Credit Outstandings.

                  Loan Documents - This Agreement, the Revolving Credit Notes,
the Term Notes, and all agreements, instruments and documents executed and/or
delivered from time to time pursuant to this Agreement or in connection
therewith, as amended or replaced from time to time.

                  Majority Lenders - At any time while no Loans are outstanding
hereunder, the Lenders holding at least one hundred percent (100%) of the
aggregate amount of the Revolving Credit Facility Pro Rata Shares at such time
and, at any time while Loans are outstanding hereunder, the Lenders holding at
least one hundred percent (100%) of the outstanding aggregate principal amount
of the Loans hereunder.

                  Material Adverse Effect - Any material adverse effect on the
Borrower's consolidated financial condition, assets, operating status or
projected financial condition or any fact or circumstance that, singly or in the
aggregate with any fact or circumstance, has a reasonable likelihood of
resulting in or leading to the inability of the Borrower to perform in any
material respect its obligations under this Agreement or under any Loan Document
or the inability of the Agent and/or the Lenders to enforce in any material
respect the rights purported to be granted to them under this Agreement or any
Loan Document or which might have a material adverse effect on the ability of
the Borrower to effectuate (including hindering or unduly delaying) the
transactions contemplated by this Agreement and the Loan Documents on the terms
contemplated hereby and thereby.

                  Minimum Tangible Net Worth - RCM's consolidated Tangible Net
Worth shall be (i) at least $4,000,000.00 as of June 30, 2001, plus (ii)
seventy-five percent (75%) of quarterly Net Income thereafter (determined
without taking the Additional Net Restructuring Charge into account and with no
credit for losses) (the "Net Income Component"), plus (iii) one hundred percent
(100%) of the Income Tax Benefit, less (iv) the sum of (A) the Existing
Additional Deferred Consideration Payments paid on or after July 1, 2001, plus
(B) the New Acquisition Consideration Payments (hereinafter defined) (if any)
paid on or after July 1, 2001, plus (C) any net losses (expressed as a positive
number), if any, arising solely from Permitted Asset or Stock Sales up to an
amount, which when added to other net losses recognized under this subparagraph
(C), does not exceed $5,000,000.00 in the aggregate, provided that the
reductions pursuant to clauses (A) and (B) of clause (iv) shall not in the
aggregate exceed the increase in Minimum Tangible Net Worth arising from the Net
Income Component.

                  Net Income - Consolidated net income of RCM after taxes as
such would appear on a statement of income prepared in accordance with GAAP.

                  New Acquisition Consideration Payments. Cash consideration
paid at closing and deferred and/or contingent consideration paid by the
Borrower up to an amount not to exceed $3,000,000.00 in the aggregate, in
connection with any Acquisition closed after July 1, 2001, including without
limitation (i) fixed pre-set amounts paid as a result of the achievement of a
defined level of earnings by the acquired business following the closing of such
Acquisition, and (ii) additional amounts paid following closing which arise as a
result of earnings achieved by the acquired business in excess of defined
levels. (In no event shall payments made in consideration of consulting services
be considered to be New Acquisition Consideration Payments).

           Notes - Collectively, the Revolving Credit Notes and the Term Notes.

                  Obligations - All existing and future liabilities and
obligations of every kind or nature at any time owing by the Borrower to the
Lenders, and/or to the Agent in connection with the Loan Documents (including,
without limitation, this Agreement, the Term Notes and the Revolving Credit
Notes) and the transactions contemplated hereby and thereby or administration
thereof, whether joint or several, related or unrelated, primary or secondary,
matured or contingent, direct or indirect, due or to become due, and whether
principal, interest, Fees or Expenses, including, without limitation,
Obligations in respect of the Revolving Credit Facility, Letter of Credit
Outstandings, and/or the Term Loan, whether related to Advances or otherwise,
and any extensions, modifications, substitutions, increases and renewals
thereof, and the payment of all reasonable amounts advanced by the Agent (or any
Lender after the occurrence of an Event of Default), on behalf of the Lenders,
to preserve, protect and enforce rights hereunder and in the Collateral and all
Expenses incurred in connection therewith and herewith.

                  Official Body - any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

                  Participation Advance - As defined in Section 2.1(i).

                  Permitted Acquisitions - An Acquisition which satisfies each
of the criteria set forth in Section 2.7 hereof.

                  Permitted Asset or Stock Sale - A sale of the assets or stock
pertaining to one or more business units operated by the Borrower, provided (A)
Borrower obtains the prior written consent of the Majority lenders, which such
consent can be withheld in the sole reasonable discretion of the Majority
Lenders, (B) such sale does not cause an Event of Default or an Unmatured Event
of Default, and (C) in the event any portion of the Term Loan is still
outstanding, the net after-tax proceeds from such sale (after payment of any
expenses of such sale and obligations secured by Permitted Liens on the assets
sold) shall be applied to reduce the outstanding principal of the Term Loan, in
the inverse order of maturity. In the event the Majority Lenders approve any
such sale, the Lenders agree that the Borrower will not be charged any fee in
consideration of receiving the Majority Lenders' consent hereunder.

                  Permitted Delayed Account - shall include certain major
customers of Borrower that have a demonstrated history of paying invoices beyond
90 days without any write-offs. Any such Permitted Delayed Accounts must be
approved by Majority Lenders in their sole reasonable discretion. Permitted
Delayed Accounts as of Closing include the New York City Board of Education,
Schering-Plough Corporation, United Technologies, Vermont Yankee and Ontario
Power Group, and may be updated by Borrowers from time to time as approved by
the Majority Lenders in their sole reasonable discretion.

                  Permitted Investments - (a) Investments in direct or indirect
obligations of, or obligations unconditionally guaranteed by, the United States
of America and maturing within twelve (12) months from the date of acquisition;
(b) investments in commercial paper of the Agent or commercial paper rated
"Prime-1" by Moody's Investors Services or "A-1" by Standard & Poor's
Corporation, or with an equivalent rating by another rating agency of nationally
recognized standing, maturing within twelve (12) months from the date of
acquisition; and (c) certificates of deposit maturing within twelve (12) months
from the date of acquisition and issued by the Agent.

                  PBGC - As defined in Section 6.7.

                  Permitted Liens - As defined in Section 7.3.

                  Person - An individual, partnership, corporation, trust,
unincorporated association or organization, joint venture, limited liability
company or partnership, or any other entity.

                  Prime Based Rate - The Prime Rate plus the Applicable Prime
Rate Margin as then in effect.

                  Prime Based Rate Loan - That portion of the Loans on which
interest accrues at the Prime Based Rate.

                  Prime Rate - That per annum rate designated or announced by
the Agent at its principal office from time to time as its prime rate of
interest, which may be greater or less than other interest rates charged by the
Agent to other borrowers and is not solely based or dependent upon the interest
rate which the Agent may charge any particular borrower or class of borrowers.

                  Prime Rate Option - As defined in Section 2.3(a).

                  Pro Rata Percentage - As defined in Section 2.1(a)(ii).

                  Property  - Any  interest  in any kind of  property
          or asset,  whether  real,  personal  or mixed,  or  tangible  or
           intangible.

                  Regulation D - Regulation D of the Board of Governors of the
Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.

                  Reimbursement Obligation - as defined in Section 2.1(g).

                  Revolving Credit Facility - As defined in Section 2.1(a)(i).

                  Revolving Credit Facility Pro Rata Share - Section 2.1(a)(ii).

                  Revolving Credit Limit - The lesser of (i) $40,000,000.00, or
(ii) the Borrowing Base as then in effect.

                  Revolving Credit Loans - As defined in Section 2.1(a)(i).

                  Revolving Credit Maturity Date - August 19, 2004.

                  Revolving Credit Notes - Those notes described in Section
2.1(b), as they may be amended, supplemented, replaced or restated from time to
time.

                  Revolving Credit Term - As defined in Section 2.1(c).

                  SEC - The Securities and Exchange Commission.

                  Sellers Notes - Any notes or other instruments evidencing any
indebtedness or other obligations of the Borrowers to a seller of an acquired or
merged Person.

                  Settlement Date - As defined in Section 2.2(b)(iii)(A).

                  Software - Collectively, all applications, operating and other
computer programs (including, without limitation, all object code and the source
code therefor), all documentation (including, without limitation, all
programmers', users' and technical manuals for all such programs), the visual
expressions, screen formats, report formats and other design features of all
such programs, all ideas, methods, algorithms, formulae and concepts used in
developing and/or incorporated into such programs or documentation, all future
modifications, revisions, updates, releases, refinements, improvements and
enhancements of such programs or documentation, all derivative works based upon
any of the foregoing, and all copies of the foregoing.

                  Standby Letter of Credit - A Letter of Credit issued to
support obligations of the Borrower, contingent or otherwise, for working
capital and business needs of the Borrower incurred in the ordinary course of
business.

                  Subsidiary - Any Person (other than an individual) more than
fifty percent (50%) of whose ownership interests or voting stock is legally and
beneficially owned directly or indirectly by the Borrower or owned by a Person
(other than an individual) more than fifty percent (50%) of whose ownership
interests or voting stock is legally and beneficially owned directly or
indirectly by the Borrower.

                  Tangible Net Worth - The amount by which the total assets of
the Borrower exceeds all Liabilities of the Borrower. (For purposes of this
calculation, the aggregate amount of any intangible assets of the Borrower
including without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names, shall be
subtracted from the Borrower's total assets).

                  Termination Fee - As defined in Section 2.5(c).

                  Term Loan - As defined in Section 2.1(q).

                  Term Loan Maturity Date - 364 days from the Closing Date.

                  Term Notes - Those notes described in Section 2.1(r), as they
may be amended, supplemented, replaced or restated from time to time.

                  Total Funded Debt - The sum of all of the Borrower's bank debt
and capital lease obligations, as well as all other funded debt, including
without limitation all Sellers Notes.

                  UCC - The Uniform Commercial Code as adopted in the State of
New Jersey and in effect on the date hereof, as the same may be amended or
modified from time to time.

                  Unfunded Capital Expenditures - Capital Expenditures made with
(i) the use of any proceeds of any Loan hereunder or (ii) the Borrower's own
funds obtained other than (A) through equity contributed subsequent to the
Closing or (B) purchase money or other financing or lease transactions.

                  Unmatured Event of Default - An event which with the passage
of time, the giving of notice, or both would constitute an Event of Default.

                  Unused Line Fee - As defined in Section 2.5(b).

                  Working Capital - Current assets minus current liabilities as
defined in accordance with GAAP.

1.2 Accounting Principles: Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.


SECTION 2.         CREDIT FACILITIES

2.1      Availability of Loans and Letters of Credit - Description:

                  (a) (i) Subject to the terms and conditions of this Agreement,
each Lender hereby establishes for the benefit of the Borrower a revolving
credit facility (collectively, the "Revolving Credit Facility") which shall
include all Advances extended by Lenders to or for the benefit of the Borrower
from time to time under the Revolving Credit Facility (collectively, the
"Revolving Credit Loans"). The aggregate principal amount of all Revolving
Credit Loans, together with all Letter of Credit Outstandings, shall not, at any
time, exceed the Revolving Credit Limit. Subject to such limitation, the
outstanding balance of Revolving Credit Loans may fluctuate from time to time,
to be reduced by repayments made by the Borrower, and to be increased by future
Revolving Credit Loans which may be made by the Lenders and, subject to any
earlier payment requirements set forth herein or in any other Loan Document,
shall be due and payable on the last day of the Revolving Credit Term. If the
aggregate principal amount of all Revolving Credit Loans, together with all
Letter of Credit Outstandings, at any time exceeds the Revolving Credit Limit,
the Borrower shall repay such excess in full upon within one (1) Business Day
after Borrower has knowledge of such excess.

                           (ii)     Subject to Section 8.3(a) below and the
terms of this Agreement,  each Lender agrees to lend to the
Borrower an amount equal to such Lender's respective percentage (as to each
Lender, the percentage of the Revolving Credit Facility set forth opposite its
name on that portion of Schedule "A" attached hereto and made a part hereof
entitled "Revolving Credit Facility" and referred to as its "Pro Rata
Percentage") of any Advance requested by the Borrower. The outstanding balance
of all Advances under the Revolving Credit Facility of each Lender, together
with such Lender's Pro Rata Percentage of all Letter of Credit Outstandings,
shall not exceed the respective amount (as such amount may change from time to
time in accordance with the terms hereof, the "Revolving Credit Facility Pro
Rata Share") set forth opposite its name on that portion of Schedule "A"
attached hereto and made a part hereof and entitled "Revolving Credit Facility".

                  (b) At the Closing, the Borrower shall execute and deliver its
amended and restated promissory note to each Lender for the total principal
amount of such Lender's Revolving Credit Facility Pro Rata Share (collectively,
as the same may be amended, modified or replaced from time to time, the
"Revolving Credit Notes"). Each Revolving Credit Note shall evidence the
Borrower's absolute and unconditional obligation to repay such Lender for all
outstanding Revolving Credit Loans and Letter of Credit Borrowings owed to such
Lender, with interest as herein and therein provided. Each and every Advance,
and all Letter of Credit Borrowings, under the Revolving Credit Facility shall
be deemed evidenced by the Revolving Credit Notes, which are deemed incorporated
herein by reference and made a part hereof. All Revolving Credit Notes shall be
substantially in the form set forth in Exhibit "2.1" attached hereto and made a
part hereof.

                  (c) The term of the Revolving Credit Facility ("Revolving
Credit Term") shall expire on the Revolving Credit Maturity Date, unless having
been sooner accelerated by the Agent on behalf of the Lenders in accordance with
the terms of this Agreement, or sooner terminated by the Borrower pursuant to
Section 2.1(d) hereof. On the last day of the Revolving Credit Term, all amounts
outstanding under the Revolving Credit Facility, all outstanding Letter of
Credit Borrowings, and any other Obligation then outstanding shall be due and
payable in full, and as of and after such date no further Advances or Letters of
Credit shall be available from the Lenders.

                  (d) The Borrower may, at its option from time to time,
permanently reduce the Revolving Credit Limit in $500,000.00 increments, or
terminate the Revolving Credit Facility entirely, by giving Agent at least five
(5) Business Days' prior written notice thereof.

                  (e) Under the Revolving Credit Facility, the Borrower may
request the issuance of a letter of credit (each a "Letter of Credit") by
delivering to the Agent a completed application and agreement for letter of
credit in such form as the Agent may specify from time to time by no later than
10:00 a.m., Philadelphia time, at least three (3) Business Days, or such shorter
period as may be agreed to by the Agent, in advance of the proposed date of
issuance. Each Letter of Credit shall be a trade letter of credit or a Standby
Letter of Credit. Subject to the terms and conditions hereof, in reliance on the
agreements of the other Lenders set forth in this Section 2.1, and provided the
Agent has not received written notice from a Lender that an Event of Default or
Unmatured Event of Default has occured, the Agent will issue a Letter of Credit
provided each Letter of Credit shall (i) have a maximum maturity of twelve (12)
months from the date of issuance, and (ii) in no event expire later than one
Business Day prior to the Revolving Credit Maturity Date and provided that in no
event shall (i) the Letter of Credit Outstandings exceed, at any one time,
$5,000,000.00 or (ii) the sum of the aggregate Letter of Credit Outstandings and
the Revolving Credit Loans then outstanding exceed, at any one time, the
aggregate Revolving Credit Facility Pro Rata Shares of the Lenders then in
effect.

                  (f) Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Agent a participation in such Letter of Credit and
each drawing thereunder in an amount equal to such Lender's Pro Rata Percentage
of the maximum amount available to be drawn under such Letter of Credit and the
amount of such drawing, respectively.

                  (g) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Agent will promptly
notify the Borrower. The Borrower shall reimburse (such obligation to reimburse
the Agent shall sometimes be referred to as a "Reimbursement Obligation") the
Agent prior to 11:00 a.m., Philadelphia time on each date that an amount is paid
by the Agent under any Letter of Credit (each such date, a "Drawing Date") in an
amount equal to the amount so paid by the Agent. In the event the Borrower fail
to reimburse the Agent for the full amount of any drawing under any Letter of
Credit by 11:00 a.m., Philadelphia time, on the Drawing Date, the Agent will
promptly notify each Lender thereof, and the Borrower shall be deemed to have
requested that a Prime Based Rate Loan be made by the Lenders pursuant to
Section 2.1(a) hereof in the full amount of the Reimbursement Obligation then
outstanding, to be disbursed on the Drawing Date under such Letter of Credit,
subject to the amount of the unutilized portion of the aggregate Revolving
Credit facility Pro Rata Shares of the Lenders then in effect and subject to the
conditions to Advances set forth herein other than any notice requirements. Any
notice given by the Agent pursuant to this Section 2.1(g) may be oral if
immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.

                  (h) Each Lender shall upon any notice pursuant to Section
2.1(g) make available to the Agent an amount in immediately available funds
equal to its Pro Rata Percentage of the amount of the drawing, whereupon the
participating Lenders shall (subject to Section 2.1(i) each be deemed to have
made a Prime Based Rate Loan to the Borrower in that amount. If any Lender so
notified fails to make available to the Agent for the account of the Agent the
amount of such Lender's Pro Rata Percentage of such drawing by 2:00 p.m.,
Philadelphia time on the Drawing Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Drawing Date to the date on
which such Lender makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Drawing Date, but failure of the
Agent to give any such notice on the Drawing Date or in sufficient time to
enable any Lender to effect such payment on such date shall not relieve such
Lender from its obligation under this Section 2.1(h) (other than interest during
the period it was not aware of such drawing).

                  (i) With respect to any Reimbursement Obligation that is not
converted into a Prime Based Rate Loan to the Borrower in whole or in part as
contemplated by Section 2.1(g) because of the Borrower's failure to satisfy any
of the applicable conditions to an Advance set forth herein (other than any
notice requirements) or for any other reason, the Borrower shall be deemed to
have incurred from the Agent a Letter of Credit Borrowing in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to the Prime Based Rate Loans or, if applicable, the Default Rate.
Each Lender's payment to the Agent pursuant to Section 2.1(h) shall be deemed to
be a payment in respect of its participation in such Letter of Credit Borrowing
in satisfaction of its participation obligation under Section 2.1(h) (a
"Participation Advance").

                  (j) Upon (and only upon) receipt by the Agent for its account
of immediately available funds from the Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which any
Lender has made a Participation Advance to the Agent, (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, or
(iii) in payment of a Letter of Credit Fee, the Agent will pay to each Lender,
in the same funds as those received by the Agent, the amount of such Lender's
ratable share of such funds, except the Agent shall retain the amount of the
ratable share of such funds of any Lender that did not make a Participation
Advance in respect of such payment by the Agent.

                  (k) If the Agent is required at any time to return to the
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by the Borrower to
the Agent pursuant to Section 2.1(g) in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent the amount of its ratable share of any
amounts so returned by the Agent plus interest thereon from the date such demand
is made to the date such amounts are returned by such Lender to the Agent, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.

                  (l) The Borrower agrees to be bound by the terms of the
Agent's application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from the Borrower's own. In the event of a
conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following the Borrower's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.

                  (m) In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.

