As filed with the Securities and
Exchange Commission on April 8, 2005 Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
TECHTEAM GLOBAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-2774613
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
27335 W. 11 MILE ROAD
SOUTHFIELD, MI 48024
(248) 357-2866
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL A. SOSIN with a copy to:
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
TECHTEAM GLOBAL, INC. TODD B. PFISTER
27335 WEST 11 MILE ROAD FOLEY & LARDNER LLP
SOUTHFIELD, MI 48024 321 NORTH CLARK STREET, SUITE 2800
(248) 357-2866 CHICAGO, ILLINOIS 60610
(Name, address, including zip code, and (312) 832-4500
telephone number, including area code, of
agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of the registration statement. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box.[X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1)(2) PRICE PER SHARE (3) OFFERING PRICE (3) REGISTRATION FEE
Common Stock, $0.01 par value 689,656 shares $ 11.05 $ 7,620,698.80 $ 897
(1) Each share of common stock has attached thereto a preferred stock purchase
right.
(2) In the event of a stock split, stock dividend, or similar transaction
involving the common stock, in order to prevent dilution, the number of
shares registered shall be automatically increased to cover additional
shares in accordance with Rule 416(a) under the Securities Act.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
average of the high and low sale prices of the common stock as reported on
the NASDAQ National Market System on April 5, 2005, which date was within
five business days of the date of this filing. The value attributable to
the preferred stock purchase rights is reflected in the price of the
common stock.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where this offer or sale is not permitted.
Subject to Completion - _________, 2005
689,656 SHARES
TECHTEAM GLOBAL, INC.
COMMON STOCK
We are registering these shares of our common stock for resale by the
selling shareholder named in this prospectus, or its successors or permitted
transferees. These shares constitute shares to be acquired by the selling
shareholder upon the conversion of shares of our Series A Convertible Preferred
Stock acquired directly from us in a private placement completed on April 8,
2003. We will not receive any proceeds from the sale of these shares, although
we have paid the expenses of preparing this prospectus and the related
registration statement.
The shares are being registered to permit the selling shareholder to sell
the shares from time to time in the public market. The selling shareholder may
sell this common stock through ordinary brokerage transactions, directly to
market makers of our shares or through any other means described in the section
entitled "Plan of Distribution" beginning on page 18.
Shares of our common stock are traded on the NASDAQ National Market System
under the symbol "TEAM." The last sale price of our common stock reported on the
NASDAQ National Market System on April 5, 2005 was $11.22 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 1 FOR A DISCUSSION OF THESE RISKS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______, 2005.
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TABLE OF CONTENTS
The Company................................... 1
Risk Factors.................................. 2
Forward-Looking Statements.................... 10
Use of Proceeds............................... 10
Description of Capital Stock.................. 11
Selling Shareholder........................... 17
Plan of Distribution.......................... 18
Where You Can Find More Information........... 21
Incorporation of Information by Reference..... 21
Legal Matters................................. 22
Experts....................................... 22
In this prospectus, "TechTeam," "company," "we," "us," and "our" refer to
TECHTEAM GLOBAL, INC. and its subsidiaries, except where the context otherwise
requires or as otherwise indicated.
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission. The selling shareholder named in
this prospectus may from time to time sell the securities described in the
prospectus.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT. WE HAVE
NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS
AND ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF THE DATES ON THEIR
RESPECTIVE COVERS, REGARDLESS OF TIME OF DELIVERY OF THIS PROSPECTUS AND ANY
APPLICABLE PROSPECTUS SUPPLEMENT OR ANY SALE OF SECURITIES. OUR BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE
THOSE DATES.
i
THE COMPANY
GENERAL OVERVIEW
We are a global provider of information technology ("IT") and business
process outsourcing ("BPO") support services to Fortune 1000 companies,
multinational companies, product providers, small and mid-size companies and
government entities. Our client base includes Ford Motor Company, Canon Europe
NV, Deere & Company, MICROS, Inc., United Parcel Service, American Community
Mutual Insurance Company, DaimlerChrysler AG, and Schering-Plough Research
Institute, as well as federal government agencies and local government entities,
such as the United States Department of Defense.
Our subsidiaries are: TechTeam Global NV/SA (Brussels, Belgium), with its
subsidiary TechTeam A.N.E. NV/SA (Gent, Belgium); TechTeam Global Ltd. (United
Kingdom); TechTeam Global GmbH (Germany); TechTeam Global AB (Sweden); S.C.
TechTeam Global SRL (Romania); TechTeam Asia Pacific (Private) Ltd. (India);
Digital Support Corporation ("DSC," Chantilly, Virginia), with its subsidiary
Sytel, Inc., acquired on January 3, 2005, ("Sytel," Bethesda, Maryland);
TechTeam Cyntergy, L.L.C., and TechTeam Capital Group, L.L.C. (Southfield,
Michigan).
