SECOND AMENDMENT TO RIGHTS AGREEMENT
THIS SECOND AMENDMENT to Rights Agreement (this "Amendment"),
effective as of the 5th day of May, 2003, is made and entered into by and
between TECHTEAM GLOBAL, INC. (formerly known as National TechTeam, Inc.), a
Delaware corporation (the "Company"), and U.S. STOCK TRANSFER CORPORATION, a
California corporation and Rights Agent under the Rights Agreement referred to
below (the "Rights Agent").
RECITALS:
A. The Company and the Rights Agent are parties to that
certain Rights Agreement, dated as of May 6, 1997, as amended by First Amendment
to Rights Agreement, dated as of August 24, 1999 (the "Rights Agreement").
B. The Board of Directors of the Company believes it is
desirable, and has authorized certain of its officers, to amend the Rights
Agreement to provide that holders of shares of the Company's Series A
Convertible Preferred Stock, par value $.01 per share ("Convertible Preferred
Stock"), as of the Close of business on the Distribution Date (as such terms are
defined in the Rights Agreement) shall be entitled to such rights, benefits and
privileges as holders of shares of the Company's Common Stock, par value $.01
per share ("Common Stock"), are entitled under the Rights Agreement on a basis
determined as if each holder of shares of Convertible Preferred Stock
outstanding as of the Close of business on the Distribution Date had converted
all such Convertible Preferred Stock into shares of Common Stock as of the such
time.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows:
1. Amendment of Section 1 of the Rights Agreement. Section 1
of the Rights Agreement is hereby amended as follows:
a. Section 1(h) of the Rights Agreement is hereby amended
and restated in its entirety to read as follows:
"(h) "Convertible Preferred Stock" shall mean shares of
the Company's Series A Convertible Preferred Stock, par value
$.01 per share; provided, however, that for purposes of
determining any rights, benefits and privileges to which
holders of shares of Convertible Preferred Stock are entitled
hereunder as of a particular time, such rights, benefits and
privileges shall be determined on a basis determined as if
each holder of shares of Convertible Preferred Stock
outstanding as of such time had converted all such Convertible
Preferred Stock into shares of Common Stock as of such time."
b. Sections 1(i) through 1(u) of the Rights Agreement is
hereby amended by renumbering such sections as Sections 1(j) through
1(v), respectively.
c. A new Section 1(i) is hereby inserted in the Rights
Agreement to read in its entirety as follows:
"(i) "Covered Securities" shall mean shares of
the Company's Common Stock and Convertible Preferred Stock."
2. Amendment of Section 3 of the Rights Agreement. Section
3 of the Rights Agreement is hereby amended as follows:
a. Section 3(a)(iii) of the Rights Agreement is hereby
amended and restated in its entirety to read as follows:
"(iii) the close of business on the tenth day after a
majority of the Company's Board of Directors determines,
pursuant to the criteria set forth in Section 11(a)(ii)(D)
hereof, that a Person is an Adverse Person (the earliest of
(i), (ii) and (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3)
by the certificates for Covered Securities registered in the
names of the holders thereof (which certificates for Covered
Securities shall also be deemed to be Right Certificates (as
defined below)) and not by separate Right Certificates, and
(y) the right to receive Right Certificates will be
transferable only simultaneously with and together with the
transfer of the underlying shares of Covered Securities. Until
the earlier of the Distribution Date or the Expiration Date,
the surrender for transfer of such certificates for shares of
Covered Securities shall also constitute the surrender for
transfer of the Rights associated with the shares of Covered
Securities represented thereby; and the conversion of shares
of Convertible Preferred Stock into shares of Common Stock
shall also constitute the surrender of Rights associated with
such shares of Convertible Preferred Stock in exchange for the
Rights associated with the shares of Common Stock into which
such shares of Convertible Preferred Stock are converted. As
soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send), by first-class, insured,
postage prepaid mail, to each record holder of the Covered
Securities as of the Close of business on the Distribution
Date, at the address of such holder shown on the records of
the Company, one or more right certificates, in substantially
the form attached hereto as Exhibit B (the "Right
Certificates"), evidencing one Right for each share of Covered
Securities so held (in the case of Convertible Preferred
Stock, subject to the proviso of Section 1(h) hereof), subject
to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Covered
Securities has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Right Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so
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that Right Certificates representing only whole numbers of
Right are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates and
may be transferred by the transfer of the Right Certificates
as permitted hereby, separately and apart from any transfer of
one or more shares of Covered Securities, and the holders of
such Right Certificates as listed in the records of the
Company or any transfer agent or registrar for the Rights
shall be the record holders thereof."