                  (n) Each Lender's obligation in accordance with this Agreement
to make the Prime Based Rate Loans or Participation Advances, as contemplated by
this Section 2.1, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.1 under all
circumstances, including the following circumstances:

                           (i)      any set-off, counterclaim, recoupment,
                                    defense or other right which such Lender may
                                    have against the Agent, the Borrower or any
                                    other Person for any reason whatsoever;

                           (ii)     the failure of the Borrower or any other
                                    Person to comply, in connection with a
                                    Letter of Credit Borrowing, with the
                                    conditions set forth in this Agreement for
                                    the making of a Prime Based Rate Loan
                                    hereunder, it being acknowledged that such
                                    conditions are not required for the making
                                    of a Letter of Credit Borrowing and the
                                    obligation of the Lenders to make
                                    Participation Advances under this Section
                                    2.1;

                           (iii)    any lack of validity or enforceability of
                                     any Letter of Credit;

                           (iv)     the existence of any claim, set-off, defense
                                    or other right which the Borrower or any
                                    Lender may have at any time against a
                                    beneficiary or any transferee of any Letter
                                    of Credit (or any Persons for whom any such
                                    transferee may be acting), the Agent or any
                                    Lender or any other Person or, whether in
                                    connection with this Agreement, the
                                    transactions contemplated herein or any
                                    unrelated transaction (including any
                                    underlying transaction between the Borrower
                                    and the beneficiary for which any Letter of
                                    Credit was procured);

                           (v)      any draft, demand, certificate or other
                                    document presented under any Letter of
                                    Credit proving to be forged, fraudulent,
                                    invalid or insufficient in any respect or
                                    any statement therein being untrue or
                                    inaccurate in any respect even if the Agent
                                    has been notified thereof,

                           (vi)     payment by the Agent under any Letter of
                                    Credit against presentation of a demand,
                                    draft or certificate or other document which
                                    does not comply with the terms of such
                                    Letter of Credit;

                           (vii)    any adverse  change in the  business,
                                    operations,  properties,  assets,
                                    condition  (financial  or
                                    otherwise) or prospects of the Borrower;

                           (viii)   any breach of this Agreement or any other
                                    Loan Document by any party thereto;

                           (ix)     the occurrence or continuance of an
                                    Insolvency Proceeding with respect to
                                    the Borrower;

                           (x)      the fact that an Event of Default or a
                                    Default shall have occurred and be
                                    continuing;

                           (xi)     the fact that the Revolving Credit Maturity
                                    Date shall have passed or this Agreement or
                                    the Revolving Credit Facility Pro Rata
                                    Shares shall have been terminated; and

                           (xii)    any other circumstance or happening
                                    whatsoever, whether or not similar to any of
                                    the foregoing; provided that each Lender's
                                    obligation to make Prime Based Rate Loans
                                    under this Section 2.1 is subject to the
                                    conditions to Advances set forth in this
                                    Agreement.

                  (o) In addition to amounts payable as provided in Section 9
hereof, the Borrower hereby agrees to protect, indemnify, pay and save harmless
the Agent and the Lenders from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent or the Lenders may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of (A) the gross negligence or willful misconduct of the
Agent as determined by a final judgment of a court of competent jurisdiction or
(B) subject to the following clause (ii), the wrongful dishonor by the Agent of
a proper demand for payment made under any Letter of Credit (except upon the
request of the Borrower), or (ii) the failure of the Agent to honor a drawing
under any such Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").

                  (p) (i) As between the Borrower and the Agent, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof); (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (C) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of the Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among the Borrower and any beneficiary of any Letter of Credit or any
such transferee; (D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any such Letter
of Credit or the proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Agent, including any
Governmental Acts, and none of the above shall affect or impair, or prevent the
vesting of, any of the Agent's rights or powers hereunder.

                           (ii)     In furtherance and extension and not in
limitation of the specific  provisions set forth above, any
action taken or omitted by the Agent under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put the Agent under any resulting
liability to the Borrower or any Lender.

                  (q) In reliance on the representations, warranties and
covenants contained in, and upon the terms and conditions of, this Agreement,
the Lenders agree to make a loan (the "Term Loan") to the Borrower, at a single
time on the Closing Date, in the aggregate amount of $7,500,000.00, with the
amount to be advanced by each Lender to fund the Term Loan hereunder being as
set forth opposite the Lender's name on that portion of Schedule "A" attached
hereto and made a part hereof entitled "Term Loan Facility" (the "Term Loan
Commitment"), which amount shall be remitted by the Lender to the Agent on the
Closing Date in immediately available funds by federal funds wire transfer. Any
amount repaid by the Borrower under the Term Loan may not be reborrowed.

                  (r) At the Closing, the Borrower shall execute and deliver its
promissory note to each Lender for the total principal amount of such Lender's
Term Loan Commitment (collectively, as the same may be amended, modified or
replaced from time to time, the "Term Notes"). Each Term Note shall evidence the
Borrower's absolute and unconditional obligation to repay such Lender for that
portion of the outstanding balance of the Term Loan owed to such Lender, with
interest as herein and therein provided. All Term Notes shall be substantially
in the form set forth in Exhibit "2.1(r)" attached hereto and made a part
hereof.

                  (s) The Term Loan shall mature on the Term Loan Maturity Date,
unless having been sooner accelerated by the Agent on behalf of the Lenders or
sooner prepaid by the Borrower in accordance with the terms and provisions of
this Agreement.


2.2      Advances, Conversions, Renewals and Payments:

                  (a) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Credit
Facility, the Term Loan, the Fees, the Expenses, and all other charges and any
other Obligations of the Borrower hereunder, shall be made to the Agent at its
main Philadelphia banking office, Citizens Bank, 3025 Chemical Road, Suite 300,
Plymouth Meeting, Pennsylvania in United States dollars, in immediately
available funds. The Agent, on behalf of all of the Lenders, shall have the
unconditional right and discretion to make an Advance under the Revolving Credit
Facility to pay, and/or to charge RCM's or any other Borrower's operating
account with the Agent or any Lender for, all of the Borrower's Obligations as
they become due from time to time under this Agreement including without
limitation, interest, principal, Fees and reimbursement of Expenses. Any such
Advance shall not, in any event, cause the Revolving Credit Loans, together with
the aggregate amount of all Letter of Credit Outstandings, to exceed the
Revolving Credit Limit.

                  (b) (i) Any Loans which may be made by Lenders from time to
time under this Agreement shall be made available for the use and benefit of the
Borrower by crediting such proceeds to RCM's operating account with the Agent.

                           (ii)     All Loans subject to the Prime Rate Option
requested by the Borrower  hereunder  must be requested
by 11:00 A.M., Philadelphia time, on the date such Loan is to be made, which
must be a Business Day. All Loans subject to the LIBOR Rate Option or
conversions from Loans subject to the Prime Rate Option to the LIBOR Rate
Option, requested by the Borrower must be requested by 11:00 A.M. Philadelphia
time, three Good Business Days prior to the date of such requested Loan or
conversion. If the Borrower does not have the required availability for such
requested Loan on the date any such LIBOR Based Rate Loan is to be made, then
the Lenders shall not be required to make such Loan. All remittances at any time
among the Lenders and the Agent under this Agreement shall be made in
immediately available funds by federal funds wire transfer. All requests for a
Loan may be made either by telephone or in writing, provided that all telephonic
requests are, upon the Agent's request, to be confirmed by the Borrower in
writing on the same day, and further provided that such written confirmation may
be sent by telecopy or facsimile transmission. No Lender shall be obligated, for
any reason whatsoever, to advance or reimburse Agent for the share of any other
Lender.

                           (iii)    A.      Between  each  Settlement  Date,
 the Agent,  in its  capacity as a Lender,  shall have the
discretion (without any duty or obligation regardless of any prior practice or
procedures) to make all Advances for the account and on behalf of the Lenders in
accordance with each Lender's Pro Rata Percentage. Periodically but not less
frequently than once every week on the same day of each week, unless such day is
not a Business Day, in which event such determination shall be made the next
Business Day ("Settlement Date"), the Agent shall make a determination of the
appropriate dollar amount of each Lender's Revolving Credit Loans based upon
each such Lender's Pro Rata Percentage of all then outstanding Revolving Credit
Loans, which amounts shall be calculated as of the close of the Business Day
immediately preceding each respective Settlement Date. A Settlement Date shall
occur notwithstanding any intervening Event of Default or other occurrence,
event or circumstance, including without limitation the commencement of a
bankruptcy or reorganization case. Amounts of principal paid to the Agent by the
Borrower with respect to the Loans from time to time, between Settlement Dates,
shall be applied to the outstanding balance of the Loans made by the Agent, as a
Lender pursuant hereto, with the outstanding balance of the Loans made by each
other Lender to be adjusted on the next Settlement Date. Interest shall accrue
and each Lender shall be entitled to receive interest at the applicable rate
only on the actual outstanding dollar amount of its respective outstanding Loans
without regard to a prospective settlement. On each Settlement Date, Agent shall
then issue to each Lender a settlement schedule containing information with
respect to the status of the Loans and the relevant net positions of the Lenders
and the outstanding balances of their respective Loans as of the close of the
Business Day preceding such Settlement Date. Each settlement schedule shall show
the net amount then owing by each Lender to the Agent or by the Agent to each
such Lender based upon the aggregate Advances made and collections received
since the most recent Settlement Date and settlement among the Lenders and the
Agent shall be made in accordance with the direction of the Agent no later than
11:00 A.M. Philadelphia time, on each Settlement Date. To the extent the Agent
is not reimbursed by any Lender on a Settlement Date in accordance with the
Agent's direction, the Borrower shall immediately repay the Agent on demand the
amount of any reimbursement not so made by any Lender.

                                    B.      Each Lender is absolutely  and
unconditionally  obligated  without  setoff or deduction of
any kind, to remit to the Agent on the Settlement Date any amount owing to the
Agent by such Lender on the settlement schedule for such date. The Agent shall
also be entitled to recover any and all actual losses and damages (including
without limitation, reasonable attorneys' fees) from any party failing to remit
payment on the Settlement Date in accordance with this Agreement. The Agent may
set off the obligations of such party under this paragraph against any
distributions or payments of the Obligations which such party would otherwise be
entitled to hereunder at any time.

                           (iv)     A.      In lieu of the  procedure set
forth in the preceding  subparagraph  (iii),  the Agent shall
provide the Lenders with notice that the Borrower has requested an Advance, on
the same Business Day as such request, and request each Lender to provide the
Agent with such Lender's Pro Rata Percentage of such requested Advance prior to
the Agent's making such Advance. Upon receipt of such notice from the Agent
prior to 12:00 p.m., Philadelphia time, each Lender shall remit to the Agent its
respective Pro Rata Percentage of such requested Advance, prior to 1:00 P.M.
Philadelphia time, on the Business Day the Agent is scheduled to make such
Advance in accordance with Section 2.2(b)(ii) hereof. Neither the Agent nor any
other Lender shall be obligated, for any reason whatsoever, to remit or advance
the share of any other Lender. The Agent shall not be required to make the full
amount of the requested Advance unless and until it receives funds representing
each other Lender's Pro Rata Percentage of such requested Advance, but the Agent
shall advance to the Borrower that portion of the requested Advance equal to the
Pro Rata Percentages of such requested Advance which it has received from the
Lenders.

                                    B.      If the Agent does not receive
each other  Lender's Pro Rata  Percentage  of such  requested
Advance, and the Agent elects, in its sole discretion, to make the requested
Advance on behalf of the Lenders or any of them, the Agent shall be entitled to
recover each Lender's Pro Rata Percentage of each Advance together with interest
at a per annum rate equal to the Federal Funds Rate during the period commencing
on the date such Advance is made and ending on (but excluding) the date on which
the Agent recovers such amount. Each Lender is absolutely and unconditionally
obligated, without deduction or setoff of any kind, to forward to the Agent its
Pro Rata Percentage of each Advance made pursuant to the terms of this
Agreement. To the extent the Agent is not reimbursed by such Lender, he Borrower
shall repay the Agent immediately on demand, such amount. The Agent shall also
be entitled to recover any and all actual losses and damages (including, without
limitation, reasonable attorneys' fees) from any Lender failing to so advance
upon demand of the Agent. The Agent may set off the obligations of a Lender
under this paragraph against any distributions or payments of the Obligations
which the Agent would otherwise make available to such Lender at any time.

                           (v)      To the extent and during the time
period in which any Lender  fails to provide or delays  providing
its respective payment to the Agent pursuant to clause (iii) or (iv) above (any
such Lender being referred to, during such period, as a "Defaulting Lender"),
such Lender's percentage of all payments of the Obligations (but not its Pro
Rata Percentage of future Advances required to be funded by such Lender) shall
decrease to reflect the actual percentage which its actual outstanding Loans
bears to the total outstanding Loans of all Lenders and said amount shall be
subordinate to the outstanding Loans of all Lenders.

         In addition, notwithstanding any definition or other provision in this
Agreement to the contrary, during any period in which a Lender is a Defaulting
Lender and such default continues for three (3) Good Business Days, all
calculations for voting purposes among the Lenders shall be made as if the
Defaulting Lender were not a Lender and not a party to this Agreement.

2.3      Interest.

                  (a) Prime Based Rate Option. The unpaid principal balance of
the Loans, unless subject to the LIBOR Rate Option, shall bear interest, subject
to the terms hereof, at a per annum rate equal to the Prime Based Rate. Changes
in the Prime Based Rate shall become effective on the same day as the Agent
announces a change in its Prime Rate and upon any change in the Applicable Prime
Rate Margin occurring hereunder.

                  (b)      LIBOR Rate Option.

                           (i)      So long as no Event of Default has
occurred and is  continuing,  the Borrower shall have the option
to have the unpaid principal balance of the Loans bear interest at the LIBOR
Based Rate ("LIBOR Rate Option"), provided that LIBOR Based Rate Loans shall be
in a minimum amount of Five Hundred Thousand Dollars ($500,000.00). In no event,
however, may the Borrower have more than ten (10) LIBOR Rate Loans outstanding
at any one time.

                           (ii)     LIBOR  Based Rate Loans  shall be
selected  for a period of either one month,  two  months,  three
months or six months duration, as the Borrower may elect, during which the LIBOR
Based Rate is applicable (the "LIBOR Interest Period"); provided, however, that
(a) if the LIBOR Interest Period would otherwise end on a day which shall not be
a Good Business Day, such LIBOR Interest Period shall be extended to the next
succeeding Good Business Day, unless such Good Business Day falls in another
calendar month, in which case such LIBOR Interest Period shall end on the next
preceding Good Business Day subject to clause (c) below; (b) interest shall
accrue from and including the first day of each LIBOR Interest Period to, but
excluding the day on which any LIBOR Interest Period expires; and (c) with
respect to any LIBOR Interest Period which begins on the last Good Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Interest Period), the LIBOR
Interest Period shall end on the last Good Business Day of a calendar month. No
LIBOR Interest Period for any Revolving Credit Loan may end after the Revolving
Credit Maturity Date. No LIBOR Interest Period for any Term Loan may end after
the Term Loan Maturity Date. Subject to all of the terms and conditions
contained herein applicable to a request that a new Advance be a LIBOR Based
Rate Loan, the Borrower may extend a LIBOR Based Rate Loan as of the last day of
the LIBOR Interest Period to a new LIBOR Based Rate Loan or, subject to clause
(i) above, may convert a portion of the Loans subject to the Prime Based Rate
Option to a LIBOR Based Rate Loan. If the Borrower fails to notify the Agent of
the LIBOR Interest Period for a subsequent LIBOR Based Rate Loan at least three
Good Business Days prior to the last day of the then current LIBOR Interest
Period of an outstanding LIBOR Based Rate Loan, then such outstanding LIBOR
Based Rate Loan shall become a loan subject to the Prime Based Rate Option at
the end of the current LIBOR Interest Period for such outstanding LIBOR Based
Rate Loan and shall accrue interest in accordance with Section 2.3(a) above.

                           (iii)    The LIBOR  Rate may be  automatically
adjusted  by the Agent on a  prospective  basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes after the date hereof
in applicable law or regulation or the interpretation thereof occurring
subsequent to the commencement of the then applicable LIBOR Interest Period,
including but not limited to changes after the date hereof in tax laws (except
changes of general applicability in corporate income tax laws as they affect
financial institutions) and changes in the reserve requirements imposed by the
Board of Governors of the Federal Reserve System (or any successor), excluding
any such changes that have resulted in a payment pursuant to Section 2.8 hereof,
that increase the cost to the Lenders of funding LIBOR Based Rate Loans. The
Agent shall promptly give the Borrower and each Lender notice of such a
determination and adjustment, which determination shall be conclusive as to the
correctness of the fact and the amount of such adjustment, absent manifest
error. The Borrower may, by written notice to the Agent, (A) request the Agent
to furnish to the Borrower a statement setting forth the basis for adjusting
such LIBOR Rate and the method for determining the amount of such adjustment;
and/or (B) prepay the LIBOR Based Rate Loan with respect to which such
adjustment is made, subject to the requirements of Section 2.5(c) and Section
2.8 below.

                           (iv)     In the event that the  Borrower
shall have  requested  the LIBOR Rate  Option in  accordance  with
Section 2.3(b) and Agent shall have reasonably determined that Eurodollar
deposits equal to the amount of the principal of the requested LIBOR Based Rate
Loan and for the LIBOR Interest Period specified are unavailable, impractical or
unlawful, or that the rate based on the LIBOR Rate will not adequately and
fairly reflect the cost of funds of the LIBOR Based Rate applicable to the
specified LIBOR Interest Period, of making or maintaining the principal amount
of the requested LIBOR Based Rate Loan specified by the Borrower during the
LIBOR Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets, adequate and reasonable means do not exist for ascertaining
the rate based on the LIBOR Rate applicable to the specified LIBOR Interest
Period, the Agent shall promptly give notice of such determination to the
Borrower that the rate based on the LIBOR Rate is not available. A determination
by the Agent hereunder shall be prima facie evidence of the correctness of the
fact and amount of such additional costs or unavailability. Upon such a
determination, (A) the right of the Borrower to select, convert to, or maintain
a LIBOR Based Rate Loan hereunder shall be suspended until the Agent shall have
notified the Borrower that such conditions shall have ceased to exist (which
notice the Agent shall give promptly after such cessation), and (B) the Loans
subject to the requested LIBOR Rate Option shall accrue interest in accordance
with Section 2.3(a) above.

                           (v)      In  the  event  that,  as a  result
of  any  changes  in  applicable  law  or  regulation  or  the
interpretation thereof after the date hereof, it becomes unlawful for a Lender
to make or to continue to fund or maintain LIBOR Based Rate Loans or to maintain
Eurodollar liabilities sufficient to fund any LIBOR Based Rate Loan, then such
Lender shall immediately notify the Agent who shall immediately notify the other
Lenders and the Borrower thereof and such Lender's obligations to make, convert
to, or maintain a LIBOR Based Rate Loan shall be suspended until such time as
such Lender may again cause the LIBOR Based Rate to be applicable to its share
of any LIBOR Based Rate Loans and such Lender's share of the Loans subject to
the LIBOR Based Rate shall accrue interest in accordance with Section 2.3(a)
above. Promptly after becoming aware that it is no longer unlawful for such
Lender to maintain such Eurodollar liabilities, such Lender shall notify the
Agent who will notify the Borrower and the other Lenders thereof and such
suspension shall cease to exist.

(c) Payment Dates. Interest on amounts outstanding under the Term Loan
(including without limitation any LIBOR Based Rate Loan) shall be due and
payable in arrears on the first day of each calendar month, commencing on the
first day of the first full calendar month following the Closing Date. Interest
on amounts outstanding under any Revolving Credit Loan (including without
limitation any LIBOR Based Rate Loan with an Interest Period of greater than two
(2) months) shall be due and payable in arrears on the first day of each
calendar quarter, commencing on the first day of the first full calendar quarter
following the Closing Date. In addition to the foregoing, (i) for any LIBOR
Based Rate Loan, all accrued and unpaid interest thereon shall be due and
payable in full on the last day of the applicable LIBOR Interest Period for such
Loan, and (ii) in the case of any Loan, all accrued and unpaid interest thereon
shall be due an d payable in full upon the payment in full or any prepayment
thereof or the conversion thereof into a Loan of another type (but only on the
principal so paid, prepaid or converted).

2.4      Additional Interest Provisions.

                  (a) Calculation of Interest. Interest on the Loans, regardless
of the rate option, shall be based on a three hundred sixty (360) day year and
charged for the actual number of days elapsed.

                  (b) Limitation on LIBOR Based Rate Loans. Upon the occurrence
and continuance of an Event of Default described in Section 8 below, the Agent
may in its sole discretion eliminate the availability of LIBOR Based Rate Loans.

                  (c) Default Rate. After the occurrence and during the
continuance of an Event of Default hereunder, the Agent may, and shall at the
direction of the Majority Lenders, increase the per annum effective rate of
interest on all Loans outstanding hereunder, regardless of the rate option, to a
rate equal to two percentage points (2%) in excess of the then current
applicable interest rate (the "Default Rate"). The Borrower acknowledges that
the Default Rate is imposed as a direct result of the increased cost attendant
to the administration of the Loans because of said Event of Default.

                  (d) Continuation of Interest Charges. All contractual rates of
interest chargeable on outstanding Loans, regardless of the rate option, shall
continue to accrue and be paid even after default, maturity, acceleration,
judgment, bankruptcy, insolvency proceedings of any kind or the happening of any
event or occurrence similar or dissimilar to the foregoing.