Over the past 15 months, we have acquired three of those companies -- DSC,
TechTeam A.N.E., and Sytel. As a result of these acquisitions, we have
strategically added governmental technology services to our long-standing core
businesses of corporate helpdesk, professional services/systems integration,
technical staffing, and training services. Consequently, our business is
currently comprised of five reporting segments -- Diversified IT Outsourcing
Services (comprised primarily of our former corporate helpdesk services
segment), Government Technology Services (comprised of all services provided to
government-based customers primarily through our DSC and Sytel subsidiaries), IT
Consulting and Systems Integration (comprised primarily of our former
Professional Services/Systems Integration segment), Technical Staffing, and
Learning Services (formerly our training programs segment).
CORPORATE INFORMATION
TechTeam was incorporated under the laws of the State of Delaware in 1987.
Our principal executive offices are located at 27335 West 11 Mile Road,
Southfield, Michigan 48034, and our telephone number is (248) 357-2866. Our
website address is www.techteam.com. However, the information contained on our
website is not part of this prospectus or any prospectus supplement.
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RISK FACTORS
You should carefully read the following factors and other information
contained or incorporated by reference in this prospectus before investing in
our common stock. Any of these risks could have a material adverse effect on our
business, financial condition, results of operations and prospects, which could
in turn have a material adverse effect on the price of our common stock. In this
case, you may lose all or part of your investment.
RISKS RELATED TO US AND OUR BUSINESS:
WE ARE DEPENDENT UPON A LIMITED NUMBER OF MAJOR CUSTOMERS FOR A SUBSTANTIAL
PORTION OF OUR REVENUE.
We depend upon Ford Motor Company and its subsidiaries for a substantial
portion of our revenue. For the three years ended December 31, 2004, 2003 and
2002, Ford accounted for 37.4%, 52.9% and 55.9%, respectively, of our total
revenue. The past three years have been difficult financially for this client,
and further deterioration of its financial condition could have a material
adverse impact on our business, as Ford may seek further price concessions or
the termination of existing projects.
Our largest contract, the Ford Global Helpdesk contract (currently
scheduled to expire on July 31, 2005), is up for renewal during 2005. While we
believe that we are positioned to obtain renewal of this contract, there can be
no assurances in this regard. The loss of, or a significant reduction in,
business from this or any other significant customer would have a material
adverse effect on our business, financial condition and results of operations.
INTENSE COMPETITION COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
We face intense competition in all of our markets and for all of our
services. Many competitors have substantially greater resources, including more
locations, greater financial resources, a larger client base, and greater name
and brand recognition. These competitors may be willing to provide the same
services that we do at a loss in order to attain other, more lucrative business
from our customers. Due to this competition, it may be difficult for us to
retain our current customers or grow our revenue outside of our current customer
base.
The intense competition may result in our customers being able to demand
reduced pricing in order for us to remain a preferred vendor. These pressures
will likely increase due to the trend to move outsourcing services offshore to
countries with lower labor costs, such as India, Malaysia, and the Philippines.
Our inability to continue to execute upon our strategy to address the
globalization of the support services market could have a material adverse
impact on our ability to maintain and grow our customer base. Further, we may
have to continue to lower the prices of our services to stay competitive, while
at the same time trying to maintain or improve revenue and gross margin. If we
cannot proportionately decrease our cost structure on a timely basis in response
to competitive price pressures, our gross margin and therefore our profitability
could be adversely affected. Any of these circumstances could have a material
adverse effect on our business, financial condition, and results of operations.
Moreover, the process to win new business tends to be long. Our
diversified IT outsourcing services business models require significant changes
to our customers' business processes and each customer has significant internal
political difficulties with local environments giving up decentralized control
of the support function. The decision makers are rarely involved in the early
details of the selection process so there are multiple sales efforts -- to the
team charged with selection and then to the Chief Information Officer/Chief
Executive Officer/Board -- that have to occur. Our results are dependent on our
ability to successfully manage the sales process and strong competition in these
markets.
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WE ARE SUBJECT TO CONTRACT RISKS INHERENT IN OUR BUSINESS.
The great majority of our contracts, including our Ford Global Helpdesk
contract, may be terminated without cause on short notice, often upon as little
as 90 days' notice. Terminations and non-renewals of major contracts could have
a material adverse impact upon our business, financial condition, and results of
operations.
A portion of our diversified IT outsourcing services business is billed
during a one-month period on a managed service basis (where the fee is fixed to
perform specified services) as opposed to time and materials. The onset of
problems in our customers' infrastructure, such as computer viruses, may require
us to deploy additional resources to solve these problems. In many instances, we
would not receive any additional revenue for the work performed, thereby
adversely impacting our profitability for that one-month period.