b. Section 3(b) of the Rights Agreement is hereby amended
by replacing all references to the defined term "Common Stock" in such
section with references to the defined term "Covered Securities."
c. Sections 3(c) of the Rights Agreement is hereby amended
and restated in its entirety to read as follows:
"(c) Rights shall be issued in respect of all shares
of Covered Securities which are issued after the Record Date
but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such shares of
Covered Securities shall also be deemed to be certificates for
Rights. Certificates representing shares of Covered Securities
shall bear the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights
Agreement between TechTeam Global, Inc. and U.S. Stock
Transfer Corporation dated as of May 6, 1997, as amended, the
terms of which are incorporated herein by reference and a copy
of which is on file at the principal executive offices of
TechTeam Global, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed,
may expire, or may be evidenced by separate certificates and
no longer be evidenced by this certificate. TechTeam Global,
Inc. will mail to the holder of this certificate a copy of the
Rights Agreement (as in effect on the date of mailing) without
charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or an Adverse Person or any
Affiliate or Associate of an Acquiring Person or an Adverse
Person (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by
any subsequent holder, will become null and void.
With respect to such certificates containing the
foregoing legend, until the earlier of the Distribution Date
or the Expiration Date, the Rights associated with the Covered
Securities represented by such Certificates shall be evidenced
by such Certificates alone and registered holders of Covered
Securities shall also be the registered holders of the
associated Rights; and the surrender for transfer of any of
such certificates shall also constitute the transfer of the
Rights associated with the Covered Securities represented by
such certificates; and the conversion of shares of Convertible
Preferred Stock into shares of Common Stock shall also
constitute the surrender of Rights associated with such shares
of Convertible Preferred Stock
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in exchange for the Rights associated with the shares of
Common Stock into which such shares of Convertible
Preferred Stock are converted.
3. Amendment of Section 13(c) of the Rights Agreement.
Section 13(c) of the Rights Agreement is hereby amended by replacing the
reference to the defined term "Common Stock" in such section with a reference to
the defined term "Covered Securities."
4. Amendment of Section 15 of the Rights Agreement. Section
15 of the Rights Agreement is hereby amended by replacing the references
to the defined term "Common Stock" in such section with references to the
defined term "Covered Securities."
5. Amendment of Section 16 of the Rights Agreement. Section
16 of the Rights Agreement is hereby amended by replacing the references to the
defined term "Common Stock" in such section with references to the defined term
"Covered Securities."
6. Amendment of Summary of Rights to Purchase Preferred
Stock. The Summary of Rights to Purchase Preferred Stock attached as Exhibit C
to the Rights Agreement is hereby amended and restated in its entirety in the
form attached as Exhibit A to this Amendment.
7. Certificate. The Secretary of the Company shall execute
and deliver to the Rights Agent a Certificate in the form attached hereto as
Exhibit A, which states that this Amendment is in compliance with the terms of
Section 27 of the Rights Agreement.
8. No Further Amendment. Except as provided in Sections 1
through 6 above, the terms and conditions of the Rights Agreement shall be
unaffected by this instrument and shall remain in full force and effect.
9. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the Company and the Rights Agent and their
respective successors and assigns.
10. Governing Law. This instrument shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
11. Counterparts. This instrument may be executed in any
number of counterparts, and each of such counterparts shall for all purposes are
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
12. Severability. If any term, provision, covenant or
restriction of this Amendment or applicable to this Amendment is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment and the Rights Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument,
effective as of the date recited above.