                  (e) Applicable Interest Limitations: In no contingency or
event whatsoever shall the aggregate of all amounts deemed interest hereunder
and charged or collected pursuant to the terms of this Agreement exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that such
court determines that the Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the Agent, on behalf of the Lenders,
shall in its sole reasonable discretion, apply and set off such excess interest
received by the Lenders against other Obligations due or to become due hereunder
and such rate shall automatically be reduced to the maximum rate permitted by
such law.

2.5      Fees.

                   (a) Extension Fee: At the Closing, the Borrower shall pay to
the Agent, for the ratable benefit of the Lenders, a non-refundable extension
fee (the "Extension Fee") in an amount equal to one-quarter of one percent
(0.25%) of the sum of (i) the aggregate Revolving Credit Facility Pro Rata
Shares, and (ii) the initial principal amount of the Term Loan.

                  (b) Unused Line Fee. So long as the Revolving Credit Facility
is outstanding and has not been terminated pursuant to the terms hereof, the
Borrower shall unconditionally pay to the Agent, for the benefit of the Lenders
in accordance with their Pro Rata Percentages, a non-refundable fee (the "Unused
Line Fee") based on the Borrower's financial condition, tested quarterly, as
follows:

 Total Funded
 Debt to EBITDA         Unused Line Fee
 > 2.25x                35.0 bp
 > 1.75x and < 2.25x    30.0 bp           >    1.25x     and    <
 1.75x                  25.0 bp          < 1.25x       20.0 bp

The Unused Line Fee shall be charged on the average daily unused portion of the
Revolving Credit Facility calculated by subtracting the sum of the average daily
outstanding balance of all Revolving Credit Loans and Letter of Credit
Outstandings from $40,000,000. The Unused Line Fee shall be computed and paid on
a quarterly basis, in arrears, on the first day of each April, July, October and
January beginning on July 1, 2002, and on the earlier of (i) the Revolving
Credit Maturity Date or the date on which the Revolving Credit Facility is
terminated by the Borrower pursuant to Section 2.1(d) hereof, and, in the event
the Borrower requests a Line Reduction as provided in Section 2.1(d) hereof, on
the effective date of such reduction.

                  (c) Termination Amount. LIBOR Based Rate Loans may not be
repaid other than on the last day of the applicable LIBOR Interest Period. If
the Borrower prepays (for any reason whatsoever, including without limitation
any prepayment required in connection with an acceleration of any Loan
hereunder) a portion or all of the outstanding debt under a LIBOR Based Rate
Loan prior to the last day of the applicable LIBOR Interest Period, the Borrower
shall indemnify the Agent on behalf of the Lenders against any loss or expense
which the Agent on behalf of the Lenders has sustained or incurred as a
consequence of such prepayment in an amount equal to the, Termination Amount
(hereinafter defined). As used herein, the term "Termination Amount" means the
amount which the Borrower shall pay to the Agent, on behalf of the Lenders, as a
premium in connection with a repayment of a LIBOR Based Rate Loan other than on
the last day of the applicable LIBOR Interest Period therefor, which amount
shall be the amount determined by the Agent on behalf of the Lenders to be the
difference between (a) the present value of the interest payments that would
have been paid in the future to the Agent on behalf of the Lenders by the
Borrower on such repaid portion of the LIBOR Based Rate Loan but for such
repayment, and (b) the present value of the interest payments that would be paid
in the future to the Agent on behalf of the Lenders at the United States
Treasury Rate if on or about the date of repayment the Agent, on behalf of the
Lenders, made a hypothetical investment of the repaid portion of the LIBOR Based
Rate Loan in United States Treasury securities maturing on or about the date
that the repaid portion of the LIBOR Based Rate Loan would have matured but for
such repayment and bearing interest accruing from the date of repayment, payable
on each date on which the Borrower, but for such repayment, would have paid
interest on the repaid portion of principal. "United States Treasury Rate" means
a rate of interest per annum equal to (rounded downward to the nearest 1/100 of
one percent) the annual yield the Agent on behalf of the Lenders could obtain by
purchasing on the date of repayment United States Treasury Securities with
semi-annual interest payments, maturing on or about the date on which the repaid
portion of the LIBOR Based Rate Loan would have matured.

                  (d) Letter of Credit Fees. The Borrower shall pay: (i) to the
Agent, for the ratable benefit of the Lenders, a fee (the "Letter of Credit
Fee") in an amount equal to the Letter of Credit Applicable Margin, which fee
shall be computed on the daily average Letter of Credit Outstandings and shall
be payable quarterly in arrears on the first Business Day of each January,
April, July and October following the issuance of each Letter of Credit and on
the last day of the Revolving Credit Term; and (ii) to the Agent for its own
account a fronting fee ("Fronting Fee") at the time of the issuance of each
Letter of Credit in an amount equal to one-eighth of one percent (0.125%) of the
face amount of such Letter of Credit. The Borrower shall also pay to the Agent
for the Agent's sole account the Agent's then in effect customary fees and
administrative expenses payable with respect to letters of credit as the Agent
may generally charge or incur from time to time in connection with the issuance,
maintenance, modification (if any), assignment or transfer (if any), negotiation
and administration of the Letters of Credit.

                  (e) Calculation of Fees. All fees provided for in this Section
2.5 shall be based on a three hundred sixty (360) day year and charged for the
actual number of days elapsed.

                  (f)      Defined Fee Terms. The Extension Fee, the
Unused Line Fees, the Termination  Amount,  the Frontage Fees, and
the Letter of Credit Fees are hereinafter sometimes referred to
individually as a "Fee" and, collectively, as the "Fees".

2.6      Prepayments.

                  (a) LIBOR Based Rate Loans. Apart from the provisions of
Section 2.5(c) above, if applicable, no portion of any LIBOR Based Rate Loan may
be prepaid at any time unless the Borrower first satisfies in full its
obligations under Section 2.8 below arising from such prepayment.

                  (b) Prime Based Rate Loans. Prime Based Rate Loans may be
prepaid at any time and from time to time in whole or in part without premium or
penalty, provided that any such prepayment under the Term Loan shall be in a
minimum amount of $500,000.00 and integral multiples thereof.
                  (c) Mandatory Prepayment of Term Loan. Pursuant to the terms
and provisions of this Agreement, as security for, among other things,
Borrower's performance of its obligations under the Loan Documents, Borrower has
heretofore pledged to, and granted a security interest in favor of, Agent, for
the benefit of the Lenders, in the Collateral. Included within the Collateral is
a certain federal income tax refund owed to RCM by the United States Government
in the approximate amount of $3,900,000.00 (the "Pledged Tax Refund").
Notwithstanding any other provision contained in this Agreement or the other
Loan Documents, Borrower shall also be required to make an additional payment(s)
of principal under the Term Loan in an amount equal to the amount of the
proceeds of the Pledged Tax Refund received by Borrower, which such payment(s)
shall be made on the date(s) on which Borrower actually receives any of said
proceeds. The principal payment(s) required to be made by Borrower under this
Section 2.6(c) shall be applied first to accrued but unpaid interest on the Term
Loan and then to the principal payments due under the Term Loan in the inverse
order of maturity. Prior to the occurrence of an Event of Default or Unmatured
Event of Default, Agent shall be permitted, at its sole option, to the extent
any principal payment is to be applied to the outstanding balance of a LIBOR
Based Rate Loan under this Section 2.6(c), to elect to hold such payment and not
apply it against the outstanding balance of said LIBOR Based Rate Loan, until
the earlier to occur of (a) an Unmatured Event of Default, (b) an Event of
Default, (c) the end of the applicable LIBOR Interest Period, or (d) the
thirtieth day following the Agent's receipt of such proceeds. If the application
of any payment made by Borrower pursuant to this Section 2.6(c) is delayed
pursuant to the immediately preceding sentence, interest shall continue to
accrue on the outstanding principal of the Term Loan until such payment is
actually applied by Agent to reduce the outstanding principal balance of the
Term Loan.

                  (d) Proceeds of Collateral. Except for sales or dispositions
in the ordinary course of The Borrower's business and with respect to equipment
which is replaced, the Borrower shall, upon the receipt of proceeds from the
sale or other disposition of any Collateral, hold such proceeds in trust for
Lenders and immediately remit in specie, all such proceeds to the Agent.

2.7 Use of Proceeds. The extensions of credit hereunder and the proceeds of the
Loans shall be used by the Borrower solely for (i) the financing of Acquisitions
(subject to the conditions set forth below), (ii) to refinance all existing
indebtedness owed by the Borrower pursuant to the Original Loan Agreement, and
(iii) for working capital and other general corporate purposes. The total cash
consideration paid or owed by the Borrower in connection with all Acquisitions
closed after December 31, 2001 and prior to the termination of this Agreement
shall not exceed $3,000,000.00, in the aggregate. (For purposes of this Section
2.7, cash consideration paid or owed for consulting services, agreements not to
compete or similar arrangements shall be considered paid or owed in connection
with an Acquisition).

2.8      Indemnity/Loss of Margin.

                  (a) The Borrower shall indemnify, defend and hold harmless the
Agent and the Lenders against any and all out of pocket loss, liability, cost or
expense which the Agent and any Lender or Lenders may sustain or incur as a
consequence of (i) any failure of the Borrower to obtain, convert or extend any
LIBOR Based Rate Loan after notice thereof has been given to the Agent; or (ii)
any payment, prepayment, termination or conversion of a LIBOR Based Rate Loan
made for any reason on a date other than the last day of the applicable LIBOR
Interest Period therefor. The Borrower shall pay the full amount thereof to the
Agent, for the ratable benefit of the Lenders, within fifteen (15) days of a
demand therefor by the Agent.

                  (b) In the event that any future law, rule, regulation, treaty
or official directive or the interpretation or application thereof by any
central bank, monetary authority or governmental authority, or the compliance
with any future guideline or request of any central bank, monetary authority or
governmental authority (whether or not having the force of law) imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit, or
other similar requirement with respect to deposits in or for the account of, or
loans or advances or commitment to make loans or advances by a Lender and the
result of any of the foregoing is to increase the costs of a Lender, reduce the
income receivable by or return on equity of a Lender or impose any expense upon
a Lender with respect to any advances or extensions of credit or commitments to
make advances or extensions of credit under this Agreement, such Lender shall so
notify the Agent in writing. Upon notice from the Agent, the Borrower agrees to
pay such Lender the amount of such increase in cost, reduction in income,
reduced return on equity or capital, or additional expense after presentation by
such Lender of a statement in reasonable detail concerning such increase in
cost, reduction in income, reduced return on equity or capital, or additional
expense. Such statement shall be limited to ninety (90) days and shall set forth
a brief explanation of the amount and such Lender's calculation of the amount
(in determining such amount such Lender may use any reasonable averaging and
attribution methods), which statement shall be conclusively deemed correct
absent error. The terms of this Agreement and the Loan Documents shall be
amended to eliminate any such expenses and/or loss to the Lenders.

2.9 Capital Adequacy: If any future law, governmental rule, regulation, policy,
guideline, directive or similar requirement (whether or not having the force of
law) imposes, modifies, or deems applicable any capital adequacy, capital
maintenance or similar requirement which affects the manner in which any Lender
allocates capital resources to its commitments (including any commitments
hereunder), and as a result thereof, in the opinion of such Lender, the rate of
return on such Lender's capital with regard to the Loans and/or its obligations
hereunder is reduced to a level below that which such Lender could have achieved
but for such circumstances taking into account such Lender's policies regarding
capital adequacy, then in such case and upon notice from the Agent to the
Borrower, from time to time, the Borrower shall pay such Lender such additional
amount or amounts as shall compensate such Lender for such reduction in its rate
of return. Such notice shall contain the statement of such Lender in reasonable
detail with regard to any such amount or amounts which shall, in the absence of
error, be binding upon the Borrower. In determining such amount, such Lender may
use any reasonable method of averaging and attribution that it deems applicable.
In the event that a Lender, other than Citizens, exercises its rights under this
Section 2.9, the Borrower shall have the option to replace such Lender with
another financial institution (acceptable to the Agent) who will purchase all
(but not part) of such Lender's interest in the Loans then outstanding
hereunder. Such Lender shall be required to assign and transfer to the financial
institution obtained by the Borrower, pursuant to an agreement reasonably
satisfactory to such Lender and the Agent, and without representation, warranty
or recourse, its respective interest in the Loans then outstanding hereunder in
exchange for full payment of the outstanding balances thereof, with accrued
interest and all unpaid Fees.


SECTION 3.         COLLATERAL

3.1      Description:  As security for the payment of the Obligations,
 and satisfaction by the Borrower of all covenants and
undertakings contained in this Agreement and the other Loan Documents:

                  (a) The Borrower has heretofore assigned and granted to the
Agent, on behalf of the Lenders, a continuing first lien on and security
interest in, upon and to all of its Property and business assets, including
without limitation the following described Property (the "Collateral"):

                           (i)      Accounts,  Contract  Rights,  Etc. -
 All now owned and  hereafter  acquired,  created,  or arising
Accounts, accounts receivable, notes receivable, contract rights, chattel paper,
documents (including documents of title), instruments and letters of credit;

                           (ii)     Inventory - All now owned or hereafter
 acquired,  created or arising Inventory of every nature and
kind, wherever located;

                           (iii)    Equipment - Except as set forth in
Section 7.3(d), all now owned or hereafter  acquired  equipment,
including without limitation machinery, furniture and fixtures, wherever
located, and all replacements, parts, accessories, substitutions and additions
thereto;

                           (iv)     General Intangibles - All now owned
and hereafter acquired,  created or arising general intangibles
of every kind and description, including, but not limited, to all existing and
future customer lists, telephone lists and directories, choses in action, loans,
claims, books, records, patents and patent applications, copyrights, trademarks,
tradenames, tradestyles, trademark applications, blueprints, drawings, designs
and plans, trade secrets, formulae, tax and any other types of refunds, rights
to or in employee or other pension, retirement or similar plans and any assets
thereof, or any portion thereof, including without limitation refunds for
overpayments, distributions upon termination, reversion of any surplus assets or
otherwise, returned and unearned insurance premiums, rights and claims under
insurance policies relating to the Collateral, computer information, software,
records, data and, except where the terms of same prohibit the grant of a
security interest, contracts, contract rights, distributorship agreements,
licenses and license agreements.

                           (v)      Deposit Accounts and Related Property -
All now existing and hereafter  acquired or arising deposit
accounts, investment accounts, commercial paper, investment property, including
investment securities, and certificates of deposit, of every nature, wherever
located, and all documents and records associated therewith;

                           (vi)     Property in Lender's  Possession  -
All  Property,  now or hereafter in the Agent's or any Lender's
possession;

                           (vii)    Other  Property - All other
 personal  Property  of such  entity not  described  above  whether now
existing or hereafter acquired;

(viii)   Intercompany Notes - All Intercompany Notes; and

                           (ix)     Proceeds - The  proceeds
(including,  without  limitation,  insurance  proceeds),  whether cash or
non-cash, of all of the foregoing.

(b) The Borrower hereby covenants, confirms and agrees that, as security for the
repayment of the Obligations, the Agent, for the benefit of the Lenders has, or
is hereby granted, and shall therefore have and continue to have, a continuing
first priority lien on and security interest in all of the Collateral, all
whether now existing or hereafter acquired, created or arising, and all proceeds
thereof, including without limitation, a first priority lien on certain Property
granted to the Lenders under a Collateral Pledge Agreement dated August 19,
1998, and a certain Trademark Security Agreement dated August 19, 1998, except
to the extent otherwise expressly provided in Section 3.1(c) and Section 6.19 of
this Agreement. The Borrower acknowledges and agrees that nothing contained
herein or in any other Loan Document in any way impairs the Agent's existing
security interests, rights or priority in the Collateral.

(c) Notwithstanding any other provision in the Loan Documents to the contrary,
RCM shall not be required to pledge as security for the Obligations more than
sixty-five percent (65%) of the issued and outstanding stock in any of its
Subsidiaries incorporated under the laws of Canada (or any province thereof).

3.2      Lien Documents:  At the Closing and thereafter as the Agent deems
necessary, the Borrower shall execute and deliver to the
Agent, or have executed and delivered (all in form and substance reasonably
satisfactory to the Agent):

                  (a) Financing Statements - Financing statements pursuant to
the UCC, which the Agent, on behalf of the Lenders, may file in any jurisdiction
where the Borrower is located, where any Collateral is or may be located and in
any other jurisdiction that the Agent deems appropriate; and

(b) Other Agreements - Any other agreements, documents, instruments and
writings, including, without limitation, patent and trademark security
agreements, reasonably required by the Agent to evidence, perfect or protect the
Lenders' Liens and security interests in the Collateral or as the Agent may
reasonably request from time to time.

3.3 Other Actions: In addition to the foregoing, the Borrower shall do anything
further that may be lawfully and reasonably required by the Agent to secure the
Lenders and effectuate the intentions and objects of this Agreement, including,
but not limited to, execution and delivery of continuation statements,
amendments to financing statements, security agreements, contracts and any other
documents required hereunder. At the Agent's request, the Borrower shall also
promptly deliver (with execution by the Borrower of all necessary documents or
forms to reflect the Agent's Lien thereon) to the Agent as bailee for Lenders,
all items for which the Lenders must receive possession to obtain a perfected
security interest, including without limitation, all notes, letters of credit,
documents of title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.

3.4 Searches: The Agent shall, prior to or at the Closing, and thereafter as the
Agent or the Majority Lenders acting through the Agent may reasonably determine
from time to time, at the Borrower's expense, obtain the following searches (the
results of which are to be consistent with the warranties made by the Borrower
in this Agreement):

                  (a)      UCC  Searches:  UCC searches  with the  Secretary of
State and local filing office of each state or Canadian
province where the Borrower is located, maintains its executive office,
a place of business, or any assets;

                  (b)      Judgments,  Etc.:  Judgment,
 federal tax lien and corporate tax lien  searches,  in all  applicable  filing
offices of each state or province searched under subparagraph (a) above.

                  The Borrower shall, prior to or at Closing and at its expense,
obtain and deliver to the Agent good standing certificates showing the Borrower
to be in good standing in its state or province of incorporation and in each
other state or foreign country in which it is doing and presently intends to do
business, except any such jurisdiction for which such failure to be so qualified
will not have a Material Adverse Effect or adversely effect the Agent's and/or
the Lenders' rights hereunder.

3.5 Landlord's Waivers: The Borrower will use commercially reasonable efforts to
cause each landlord or warehouseman at its Parsippany, New Jersey location and
such other present and future locations of Borrower identified by the Agent from
time to time, to execute and deliver to Agent an instrument, in form and
substance reasonably satisfactory to Agent, under which such landlord or
warehouseman waives its/his/their right to distrain on or foreclose against the
Collateral.

3.6      Filing Security Agreement:  A carbon, photographic or other
 reproduction or other copy of this Agreement or of a financing
statement is sufficient as and may be filed in lieu of a financing statement.

3.7 Power of Attorney: By its signature hereon, the Borrower hereby irrevocably
authorizes the Agent to execute (on behalf of the Borrower) and file against the
Borrower one or more financing, continuation or amendment statements pursuant to
the UCC in form satisfactory to the Agent in its sole discretion, and the
Borrower will pay the cost of preparing and filing the same in all jurisdictions
in which such filing is deemed by the Agent to be necessary or desirable in
order to perfect, preserve and protect its security interests. Each of the
officers of the Agent is hereby irrevocably made, constituted and appointed the
true and lawful attorney for the Borrower (without requiring any of them to act
as such) with full power of substitution to do the following: (a) endorse the
name of the Borrower upon any and all checks, drafts, money orders and other
instruments for the payment of monies that are payable to the Borrower and
constitute collections on the Borrower's Accounts or proceeds of other
Collateral; (b) execute in the name of the Borrower any financing statements,
schedules, assignments, instruments, documents and statements that the Borrower
is obligated to give the Agent hereunder or is necessary to perfect the Agent's
security interest or lien in the Collateral; (c) to verify validity, amount or
any other matter relating to the Collateral by mail, telephone, telecopy or
otherwise in accordance with the customary procedures of the Agent's asset based
lending department; and (d) following an Event of Default and during the
continuance thereof, do such other and further acts and deeds in the name of any
such entity that the Agent may reasonably deem necessary or desirable to enforce
any Account or realize upon any other Collateral. This power of attorney is
coupled with an interest, and is irrevocable until the Obligations are
indefeasibly paid in full.