To the extent we provide service on a per-incident or per-minute basis,
our financial performance is dependent upon the volume of service requests that
we receive on the project. Some of our contracts do not contain minimum
guaranteed volume, so we may not always receive enough volume to pay for our
costs relating to a specific contract. Also, many of our contracts contain
financial penalties for our failure to meet the contractual performance service
levels. If the volume is too high, we may not be able to meet the service
levels. In the United States, we are able to manage this risk through changes in
our staffing, but due to labor laws, our European entities do not have as much
flexibility in staffing. Our inability to estimate accurately the resources and
related expenses required for the managed service project or our failure to
complete our contractual obligations in a manner consistent with their terms
could materially and adversely affect the business.
WE ARE SUBJECT TO RISKS INHERENT IN THE PROVISION OF TECHNOLOGY SERVICES TO
GOVERNMENTAL ENTITIES.
We derive an increasing amount of our revenues from government contracts
that typically are awarded through competitive processes and span a one-year
base period and one or more option years. The unexpected termination or
non-renewal of one or more of our significant contracts could result in
significant revenue shortfalls. Our clients generally have the right not to
exercise the option periods. In addition, our contracts typically contain
provisions permitting an agency to terminate the contract on short notice, with
or without cause. Following the expiration of the contract term, if the client
requires further services of the type provided in the contract, there is
frequently a competitive re-bidding process. We may not win any particular
re-bid or be able to successfully bid on new contracts to replace those that
have been terminated.
Many of the systems we support involve managing and protecting information
involved in the Department of Defense and other sensitive government functions.
A security breach in one of these systems could cause serious harm to our
business, could result in negative publicity and could prevent us from having
further access to such critically sensitive systems or other similarly sensitive
areas for other governmental clients. Losses that we could incur from such a
security breach could exceed the policy limits that we have for "errors and
omissions" insurance.
Some of our government contracts require us, and some of our employees, to
maintain security clearances. If we lose or are unable to obtain security
clearances, the client can terminate the contract or decide not to renew it upon
its expiration. As a result, to the extent we cannot obtain the required
security clearances for our employees working on a particular engagement, we may
not derive the revenue anticipated from the engagement, which, if not replaced
with revenue from other engagements, could negatively impact our operating
results.
Federal government agencies routinely audit government contracts. These
agencies review a contractor's performance on its contract, pricing practices,
cost structure and compliance with applicable
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laws, regulations and standards. An audit could result in an adjustment to our
revenues because any costs found to be improperly allocated to a specific
contract will not be reimbursed, while improper costs already reimbursed must be
refunded. If a government audit uncovers improper or illegal activities, we may
be subject to civil and criminal penalties and administrative sanctions,
including termination of contracts, forfeiture of profits, suspension of
payments, fines and suspension or debarment from doing business with federal
government agencies. In addition, we could suffer harm to our reputation if
allegations of impropriety were made against us.
We must comply with and are affected by federal government regulations
relating to the formation, administration, and performance of government
contracts. These regulations affect how we do business with our clients and may
impose added costs on our business. Any failure to comply with applicable laws
and regulations could result in contract termination, price or fee reductions or
suspension or debarment from contracting with the federal government. Further,
the federal government may reform its procurement practices or adopt new
contracting methods relating to the General Services Administration ("GSA")
schedule or other government-wide contract vehicles. To the extent that we are
unable to successfully comply with these regulations, our government technology
services business could be negatively impacted.
IF WE LOSE KEY MANAGEMENT PERSONNEL OR ARE UNABLE TO RECRUIT ADDITIONAL
QUALIFIED MANAGEMENT PERSONNEL, OUR BUSINESS AND RESULTS OF OPERATIONS COULD BE
ADVERSELY AFFECTED.
Our success is highly dependent upon the efforts, direction, and guidance
of its senior management. The only employment agreements that we currently have
with our executive officers are with our President and Chief Executive Officer,
the Vice President Sales and Marketing, EMEA, the President and Chief Executive
Officer of Digital Support Corporation, and the President and Chief Executive
Officer of Sytel, Inc. Except for Employment Agreements Relating to a Change of
Control, which only apply to a change in the control of the company, we do not
have any other employment agreements with other members of our executive officer
team. The loss of any of these senior executives or our inability to attract,
retain, or replace key management personnel in the future, could have a material
adverse effect on our business, financial condition, and results of operations.
OUR INABILITY TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS.
Our business involves the delivery of professional services and is very
labor intensive. Our success depends in large part upon our ability to attract,
develop, motivate, and retain highly skilled technical, clerical, and
administrative employees. Qualified personnel, especially in Washington, D.C.,
are in high demand. Accordingly, we expect to experience increased compensation
costs that may not be offset through either increased productivity or higher
customer pricing. Moreover, no assurances can be given that we will be able to
attract and retain sufficient numbers of qualified employees in the future,
especially when we need to expand our services in a short time period. We
attempt to implement a career path model where our helpdesks are located,
thereby enabling our employees to move to new jobs that require higher skill
levels and pay more money. Our inability to effectively implement this business
model in these locations could negatively affect our employee retention rates.
