RCM TECHNOLOGIES INC
SECOND AMENDMENT LOAN AGREEMENT 022603
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<DESCRIPTION>SECOND AMENDMENT LOAN AGREEMENT 022603
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               AMENDMENT AND MODIFICATION TO AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT


                                 by and between

               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 December 30, 2002

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               AMENDMENT AND MODIFICATION TO AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT


         This AMENDMENT AND MODIFICATION TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT ("Amendment") is dated as of December 30, 2002, by RCM
TECHNOLOGIES, INC. ("RCM"), and ALL OF ITS SUBSIDIARIES (collectively referred
to as "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") (Citizens, Suntrust and Fleet individually each being a
"Lender" and collectively referred to as "Lenders").

                                   BACKGROUND

A. Pursuant to the terms of a certain Amended and Restated Loan and Security
Agreement dated as of May 31, 2002, between Borrower and Lenders ("Loan
Agreement"), Lender made available to Borrower a revolving line of credit in the
aggregate amount of $40,000,000.00 (the "Revolving Credit"), and a term loan in
the amount of $7,500,000.00 ("Term Loan").

B. The Revolving Credit is evidenced by certain Revolving Credit Notes dated May
31, 2002, from Borrower to Lender in the aggregate amount of $40,000,000.00
("Revolving Credit Notes").

C. The Term Loan was evidenced by certain Term Notes dated May 31, 2002 from the
Borrower to the Lenders in the aggregate amount of $7,500,000.00, ("Term
Notes").

D. Borrower has requested that Lender modify certain covenants contained in the
Loan Agreement, and Lender has agreed to modify those certain covenants subject
to the terms and conditions of this Amendment.

         All capitalized terms used herein without further definition shall have
the respective meaning set forth in the Loan Agreement and all other Loan
Documents.

         NOW, THEREFORE, with the foregoing Background incorporated by reference
and intending to be legally bound hereby, the parties agree as follows:

1. Loan Agreement. The following amendments and modifications shall be made to
the Loan Agreement and shall be effective upon execution hereof:

a. Certain definitions contained in Section 1.1 of the Loan Agreement shall be
amended and/or added as follows:

(1) Adjusted Net Income shall be deleted in its entirety and replaced as
follows:

                                    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 losses
                                    previously recognized under this
                                    subparagraph (ii), does not exceed
                                    $5,000,000.00 in the aggregate, (iii) the
                                    Subsequent Additional Net Restructuring
                                    Charge, and (iv) 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, 2002 be
                                    considered as an adjustment to Adjusted Net
                                    Income).

(2) EBITDA shall be deleted in its entirety and replaced as follows:

                                    EBITDA -The sum of (i) Net Income before
                                    interest, taxes, depreciation and
                                    amortization, (ii) Additional Net
                                    Restructuring Charge, (iii) the Subsequent
                                    Additional Net Restructuring Charge, (iv)
                                    the 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 (iv),
                                    does not exceed $5,000,000.00 in the
                                    aggregate, and (v) 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, 2002 be considered as an
                                    adjustment to EBITDA).

(3) Income Tax Benefit shall be deleted in its entirety and replaced as follows:

                                    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 (i)
                                    the Additional Net Restructuring Charge on
                                    its Federal and State income tax returns for
                                    its taxable year ended December 31, 2001
                                    and/or (ii) the Subsequent Additional Net
                                    Restructuring Charge on its Federal and
                                    State Income tax returns for its taxable
                                    year ended December 31, 2002, and by giving
                                    effect to the net tax effect of any
                                    adjustments increasing or decreasing such
                                    deduction(s) subsequent to its taxable year
                                    ended December 31, 2001.

(4) Minimum Tangible Net Worth shall be deleted in its entirety and replaced as
follows:

                                    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 or Subsequent
                                    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.

(5)      Permitted Acquisitions - shall be deleted in its entirety and
                replaced as follows:
         ----------------------

                                    Permitted Acquisitions - An Acquisition
                                    which satisfies each of the criteria set
                                    forth in Section 2.7 hereof, and for which
                                    the Borrower has obtained the written
                                    consent of the Majority Lenders.

(6)      Subsequent Additional Net Restructuring Charge shall be added to
                 Section 1.1 as follows:
         ----------------------------------------------

                                    Subsequent Additional Net Restructuring
                                    Charge. A one-time deduction of good-will
                                    taken by RCM during the fourth quarter of
                                    its Fiscal Year ended December 31, 2002, up
                                    to an amount not to exceed $30,000,000.00.

b.       Section 2.6 of the Loan Agreement shall be amended by adding the
                following as Section 2.6(e):

                                    (e) Additional Mandatory Prepayment. In
                                    addition to any other payments of principal
                                    of the Revolving Credit Loans required to be
                                    made by Borrower hereunder, the Borrower
                                    shall also be required to make an additional
                                    payment of principal of the Revolving Credit
                                    Loans by an amount equal to the cash
                                    proceeds actually received by Borrower
                                    relating to the Income Tax Benefit
                                    associated with its recognition of the
                                    Additional Net Restructuring Charge. The
                                    payment(s) required to be made by Borrower
                                    under this Section 2.6(e) shall be applied
                                    first to accrued but unpaid interest on the
                                    Revolving Credit Loans and then to the
                                    principal payments due under the Revolving
                                    Credit Loans. Such payment(s) shall be due
                                    and payable within five (5) days of RCM's
                                    receipt of tax refund(s) arising as a result
                                    of its submission of a claim for such
                                    refund(s) due to its recognition of the
                                    Additional Net Restructuring Charge. 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 hereunder is to be
                                    applied to the outstanding balance of a
                                    LIBOR Based Rate Loan, to permit the
                                    Borrower to defer such payment until the end
                                    of the applicable LIBOR Interest Period. If
                                    the payment 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 Revolving Credit Loans until such
                                    payment is actually made by Borrower to
                                    reduce the outstanding principal balance of
                                    the Revolving Credit Loans.