3.8 Verifications: The Agent, on behalf of the Lenders, shall be entitled to
verify the validity, amount, or any other matter relating to the Collateral by
mail, telephone, telecopy or otherwise in accordance with the customary
procedures of the Agent.

SECTION 4.         CLOSING AND CONDITIONS PRECEDENT TO ADVANCES

         Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to the Agent
and Lenders and their respective counsel):

4.1      Resolutions, Opinions, and Other Documents:  Each of the Borrowers
 shall have delivered to the Agent the following:


                  (a)      this Agreement, the Term Notes and the Revolving
 Credit Notes all properly executed;

                  (b)      each document and  agreement  required
 to be executed  under any provision of this  Agreement or any related
agreement;

                  (c) certified copies of (i) resolutions of the board of
directors of the Borrower authorizing the execution of this Agreement, the Term
Notes and the Revolving Credit Notes to be issued hereunder and each document
required to be delivered by any Section hereof and (ii) the Borrower's Articles
or Certificate of Incorporation and By-laws (or other constituent document);

                  (d)      an incumbency certificate for the Borrower
 identifying all Authorized Officers, with specimen signatures;

                  (e) a written opinion of the Borrower's independent legal
counsel addressed to the Agent for the benefit of all of the Lenders and
opinions of such other counsel as the Agent deems necessary;

                  (f) a certification by the Borrower signed on its behalf by
the chief financial officer of the Borrower that there has not occurred any
material adverse change in the operations and condition (financial or otherwise)
of the Borrower since December 31, 2001;

                  (g)      payment by the Borrower of all Fees owing to the
Agent and/or the Lenders and all Expenses  associated  with
the Loans incurred on or prior to the Closing Date;

                  (h) agreements, in form and substance satisfactory to the
Agent in its sole discretion, subordinating all Intercompany Notes, including
but not limited to intercompany or acquisition related indebtedness and other
indebtedness which is not Permitted Indebtedness;

                  (i) Uniform Commercial Code, judgment, federal and state tax
lien searches against the Borrower, at the Borrower's expense, showing that the
Collateral is not subject to any Liens except for Permitted Liens, together with
Good Standing and Corporate Tax Lien Search Certificates showing no Liens on the
Borrower's Property (including without limitation the Collateral) and showing
the Borrower to be in good standing in each jurisdiction as required by Section
3.4 above;

                  (j)      certificates  evidencing each  Borrower's
  compliance in all material  respects with all Federal,  State and
local laws;

                  (k) all documents necessary to evidence and perfect the
Agent's, on behalf of the Lenders, security interests in all of the Borrower's
intellectual property including but not limited to trademark and copyright
assignments, registration with the U.S. Patent and Copyright offices and powers
of attorney;

(l) certified copies of or original hazard, liability, business interruption and
workman's compensation insurance policies, with coverage on terms and in amounts
acceptable to the Agent and confirming that the Agent has been named as
co-insured and loss payee, on behalf of the Lenders, on each such policy; and

(m)      a  Compliance  Certificate  evidencing  the  Borrower's  compliance
 with all of the  financial  covenants  set  forth in this
Agreement as of March 31, 2002;

4.2      Absence of Certain Events:  At the Closing Date, no Event of Default
 or Unmatured Event of Default hereunder shall have
occurred and be continuing.

4.3 Warranties and Representations at Closing: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. The Borrower shall
not have taken any action or permitted any condition to exist which would have
been prohibited by any Section hereof.

4.4 Compliance with this Agreement: The Borrower shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by the Borrower before or at the
Closing Date.

4.5 Officer's Certificate: The Agent shall have received a certificate dated the
Closing Date and signed on the Borrower's behalf by the chief financial officer
and President of each Borrower certifying that all of the conditions specified
in this Section have been fulfilled.

4.6 Closing: Subject to the conditions of this Section 4, the Revolving Credit
Facility shall be made available, and the proceeds of the Term Loan shall be
advanced by the Lenders to or on behalf of the Borrower, on the date ("Closing
Date") this Agreement is executed and all of the conditions contained in Section
4.1 hereof are completed or waived by the Agent (the "Closing").

4.7 Non-Waiver of Rights: By completing the Closing hereunder, or by making
Advances, extending the Term Loan and/or issuing a Letter of Credit hereunder,
the Agent and the Lenders do not thereby waive a breach of any warranty or
representation made by the Borrower hereunder or any agreement, document, or
instrument delivered to the Agent or any Lender, or otherwise referred to
herein, including without limitation, the Original Loan Agreement and all
documents executed or delivered in connection therewith, any claims and rights
of the Agent or any Lender resulting from any breach or misrepresentation by the
Borrower are specifically reserved by the Agent and the Lenders.


SECTION 5.         REPRESENTATIONS AND WARRANTIES

         To induce Lenders to complete the Closing, make the proceeds of the
Term Loan available to or on behalf of the Borrower and make the initial
Advances under the Revolving Credit Facility to the Borrower, each Borrower,
jointly and severally, warrants and represents to the Agent and the Lenders
that:

5.1      Corporate Organization and Validity.

                  (a) Each Borrower is a corporation duly organized and validly
existing under the laws of its state of incorporation, is duly qualified, is
validly existing and in good standing and has lawful power and authority to
engage in the business it conducts in each state where the nature and extent of
its business requires qualification, except where the failure to so qualify will
not have a Material Adverse Effect. An accurate list and/or description of its
name and all states and other jurisdictions where each Borrower is incorporated
or is qualified to do business is attached hereto as Exhibit "5.1" and made a
part hereof.

                  (b) The making and performance of this Agreement and the other
Loan Documents will not violate or result in a default (immediately or with the
passage of time) under any law, government rule or regulation, or the charter,
minutes or bylaw provisions of any Borrower, or any material contract, agreement
or instrument to which the Borrower is a party, or by which it is bound which
violation would have a Material Adverse Affect. The Borrower is not in violation
of and has not knowingly caused any Person to violate any term of any material
agreement or instrument to which it or such Person is a party or by which it may
be bound or of its charter, minutes or its bylaws which violation would have a
Material Adverse Affect.

                  (c) Each Borrower has all requisite corporate power and
authority to enter into and perform this Agreement and to incur the obligations
herein provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and the
documents and related agreements required hereby.

                  (d) This Agreement, the Term Notes and the Revolving Credit
Notes to be issued hereunder, and all related agreements and documents required
to be executed and delivered by the Borrower hereunder, when delivered, will be
valid and binding upon The Borrower, and enforceable in accordance with their
respective terms subject to bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and general equitable principles.

5.2 Places of Business: The only places of business of the Borrower, and the
places where it keeps and intends to keep its Property and records concerning
its Property, are at the addresses listed in Exhibit "5.2" attached hereto and
made a part hereof.

5.3 Pending Litigation: There are no judgments or judicial or administrative
orders, proceedings, litigation or investigations (civil or criminal) pending,
or to the knowledge of the Borrower threatened, against the Borrower in any
court or before any governmental authority or arbitration board or tribunal
which is reasonably likely to have a Material Adverse Effect, except as shown in
Exhibit "5.3" attached hereto and made a part hereof. The Borrower is not in
default with respect to any order of any court, governmental authority,
regulatory agency or arbitration board or tribunal. Neither the Borrower nor any
executive officer of the Borrower has been indicted or convicted in connection
with or is engaging in any criminal conduct, or is currently subject to any
lawsuit or proceeding or, to the Borrower's knowledge, under investigation in
connection with any anti-racketeering or criminal conduct or activity.

5.4 Title to Properties: The Borrower has good and marketable title to all the
Property constituting Collateral, free from Liens, except those of the Agent
and/or the Lenders, except for Permitted Liens as set forth in Section 7.3 and
those Liens set forth on Exhibit "5.4", attached hereto and made a part hereof.

5.5 Governmental Consent: Except as set forth on Exhibit "5.5", neither the
nature of the Borrower or of its business or Property, nor any relationship
between the Borrower and any other Person, nor any circumstance affecting the
Borrower in connection with the issuance or delivery of this Agreement or the
other Loan Documents, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any governmental authority on
the part of the Borrower in connection with the execution and delivery of this
Agreement or the issuance or delivery of the other Loan Documents.

5.6 Taxes: All tax returns required to be filed by the Borrower in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon the Borrower, or upon any of its respective Property,
income or franchises, which are shown to be due and payable on such returns have
been paid, except for those taxes being contested in good faith with due
diligence by appropriate proceedings for which appropriate reserves have been
maintained under GAAP. The Borrower is not aware of any proposed additional tax
assessment or tax to be assessed against or applicable to the Borrower that
would be reasonably likely to have a Material Adverse Effect.

5.7 Financial Statements: RCM's consolidated and consolidating annual audited
balance sheets as of December 31, 2001, and the related income statement and
statement of cash flow as of such date, accompanied, by the unqualified report
thereon, by the Borrower's independent certified public accountants, (complete
copies of which have been delivered to the Agent), have been prepared in
accordance with GAAP and present fairly, the financial position of the Borrower
as of such date and the results of its operations for such period. The
Borrower's fiscal year ends on December 31 of each calendar year. The Borrowers'
federal tax identification numbers are set forth on Exhibit "5.7" hereto.

5.8 Full Disclosure: Neither the financial statements referred to in Section
5.7, nor this Agreement nor any other Loan Document or any financial
projections, written reports or certificates regarding Accounts or Inventory, or
other financial statements or reports furnished by the Borrower to the Agent or
any Lender in connection with the negotiation of this Agreement or contained in
any financial statements or documents relating to the Borrower, as of the time
they were furnished, contained any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading.

5.9      Subsidiaries:  The Borrower has no Subsidiaries or Affiliates, except
as listed on Exhibit "5.9" attached hereto and made a
part hereof.

5.10     Guarantees, Contracts, etc:

                  (a) The Borrower does not own or hold equity or long term debt
investments in, have any outstanding advances to, or serve as guarantor, surety
or accommodation maker for the obligations of, or have any outstanding
borrowings from, any Person, or has entered into any leases for real or personal
property (whether as landlord or tenant), except as described in Exhibit "5.10",
attached hereto and a made part hereof.

                  (b) The Borrower is not a party to any contract or agreement,
or subject to any charter or other corporate restriction, which is reasonably
likely to have a Material Adverse Effect.

                  (c) Except as otherwise specifically provided in this
Agreement, the Borrower has not agreed or consented to cause or permit any of
its Property whether now owned or hereafter acquired to be subject in the future
(upon the happening of a contingency or otherwise) to a Lien not permitted by
this Agreement.

5.11     Government Regulations, etc:

                  (a) The use of the proceeds of and the Borrower's issuance of
the Revolving Credit Notes and the Term Notes will not directly or indirectly
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, Regulations U, T, G and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Borrower neither owns nor
intends to carry or purchase any "margin stock" within the meaning of said
Regulation U.

                  (b) The Borrower has obtained all licenses, permits,
franchises or other governmental authorizations necessary for the ownership of
its Property and for the conduct of its business, except those which, if not
obtained, would have or could have a Material Adverse Effect.

                  (c) As of the date hereof, no employee benefit plan ("Pension
Plan"), as defined in Section 3(2) of ERISA, maintained by the Borrower or under
which the Borrower could have any liability under ERISA (i) has failed to meet
the minimum funding standards established in Section 302 of ERISA, except for
any such failure corrected in full prior to the date hereof, and described on
Exhibit "5.11", attached hereto and made a part hereof; (ii) has failed to
comply in all material respects with all applicable requirements of ERISA and of
the Internal Revenue Code, including all applicable rulings and regulations
thereunder, (iii) has engaged in or been involved in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code which
would subject the Borrower to any material liability, or (iv) has been
terminated if such termination would subject the Borrower to any material
unfunded liability. The Borrower has not assumed, or received notice of a claim
asserted against the Borrower for, withdrawal liability (as defined in Section
4207 of ERISA) with respect to any multi- employer pension plan and is not a
member of any Controlled Group (as defined in ERISA). The Borrower has timely
made all contributions when due with respect to any multi-employer pension plan
in which it participates and no event has occurred triggering a claim against
the Borrower for withdrawal liability with respect to any multi-employer pension
plan in which the Borrower participates. All Pension Plans and multi-employer
pension plans to which the Borrower participates are listed on Exhibit "5.11"
attached hereto and made a part hereof.

                  (d) The Borrower is not in violation of, or has knowingly
caused any Person to violate, any applicable statute, regulation or ordinance of
the United States of America, or of any state, city, town, municipality, county
or of any other jurisdiction, or of any agency, or department thereof (including
without limitation, environmental laws and regulations), which violation is
reasonably likely to have a Material Adverse Effect. The Borrower has not
received written notice that it is in violation of any applicable statute,
regulation or ordinance of the United States of America, or of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency or
department thereof (including without limitation, environmental laws and
regulations), which violation is reasonably likely to have a Material Adverse
Effect.

5.12 Business Interruptions: Except as set forth in Exhibit "5.12" hereof,
within five (5) years prior to the date hereof, none of the business, Property
or operations of the Borrower have been materially and adversely affected in any
way by any casualty, strike, lockout, combination of workers, order of the
United States of America, or any state or local government, or any political
subdivision or agency thereof, directed against the Borrower. There are no
pending or threatened labor disputes, strikes, lockouts or similar occurrences
or grievances affecting the business being operated by the Borrower.

5.13

<PAGE>


         Names:

                  (a) Within the five (5) year period prior to the Closing Date,
the Borrower has not conducted business under or used any other name (whether
corporate or assumed) except for the names shown on Exhibit "5.13(a)", attached
hereto and made a part hereof. The Borrower is the sole owner of all names
listed on such Exhibit "5.13(a)" and any and all business done and all invoices
issued in such trade names are the Borrower's sales, business and invoices. Each
trade name of the Borrower represents a division or trading style of the
Borrower and not a separate corporate subsidiary or affiliate or independent
entity.

                  (b) All registered trademarks, patents or copyrights, or such
as to which applications for registration have been submitted, which the
Borrower uses, plans to use or has a right to use are listed on Exhibit
"5.13(b)" attached hereto and made a part hereof. The Borrower is the sole owner
of such Property except to the extent any other Person has claims or rights in
such Property, as such claims and rights are described on such Exhibit
"5.13(b)". To the best of the Borrower's knowledge, the Borrower is not in
violation of any rights of any other Person with respect to such Property.

5.14 Other Associations: The Borrower is not engaged or does not have an
interest in any joint venture or partnership with any other Person except as
described on Exhibit "5.14" attached hereto and made a part hereof.

5.15     Environmental Matters:  The Borrower has no knowledge:

                  (a) of the presence of any Hazardous Substances that require
remediation under any applicable environmental statute, rule or regulation of
any governmental entity presently in effect on any of the real property on which
the Collateral is located including, without limitation, the properties listed
on Exhibit "5.15(a)", or

                  (b) of any on-site spills, releases, discharges, disposal or
storage of Hazardous Substances that have occurred or are presently occurring on
any of such real property in violation of any applicable environmental statute,
rule or regulation of any governmental entity presently in effect, or

                  (c) of any spills, releases, discharges or disposal of
Hazardous Substances that have occurred or are presently occurring at other real
properties as a result of the activities or omissions of the Borrower or for
which the Borrower is reasonably likely to be held responsible in violation of
any applicable environmental statute, rule or regulation of any governmental
entity presently in effect, or

                  (d) of any notice, summons, citation or other communication
sent to the Borrower from any state or federal agency concerning any intentional
or unintentional action or conduct, inaction or omission, past or present which
is or may be in violation of any state or federal environmental law, rule or
regulation.

As used herein, the term "Hazardous Substances" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, by any environmental statute, rule or
regulation of any governmental entity presently in effect and applicable to such
real property.

5.16 Regulation O: No director, executive officer or principal shareholder of
the Borrower is a director, executive officer or principal shareholder of any
Lender. For the purposes hereof the terms "director" (when used with reference
to a Lender), "executive officer" and "principal shareholder" have the
respective meanings assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.

5.17 Capital Stock: The authorized and outstanding Capital Stock of the Borrower
is as set forth on Exhibit "5.17" attached hereto and made a part hereof. All of
the outstanding Capital Stock of the Borrower has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
rights and obligations set forth in Exhibit "5.17", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which the
Borrower or any of its shareholders is bound relating to the issuance, transfer,
voting or redemption of shares of its capital stock or any preemptive rights
held by any Person with respect to the shares of the Borrower's Capital Stock.
Except as set forth in Exhibit "5.17", the Borrower has not issued any
securities convertible into or exchangeable for shares of its Capital Stock or
any options, warrants or other rights to acquire such shares or securities
convertible into or exchangeable for such shares.

5.18 Solvency: The Borrower is solvent, able to pay its debts as they become
due, and has capital sufficient to carry on its business and all businesses in
which it is about to engage, and now owns Property having a value both at fair
valuation and at present fair salable value greater than the amount required to
pay its debts. The Borrower will not be rendered insolvent by the execution and
delivery of this Agreement or any of the other documents executed in connection
with this Agreement or by the transactions contemplated hereunder or thereunder,
other than the potential insolvency of a Subsidiary of RCM (as a Borrower)
arising as a result of such Subsidiary being fully liable solely for the
Obligations due to the joint and several nature of the Obligations.

5.19 Patents, Trademarks, Etc: Except as set forth on Exhibit 5.19 attached
hereto and made a part hereof, (a) the Borrower does not require any patents,
trademarks or other intellectual property, or any license(s) to use any patents,
trademarks or other intellectual property in order to conduct business; and (b)
the Agent will not require any patents, trademarks or other intellectual
property or any licenses to use the same in order conduct business after the
occurrence of an Event of Default.

5.20     Investment Company:  The Borrower is not an "investment company"
registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is the Borrower controlled by
 such a company.

5.21

<PAGE>


         Location of Customer Lists: The Borrower has a complete and accurate
list of all of RCM's and its Subsidiaries' customers names and addresses kept at
277 Fairfield Road, Suite 210, Fairfield, New Jersey, 07004.

5.22     Offering, Syndication, Etc.:  Since January 1, 2002, there has been no
 additional offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Borrower or any
 Affiliate.

5.23. Government Contracts. Each of the contracts or other agreements currently
between any Borrower and the (i) Comptroller of the Currency, (ii) Jet
Propulsion Laboratory, and (iii) the New York City Board of Education, does not
contain any provision which would prohibit such Borrower from taking such steps
as is determined necessary by the Agent to perfect the Agent's and the Lenders'
security interest in the Accounts arising from any such contract or agreement,
including but not limited to any notices or filings required under the
Assignment of Claims Act of 1940, as amended, or any other applicable law.

5.24.    Canadian Operations.  The only Borrower which owns any Accounts
arising out of operations in Canada is RCM Technologies
Canada Corp. and all payments on such  Accounts  are made solely to the
 office of that Borrower located in Mississauga, Ontario.

SECTION 6.         AFFIRMATIVE COVENANTS

         The Borrower covenants that until all of the Obligations to the Lenders
are indefeasibly paid and satisfied in full and the Revolving Credit has been
terminated:

6.1      Payment of Taxes and Claims:  The Borrower shall pay, before they
become delinquent,

                  (a)      all taxes, assessments and governmental charges
or levies imposed upon it or its Property, and

                  (b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other Persons entitled to the benefit of statutory
or common law Liens, which, if unpaid, would result in the imposition of a Lien
upon its Property; provided, however, that the Borrower shall not be required to
pay any such tax, assessment, charge, levy, claim or demand if the amount,
applicability or validity thereof shall at the time be contested in good faith
and by appropriate proceedings by the Borrower, and if the Borrower shall have
set aside on its books adequate reserves in respect thereof, in accordance with
GAAP; which deferment of payment is permissible so long as no Lien other than a
Permitted Lien has been entered and the Borrower's title to, and its right to
use, its Property are not materially adversely affected thereby.

6.2      Maintenance of Properties and Corporate Existence:

                  (a) Property - The Borrower shall maintain its Property in
good condition and make all renewals, replacements, additions, betterments and
improvements thereto in the ordinary course of business, as the Borrower deems
reasonably necessary in good faith in the exercise of its business judgment, and
will pay and discharge when due the cost of repairs and maintenance to its
Property.