Our failure to attract and retain employees could have a material adverse effect
on our business, financial condition, and results of operations.
IMPLEMENTATION OF OUR STRATEGY TO GROW THROUGH COMPLEMENTARY BUSINESS
ACQUISITIONS IS SUBJECT TO NUMEROUS RISKS AND DIFFICULTIES.
Our business strategy includes seeking to make complementary business
acquisitions. In order to pursue a growth by acquisition strategy successfully,
we must identify suitable candidates for these
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transactions, complete these transactions, and manage post-closing issues such
as the integration of acquired companies or their employees. Integration issues
are complex, time-consuming and expensive and, without proper planning and
implementation, could significantly disrupt our business, including, but not
limited to, the diversion of management's attention, the loss of key business
and/or personnel from the acquired company, unanticipated events, legal
liabilities, dilutive effect of the issuance of additional securities, and
amortization of intangibles. Moreover, the financial risks continue after the
integration of the company. If the business becomes impaired, there could be a
non-cash partial or full write-off of the goodwill attributed to the
acquisition. Transactions may result in significant costs and expenses and
charges to earnings, including those related to severance pay, early retirement
costs, employee benefit costs, asset impairment charges, charges from the
elimination of duplicative facilities and contracts, in-process research and
development charges, inventory adjustments, legal, accounting and financial
advisory fees, and required payments to executive officers and key employees
under retention plans. Any of these possible difficulties could have a material
adverse effect on our business, financial condition, and results of operations.
WE ARE SUBJECT TO NUMEROUS RISKS RELATING TO OUR INTERNATIONAL OPERATIONS.
We operate businesses in many countries outside the United States, all of
which are currently located throughout Europe. As part of our business strategy,
we plan to further expand our global reach to be able to deliver services from
Asia and South America. As a result, we expect to continue expansion through
start-up operations and acquisitions in additional countries. Expansion of our
existing international operations and entry into additional countries will
require management attention and financial resources. Our future revenue, gross
margin, expenses, and financial condition also could suffer due to a variety of
international factors, including the following:
- changes in a country's or region's economic or political conditions,
including inflation, recession, interest rate fluctuations, and
unanticipated military conflicts;
- currency fluctuations, particularly in the euro, which contribute to
variations in sales of services in impacted jurisdictions and also
affect our reported results expressed in U.S. dollars;
- longer accounts receivable cycles and financial instability among
customers;
- local labor conditions and regulations;
- differences in cultures and languages, which impair our ability to
work as an effective global team;
- differing political and social systems;
- changes in the regulatory or legal environment;
- differing technology standards or customer requirements;
- difficulties associated with repatriating cash generated or held
abroad in a tax-efficient manner and changes in tax laws;
- natural and medical disasters.
To the extent that we do not manage our international operations
successfully, our business could be adversely affected and our revenues or
earnings could be reduced.
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In addition, there has been an increasing amount of political discussion
and debate related to worldwide outsourcing, particularly from the United States
to offshore locations. While there is federal and state legislation currently
pending related to this issue, it is too early to determine whether such
legislation, if enacted, would have an adverse effect on our results of
operations and financial condition.
THERE ARE SUBSTANTIAL RISKS ASSOCIATED WITH EXPANDING OUR BUSINESS INTO OFFSHORE
MARKETS.
The industry trend to move business towards offshore markets could result
in excess operating capacity in the United States, thereby increasing
competition for customers. Moreover, there are no assurances that we will be
able to successfully expand into and conduct business in offshore markets. The
success of any offshore operation is subject to numerous contingencies, some of
which are beyond management control, including general and regional economic
conditions, prices for our services, competition, changes in regulation, and
other risks. Any failure in our strategy could have a material adverse effect on
our business, financial condition, and results of operations. See "Risks
Associated with International Operations."
Our customers are primarily attracted to a reduction in cost of our
services as a result of delivery from an offshore location, and they are looking
to enter into long-term contracts to provide monthly services with a price that
does not adjust significantly with inflation. When a number of service providers
enter these offshore locations, the competition for employees increases, causing
turnover and increasing labor costs. In these circumstances, we bear the risk of
inflation, which could result in our costs increasing faster than we can improve
technician productivity.
WE ARE SUBJECT TO CURRENCY RISKS AS A RESULT OF OUR EUROPEAN OPERATIONS.
We serve an increasing number of our U.S.-based customers using helpdesks
in Europe. Some of these contracts are priced in U.S. dollars, while a
substantial portion of our costs are incurred in Romanian lei or the euro. Thus,
we are subject to a foreign currency exchange risk. Although we enter into
contracts to limit potential foreign currency exposure, we do not fully hedge
this exposure. As a result, our gross profit may be reduced on these contracts.
OUR INABILITY TO PROPERLY MANAGE PROJECTS AND CAPACITY COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS.