TECHTEAM GLOBAL, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive Officer
Attest:
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary and General Counsel
U.S. STOCK TRANSFER CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Attest:
/s/ Xxxxx Clays
------------------------------------
Name: Xxxxx Clays
Title: Assistant Vice President
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On April 29, 1997, the Board of Directors of TechTeam Global,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of the Company's Common Stock, $.01 par value per share (the
"Common Stock"), to stockholders of record at the close of business on May 7,
1997. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Stock"), at a Purchase Price of $80 per one
one-hundredth of a share of Preferred Stock ("Purchase Price"), subject to
adjustment. The Purchase Price may be paid, at the option of the holder, in cash
or shares of Common Stock having a value at the time of exercise equal to the
Purchase Price. The description and terms of the Rights are set forth in a
Rights Agreement, dated as of May 6, 1997, as amended (the "Rights Agreement"),
between the Company and U.S. Stock Transfer Corporation, as Rights Agent.
On April 8, 2003, the Board of Directors approved amendments
to the Rights Agreement providing that holders of shares of the Company's Series
A Convertible Preferred Stock, par value $.01 per share ("Convertible Preferred
Stock," and together with the Common Stock, "Covered Securities"), as of the
close of business on the Distribution Date (as defined below) shall be entitled
to such rights, benefits and privileges as holders of shares of the Company's
Common Stock, are entitled under the Rights Agreement on a basis determined as
if each holder of shares of Convertible Preferred Stock outstanding as of the
close of business on the Distribution Date had converted all such Convertible
Preferred Stock into shares of Common Stock as of the such time.
Initially, the Rights will be represented by the certificates
evidencing the Covered Securities and no separate Right Certificates will be
distributed. Upon the earlier of the following dates (the "Distribution Date"),
the Rights will separate from the Covered Securities: (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Dates"); (ii) 10 days following the date that a tender
or exchange offer by any Person is first published or sent or given within the
meaning of Rule 14d-4(a) promulgated under the Exchange Act or any successor
rule, if upon consummation thereof, such Person would be the Beneficial Owner of
15% or more of the outstanding shares of Common Stock; or (iii) promptly after a
majority of the Board of Directors of the Company shall declare any person to be
an "Adverse Person" upon a determination that such person, together with its
affiliates and associates, has become the beneficial owner of an amount of
Common Stock which a majority of the Board of Directors determines to be
substantial (but in no event less than 15% of the shares of Common Stock then
outstanding), and a determination by a majority of the Board of Directors that
(a) such beneficial ownership by such person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under circumstances where a majority of the Board of Directors determines that
the best long-term interests of the Company and its stockholders would not be
served by taking such action or entering into such transactions or series of
transactions at that time or (b) such beneficial ownership is causing or
reasonably likely to cause a material adverse
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impact (including impairment of relationships with customers or impairment of
the Company's ability to maintain its competitive position) on the business or
prospects of the Company.
Until the Distribution Date, (i) the Rights will be evidenced
by the Covered Securities certificates and will be transferred with, and only
with, such Covered Securities certificates, (ii) new Covered Securities
certificates issued after May 7, 1997 will contain a notation incorporating the
Rights Agreement by reference, (iii) the surrender for transfer of such
certificates for shares of Covered Securities shall also constitute the
surrender for transfer of the Rights associated with the shares of Covered
Securities represented thereby; and (iv) the conversion of shares of Convertible
Preferred Stock into shares of Common Stock shall also constitute the surrender
of Rights associated with such shares of Convertible Preferred Stock in exchange
for the Rights associated with the shares of Common Stock into which such shares
of Convertible Preferred Stock are converted.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. Detroit time, on May 6, 2007 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Right
Certificates will be mailed to the holders of record of the Covered Securities
as of the close of business on the Distribution Date and, thereafter, the
separate Right Certificates alone will represent the Rights. Only shares of
Covered Securities issued prior to the Distribution Date will be issued with
Rights.