                  (b) Property Insurance - The Borrower shall maintain insurance
on all insurable tangible Property against fire, flood, casualty and such other
hazards (including, without limitation, extended coverage, workmen's
compensation, boiler and machinery) in such amounts, with such deductibles and
with such insurers as are customarily used by companies operating in the same
industry as the Borrower and reasonably acceptable to the Agent. At or prior to
Closing, the Borrower shall furnish the Agent with a schedule of all such
insurance prepared by its insurance broker, and certificates of insurance with
respect thereto (including the text of the Lender's Loss Payable Clause in favor
of the Agent required below), or such other evidence of insurance as the Agent
may require. The Borrower shall furnish the Agent with a copy of each such
policy at the Closing. In the event the Borrower fails to procure or cause to be
procured any such insurance or to timely pay or cause to be paid the premium(s)
on any such insurance, the Agent (on behalf of the Lenders) may do so for the
Borrower, but the Borrower shall continue to be liable for the same. The
policies of all casualty insurance shall contain standard Lender's Loss Payable
Clauses issued in favor of the Agent (on behalf of the Lenders) indicating that
the Agent is sole Lender Loss Payee, under which all losses thereunder shall be
paid to the Agent (on behalf of the Lenders) as the Agent's interest may appear
provided that the Agent will release insurance proceeds to the Borrower for
repair or replacement provided that the Borrower demonstrates to the
satisfaction of the Agent that (i) the business interruption resulting from the
casualty will not have a Material Adverse Effect; (ii) the Borrower has the
financial resources to effectuate repairs and/or restoration; and (iii) the
repairs and/or restoration can be completed within sixty (60) days. Such
policies shall expressly provide that the requisite insurance cannot be altered
or canceled without thirty (30) days prior written notice to the Agent and shall
insure Lenders notwithstanding the act or neglect of the Borrower. The Borrower
hereby appoints the Agent as its attorney-in-fact, exercisable at the Agent's
option (without any obligation to do so), to endorse any check which may be
payable to the Borrower, and to file proofs of loss with respect to any
insurance claims, in order to collect the proceeds of such insurance and any
amount or amounts collected by the Agent pursuant to the provisions of this
paragraph may be applied by the Agent to the Obligations. The Borrower further
covenants that all insurance premiums due and owing under their current casualty
policies have been paid. The Borrower also agrees to notify the Agent, promptly,
upon any receipt of a notice of termination, cancellation, or non-renewal from
its insurance company of any such policy.

                  (c) Public and Products Liability Insurance - The Borrower
shall maintain, and shall deliver to the Agent upon the Agent's request evidence
of, public liability and business interruption insurance in such amounts as are
reasonably acceptable to the Agent, but in any event not more than are customary
for companies in the same or similar businesses located in the same or similar
area.

                  (d) Financial Records - Consistent with the existing practice
of the Borrower, it shall keep current and accurate books of records and
accounts in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Borrower shall not
change its fiscal year end date without providing the Agent with thirty (30)
days prior written notice thereof, provided that the Borrower may make such
change only once prior to the Revolving Credit Maturity Date.

                  (e) Corporate Existence and Rights - The Borrower shall do (or
cause to be done) all things necessary to preserve and keep in full force and
effect its existence, good standing in all jurisdictions where its failure to be
in good standing would likely result in a Material Adverse Effect, and all of
its rights, licenses and franchises, the absence of which might result in a
Material Adverse Effect.

                  (f) Compliance with Laws - The Borrower shall (i) be in
material compliance with any and all laws, ordinances, governmental rules and
regulations, and court or administrative orders or decrees to which it is
subject, whether federal, state or local, (including, without limitation,
environmental or environmental-related laws, statutes, ordinances, rules,
regulations and notices); (ii) shall obtain and maintain any and all licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its Property or to the conduct of its business, which violation or
failure to obtain or maintain causes or might cause a Material Adverse Effect.
The Borrower shall timely satisfy all assessments, fines, costs and penalties
imposed by any governmental body against the Borrower or any Property of the
Borrower subject to the provisions of Section 6.1 above.

6.3      Business Conducted:

                  (a) The Borrower shall continue in the business presently
operated by it using commercially reasonable efforts to maintain its customers
and goodwill. The Borrower shall not engage, directly or indirectly, in any
material respect in any line of business substantially different from the
business conducted by the Borrower immediately prior to the Closing Date, unless
such line of business is reasonably related to such business so conducted prior
to the Closing Date.

                  (b) The Borrower shall comply with all agreements to which it
is a party and by which it is bound and comply with all laws and regulations
applicable to it, to the extent that such non-compliance is reasonably likely to
have a Material Adverse Effect.

6.4 Litigation: The Borrower, upon having knowledge thereof, shall give prompt
notice to the Agent of (a) the commencement against the Borrower of any
litigation claiming from the Borrower more than $200,000.00 in excess of any
available insurance coverage the Borrower may have for such claim, and (b) any
other claims made against the Borrower, or investigations or proceedings
commenced against the Borrower the existence of which or adverse disposition of
which might have a Material Adverse Effect.

6.5      Taxes:

                  (a) Notwithstanding any other provision of this Agreement
(other than 6.5(f) and (g)), any and all payments by the Borrower hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts or withholding taxes, and all liabilities with
respect thereto, excluding taxes imposed on the Agent's or any Lender's net
income or gross receipts and capital stock or franchise taxes or similar taxes
imposed on the Agent or any Lender (all such non-excluded taxes, levies,
imports, withholding taxes and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender or the Agent (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 6.5) such Lender or the Agent shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, and (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other governmental authority
in accordance with applicable law.

                  (b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other general intangible, excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").

                  (c) The Borrower will indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 6.5) paid by
such Lender or the Agent in respect of any and all payments made by the Borrower
hereunder, as the case may be, and any liability (including penalties, interest
and expenses other than those resulting from the failure of a Lender or the
Agent to pay any Taxes or Other Taxes for which it shall have received an
indemnity payment hereunder) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made promptly after the date any Lender or the Agent,
as the case may be, makes written demand therefor showing in reasonable detail
the basis for such demands. If a Lender or the Agent shall become aware that it
is entitled to receive a refund of taxes or other taxes (including penalties and
interest) paid or indemnified by the Borrower under this Section, it shall
notify the Borrower and shall, promptly after receipt of a request by the
Borrower, apply for and pursue such a refund at the Borrower's expense. If any
Lender or the Agent receives a refund in respect of any Taxes or Other Taxes for
which such Lender or the Agent has received payment from the Borrower hereunder
it shall promptly upon receipt repay such refund to the Borrower without
interest, except to the extent interest shall have accompanied such refund,
provided that the Borrower, upon the request of such Lender or the Agent, agrees
to return such refund (plus penalties, interest or other charges) to such Lender
or the Agent in the event such Lender or the Agent is required to repay such
refund.

                  (d) Within 45 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrower in respect of any payment to any Lender or
the Agent, the Borrower will furnish to the Agent, the original or a certified
copy of a receipt evidencing payment thereof.

                  (e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 6.5
shall survive the payment in full of all Obligations hereunder.

                  (f) On or prior to the date it becomes a party to this
Agreement, each Lender that is organized outside of the United States shall
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
Internal Revenue Service Form 4224, 1001 or W-8 and any other certificate or
statement or exemption required by Treasury Regulation Section 1.1441-4(a) or
Section 1.1441-6(c) or any subsequent version thereof, properly completed and
duly executed by such Lender establishing that such payment is (i) not subject
to withholding under the Code because such payment is effectively connected with
the conduct by such Lender of a trade or business in the United States or (ii)
totally exempt from United States Federal withholding tax under a provision of
an applicable tax treaty. In addition, each such Lender shall, if legally able
to do so, thereafter deliver such certificates, documents or other evidence from
time to time, including, without limitation, Internal Revenue Service Form W-8,
establishing that payments received hereunder are not subject to such
withholding upon receipt of a written request therefor from the Borrower or
Agent. Unless the Borrower and the Agent have timely received forms or other
documents satisfactory to them indicating that payments hereunder or under the
Revolving Credit Notes or the Term Notes are not subject to United States
Federal withholding tax under an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate.

                  (g) The Borrower shall not be required to pay any additional
amounts to any Lender in respect of United States Federal withholding tax
pursuant to this Section 6.5 if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender to deliver the
certificate, documents or other evidence specified in this Section 6.5 unless
such failure is attributable to (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment or modification to or a
revocation of any applicable tax treaty or a change in official position
regarding the application or interpretation thereof, in each case on or after
the date such Lender becomes a party to this Agreement, provided, however, that
such Lender shall promptly notify the Borrower of any such matter described in
clause (i) or (ii) above upon its learning of the same and shall thereafter take
all reasonable actions resulting from such matter including delivering
certificates, documents or other evidence as may be necessary to eliminate or
reduce the amount of tax required to be withheld.

                  (h) Any Lender claiming any additional amounts payable
pursuant to this Section 6.5 shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested by
the Borrower or to change the jurisdiction of its applicable lending office if
the making of such filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would not
result in the incurrence by such Lender of any cost for which the Borrower does
not provide such security or indemnity as may be reasonably required by the
Lender to indemnify it in full for such cost and would not in the judgment of
such Lender be otherwise disadvantageous to it. Each Lender agrees with
reasonable promptness to notify the Borrower of any determination which it shall
make to make any claim for additional amounts payable pursuant to this Section
6.5.

6.6      Bank Accounts:  The Borrower shall maintain its principal depository
 and disbursement account(s) with one or more of the
Lenders.

6.7 Employee Benefit Plans: The Borrower will (a) fund all its Pension Plan(s)
in a manner that will satisfy the minimum funding standards of Section 302 of
ERISA, or will promptly satisfy any accumulated funding deficiency that arises
under Section 302 of ERISA, (b) furnish Agent, promptly upon Agent's request of
the same, with copies of all reports or other statements filed with the United
States Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC") or
the Internal Revenue Service ("IRS") with respect to all Pension Plan(s), or
which the Borrower, or any member of a Controlled Group, may receive from the
United States Department of Labor, the IRS or the PBGC, with respect to all such
Pension Plan(s), and (c) promptly advise the Agent of the occurrence of any
reportable event (as defined in Section 4043 of ERISA, other than a reportable
event for which the thirty (30) day notice requirement has been waived by the
PBGC) or prohibited transaction (under Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) with respect to any such Pension Plan(s) and the
action which the Borrower proposes to take with respect thereto. The Borrower
will make all contributions when due with respect to any multi-employer pension
plan in which it participates and will promptly advise the Agent (i) upon its
receipt of notice of the assertion against it of a claim for withdrawal
liability, (ii) upon the occurrence of any event which, to the best of the
Borrower's knowledge, would trigger the assertion of a claim for withdrawal
liability against the Borrower, and (iii) upon the occurrence of any event
which, to the best of the Borrower's knowledge upon its learning of the same,
has placed the Borrower in a Controlled Group as a result of which any member
(including the Borrower) thereof may be subject to a claim for withdrawal
liability, whether liquidated or contingent.

6.8 Warranties for Future Advances: Each request by the Borrower for an Advance
or the issuance of a Letter of Credit under the Revolving Credit Facility in any
form following the Closing Date shall constitute an automatic representation and
warranty, the truth and accuracy of such representation and warranty of which
shall be a further condition to the funding of each Advance, by the Borrower to
the effect that (without waiving, impairing or limiting the rights of the Agent
and the Lenders under Section 8 below):

(a) There has not occurred any event or occurrence since the date of delivery of
the Borrower's most recent financial statements which has resulted in, or has
had, a Material Adverse Effect.

                  (b)      No Event of Default or Unmatured Event of Default;
then exists;

                  (c) Each Advance is within and complies with the terms and
conditions of this Agreement including without limitation the notice provisions
contained in Section 2.2 hereof; and

                  (d) Each representation and warranty set forth in Section 5 of
this Agreement is then true and correct in all material respects; provided that
the Borrower may update all Exhibits and prepare additional Exhibits so that all
such Exhibits and the representations and warranties, taken together, accurately
reflect the state of the Borrower's affairs as of the date of a request for an
Advance or the issuance of a Letter of Credit by giving written notice thereof
to the Agent, and further provided that such updated and additional Exhibits do
not reflect events or conditions which constitute violations of Section 6 or 7
hereof or otherwise reflect material adverse developments.

6.9 Financial Covenants: RCM shall maintain and comply with the following
financial covenants (calculated on the basis of GAAP), to be tested quarterly on
a consolidated basis (The covenants set forth in Sections 6.9(a) and 6.9(c)
below will be based on a rolling two quarters times two basis, and trailing
unadjusted EBITDA of all Acquisitions will be included):

                  (a)      Fixed Charge Ratio shall be maintained at a minimum
of 1.50x (contingent  payments to acquirees are excluded
from this calculation);

(b) The Borrower shall not permit, in the aggregate, Capital Expenditures and/or
purchase money financing (excluding Acquisitions) to exceed, in the aggregate,
$3,000,000.00 in any rolling four quarter period.

                  (c)      Interest Coverage shall be maintained at a minimum
of 3.75x; and

                  (d)      RCM shall  maintain,  on a consolidated  basis,
 a Tangible Net Worth no less than the Minimum  Tangible Net
Worth.

                  (e)      The Borrower shall have an Adjusted Net Income in
any fiscal quarter of the Borrower of not less than $1.00.

6.10     Financial and Business Information:  The Borrower shall deliver to
Agent the following:

                  (a)      Financial Statements and Collateral Reports:
 Such data, reports,  statements and information,  financial or
otherwise, as Agent may reasonably request, including, without limitation:

                           (i)       within  ninety  (90) days after the end
of each fiscal year of RCM,  financial  statements  of the
Borrower for such year on a consolidated (and unaudited consolidating) basis,
eliminating inter-company transactions, including the balance sheet as at the
end of such fiscal year and a statement of cash flows and income statement for
such fiscal year, setting forth in the consolidated statements in comparative
form, the corresponding figures as at the end of and for the previous fiscal
year, all in reasonable detail, including all supporting schedules, and audited
and certified on an unqualified basis by Grant Thornton, or another national
independent public accountants of recognized standing selected by the Borrower
and reasonably satisfactory to the Agent, to have been prepared in accordance
with GAAP, along with the Borrower's Form 10-K Report filed with the SEC and a
management letter;

                           (ii)     within  fifteen (15) days of the end of
each calendar  month,  such  information as the Agent deems
reasonably necessary;

                           (iii)    a Compliance  Certificate to accompany all
quarterly and year-end financial statements delivered by
the Borrower hereunder;

                           (iv)     no later than sixty (60) days after the end
 of each fiscal year,  annual  projections  and a budget
for the upcoming/current fiscal year of profit and loss, cash flows and balance
sheets prepared on a quarterly basis in a manner consistent with the prior
year's financial statements, all in form reasonably satisfactory to the Agent;

                           (v)      no later  than  forty-five  (45) days
 after the end of each of the first  three  quarters  of each
fiscal year of the Borrower, financial statements in the form filed with the
Borrower's report on Form 10-Q filed with the SEC for such quarter and a copy of
the Borrower's Form 10-Q filed with the SEC;

                           (vi)     copies of all other  periodic or  episodic
  SEC filings by the  Borrower to be  delivered  promptly
after such filing, including without limitation all Forms 10-K and 8-K,
registration statements and prospectuses;

(vii)    updated customer lists within thirty (30) days after the end of
each calendar quarter; and

                           (viii)   within 15 days after the end of each
calendar month a borrowing base  certificate for the Borrower,
signed on the Borrower's behalf by the Borrower's CFO, in the form of Exhibit
6.10(a)(vii) hereto and otherwise in form satisfactory to the Agent in its sole
reasonable discretion.

                  (b) Notice of Event of Default or Unmatured Event of Default -
Promptly upon becoming aware of the existence of any condition or event which
constitutes an Event of Default or an Unmatured Event of Default under this
Agreement, a written notice specifying the nature and period of existence
thereof and what action the Borrower is taking (and/or proposes to take) with
respect thereto.

                  (c) Notice of Claimed Default - Promptly upon receipt thereof
by the Borrower, a copy of any notice of default, oral or written, given to the
Borrower by any creditor for borrowed money in excess of $100,000.00.

                  (d) Securities and Other Reports - If the Borrower shall be
required to file reports with the SEC pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, promptly upon its becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Borrower to stockholders generally, and, a copy of each
regular or periodic report, and any registration statement, or prospectus in
respect thereof, filed by the Borrower with any securities exchange or with
federal or state securities and exchange commissions or any successor agency.

6.11 Officers' and Accountant's Certificates: Along with the set of financial
statements and other reports delivered to the Agent and each Lender at the end
of each fiscal quarter and fiscal year, as applicable, pursuant to Section
6.10(a) hereof, the Borrower shall deliver to the Agent a certificate (in the
form of Exhibit "6.11" attached hereto and made a part hereof, with such changes
thereto determined necessary by the Agent in its sole reasonable discretion)
from the Borrower signed on its behalf by the chief financial officer of the
Borrower (the "Compliance Certificates") setting forth:

                  (a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Borrower is in
compliance with the requirements of Section 6.9 as of the end of the period
covered by the financial statements then being furnished (and any exhibits
appended thereto) under Section 6.10; and

                  (b) Event of Default - that the signer in his capacity as an
officer of the Borrower has reviewed the relevant terms of this Agreement, and
has made (or caused to be made under his supervision) a review of the
transactions and conditions of the Borrower from the beginning of the accounting
period covered by the financial statements being delivered therewith to the date
of the certificate, and that such review has not disclosed the existence during
such period of any condition or event which constitutes an Event of Default or
an Unmatured Event of Default or if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken or proposes to take with respect thereto.

6.12 Inspection: So long as this Agreement is in effect or any Obligation is
outstanding, the Borrower will permit any of the Agent's officers or other
representatives to visit and inspect any of the locations of the Borrower at any
time during normal business hours, provided that prior to the occurrence of any
Event of Default or an Unmatured Event of Default, the Agent shall give the
Borrower reasonable prior notice of each visit, to examine and audit all of the
Borrower's books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss its affairs, finances and accounts with
its officers, employees and independent certified public accountants. The
Borrower hereby irrevocably authorizes and directs all such accountants and
auditors to exhibit and deliver to the Agent copies of any and all of the
Borrower's financial statements or other accounting records of any sort in the
accountant's or auditor's possession. The Agent's reasonable out-of-pocket
expenses associated with said inspections shall be paid for by the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, prior to
the occurrence of an Event of Default, the Borrower shall not be required to
reimburse the Agent for more than one such audit or more than four inspections
during any twelve month period.

6.13 Tax Returns and Reports: At the Agent's request from time to time, the
Borrower shall promptly furnish the Agent with copies of its annual federal and
state income tax returns. The Borrower further agrees that, if requested by the
Agent, it shall promptly furnish the Agent with copies of all reports filed by
it with any federal, state or local governmental authority or agency, board or
commission.

6.14 Acquisitions: All Acquisitions (regardless of whether such Acquisition is
funded with the proceeds of any Loan hereunder), other than Acquisitions of the
assets or stock of one Borrower (other than RCM), by another Borrower, must be
approved by the Majority Lenders if Total Funded Debt to EBITDA of the Borrower
(for the prior rolling two (2) quarters times two (2)) following such
Acquisition exceeds 1.5x on a pro forma basis. Any Acquisition (regardless of
whether such Acquisition is funded with the proceeds of any Loan hereunder) of
an entity exhibiting negative EBITDA in the preceding 12 months must be approved
by the Majority Lenders. All Acquisitions shall be in the Borrower's same line
or similar line of business and show historical and pro forma covenant
compliance based on an unadjusted historical financial basis. The results of due
diligence, including without limitation a review of the acquisition documents,
shall be to the satisfaction of the Majority Lenders in their sole discretion.
Notwithstanding anything herein to the contrary, any Acquisition shall have been
approved by the Board of Directors or like governing body of the acquiree.

6.15 Information to Participant: Each Lender may divulge to any participant,
co-lender or assignee or prospective participant, co-lender or assignee it is
permitted to obtain hereunder, all information, and furnish to such Person
copies of any reports, financial statements, certificates, and documents
obtained under any provision of this Agreement, or related agreements and
documents; provided, however that the Lender and any potential participant,
co-lender or assignee agrees to hold in confidence all confidential or
proprietary information not otherwise public (as indicated in writing to them by
the Borrower) provided to them by the Borrower, the Agent or such Lender except
(a) to the extent disclosure thereof is required under any statute, ordinance,
regulation, rule or order or any subpoena or any governmental inquiry or by
reason of any bank regulation in connection with any bank examination, and (b)
such potential participant, co-lender or assignee shall not be prohibited from
disclosing any such information to any of their agents, officers, employees,
attorneys, accountants or consultants who shall be informed of this provision.