Our ability to profit from the global trend toward outsourcing depends in
part on how effectively we manage our helpdesk capacity. There are several
factors and trends that have intensified the challenge of resource management.
In order to create the additional capacity necessary to accommodate new or
expanded outsourcing projects, we must consider opening new helpdesk facilities.
The opening or expansion of a helpdesk facility may result, at least in the
short term, in idle capacity until any new or expanded program is implemented
fully. We periodically assess the expected long-term capacity utilization of its
helpdesk facilities. As a result, it may, if deemed necessary, consolidate,
close or partially close under-performing helpdesk facilities in order to
maintain or improve targeted utilization and margins. There can be no assurance
that we will be able to achieve or maintain optimal utilization of its helpdesk
capacity. If we do not effectively manage our capacity, our results of
operations could be adversely affected.
With the inclusion of our Romanian helpdesk facility, we have
significantly increased the amount of business that we are performing for the
same customers from more than one location. Multi-site delivery increases the
complexity of the service provided, including but not limited to managing call
volume and resources. Our inability to manage the different cultures and
personnel to deliver consistent quality from different sites could reduce our
profitability and results of operation.
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WE ARE HIGHLY DEPENDENT UPON TECHNOLOGY, AND OUR INABILITY TO KEEP UP WITH
TECHNOLOGICAL ADVANCES IN OUR INDUSTRY, OR OUR FAILURE OR INABILITY TO PROTECT
AND MAINTAIN OUR EXISTING SYSTEMS, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND RESULTS OF OPERATIONS.
Our success depends in part on our ability to develop IT solutions that
keep pace with continuing changes in the IT industry, evolving industry
standards, and changing client preferences. There can be no assurance that we
will be successful in adequately addressing these developments on a timely basis
or that, if these developments are addressed, we will be successful in the
marketplace. For example, our Support Portal offering is comprised of our
proprietary incident management tool and software developed and sold by software
companies. We have integrated this software into the Support Portal. During this
time, there have been other tools developed by other competitors and software
vendors that can match the functionality of the Support Portal. If these other
tools can provide similar or better functionality at a lower effective cost, or
if our software vendors go out of business, we could have a product and service
offering that will lose its marketability. The cost to update our incident
management tool and change the third party software comprising the Support
Portal could be significant. Our inability to effectively keep pace with
continuing changes in the IT industry could have a material adverse effect on
our business, financial condition, and results of operations.
Moreover, experienced computer programmers and hackers may be able to
penetrate our network security, or that of our customers, and misappropriate our
confidential information, create system disruptions, or cause shutdowns. As a
result, we could incur significant expenses in addressing problems created by
security breaches of our network. Moreover, we could lose existing or potential
customers for information technology outsourcing services or other information
technology solutions, or incur significant expenses in connection with our
customers' system failures. In addition, sophisticated hardware and operating
system software and applications that we produce or procure from third parties
may contain defects in design and manufacture, including "bugs" and other
problems that can unexpectedly interfere with the operation of our systems. The
costs to eliminate or alleviate security problems, viruses, worms, and bugs
could be significant, and the efforts to address these problems could result in
interruptions, delays, or cessation of service.
Our operations are dependent upon our ability to protect our helpdesk
facility and our information databases against damages that may be caused by
fire and other disasters, power failure, telecommunications failures,
unauthorized intrusion, computer viruses, and other emergencies. The temporary
or permanent loss of such systems could have a material adverse effect on our
business, financial condition, and results of operations. Notwithstanding
precautions we have taken to protect ourselves and our clients from events that
could interrupt delivery of our services, there can be no assurance that a fire,
natural disaster, human error, equipment malfunction or inadequacy, computer
virus, firewall breach, or other event would not result in a prolonged
interruption in our ability to provide support services to our clients. As we
commence delivering services from an offshore location, the risks attendant to
interruption of telecommunications increase. Any interruption to our data or
voice telecommunications networks could have a material adverse effect on our
business, financial condition, and our results of operations.
OUR BUSINESS IS DEPENDENT UPON GENERAL ECONOMIC CONDITIONS, WHICH MAY AFFECT OUR
FINANCIAL PERFORMANCE AND THE PRICE OF OUR COMMON STOCK.
Our revenue and gross profit depend significantly on general economic
conditions and the demand for our services in the markets in which we compete.
Softened demand for our services caused by economic weakness and constrained
information technology spending over the past several years has resulted, and
may result in the future, in decreased revenue, gross profit, earnings, or
growth rates and problems with our ability to realize customer receivables. In
addition, customer financial difficulties have resulted, and
7
could in the future result, in increases in bad debt write-offs and additions to
reserves in our receivables portfolio. Uncertainty about future economic
conditions makes it difficult to forecast operating results and to make
decisions about future investments. Further delays or reductions in information
technology spending could have a material adverse effect on demand for our
products and services and consequently our results of operations, prospects, and
stock price.