c.       Section 2.7 of the Loan Agreement shall be deleted in its entirety
                and replaced as follows:

                                    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 Permitted
                                    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.

d.       Section 6.14 of the Loan Agreement shall be deleted in its entirety
                 and replaced as follows:

                                    6.14 Acquisitions. All Acquisitions
                                    (regardless of whether such Acquisition is
                                    funded with the proceeds of any Loan
                                    hereunder), must be approved by the Majority
                                    Lenders, in their sole discretion. 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 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.

2. Permitted Asset or Stock Sale. The Lenders' hereby acknowledge and confirm
that pursuant to the terms of that certain Asset Purchase Agreement dated August
31,2002 between RCM and Premier Staffing Services of Rutherford, LLC, RCM sold
assets related to its Intertec division located in Montclair, New Jersey, and
that such sale constituted a "Permitted Asset or Stock Sale" under the terms of
the Loan Agreement..

3. Representations and Warranties. Borrower warrants and represents to Lenders
that:

a. Prior Representations. By execution of this Amendment, Borrower reconfirms
that all warranties and representations made to Lender under the Loan Agreement
and the other Loan Documents are true and correct in all material respects as of
the date hereof, all of which shall be deemed continuing until all of the
Obligations to Lenders are paid and satisfied in full. Lenders acknowledge that
Borrower has notified Lenders of various lawsuits and claims referred in Note 8
to Borrower's financial statements included in Borrower's Form 10-Q for the
period ending September 30, 2002. In the opinion of management and based upon
the advice of counsel, the Borrower has meritorious defenses to the lawsuits and
claims. However, if material adverse determinations on either the lawsuits or
claims were to be rendered, such determinations will have a material adverse
impact on the results of operations in the period of the respective charges as
well as a material adverse impact on the financial position and liquidity of the
Borrower.

b. Authorization. The execution and delivery by Borrower of this Amendment and
the performance by Borrower of the transactions herein contemplated (i) are and
will be within its powers and (ii) are not and will not be in contravention of
any order of court or other agency of government, of law or of any indenture,
agreement or undertaking to which Borrower is a party or by which the property
of Borrower is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any lien,
charge or encumbrance of any nature on any of the properties of Borrower.

c. Valid, Binding and Enforceable. This Amendment and any other instrument,
document or agreement executed and delivered in connection herewith, will be
valid, binding and enforceable in accordance with their respective terms subject
to bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and general equitable principles.

d. Costs. Upon execution hereof, Borrower shall pay all costs (including
attorneys' fees of Lenders) attendant to this Amendment.

4. Ratification of Loan Documents. This Amendment is hereby incorporated into
and made a part of the Loan Agreement and all other Loan Documents respectively,
the terms and provisions of which, except to the extent modified by this
Amendment are each ratified and confirmed and continue unchanged in full force
and effect. Borrower acknowledges and agrees that, to its knowledge, it has no
defenses, set-offs, counterclaims or deductions of any nature with respect to
its obligations to Lender. Any reference to the Loan Agreement and all other
Loan Documents respectively in this or any other instrument, document or
agreement related thereto or executed in connection therewith shall mean the
Loan Agreement and all other Loan Documents respectively as amended by this
Amendment. The Loan Agreement and this Amendment shall be construed as
integrated and complementary of each other, and augmenting and not restricting
Lender's powers, rights, remedies and security. If, after applying the
foregoing, an inconsistency still exists, the provisions of this Amendment shall
control.

5. Effectiveness Conditions. This Amendment shall become effective upon the full
execution of this Amendment and the following:

a. Payment of the Lender's legal fees attendant to this Amendment;





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b. A Certificate of the Secretary or Assistant Secretary of the Borrower, dated
the date hereof, including (i) resolutions duly adopted by the Borrower
authorizing this Amendment, and (ii) evidence of the incumbency and signature of
the officers executing the Amendment on the Borrower's behalf.

c. Any other documents reasonably required by Agent or Lenders.

6. Governing Law. This Amendment and all instruments, documents and agreements
and the rights and obligations of the parties hereto and thereto shall be
governed by and interpreted in accordance with the substantive laws of the
Commonwealth of Pennsylvania.

7. Severability. The invalidity or unenforceability of any provision of this
Amendment shall not affect the validity or enforceability of the remaining
provisions.

8. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.

9. Modification. This Amendment may not be modified, amended or terminated
except by an agreement in writing executed by the parties hereto.

         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:_______________________


                                                 SOFTWARE ANALYSIS &
                                                  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:______________________





































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, ATLANTA, as
                                                  Documentation Agent and Lender

                                                 By:_________________________

                                                 Name:_______________________

                                                 Title:______________________


                                                 FLEET NATIONAL BANK,
                                                  as Syndication Agent and
                                                   Lender

                                                 By:_________________________

                                                 Name:_______________________

                                                 Title:______________________






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