6.16 Material Adverse Developments: The Borrower agrees that promptly after
becoming aware of any development or other information which would reasonably be
expected to have or cause a Material Adverse Effect, it shall give to the Agent
telephonic or telegraphic notice specifying the nature of such development or
information and such anticipated effect. In addition, such verbal communication
shall be confirmed by written notice thereof to the Agent on the next Business
Day after such verbal notice is given.

6.17 Name Changes, Places of Business: The Borrower shall give thirty (30) days
prior written notice to the Agent of any name change, any proposed change in the
state of its incorporation, or change in the location of any of its respective
places of business, of the places where records concerning its Accounts are
kept, or the establishment of any new, or the discontinuance of any existing
place of business which may require the filing of new financing statements or
other documents in connection with the perfection of the Agent's, for the
benefit of the Lenders, Liens on the Collateral.

6.18     Change in Control or Chief Executive Officer:

(a) In the event that Leon Kopyt leaves his position as CEO of RCM Technologies,
Inc., the Borrower will obtain, within 180 days thereof, the written consent of
the Majority Lenders with respect to any proposed replacement, which consent
shall not be unreasonably withheld.

                  (b)      In addition to the foregoing,  the Borrower will not
 make any material change in the executive management of
the Borrower.

6.19 Canadian Collateral: Upon the earlier to occur of (a) an Unmatured Event of
Default, (b) an Event of Default, or (c) the Borrower having furniture,
fixtures, inventory, equipment, intellectual property and leasehold improvements
located in Canada having an aggregate net book value in excess of $1,000,000.00
U.S. Dollars, as shown on the most recent financial statements delivered by the
Borrower to the Agent, the Agent may file such financing statements or financing
change statements as are necessary to perfect the security interest previously
granted by the Borrower in such of the Borrower's Property located in Canada
without further consent or action by or on behalf of the Borrower, and the
Borrower shall take whatever action is or may be requested by the Agent to
further grant to the Agent, on behalf of the Lenders, a first priority,
perfected security interest in all of such Borrower's Property located in
Canada. (The Lenders hereby acknowledge that unless the Agent has filed the
foregoing financing statements or financing change statements, the Lenders will
not have a first priority, perfected security interest in such of Borrower's
Property located in Canada).


         6.20 Dissolution of Management Systems Integrators, Inc. and Solutions
Through Data-Processing, Inc. The Borrower hereby ratifies and confirms that RCM
is currently taking all steps necessary to promptly dissolve its wholly-owned
subsidiaries, Management Systems Integrators, Inc. and Solutions Through
Data-Processing, Inc. The Borrower further agrees to (i) continue to take all
such steps following Closing to promptly effectuate such dissolutions, and (ii)
promptly deliver to the Agent (when available) copies of all documentation
evidencing such dissolutions, including without limitation certificates of
dissolution evidencing their filing in the appropriate jurisdictions.


SECTION 7.         NEGATIVE COVENANTS

         The Borrower covenants that until all of the Obligations to the Lenders
are indefeasibly paid and satisfied in full and this Agreement has been
terminated, that:

7.1      Merger, Consolidation, Dissolution or Liquidation:


                  (a)      The Borrower shall not sell, lease, license,
 transfer or otherwise dispose of its Property, except for:

                           (i)  Equipment in the ordinary course of the
 Borrower's business; or

                           (ii)  A Permitted Asset or Stock Sale.

                  (b) Except for Permitted Acquisitions, the Borrower shall not
merge or consolidate with any other Person, or commence a dissolution or
liquidation, except that any Subsidiary may merge into the Borrower or another
Subsidiary.

         7.2 Acquisitions: Except for Permitted Acquisitions, the Borrower shall
not acquire all or a material portion of the Capital Stock or assets of any
Person in any transaction or in any series of related transactions or enter into
any sale and leaseback transaction.

         7.3 Liens and Encumbrances: The Borrower shall not: (i) execute a
negative pledge agreement with any Person other than the Agent and/or the
Lenders covering any of its Property except with respect to property subject to
a permitted capitalized lease or purchase money financing, or (ii) cause or
permit or agree or consent to cause or permit in the future (upon the happening
of a contingency or otherwise), its Property (including, without limitation, the
Collateral), whether now owned or hereafter acquired, to be subject to a Lien or
be subject to any claim except for Permitted Liens. As used herein, "Permitted
Liens" means:

                  (a) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords, and other like persons, provided the payment thereof is
not at the time required by Section 6.1;

                  (b) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment, insurance,
social security and other like laws;

                  (c)      Liens described in Exhibit 5.4 and replacements
 thereof;

                  (d) Liens constituting purchase money security interests in
equipment, capitalized leases or finance leases previously or hereafter created
by the Borrower to Persons providing financing for Capital Expenditures
permitted under this Agreement so long as each obligation secured by a Lien
permitted by this subparagraph (d), (i) does not exceed 100% of the total cost
(including interest) to acquire and install such Property, (ii) such Lien
extends only to the Property actually acquired with such financing, and (iii)
the proceeds thereof and the aggregate total of all secured obligations
permitted under this subparagraph (d) plus Capital Expenditures do not exceed
the amount permitted in Section 6.9;

                  (e)      Liens or capital leases on assets of any Person
acquired pursuant to a Permitted Acquisition; and

                  (f)      Liens granted hereunder.

         7.4      Transactions With Affiliates or Subsidiaries:

                  (a) The Borrower shall not enter into any transaction with any
Affiliate or Subsidiary including, without limitation, the purchase, sale, or
exchange of Property, or the loaning or giving of funds to any Affiliate or any
Subsidiary, unless (i) such Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by the Borrower, and the
transaction is in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's business and upon terms substantially the same
and no less favorable to the Borrower as it would obtain in a comparable
arm's-length transactions with any Person not an Affiliate or a Subsidiary, and
(ii) such transaction is not otherwise prohibited hereunder.

(b)      The Borrower shall not create or acquire any Subsidiary, except as
 a result of a Permitted Acquisition.

         7.5 Guarantees: Excepting the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection, the Borrower shall
not become or be liable, directly or indirectly, primary or secondary, matured
or contingent, in any manner, whether as guarantor, surety, accommodation maker,
or otherwise, for the existing or future indebtedness of any kind of any Person.

         7.6 Distributions, Redemptions and Other Indebtedness: The Borrower
shall not: (a) declare or pay or make any forms of Distribution to its
shareholders, their successors or assigns; (b) make any prepayments on any
existing or future indebtedness for borrowed money to any Person without the
prior written consent of the Agent which consent will not be unreasonably
withheld; or (c) hereafter borrow money other than from Lenders hereunder except
in connection with borrowed money giving rise to a Permitted Lien under Section
7.3(d) and, in connection with Permitted Acquisitions, subordinated Sellers
Notes on terms and conditions reasonably acceptable to the Agent.

         7.7 Loans and Investments: The Borrower shall not make or have
outstanding loans, advances, extensions of credit or capital contributions to,
or investments in, any Person other than advances made to employees for travel,
expenses and other business related activities, in the ordinary course of the
Borrower's business, in an aggregate amount not to exceed $500,000.00
outstanding at any one time.

         7.8 Use of Lenders' or the Agent's Name: The Borrower shall not use the
Agent's or any Lender's name (or the name of any of the Agent's or any Lender's
affiliates) in connection with any of its business operations except to identify
the existence of the Loans and the names of the Lenders and the Agent in the
ordinary course of the Borrower's business. Nothing herein contained is intended
to permit or authorize the Borrower to make any commitment or contract on behalf
of any Lender or the Agent. The Agent and the Lenders may, however, publish the
existence of the credit facilities established hereunder and prepare
"tombstones" to memorialize the transactions.

         7.9      Miscellaneous Covenants:

                  (a) The Borrower shall not become or be a party to any
contract or agreement which at the time of becoming a party to such contract or
agreement materially impairs the Borrower's ability to perform under this
Agreement, any other Loan Document, or under any other instrument, agreement or
document to which the Borrower is a party or by which it is or may be bound.

                  (b) The Borrower shall not carry or purchase any "margin
stock" within the meaning of Regulations U, G, T or X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II.

         7.10     Change of Ownership Interests:  The Borrower shall not
change its ownership or dispose of or transfer any ownership
interest in its wholly owned Subsidiaries.


SECTION 8.        DEFAULT

8.1 Events of Default: Each of the following events shall constitute an event of
default ("Event of Default") and the Majority Lenders shall have the option to
cause the Agent, to declare the Obligations immediately due and payable, all
without demand, notice, presentment or protest or further action of any kind (it
also being understood that the occurrence of any of the events or conditions set
forth in subparagraphs (i), (j), (k) or (l) shall automatically cause an
acceleration of the Obligations):

                  (a) Payments - if the Borrower fails to make any payment of
principal or interest, or any fees, under this Agreement, the Term Notes, the
Revolving Credit Notes, or any other Loan Document on the due date of such
payment; or

                  (b) Other Charges - if the Borrower fails to pay any other
charges, Expenses or other monetary obligations owing to any Lender or the Agent
arising out of or incurred in connection with this Agreement or any other Loan
Document within five (5) days after notice that such payment was not made when
due or demanded, as applicable; or

                  (c) Covenant Defaults - the failure of the Borrower to duly
perform or observe any obligation, covenant, or agreement on its part contained
herein or in any other Loan Document or in any other existing or future
agreement (related or unrelated) between the Borrower and the Agent or any
Lender or all Lenders not otherwise specifically constituting an Event of
Default under this Section 8 and such failure continues unremedied for a period
of thirty (30) Business Days after the earlier of (i) notice from the Agent or
any Lender to the Borrower of the existence of such failure, or (ii) any officer
or principal of the Borrower knows or should have known of the existence of such
failure, provided that, in the event such failure is incapable of remedy as
determined by the Agent in its sole discretion or consists of a default on
account of the payment of any sum due hereunder or under the Loan Documents or
of any of the financial covenants in Section 6.9 or was willfully caused or
permitted by the Borrower, the Borrower shall not be entitled to any notice or
grace hereunder; or

                  (d) Financial Information - if any statement, report,
financial statement, or certificate made or delivered at any time by the
Borrower or any of its officers, employees or agents, to the Agent or any Lender
is not true and correct, in all material respects, when made; or

                  (e) Uninsured Loss - if there shall occur any uninsured damage
to or loss, theft, or destruction with respect to any portion of any Property of
the Borrower which is reasonably likely to result in a Material Adverse Effect;
or

                  (f) Warranties or Representations - if any warranty,
representation or other statement by or on behalf of the Borrower contained in
or pursuant to this Agreement, or in any document, agreement or instrument
furnished in compliance with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when made or deemed
made; or

                  (g) Agreements with Others - if there shall be any default by
the Borrower beyond any grace period under any agreement with any other creditor
for borrowed money in excess of $200,000.00, and (i) such default consists of
the failure to pay any principal, premium or interest with respect to such
indebtedness, or (ii) such default consists of the failure to perform any
covenant or agreement with respect to such indebtedness, if the effect of such
default is to cause or to permit the relevant creditor to cause the Borrower's
obligations which are the subject thereof to become due prior to their maturity
date or prior to their regularly scheduled date of payment;

                  (h) Judgments - if any final judgment is entered against the
Borrower for the payment of money in excess of $200,000.00 which shall not be
satisfied, dismissed or bonded pending appeal within thirty (30) days after the
entry thereof; or

                  (i) Assignment for Benefit of Creditors, etc. - if the
Borrower makes or proposes an assignment for the benefit of creditors generally,
offers a composition or extension to creditors, or makes or sends notice of an
intended bulk sale of any business or assets now or hereafter owned or conducted
by the Borrower; or

                  (j) Bankruptcy, Dissolution, etc. - upon the commencement of
any action for the dissolution or liquidation of the Borrower, or the
commencement of any case or proceeding for reorganization or liquidation of the
Borrower's debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or
against the Borrower; provided, however, that the Borrower shall have sixty (60)
days to obtain the dismissal or discharge of any involuntary proceeding filed
against it, it being understood that during such sixty (60) day period, no
Lender shall be obligated to make Advances or issue Letters of Credit hereunder
and the Agent may seek adequate protection in any bankruptcy proceeding
(provided, however, that the dissolution of any Borrower, other than RCM, with
the prior written consent of the Majority Lenders (which consent shall not be
unreasonably withheld), shall not constitute an Event of Default hereunder); or

                  (k)      Receiver - upon the  appointment  of a  receiver,
 liquidator,  custodian,  trustee or similar  official  or
fiduciary for the Borrower or for a material portion of the Borrower's
Property; or

                  (l)      Execution  Process,  Seizure,  etc. - if any
Property of the Borrower,  with an aggregate  cost in excess of
$250,000.00 is seized by any governmental  entity (federal,  state or local),
  landlord or other Person without the Borrower's consent;
or

                  (m)      Termination  of  Business - if the  Borrower
  ceases any  material  portion of its  business  operations  as
presently conducted; or

                  (n) Pension Benefits, etc. - if the Borrower fails to comply
with ERISA, so that grounds exist to permit the appointment of a trustee under
ERISA to administer the Borrower's employee plans or to allow the Pension
Benefit Guaranty Corporation to institute proceedings to appoint a trustee to
administer such plan(s), or to permit the entry of a Lien to secure any
deficiency or claim; or

                  (o) Criminal Conduct and Investigations - if the Borrower
commits or is indicted for committing any crime or if any proceeding or
investigation by any governmental body is pending an adverse disposition of
which would be reasonably likely to result in the forfeiture of any material
Property of the Borrower to any governmental entity, federal, state or local; or

                  (p) Chief Executive Officer - if Leon Kopyt is no longer
active in his capacity as CEO of RCM, unless a replacement is hired within 180
days that is reasonably satisfactory to the Majority Lenders; or

                   (q)     Material  Adverse  Effect - the happening of
 any event or  occurrence  which results in or causes a Material
Adverse Effect.

8.2 Cure: Nothing contained in this Agreement or the Loan Documents shall be
deemed to compel the Agent and/or the Lenders to accept a cure of any Event of
Default hereunder.

8.3      Rights and Remedies on Default:

                  (a) In addition to all other rights, options and remedies
granted or available to the Agent or the Lenders under this Agreement or the
Loan Documents, or otherwise available at law or in equity, upon or at any time
after the occurrence and during the continuance of an Event of Default, or any
Unmatured Event of Default, the Majority Lenders shall have the option to
instruct the Agent to direct the Lenders, to, withhold or cease making Advances
and/or issuing Letters of Credit hereunder.

                  (b) In addition to all other rights, options and remedies
granted or available to the Agent under this Agreement or the Loan Documents
(each of which is also then exercisable by the Agent), the Agent may, at the
discretion of the Majority Lenders after the occurrence and during the
continuance of an Event of Default, terminate the Revolving Credit Facility and
the Term Loan.

                  [(c)     INTENTIONALLY OMITTED]

                  (d) In addition to all other rights, options and remedies
granted or available to the Agent under this Agreement or the Loan Documents
(each of which is also then exercisable by the Agent), the Agent may, at the
discretion of the Majority Lenders, upon or at any time following the occurrence
of an Event of Default exercise all rights under the UCC and any other
applicable law or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including the following
rights and remedies (which list is given by way of example and is not intended
to be an exhaustive list of all such rights and remedies):

                           (i)      The right to take possession of,
 send notices  regarding and collect directly the Collateral,  with
or without judicial process (including without limitation the right to notify
the United States postal authorities to redirect mail addressed to the Borrower
to an address designated by the Agent); or

                           (ii)     By its own means or with judicial
assistance,  enter the Borrower's premises and take possession of
the Collateral, or render it unusable, or dispose of the Collateral on such
premises in compliance with subsection (e) below, without any liability for
rent, storage, utilities or other sums, and the Borrower shall not resist or
interfere with such action; or

                           (iii)    Require the Borrower at the  Borrower's
 expense to assemble all or any part of the  Collateral and
make it available to the Agent at any place designated by the Agent;

                           (iv)     The right to reduce the  Revolving  Credit
 Limit or to modify the terms and  conditions  upon which
the Lenders may be willing to consider making Advances or issuing Letters of
Credit under the Revolving Credit Facility.

                  (e) The Borrower hereby agrees that a notice received by it at
least ten (10) days before the time of any intended public sale or of the time
after which any private sale or other disposition of the Collateral is to be
made, shall be deemed to be reasonable notice of such sale or other disposition.
If permitted by applicable law, any perishable inventory or Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by the Agent without prior notice to the Borrower. The
Borrower covenants and agrees not to interfere with or impose any obstacle to
the Agent's exercise of its rights and remedies with respect to the Collateral
after the occurrence of an Event of Default hereunder.

8.4 Nature of Remedies: All rights and remedies granted the Agent or the Lenders
hereunder and under the Loan Documents, or otherwise available at law or in
equity, shall be deemed concurrent and cumulative, and not alternative remedies,
and the Agent may proceed with any number of remedies at the same time until all
of the Obligations are satisfied in full. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
the Agent, at the discretion of the Majority Lenders, upon or at any time after
the occurrence of an Event of Default, may proceed against the Borrower or any
of the Collateral, at any time, under any agreement, with any available remedy
and in any order.

8.5 Set-Off: If any bank account of the Borrower with the Agent, any Lender or
any participant is attached or otherwise liened or levied upon by any third
party, the Agent and/or such Lender (and such participant) as agent for the
Lenders shall have and be deemed to have, without notice to the Borrower, the
immediate right of set-off and shall apply the funds or amount thus set-off
against any of the Obligations hereunder.


SECTION 9.         AGENT

9.1 Appointment and Authorization. Each Lender, and each subsequent holder of
any of the Notes by its acceptance thereof, hereby irrevocably appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Except as may be
otherwise expressly provided herein, the Borrower is hereby authorized by the
Lenders to deal solely with the Agent in all transactions which affect the
Lenders under this Agreement and the Loan Documents. The rights, privileges and
remedies accorded to the Agent hereunder shall be exercised by the Agent on
behalf of all of the Lenders.

9.2 General Immunity. Subject to the provisions of this Agreement, the Agent
will handle all transactions relating to the Loans and all other Obligations,
including, without limitation, all transactions with respect to this Agreement,
the Loan Documents and all related documents in accordance with its usual
banking practices. In performing its duties as Agent hereunder, the Agent will
take the same care as it takes in connection with loans in which it alone is
interested. However, neither the Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them hereunder or in connection herewith except for its or their own
gross negligence or willful misconduct.

9.3 Consultation with Counsel. The Agent may consult with legal counsel and any
other professional advisors or consultants deemed necessary or appropriate and
selected by Agent and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.

9.4 Documents. The Agent shall not be under a duty to examine into or pass upon
the effectiveness, genuineness or validity of this Agreement or any of the
Revolving Credit Notes or the Term Notes or any other instrument or document
furnished pursuant hereto or in connection herewith, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be. In addition the Agent shall not be liable for failing to make any
inquiry concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document.

9.5 Rights as a Lender. With respect to its applicable Pro Rata Percentage of
the Credit Facility, the Agent shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not the Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. Subject to the
provisions of this Agreement, the Agent may accept deposits from, lend money to
and generally engage in any kind of banking or trust business with The Borrower
and its Affiliates as if it were not the Agent.

9.6 Responsibility of Agent. It is expressly understood and agreed that the
obligations of the Agent hereunder are only those expressly set forth in this
Agreement and that the Agent shall be entitled to assume that no Event of
Default, and no event which with the passage of time, or the giving of notice,
would constitute an Event of Default, has occurred and is continuing, unless the
Agent has actual knowledge of such fact. Except to the extent the Agent is
required by the Lenders pursuant to the express terms hereof to take, or refrain
from taking, a specific action, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, or with respect to taking or refraining from
taking any action or actions that it may be able to take under or in respect of,
this Agreement and the Loan Documents. Except for gross negligence or willful
misconduct, the Agent shall incur no liability under or in respect of this
Agreement and the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable under the
circumstances. The relationship between the Agent and each Lender is and shall
be that of agent and principal only and nothing herein shall be construed to
constitute the Agent a joint venturer with any Lender, a trustee or fiduciary
for any of the Lenders or for the holder of a participation therein nor impose
on the Agent duties and obligations other than those set forth herein.