RISING HEALTH CARE AND OTHER BENEFIT COSTS COULD ADVERSELY IMPACT OUR
PROFITABILITY.
Health care and other benefit costs continue to increase. Our business is
labor intensive, and therefore we have exposure to these increasing healthcare
benefit costs. While we attempt to compensate for these escalating costs in our
business cost models and customer pricing and have passed along some of these
increased costs to our employees, we have long-term, generally fixed-price
pricing agreements with our customers.
WE MAY BE SUBJECT TO RISKS ASSOCIATED WITH TERRORIST ACTS OR OTHER EVENTS BEYOND
OUR CONTROL.
Terrorist acts or acts of war (wherever located around the world) may
cause damage or disruption to TechTeam, our employees, facilities, partners,
suppliers, distributors, resellers, or customers, which could adversely impact
our revenue, costs and expenses, and financial condition.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR USE OF INTELLECTUAL PROPERTY.
We rely upon a combination of nondisclosure and other contractual
arrangements and trade secrets, copyright, and trademark laws to protect our
proprietary rights and the proprietary rights of third parties from whom we
license intellectual property. We enter into confidentiality agreements with our
employees, customers, and suppliers and limit distribution of proprietary
information. There can be no assurance, however, that the steps taken by us in
this regard will be adequate to deter misappropriation of proprietary
information or that we will be able to detect unauthorized use of such
information and take appropriate steps to enforce our intellectual property
rights.
Although we believe our services and/or software do not infringe upon the
intellectual property rights of others and that we have all of the rights
necessary to utilize the intellectual property employed in our business, we are
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require us to spend
significant sums of money in litigation, pay damages, develop non-infringing
intellectual property, or acquire licenses of the intellectual property, which
may be the subject of asserted infringement.
RISKS RELATED TO OUR COMMON STOCK AND THIS OFFERING
FUTURE SALES OF OUR COMMON STOCK, OR THE POSSIBILITY OR PERCEPTION OF SUCH
SALES, COULD DEPRESS OUR STOCK PRICE.
We cannot predict the effect that future sales of our common stock will
have on the market price of our common stock. As of March 28, 2005, we had
8,797,671 shares of common stock outstanding (9,487,327 shares assuming the
conversion of the shares of Series A Convertible Preferred Stock held by the
selling shareholder). Shares that we issue to the selling shareholder or other
shares of our common stock that we issue in the future may become available for
resale in the public market from time to time. Sales of substantial amounts of
our common stock, or the perception that such sales may occur, could adversely
affect the market price of our common stock or our ability to raise capital by
offering equity securities.
8
WE MAY EXPERIENCE VOLATILITY IN OUR STOCK PRICE THAT COULD AFFECT YOUR
INVESTMENT.
The price of our common stock has been, and may continue to be, highly
volatile in response to various factors, many of which are beyond our control,
including:
- the depth and liquidity of the trading market for our common stock;
- general economic conditions;
- developments in the industries or markets in which we operate;
- announcements by competitors;
- actual or anticipated variations in quarterly or annual operating
results;
- speculation in the press or investment community;
- sales of large blocks of our common stock or sales of our common
stock by insiders;
- regulation actions or litigation; and
- departures of our key personnel.
Our common stock's market price may also be affected by our inability to
meet analyst and investor expectations and failure to achieve projected
financial results. Any failure to meet such expectations or projected financial
results, even if minor, could cause the market price of our common stock to
decline. Volatility in our stock price may result in your inability to sell your
shares at or above the price at which you purchased them in this offering.
In addition, stock markets have generally experienced a high level of
price and volume volatility, and the market prices of equity securities of many
companies have experienced wide price fluctuations not necessarily related to
the operating performance of such companies. These broad market fluctuations may
adversely affect our common stock's market price. In the past, securities class
action lawsuits frequently have been instituted against such companies following
periods of volatility in the market price of such companies' securities. If any
such litigation is instigated against us, it could result in substantial costs
and a diversion of management's attention and resources, which could have a
material adverse effect on our business, results of operations, and financial
condition.
CERTAIN PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS AND RIGHTS AGREEMENT, AS WELL
AS APPLICABLE DELAWARE CORPORATE LAW, COULD IMPEDE AN ATTEMPT TO REPLACE OR
REMOVE OUR MANAGEMENT, PREVENT THE SALE OF OUR COMPANY OR PREVENT OR FRUSTRATE
ANY ATTEMPT BY STOCKHOLDERS TO CHANGE THE DIRECTION OF OUR COMPANY, EACH OF
WHICH COULD DIMINISH THE VALUE OF OUR COMMON STOCK.