In the event that the Board of Directors determines that a
person is an Adverse Person or, at any time following the Distribution Date, (i)
the Company is the surviving corporation in a merger or other business
combination with an Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of more than 15% of the
then outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which a majority of the Board of Directors
determines to be fair to and otherwise in the best interests of the Company and
its stockholders), (iii) an Acquiring Person engages in one or more
"self-dealings transactions" as set forth in the Rights Agreement, or (iv)
during such time as there is an Acquiring Person, an event occurs which results
in such Acquiring Person's ownership interest being increased by more than 1%
(e.g., a reverse stock split); each holder of a Right promptly thereafter (but
in the case of (ii) above, 5 days thereafter) will have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the exercise
price of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or an Adverse Person will be null and
void. However, Rights are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable or
exchangeable by the Company as set forth below.
For example, at an exercise price of $80 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding
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paragraph would entitle its holder to purchase $160 worth of Common Stock (or
other consideration, as noted above) for $80. Assuming that the Common Stock had
a per share value of $20 at such time, the holder of each valid Right would be
entitled to purchase eight shares of Common Stock for $80.
Unless the Rights are earlier redeemed or exchanged, in the
event that, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation (other than a merger which follows an
offer described in the second preceding paragraph and is at the same price), or
(ii) 50% or more of the Company's assets or earning power is sold or
transferred; each holder of a Right (except rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise of such holder's Right, common stock of the acquiring company having a
value equal to two times the exercise price of the Right.
The events set forth in the third preceding paragraph, and the
events set forth in subsections (i) and (ii) of the first preceding paragraph
shall collectively be termed "Triggering Events" and each a "Triggering Event."
The Purchase Price payable, and the number of one
one-hundredths of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price.
At any time on or prior to the close of business on the tenth
day following the Stock Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable in cash or stock
(the "Redemption Price"). The Company may not redeem the Rights if a majority of
the Board of Directors has previously determined a person to be an Adverse
Person. After the redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board of Directors ordering redemption of the Rights
with, where required, the concurrence of a majority of the Board of Directors,
the Rights will terminate and the only right of the holders of Rights will be to
receive the $.01 Redemption Price.
In addition, at any time after the Stock Acquisition Date -
but before the Acquiring Person has acquired a 50% stake - the Board may, at its
discretion, exchange each Right (except those owned by the Acquiring Person) for
one share of TechTeam Common Stock.
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The shares of Preferred Stock purchasable upon exercise of the
Rights will have a minimum preferential quarterly dividend of $1.00 per share,
but will be entitled to receive, in the aggregate, a dividend of 100 times the
dividend declared per share of Common Stock. In the event of liquidation, the
holders of the shares of Preferred Stock will be entitled to receive a minimum
liquidation payment of $100 per share, but will be entitled to receive an
aggregate liquidation payment equal to 100 times the payment made per share of
Common Stock. Each share of Preferred Stock will have one hundred votes, voting
together with the shares of Common Stock.
In the event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the shares of Preferred Stock
as to dividends and liquidation, and in the event of mergers and consolidation,
are protected by customary anti-dilution provisions.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, other than rights resulting from
such holder's ownership of shares of Common Stock, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above.
In general, other than those provisions relating to the
principal economic terms of the Rights, the provisions of the Rights Agreement
may be amended by the Board of Directors of the Company prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board of Directors in order to cure any
ambiguity, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement and the amendments thereto have
been filed with the Securities and Exchange Commission. A copy of the Rights
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference.
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CERTIFICATE
The Undersigned, being the duly elected Secretary of TechTeam Global,
Inc., a Delaware corporation (the "Company"), hereby certifies that the Second
Amendment of Rights Agreement dated as of May 5, 2003, between the Company and
U.S. Stock Transfer Corporation, is in compliance with the terms of Section 27
of the Rights Agreement dated as of May 6, 1997, as amended August 24, 1999,
between the Company and U.S. Stock Transfer Corporation.
Dated: May 5, 2003 TECHTEAM GLOBAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
Secretary
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