9.7      Collections and Disbursements.

                  (a) The Agent will have the right to collect and receive all
payments of the Obligations, together with all fees, charges or other amounts
due under this Agreement and the Loan Documents. On each Settlement Date, the
Agent shall make a determination of the actual outstanding dollar amount of each
Lender's Loans based upon its Pro Rata Percentage (or such lesser percentage if
such Lender has failed to remit a required payment to the Agent hereunder) of
the outstanding principal amount of all Loans.

                  (b) The Agent shall pay to each Lender, on each Settlement
Date, from the interest actually received by Agent from the Borrower, a sum
equal to the interest calculated for the actual number of days elapsed on the
basis of a year of 360 days, on each Lender's outstanding balance of its Loans
at the rate equal to the applicable rate of interest chosen by the Borrower with
respect to such Lender's Pro Rata Percentage of the Loans outstanding. If the
Agent should for any reason receive less than the full amount of the interest or
other compensation due under the Loan Documents, each Lender's share of such
interest or compensation shall decrease in proportion to each Lender's Pro Rata
Percentage.

                  (c) If any such payment received by the Agent is rescinded,
determined to be unenforceable or invalid or is otherwise required to be
returned for any reason at any time, whether before or after termination of this
Agreement and the Loan Documents, each Lender will, upon written notice from the
Agent, promptly pay over to the Agent its Pro Rata Percentage of the amount so
rescinded, held unenforceable or invalid or required to be returned, together
with interest and other fees thereon if also required to be rescinded or
returned.

                  (d) All payments by the Agent and the Lenders to each other
hereunder shall be in immediately available funds. The Agent will at all times
maintain proper books of account and records reflecting the interest of each
Lender in the Credit Facility and the Letters of Credit, in a manner customary
to the Agent's keeping of such records, which books and records shall be
available for inspection by each Lender at reasonable times during normal
business hours, at such Lender's sole expense. In the event that any Lender
shall receive any payments in reduction of the Obligations in an amount greater
than its applicable Pro Rata Percentage in respect of indebtedness to the
Lenders evidenced hereby (including, without limitation amounts obtained by
reason of setoffs), such Lender shall hold such excess in trust (to the extent
such Lender is lawfully able to do so) for the Agent (on behalf of all other
Lenders) and shall promptly remit to the Agent such excess amount so that the
amounts received by each Lender hereunder shall at all times be in accordance
with its applicable Pro Rata Percentage. To the extent necessary for each
Lender's actual percentage of all outstanding Loans to equal its applicable Pro
Rata Percentage, the Lender having a greater share of any payment(s) than its
applicable Pro Rata Percentage shall acquire a participation in the applicable
outstanding balances of the Loans of the other Lenders as determined by the
Agent.

                  (e) The proceeds from the sale or disposition of any
Collateral shall be applied first to Expenses incurred by the Agent, then to
accrued but unpaid interest, then to unpaid Fees owing to the Lenders and/or the
Agent, then on the next Settlement Date to the principal balance of the Loans in
accordance with the percentage which each Lender's respective outstanding Loans
bears to the aggregate outstanding Loans.

9.8 Indemnification. To the extent not promptly paid by the Borrower, the
Lenders hereby each indemnify the Agent ratably according to their respective
Pro Rata Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by the Agent
under or related to this Agreement or the other Loan Documents or the Loans,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. The Agent shall have the right to deduct, from any amounts
to be paid by the Agent to any Lender hereunder, any amounts owing to the Agent
by such Lender by virtue of this paragraph.

9.9      Expenses.

(a) All reasonable out-of-pocket costs and out-of-pocket expenses incurred by
the Agent in connection with the creation, amendment, administration,
termination and enforcement of the Loans (including, without limitation, audit
expenses, counsel fees and expenditures to protect, preserve and defend the
Agent's and each Lender's rights and interest under the Loan Documents) shall be
shared and paid on demand by the Lenders pro rata based on their applicable Pro
Rata Percentage.

                  (b) The Agent may deduct from payments or distributions to be
made to the Lenders such funds as may be necessary to pay or reimburse the Agent
for such costs or expenses.

                  (c) In connection with reimbursement of expenses set forth in
this Section 9.9 and indemnification obligations set forth in Section 9.8, the
Agent shall provide a written statement to the Lenders describing such expenses
or indemnification obligations.

9.10 No Reliance. By execution of or joining in this Agreement, each Lender
acknowledges that it has entered into this Agreement and the Loan Documents
solely upon its own independent investigation and is not relying upon any
information supplied by or any representations made by the Agent. Each Lender
shall continue to make its own analysis and evaluation of the Borrower. The
Agent makes no representation or warranty and assumes no responsibility with
respect to the financial condition or Property of the Borrower, any obligor or
any account debtor of The Borrower; the accuracy, sufficiency or currency of any
information concerning the financial condition, prospects or results of
operations of the Borrower; or for sufficiency, authenticity, legal effect,
validity or enforceability of the Loan Documents. The Agent assumes no
responsibility or liability with respect to the collectibility of the
Obligations or the performance by the Borrower of any obligation under the Loan
Documents.

9.11 Reporting. During the term of this Agreement, the Agent will promptly
furnish each Lender with such financial statements, reports and other materials
actually received by the Agent. The Agent will notify the Lenders promptly after
it receives actual knowledge of any Event of Default under the Loan Documents.

9.12 Removal of Agent. The Agent may resign at any time upon thirty (30) days
prior written notice thereof to the Lenders and the Borrower and upon receipt
from the Borrower of its written consent to such resignation, which consent
shall not be unreasonably withheld. The Agent may be removed as Agent hereunder
by the written direction of the Majority Lenders (exclusive of Citizens) upon
the following (i) willful misconduct in the performance of the Agent's duties or
responsibilities under this Agreement; or (ii) if a receiver, trustee or
conservator is appointed for the Agent or any state or federal regulatory
authority assumes management or control of the Agent or, if under applicable
law, the administrative discretionary duties and responsibilities of the Agent
hereunder become controlled by or subject to the approval of any state or
federal regulatory authority. Upon any such removal, the Majority Lenders shall
have the right to appoint a successor Agent. Upon the acceptance of the
appointment as a successor Agent hereunder by such successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, obligations and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder.

9.13 Action on Instructions of Lenders. With respect to any provision of this
Agreement, or any issue arising thereunder, concerning which the Agent is
authorized to act or withhold action by direction of the Lenders (or as the case
may be under this Agreement, the Majority Lenders), the Agent shall in all cases
be fully protected in so acting, or in so refraining from acting, hereunder in
accordance with written instructions signed by the Lenders. Such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders and on all holders of the Notes.

9.14     Several Obligations.  The obligation of each Lender is several, and
 neither the Agent nor any other Lender shall be
responsible for any obligation or commitment hereunder of any other Lender.

9.15     Consent of Lenders to Agent's Rights.

                  (a) Subject to the provisions of this Section 9.15, the Agent
shall have the sole and exclusive right to service, administer and monitor the
Loans and the Loan Documents. The Agent shall, at the discretion of the Majority
Lenders, have the right to exercise all rights, remedies, privileges and options
under the Loan Documents, including without limitation the determination as to
whether Advances should be made or Letters of Credit issued under the Agreement
and the determination as to the basis on which and extent to which Advances may
be made or Letters of Credit issued.

                  (b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, the Agent shall not, without the prior written consent
of all of the Lenders: (i) extend the Revolving Credit Term, any payment date
under the Credit Facility, the Term Loan Maturity Date or the Revolving Credit
Facility Maturity Date, (ii) decrease any interest rate or any fee or other
amount payable for the benefit of the Lenders hereunder, (iii) compromise or
settle all or any material portion of the Obligations, (iv) release any obligor
from the Obligations except in connection with a termination of the Revolving
Credit and the Term Loan and full payment and satisfaction of all Obligations,
(v) modify Sections 9.15(b) or 9.15(c) or any other provision of this Agreement
or any other Loan Document expressly providing for consent of all Lenders, or
the definition of Majority Lenders, (vi) release or subordinate the Agent's
interest (except with respect to Permitted Liens, to the extent applicable) in
any Collateral except in connection with (A) a sale in the ordinary course or
other permitted disposition, or (B) the enforcement of the Agent's rights and
interests in Collateral after the occurrence of an Event of Default; or (vii)
increase the Revolving Credit Limit or the Revolving Credit Pro Rata Share of
any Lender; and, except as expressly provided in this Section 9.15(b) the Agent
shall not, without the prior written consent of the Majority Lenders, modify,
amend or waive any provision of this Agreement or the other Loan Documents
unless expressly permitted herein.

                  (c) After an acceleration of the Obligations, the Agent shall
have the sole and exclusive right, with communication (to the extent reasonably
practicable under the circumstances) with all Lenders, to exercise or refrain
from exercising any and all right, remedies, privileges and options under the
Loan Documents and available at law or in equity to protect and enforce the
rights of the Lenders and collect the Obligations, including, without
limitation, instituting and pursuing all legal action against the Borrower or to
collect the Obligations, or defending any and all actions brought by the
Borrower or other Person; or incurring Expenses or otherwise making expenditures
to protect the Loans, the Collateral or the Lenders' rights or remedies.

                  (d) To the extent the Agent is required to obtain or otherwise
elects to seek the consent of the Lenders to an action the Agent desires to
take, if any Lender fails to notify the Agent, in writing, of its consent or
dissent to any request of the Agent hereunder within five (5) Business Days of
such Lender's receipt of such request, such Lender shall be deemed not to have
given its consent thereto.

                  (e) Any amendment to this Section 9 of this Agreement shall
not require the Borrower's consent, provided that any such amendment shall not
reduce the rights, or increase the obligations, of the Borrower under this
Agreement.

9.16 Participations and Assignments: (a) Subject to subparagraph (b) below, each
Lender may at any time: (i) grant participations of its Pro Rata Percentage of
Loans or in and to its interests under this Agreement (collectively,
"Participations") to any other lending office of such Lender or to any other
bank, lending institution or the Federal Reserve Bank ("Participants"); provided
however that: all amounts payable by the Borrower to such Lender hereunder and
voting rights of such Lender hereunder shall be determined as if such Lender had
not granted such Participation (a change in voting rights requiring written
consent of all Lenders); and any agreement pursuant to which such Lender may
grant a Participation (A) shall provide that such Lender is not delegating and
therefor shall retain the sole right and responsibility to exercise its rights
and privileges including, without limitation, the right to approve any
amendment, modification or waiver of any provisions of this Agreement, provided,
however that as between such Lender and its Participant such Lender may agree to
consult with and obtain the approval of its Participant regarding any amendment,
modification or waiver of any provision set forth in Section 9.15(b); and (B)
shall not release or discharge such Lender from its duties and obligations,
which shall remain absolute, to make Advances or issue Letters of Credit
hereunder; and (ii) assign all or any portion of its Pro Rata Percentage of
Loans and its right, title and interest therein or in and to this Agreement to a
Lender or any affiliate of a Lender, or to any other bank or financial
institution, with the prior written consent of the Agent and the Borrower
provided that the Borrower's consent shall not be required after the occurrence
and during the continuance of an Event of Default; and provided further that
each Lender's Revolving Credit Pro Rata Share shall be at least $5,000,000.00.
Notwithstanding anything to the contrary contained herein, each Lender may at
any time collaterally assign all or any portion of its rights under this
Agreement and its Revolving Credit Notes and its Term Notes to any Federal
Reserve Bank to secure overnight deposits, provided that no such assignment
shall release the assignor Lender from its obligations hereunder.


                  (b) Sales and/or assignments must be in minimum amounts of
$5,000,000.00 and Agent fees attendant thereto shall be in the minimum amount of
$3,500.00 per assignment. The Borrower will not be responsible for the payment
of any fees in connection with any said sale and/or assignment. Provided
further, transferability of voting rights in connection with transfers of
participation interests shall be limited to changes in principal, decreases in
rate, decreases in fees, changes in term, and release of collateral. Assignments
will require the written consent of the Agent and, absent an Event of Default,
the Borrower, except for assignments to an affiliate of the assigning Lender, to
another Lender or to the Federal Reserve Bank. Consents to assignments shall not
be unreasonably withheld.

SECTION 10.        MISCELLANEOUS

10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO
BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION
SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL
FORCE AND EFFECT.

10.2 Integrated Agreement: The Notes, the other Loan Documents, all related
agreements, and this Agreement shall be construed as integrated and
complementary of each other, and as augmenting and not restricting the Lenders'
and the Agent's rights and remedies. If, after applying the foregoing, an
inconsistency still exists, the provisions of this Agreement shall constitute an
amendment thereto and shall control.

10.3     Waiver:

                  (a) No omission or delay by the Agent or the Lenders in
exercising any right or power under this Agreement or any related agreements and
documents will impair such right or power or be construed to be a waiver of any
Unmatured Event of Default, or Event of Default or an acquiescence therein, and
any single or partial exercise of any such right or power will not preclude
other or further exercise thereof or the exercise of any other right, and as to
the Borrower no waiver will be valid unless in writing and signed by the Agent
and then only to the extent specified.

                  (b) The Borrower releases and shall indemnify, defend and hold
harmless the Agent and the Lenders, and their respective officers, employees and
agents, of and from any claims, demands, liabilities, obligations, judgments,
injuries, and out-of-pocket losses, damages and costs and expenses (including,
without limitation, reasonable legal fees) resulting from (i) acts or conduct of
the Borrower under, pursuant or related to this Agreement and the other Loan
Documents, (ii) the Borrower's breach or violation of any representation,
warranty, covenant or undertaking contained in this Agreement or the other Loan
Documents, and (iii) the Borrower's failure to comply with any or all laws,
statutes, ordinances, governmental rules, regulations or standards, whether
federal, state or local, or court or administrative orders or decrees,
(including without limitation environmental laws, etc.) and all costs, expenses,
fines, penalties or other damages resulting therefrom, unless resulting from
acts or conduct of the Agent or the Lenders constituting willful misconduct or
gross negligence. The obligations of the Borrower under this Section 10.3(b)
shall survive the occurrence of any and all events whatsoever, including without
limitation, payment of the Obligations or investigation by or knowledge of the
Agent or the Lenders.

10.4 Time: Whenever the Borrower shall be required to make any payment, or
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day except with
respect to the repayment of LIBOR Based Rate Loans as set forth in Section
2.3(b)(ii). Time is of the essence in the performance under all provisions of
this Agreement and all related agreements and documents.

10.5 Expenses of Agent and Lenders: At the Closing and from time to time
thereafter, the Borrower will pay all reasonable expenses of the Agent on demand
(including, without limitation, search costs, audit fees, appraisal fees,
environmental fees and the reasonable fees and expenses of legal counsel for the
Agent) relating to the closing of this Agreement, and all related agreements and
documents, including, without limitation, closing, enforcement of this Agreement
and the other Loan Documents, the enforcement, protection and defense of the
rights of the Agent and the Lenders in and to the Loans and the Collateral or
otherwise hereunder, and any expenses relating to extensions, amendments,
waivers or consents pursuant to the provisions hereof, or any related agreements
and documents or relating to agreements with other creditors, or termination of
this Agreement. The Borrower further agrees to pay, or reimburse the Lenders
for, all reasonable out-of-pocket costs and expenses, including without
limitation attorneys' fees (including the allocated costs of in-house counsel),
incurred in connection with the enforcement, protection and defense of their
rights in and to the Loans and the Collateral or otherwise hereunder, following
acceleration of the Obligations after the occurrence of an Event of Default
hereunder or following the failure to repay the Obligations in full upon
maturity. Collectively all of the foregoing are referred to as the "Expenses."

10.6 Brokerage: This transaction was brought about and entered into by the
Agent, the Lenders and the Borrower acting as principals and without any
brokers, agents or finders being the effective procuring cause hereof. The
Borrower represents that it has not committed the Agent or any Lender to the
payment of any brokerage fee, commission or charge in connection with this
transaction. If any such claim is made on the Agent or any Lender by any broker,
finder or agent or other person as a result of the Borrower's engaging thereof,
the Borrower hereby indemnifies, defends and saves such party harmless against
such claim and further will defend, with counsel satisfactory to the Agent, any
action or actions to recover on such claim, at the Borrower's own cost and
expense, including such party's reasonable counsel fees. The Borrower further
agrees that until any such claim or demand is adjudicated in such party's favor,
the amount demanded shall be deemed a liability of the Borrower under this
Agreement.

10.7     Notices:

                  (a) Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed given if delivered in person
or if sent by telecopy or by nationally recognized overnight courier, or via
first class, Certified or Registered mail, postage prepaid, as follows, unless
such address is changed by written notice hereunder:

         If to Agent to:            Citizens Bank of Pennsylvania
                                    3025 Chemical Road
                                    Suite 300
                                    Plymouth Meeting, Pennsylvania 19462
                                    Attn.:  Stephen M. Wilus, Vice President
                                    Telecopy No.: 610/941-4136



         With copies to:   Archer & Greiner, P.C.
                                    One Centennial Square
                                    Haddonfield, New Jersey 08033
                                    Attn: Terence J. Fox, Esquire
                                    Telecopy No.: 856/795-0574

         If to The Borrower to:     RCM Technologies, Inc.
                                    2500 McClellan Avenue, Suite 350
                                    Pennsauken, New Jersey 08109
                                    Attn:  Leon Kopyt, Chairman, President & CEO
                                    Telecopy No.: 856/488-8833

         With copies to:   Norman S. Berson, Esquire
                                    Fineman & Bach, P.C.
                                    1608 Walnut Street, 19th Floor
                                    Philadelphia, PA  19103

         If to Lenders:             to the addresses set forth on Schedule "B"

                  (b)      Any notice sent by the Agent,  any Lender or the
Borrower by any of the above  methods shall be deemed to be
given when so received.

                  (c) The Agent shall be fully entitled to rely upon any
facsimile transmission or other writing purported to be sent by any Authorized
Officer (whether requesting an Advance, the issuance of a Letter of Credit or
otherwise) as being genuine and authorized.

         10.8 Joint and Several. If this Agreement is executed by more than one
Borrower, the obligations of such Persons or entities hereunder will be joint
and several.


         10.9     Headings:  The headings of any paragraph or Section of this
Agreement are for convenience only and shall not be used
to interpret any provision of this Agreement.

         10.10 Survival: All warranties, representations, and covenants made by
the Borrower herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by the Agent and
Lenders, and shall survive the delivery to Lenders of the Revolving Credit
Notes, regardless of any investigation made by the Lenders or on their behalf.
All statements in any such certificate or other instrument prepared and/or
delivered for the benefit of the Agent and any and all Lenders shall constitute
warranties and representations by the Borrower hereunder. Except as otherwise
expressly provided herein, all covenants made by the Borrower hereunder or under
any other agreement or instrument shall be deemed continuing until all
Obligations are satisfied in full.

         10.11 Successors and Assigns: This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
subject to the provisions of Section 9.16. The Borrower may not transfer, assign
or delegate any of its duties or obligations hereunder.

         10.12 Duplicate Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed document.

         10.13 Modification: No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by the
Borrower, the Agent and the Lenders, except as provided in Section 9 hereof. Any
modification in accordance with the terms hereof shall be binding on all parties
hereto, whether or not each is a signatory thereto.

         10.14 Third Parties: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of the Borrower. Nothing contained in
this Agreement shall be construed as a delegation to the Agent or any Lender of
the Borrower's duty of performance, including, without limitation, the
Borrower's duties under any Account or contract with any other Person.

         10.15 Discharge of Taxes, The Borrowers' Obligations, Etc.: The Agent,
in its sole discretion, shall have the right at any time, and from time to time,
if the Borrower fails to timely perform, to: (a) pay for the performance of any
of the Borrower's Obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of the Borrower's Property in violation of this
Agreement unless such entity is in good faith with due diligence by appropriate
proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Expenses and advances shall be added to the
Revolving Credit Loans, and bear interest at the same rate applied to the
Revolving Credit Loans, until reimbursed to the Agent. Such payments and
advances made by the Agent shall not be construed as a waiver by the Agent or
the Lenders of an Event of Default under this Agreement.