Our certificate of incorporation and bylaws, each as amended and/or
restated, as well as applicable Delaware corporate law, contain provisions that
could impede an attempt to replace or remove our management or prevent the sale
of our company that, in either case, stockholders might consider to be in their
best interests. For example, our bylaws limit the ability of stockholders to
call special meetings of the stockholders and establish certain advance notice
procedures for nomination of candidates for election as directors and for
stockholder proposals to be considered at stockholders' meetings. Our
certificate of incorporation also authorizes our Board of Directors to determine
the rights, preferences and restrictions of unissued series of preferred stock,
without any vote or action by our stockholders. We could issue one or more
series of preferred stock (such as our presently outstanding class of Series A
Convertible
9
Preferred Stock) that could impede the completion of a merger, tender offer or
other takeover attempt. In addition, our Board of Directors has adopted a Rights
Agreement, dated as of May 6, 1997, as amended, that may have anti-takeover
effects by delaying, deferring or preventing an unsolicited acquisition
proposal, even if the proposal may be beneficial to the interests of our
stockholders. Further, certain anti-takeover provisions of the Delaware General
Corporation Law could make it more difficult for an unsolicited bidder to
acquire us. These provisions of our certificate of incorporation and bylaws, and
Delaware law, may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of our company, including through
transactions, and in particular unsolicited transactions, that some or all of
our stockholders might consider to be desirable. As a result, efforts by our
stockholders to change the direction or management of our company may be
unsuccessful and the existence of such provisions may adversely affect market
prices for our common stock if they are viewed as discouraging takeover
attempts.
FORWARD-LOOKING STATEMENTS
This prospectus, and any applicable prospectus supplement, and the
documents incorporated by reference may contain forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements represent our management's
judgment regarding future events. In many cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"plan," "expect," "anticipate," "estimate," "believe," "predict," "intend,"
"potential" or "continue" or the negative of these terms or other words of
similar import, although some forward-looking statements are expressed
differently. All statements other than statements of historical fact included in
this prospectus or any prospectus supplement and the documents incorporated by
reference in this prospectus and any prospectus supplement regarding our
financial position, business strategy and plans or objectives for future
operations are forward-looking statements. We cannot guarantee the accuracy of
the forward-looking statements, and you should be aware that results and events
could differ materially and adversely from those contained in the
forward-looking statements due to a number of factors, including those set forth
above under the heading "Risk Factors," as well as the other factors described
in the documents incorporated by reference into this prospectus. All subsequent
written and oral forward-looking statements attributable to us or to persons
acting on our behalf are expressly qualified in their entirety by the applicable
cautionary statements. The forward-looking statements included in this
prospectus and any accompanying prospectus supplement are made only as of their
respective dates, and we undertake no obligation to update these statements to
reflect subsequent events or circumstances.
USE OF PROCEEDS
The selling shareholder will receive all of the proceeds from the sale of
the common stock offered by this prospectus. We will not receive any of the
proceeds from the sale of the common stock.
10
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our Certificate of Incorporation, as amended to date, authorizes the
issuance of 45,000,000 shares of common stock, par value $.01 per share, and
5,000,000 shares of preferred stock, par value $.01 per share. Our common stock
is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended. As of March 28, 2005, we had 8,797,671 shares of common stock and
689,656 shares of preferred stock outstanding. The following description of our
capital stock is intended as a summary only and is qualified in its entirety by
reference to the more complete descriptions set forth in our Certificate of
Incorporation, rights agreement and Bylaws, all as amended and/or restated,
which are filed as exhibits to the registration statement of which this
prospectus is a part, and to Delaware corporate law.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders and have no cumulative voting rights.
Subject to the rights of the holders of any preferred stock then outstanding,
holders of shares of common stock are entitled to share ratably in dividends, if
any, as may be declared from time to time by the Board of Directors at its
discretion, from funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the company, the holders of shares of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities and provisions for the liquidation of any shares of
preferred stock then outstanding. Holders of common stock have no preemptive or
other subscription rights, and there are no conversion rights or redemption or
sinking fund provisions with respect to the common stock. All outstanding shares
of common stock are fully paid and non-assessable.
PREFERRED STOCK
Our preferred stock may be issued from time to time in one or more series,
without stockholder approval. Subject to limitations prescribed by law, our
Board of Directors is authorized to determine the voting powers (if any),
designation, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, for each series
of preferred stock that may be issued and to fix the number of shares of each
series. Thus, our Board of Directors, without stockholder approval, could
authorize the issuance of preferred stock with voting power and other rights
that could adversely affect the voting power and other rights of holders of
common stock or that could make it more difficult for another company to effect
certain business combinations with us.
On April 8, 2003, we issued 689,656 shares of Series A Convertible
Preferred Stock ("Convertible Preferred Stock") to the selling shareholder. A
description of the Convertible Preferred Stock is set forth in detail in the
Certificate of Designations filed by us on April 7, 2003, with the Secretary of
State for the State of Delaware ("Certificate of Designations"). The Certificate
of Designations authorized the issuance of up to 689,656 shares of Convertible
Preferred Stock. The powers, rights, restrictions and limitations of the
Convertible Preferred Stock include the following:
Rights Shared With Common Stock
The holder(s) of Convertible Preferred Stock ("Holder") has the right to
vote each share of its Convertible Preferred Stock as if it were converted into
shares of our common stock on the record date for determination of a common
stockholder's entitlement to vote. The Holder will also participate, on the same
basis, in any dividends or other distributions made to the holders of common
stock.