         10.16 Withholding and Other Tax Liabilities: Each Lender shall have the
right to refuse to make any Advances or issue any Letter of Credit from time to
time unless the Borrower shall, at Agent's request, have given to the Agent
evidence, reasonably satisfactory to the Agent, that they have properly
deposited or paid, as required by law, all withholding taxes and all federal,
state, city, county or other taxes due up to and including the date of the
requested Advance or Letter of Credit issuance. Copies of deposit slips showing
payment shall likewise constitute satisfactory evidence for such purpose. In the
event that any lien, assessment or tax liability against the Borrower shall
arise in favor of any taxing authority, whether or not notice thereof shall be
filed or recorded as may be required by law, the Agent shall have the right (but
shall not be obligated, nor shall the Agent or any Lender hereby assume the
duty) to pay any such lien, assessment or tax liability by virtue of which such
charge shall have arisen; provided, however, that the Agent shall not pay any
such tax, assessment or lien if the amount, applicability or validity thereof is
being contested in good faith and by appropriate proceedings by such entity. In
order to pay any such lien, assessment or tax liability, the Agent shall not be
obliged to wait until said lien, assessment or tax liability is filed before
taking such action as hereinabove set forth. Any sum or sums which the Agent
(shared ratably by the Lenders) shall have paid for the discharge of any such
lien shall be added to the Credit Facility and shall be paid by the Borrower to
the Agent with interest thereon, upon demand, and the Agent shall be subrogated
to all rights of such taxing authority against the Borrower.

         10.17 CONSENT TO JURISDICTION: THE BORROWER AND EACH LENDER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA IN ANY AND ALL ACTIONS AND PROCEEDINGS WHETHER ARISING HEREUNDER OR
UNDER ANY OTHER AGREEMENT OR UNDERTAKING AND IRREVOCABLY AGREE TO SERVICE OF
PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ADDRESS OF THE
APPROPRIATE PARTY SET FORTH HEREIN.

         10.18 Waiver of Jury Trial: AS AN INDEPENDENT COVENANT, THE AGENT, EACH
LENDER AND THE BORROWER HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY LITIGATION COMMENCED BY OR AGAINST ANY OF THEM WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN
DOCUMENTS WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.




1052702v6

     [INTENTIONALLY LEFT PARTIALLY BLANK]


<PAGE>



         IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.


BORROWER:                           RCM TECHNOLOGIES, INC.


                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                            CATARACT, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                            RCM TECHNOLOGIES (USA), INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________




                                            PROGRAMMING ALTERNATIVES
                                            OF MINNESOTA, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________




<PAGE>


                             SOFTWARE ANALYSIS AND MANAGEMENT, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                            RCMT DELAWARE, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                            RCM TECHNOLOGIES CANADA CORP.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                 BUSINESS SUPPORT GROUP OF MICHIGAN, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                                            PINNACLE CONSULTING, INC.

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________





<PAGE>



AGENT:  CITIZENS BANK OF PENNSYLVANIA, as Administrative  Agent and Arranger

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


LENDERS:                            CITIZENS BANK OF PENNSYLVANIA, as Lender

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


                       SUNTRUST BANK, as Documentation Agent and Lender

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________


               LEET NATIONAL BANK, as Syndication Agent and Lender

                  By:_________________________________________

                  Name:_______________________________________

                 Title:________________________________________



1052702 - v6


<PAGE>



                                                     SCHEDULE A


Revolving Credit Facility


   evolving Credit Revolving Credit
  Lenders                     Pro Rata Share                 Pro Rata Percentage

Citizens Bank of Pennsylvania           $ 16,842,500                    42.1%
Fleet National Bank                     $ 14,740,000                    36.8%
SunTrust Bank                          $   8,417,500                    21.1%

         TOTAL COMMITMENT       $ 40,000,000                            100%



Term Loan Facility


  Lenders                                    Pro Rata Share

Citizens Bank of Pennsylvania                    $ 3,157,500
Fleet National Bank                              $ 1,582,500

         TOTAL COMMITMENT                        $ 7,500,000




<PAGE>


                                   SCHEDULE B


                           CITIZENS BANK OF PENNSYLVANIA
                           3025 Chemical Road
                           Suite 300
                           Plymouth Meeting, Pennsylvania 19462
                           Attn.: Stephen M. Wilus, Vice President
                           Telecopy No.: 610/941-4136

                           SUNTRUST BANK
                           303 Peachtree Street
                            MCI921 -2nd Floor
                           Atlanta, GA 30302
                           Attn:  Daniel S. Komitor, Director
                           Telecopy No.: 404-588-8833

                           FLEET NATIONAL BANK
                           100 Federal Street
                           MA DE/0007F
                           Boston, MA 02110
                           Attn:  Deborah Lawrence, Senior Vice President
                           Telecopy No.: 617-434-4560






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>sevagr61002.txt
<DESCRIPTION>SEV. AGR., 61002 - RCM TECH., INC. AND LEON KOPYT
<TEXT>
SEVERANCE AGREEMENT

This Severance Agreement ("Agreement") is entered into this 10th day of June
2002 between RCM Technologies, Inc. ("Company") and Leon Kopyt ("Employee").

WHEREAS, Employee is presently employed by the Company as Chief Executive
Officer, President and Chairman of the Board of Directors;

WHEREAS, Employee possesses skills and experience that the Company believes are
of substantial value and importance to the success of Company's business
operations, and has provided a substantial period of meritorious service and
has contributed significantly to the Company's success;

WHEREAS, in consideration of Employee's continued employment with the Company
and agreeing to keep Company information confidential and not to compete with
the Company in the event Employee's employment is terminated, the
Company agrees that Employee shall receive the compensation and benefits set
forth in this Agreement as a cushion against the financial and career impact on
Employee in the event Employee's employment with the Company is terminated for
a reason set forth in this Agreement;

WHEREAS, Employee and the Company are parties to the Amended and Restated
Employment Agreement dated November 30, 1996 (the "Employment Agreement")
and the Second Amended and Restated Termination Benefits Agreement dated
March 18, 1997 (the
"Change In Control" or "CIC Agreement") and Employee and the Company have agreed
that this Agreement shall not supersede, but rather supplement, those
agreements.

NOW, THEREFORE, the parties hereto, agreeing to be legally bound,
hereby agree as follows:

1.Definitions. For purposes of this Agreement, the
following terms shall have the meanings specified in this Section:

a. "Cause"
shall mean (i) any action or series of actions undertaken by Employee that
results in the commission by Employee of a felony for which he is convicted by a
court of competent jurisdiction; or (ii) any action or series of actions
undertaken by Employee that results in material breach of the nondisclosure or
non-competition provision in Section 7 of this Agreement and such breach results
in material economic harm to the Company.

b. "Good Reason" shall have the
meaning set forth in Section 2 of the CIC Agreement except that, for purposes of
this Agreement, this term shall also mean that Employee may terminate his
employment for any reason during the one-month period commencing twelve months
following the occurrence of a "Change in Control" (as defined in Section 3 of
the CIC Agreement) and be treated as if such termination were for Good Reason.

c. "Stock Option Agreements" shall mean the Stock Option Agreements between the
Employee and the Company dated November 21, 1996, November 1, 1997, October 8,
1998, October 6, 1999 and October 26, 2000, as amended, or any additional stock
option agreements entered into by the parties after the date of execution of
this Agreement.

2. Severance Payments. If Employee terminates his employment for
Good Reason, or upon Employee's retirement with at least twelve (12) years of
service with the Company, or if Employee is terminated by the Company due to
death, disability or illness, or if Employee is terminated by the Company other
than for Cause as defined hereinabove, then Employee or his heirs shall receive,
subject to Section 3 below, the following payments and/or benefits:
a. Within
thirty (30) days of termination, a lump sum cash payment of all amounts then due
and payable to Employee at the time of termination, including accrued salary,
bonus, and reimbursement for reasonable out-of-pocket business expenses properly
incurred but not yet reimbursed by the Company;

b. Within thirty (30) days of
termination, a lump sum cash payment which is equal to one-sixth (1/6) of the
aggregate of Employee's then-current gross annual salary (for federal income tax
purposes) and ascertainable bonus (i.e., the bonus that was received by Employee
during the Company's most recently completed fiscal year) multiplied by the
number of years or partial years that Employee has been employed by the Company.

c. The Company shall continue to pay and make available to Employee all employee
benefits (including, without limitation, life and medical insurance benefits,
disability insurance, and leased automobile), substantially identical to those
which Employee was receiving at time of termination for a period of three (3)
years following date of termination;

d. All stock options held by Employee, to
the extent not vested pursuant to the terms of any plan or agreement governing
such options, shall become fully vested and exercisable by Employee
notwithstanding any provision of the Stock Option Agreements to the contrary,
and shall remain exercisable for the remainder of their original term.

3.Coordination With Payments Received Under Other Agreements; Minimum Payment
Guarantee. The payments due under Section 2 (b) above shall be prospectively
reduced by any payments which Employee is to receive under the terms of the
Employment Agreement or the CIC Agreement (the "Other Payments"); provided,
however, that Employee's payments due under Section 2(b) above after any such
reduction shall not under any circumstances be less than the equivalent of
Employee's gross annual salary and ascertainable bonus (as determined in the
manner prescribed in Section 2(b) above) for a period of one and one-half (11/2)
years. In the event any Other Payments are not actually received by Employee,
the reduction provided for above shall be retroactively and coextensively
rescinded. The minimum payment guarantee provided for in this Section is not
intended to and shall not alter or affect in any way the rights or obligations
of the parties under the Employment Agreement or the CIC Agreement.

4.
Non-Renewal of Employment Agreement. Employee shall be entitled to receive the
payments and benefits under this Agreement in the event of, and notwithstanding,
the termination by non-renewal of the Employment Agreement; provided, however,
that Employee's rights to payment hereunder shall be subject to the provisions
of Section 3 hereof.

5. Release. Notwithstanding Section 2 above, no payments
shall be made under this Agreement unless Employee executes, and does not revoke
a General Release (in the form and substance as attached hereto as Exhibit A).

6. No Duty to Mitigate. Employee shall be entitled to all payments under Section
2 without obligation on Employee's part to seek or accept other employment or in
any manner to mitigate any damages or losses which Employee may sustain as a
result of his termination, irrespective of whether Employee shall accept other
employment or be gainfully employed in any manner following termination of his
employment with Company.

7. Nondisclosure/Non-Compete. The "Non-Disclosure/Non
Competition" restrictions contained within Section 8 of the Employment Agreement
are incorporated by reference as if set forth herein at length.

8. Dispute
Resolution. Except for matters arising under Section 7 above, the exclusive
forum for the resolution of any controversy, claim or dispute arising out of or
relating to this Agreement shall be in an arbitration proceeding conducted in
the City of Philadelphia, Commonwealth of Pennsylvania, before a panel of three
(3) arbitrators in conformity with the Commercial Rules of the American
Arbitration Association ("AAA"), but not formally administered by the AAA
(unless otherwise agreed by the parties). The arbitrators shall be appointed as
follows: one by the Company; one by Employee; and the third by the two appointed
arbitrators, or if they cannot agree, then by the AAA. The determination and
award of a majority of the arbitrators shall be conclusively binding upon the
parties, and shall be final and nonreviewable on the merits in any court. Such
award shall be enforceable as a judgment in any court of competent jurisdiction.
All expenses of the arbitration, including any attorneys' fees incurr ed by
Employee shall promptly be advanced on Employee's behalf or paid by the Company
when due and payable in the same manner and on the same terms as prescribed in
Paragraph 8 of the CIC Agreement. In the event Employee is not the prevailing
party in the arbitration, Employee shall reimburse the Company for that portion
of the expenses of the arbitration (other than attorney's fees) advanced by the
Company on his behalf in connection therewith; however, under no circumstances
shall Employee be responsible for the attorney's fees or any other expenses
incurred in connection with the arbitration. Employee agrees that any violation
of the provisions of Section 7 above will cause irreparable damage to the
Company, the exact amount of which will be impossible to ascertain. For that
reason, Employee agrees that the Company shall be entitled to injunctive relief
restraining any violation of Section 7 above by Employee and any person, firm or
corporation associated with him, such right to be cumulative and in addition to
all other remedies available to Employer by reason of such violation.

9. Successor Company. Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Company would be required to perform it if no such succession had taken
place. Failure of Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Employee to receive on the effective date of such succession a severance payment
equivalent in aggregate amount and on the same terms as the payments Employee
would be entitled to have received hereunder had there been no succession.

10.Notice of Termination. Any termination of Employees' employment must, for
purposes of triggering the performance obligations under this Agreement, be
communicated by a notice of termination to the other party in accordance with
Section 11 below. The notice of termination must be in writing and must indicate
the date on which the termination will be effective.

11. Notices. Any notices
required or permitted to be given under this Agreement shall be sufficient if in
writing, and if sent by certified mail, return receipt requested, and regular
mail addressed as follows: IF TO EMPLOYEE: IF TO EMPLOYER: Leon Kopyt RCM
Technologies, Inc. 447 Waring Street 2500 McClellan Avenue Philadelphia, PA
19116 Pennsauken, NJ 08109-4613 Attn: Chief Financial Officer

12. Nonwaiver of
Rights. The failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any of the
provisions hereof shall in no way be construed to be a waiver of such provisions
or to affect either the validity of this Agreement, or any part hereof, or the
right of either party thereafter to enforce each and every provision in
accordance with the terms of this Agreement.

13. Invalidity of Provisions. The
invalidity or unenforceability of any particular provision of this Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.

14. Governing Law. This Agreement shall be interpreted
in accordance with and governed by the internal laws of the Commonwealth of
Pennsylvania. 15. Amendments. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the parties. In witness whereof, the parties hereto have entered into this
Severance Agreement to be effective as of the day and year first above written.


RCM TECHNOLOGIES, INC.

Attest:                         Chair, Compensation Committee


Witness:
                                 Leon Kopyt


- -8-




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>rcmkopytsevrel61002.txt
<DESCRIPTION>EXHIBIT A TO SEVERANCE AGREEMENT 61002
<TEXT>
                       EXHIBIT A TO SEVERANCE AGREEMENT

                               GENERAL RELEASE

         WHEREAS, Leon Kopyt (hereinafter "Employee") has been employed by RCM
Technologies, Inc. ("Company") in the capacity of Chief Executive Officer,
President and Chairman of the Board of Directors;

         WHEREAS, the Employee and the Company have previously entered into a
Severance Agreement, dated as of June 10, 2002 (the "Severance Agreement"), an
Amended and Restated Employment Agreement dated November 30, 1996 (the
"Employment Agreement"), and a Second Amended and Restated Termination Benefits
Agreement dated March 18, 1997 (the "Change In Control" or "CIC Agreement");

         WHEREAS, the Employee and the Company desire to terminate the
          Employee's employment;

         IT IS HEREBY AGREED by and between Employee and the Company as follows:

1. Employee agrees that by entering into this Agreement, he RELEASES AND FOREVER
DISCHARGES the Employer and its subsidiaries, affiliates, successors and
assigns, and their present and former officers, directors, shareholders,
representatives and employees, in their individual and representative capacities
and any employee benefit plans maintained by the Employer (a "Benefit Plan")
(hereinafter referred to collectively as "RELEASEES") from all causes of action,
suits, claims, charges and complaints, of any kind, that Employee has or may
have against the Employer relating to his employment with the Employer and
arising on or before the date of this Agreement, whether known or unknown,
asserted or unasserted, and whether before courts, administrative agencies or
other forums wherever situated. Employee acknowledges that this release
includes, but is not limited to, any claims for discrimination on the basis of
race, color, sex, national origin, religion, disability, age, martial status and
veteran status pursuant to any applicable federal and/or state statutes, such as
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, as amended by the Older Worker Benefit
Protection Act of 1990, the Family and Medical Leave Act of 1993, the
Pennsylvania Human Relations Act, the New Jersey Law Against Discrimination, the
New Jersey Family Leave Act, the New Jersey Conscientious Employee Protection
Act, the American with Disabilities Act of 1990, as well as all wage claims of
any kind, common law claims of any kind and express or implied contract claims
of any kind. This release also includes any claims for severance benefits under
the terms of any employee benefit plan arrangement or agreement maintained by
the Employer except that this release shall not affect, and Employee hereafter
fully retains, any and all of his rights to (a) severance payments and benefits
under the Severance Agreement, the Employment Agreement, the CIC Agreement, and
all current and future Stock Option Agreements; and (b) to benefits fully earned
prior to his date of termination under the terms of any applicable benefit plan
maintained by the Employer.

Nothing contained in this Agreement constitutes an admission by the Employer as
to the violation of any law, or breach of any duty, contract or agreement,
expressed or implied.

2. In full consideration of Employee's execution of this release, and his
agreement to be legally bound by its terms, the Company agrees, beginning upon
the 7th day following Employee's execution of this agreement or 30 days after
Employee's termination, whichever is later, to provide Employee with those
payments or benefits to which he is entitled under Section 2 of the Severance
Agreement.

3. Except as set forth in Paragraph 1 above, it is expressly agreed and
understood that the Company does not have, and will not have, any obligation to
provide Employee at any time in the future with any additional payment or
consideration for this release other than those set forth in paragraph 2 above.

4. The parties hereto acknowledge that the undertakings of each of the parties
herein are expressly contingent upon the fulfillment and satisfaction of the
obligations of the other party as set forth herein.

5. Employee agrees and acknowledges that the agreement by the Company, described
herein, is not and shall not be construed to be an admission of any violation of
any federal, state or local statute or regulation, or of any duty owed by the
Company and that this release is made voluntarily to provide an amicable
conclusion of his employment relationship with the Company.

6. Employee agrees, covenants and promises that, except as to the portions of
this release already publicly disclosed as of the relevant date, he has not
communicated or disclosed, and will not hereafter communicate or disclose, the
terms of this release to any persons with the exception of members of his
immediate family, his attorney, and his accountant or tax advisor, each of whom
shall be informed of this confidentiality obligation and shall be bound by its
terms.

7.       Employee hereby certifies that:

7.1      He has read the terms of this release and understands its terms;

7.2      He has been informed by the Company, through this document, that he
          should discuss this release with an    attorney of his own choice;

7.3      He has the intention of releasing all claims recited herein in
         exchange for the consideration described herein, which he acknowledges
          as adequate and satisfactory to him; and

7.4               Neither the Company nor any of its agents, representatives or
                  attorneys has made any representations to Employee concerning
                  the terms or effects of this release other than those
                  contained herein.

8. Employee acknowledges that he has been informed that he has the right to
consider this release for a period of at least 21 days prior to entering into
this release. He further acknowledges that he has the right to revoke this
release within seven (7) days of its execution by giving written notice of such
revocation by hand delivery or fax to the Company, Attention Chief Financial
Officer.

9. This release may not be amended, modified or revised except by a writing
signed by all the parties expressly stating that it amends this release. This
release may be executed, including by facsimile, in counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement.

10. Each term and provision of this release constitutes a separate undertaking,
covenant or promise. In the event that any term or provision hereof is
determined to be unenforceable, invalid, or illegal in any respect, the
remaining terms and provisions shall continue to be enforceable and valid.
Moreover, if any term or provision hereof shall, for any reason, be held to be
excessively broad as to time, duration, activity, scope or subject, it shall be
construed, by limiting and reducing it, so as to be enforceable to the extent
permitted by the applicable law of the Commonwealth of Pennsylvania.

         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have executed the foregoing release this 10th day of June, 2002.

WITNESS:
        ---------------------------- ------------------------------------
                                     Leon Kopyt


                                     RCM Technologies, Inc.



WITNESS:                             BY:
        -------------------------    -----------------------------------------
                                     TITLE:
                                     -----------------------------



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>certceo.txt
<DESCRIPTION>CERT. PUR. SEC. 906 OF THE SARBANES-OXKLEY ACT
<TEXT>
Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO




SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of RCM Technologies, Inc.(the "Company")
on Form 10-Q for the period ended June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Leon Kopyt, President
& CEO of the Company, certify, pursuant to 18 U.S.C.Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d)
   of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material
   respects, the financial condition and result of operations of the Company.



______________________
/s/Leon Kopyt
Chief Executive Officer
August 05, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>7
<FILENAME>certcfo.txt
<DESCRIPTION>CERT. PUR. SEC. 906 OF THE SARBANES-OXKLEY ACT
<TEXT>
Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO




SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of RCM Technologies, Inc.(the "Company")
on Form 10-Q for the period ended June 30, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Stanton Remer,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d)
   of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material
   respects, the financial condition and result of operations of the Company.



   ______________________
/s/Stanton Remer
   Chief Financial Officer
   August 05, 2002

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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