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Class Voting Rights
The Holder has the right to vote as a class on: (i) any amendment of our
Certificate of Incorporation which adversely affects the rights of the Holder,
including authorizing or creating of any class of stock ranking senior to
Convertible Preferred Stock; (ii) any increase in the amount of Convertible
Preferred Stock, or the increase in the authorized amount of any class of stock
ranking equal to or senior to the Convertible Preferred Stock; and (iii) the
redemption of any capital stock of the company, but not including any stock
repurchase program approved by our Board of Directors.
Appointment of Director
So long as the selling shareholder (or any affiliate thereof) is the
holder of fifty-one percent (51%) or more of the outstanding shares of
Convertible Preferred Stock, the holders of Convertible Preferred Stock, voting
separately as a class, will have the right to: (i) elect one (1) member of our
Board of Directors upon the affirmative vote of the holders of at least a
majority of the outstanding Convertible Preferred Stock (the "Convertible
Preferred Director"); and (ii) appoint one (1) observer (subject to the prior
approval of our Chairman of the Board of Directors) to attend any meeting of our
Board of Directors from which the Convertible Preferred Director is absent,
provided that our Board of Directors may exclude such observer from all or any
part of any meeting thereof if the Board, in its sole discretion, deems it
appropriate. In the event the number of shares of Convertible Preferred Stock
held by the selling shareholder (or any affiliate thereof) falls below fifty-one
percent (51%) of the aggregate number of outstanding shares of Convertible
Preferred Stock, our Board of Directors shall have the right, in its sole
discretion and with or without cause by majority vote of our Board of Directors,
not including the Convertible Preferred Director, to remove or request the
resignation of the Convertible Preferred Director. All members of our Board of
Directors (other than the Convertible Preferred Director, if any) shall be
elected by the holders of the Convertible Preferred Stock and the holders of our
common stock voting together as a single class.
Conversion
The Holder of Convertible Preferred Stock may convert its shares of
Convertible Preferred Stock into common stock ("Conversion Shares") at any time
after the first anniversary of the initial issuance thereof on a one share of
Convertible Preferred Stock for one share of common stock basis. The conversion
ratio is subject to adjustment if there is a dilutive issuance as defined in the
Certificate of Designations.
Redemption
Any of the shares of Convertible Preferred Stock that are not converted
three years after the initial issuance will be redeemed at the original purchase
price (subject to adjustment for a dilutive issuance). The Holder also has a
"put right" to force the redemption of its shares of Convertible Preferred Stock
at a price equal to the Redemption Price, exercisable for a period of ninety
(90) days after the occurrence of certain events, including but not limited to:
(i) the removal of William F. Coyro, Jr., without cause, as our Chief Executive
Officer by our Board of Directors; or (ii) our net cash is less than six million
five hundred thousand dollars ($6,500,000). In the event of a change of control,
if the Holder does not convert the then outstanding shares of Convertible
Preferred Stock to common stock, such shares will be automatically redeemed.
Liquidation Preference
In the event of any liquidation, dissolution or winding up of our affairs,
the Holder will receive in preference to the holders of common stock, an amount
equal to the initial purchase price (subject to adjustment as set forth in the
Certificate of Designations).
12
Restrictions On Transfer
The selling shareholder can transfer an unlimited percentage of the
Convertible Preferred Stock to qualified investors who are not engaged in a
business competitive to us. If shares of Convertible Preferred Stock are
transferred to non-affiliates of us, the new holder will not have (1) the right
to vote as common stock, or (2) any put right if Dr. Coyro is removed as our
Chief Executive Officer, without cause. Further, a subsequent holder cannot
transfer its shares of Convertible Preferred Stock without our consent. We also
have a right of first offer to purchase any shares the Holder wishes to sell.
In connection with the issuance of the Convertible Preferred Stock, we and
the selling shareholder also entered into a Registration Rights Agreement under
which the selling shareholder and/or its assignee, have been granted certain
demand and "piggyback" registration rights with respect to the Conversion
Shares.
PREFERRED STOCK PURCHASE RIGHTS
On April 29, 1997, our Board of Directors declared a dividend distribution
of one Right for each outstanding share of our common stock to stockholders of
record at the close of business on May 7, 1997. Each Right entitles the
registered holder to purchase from us one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $.01 per share ("Junior
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 us and U.S.
Stock Transfer Corporation, as Rights Agent.
On April 8, 2003, our Board of Directors approved amendments to the Rights
Agreement providing that holders of shares of our Convertible Preferred Stock
(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 our 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 shares of 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 (as defined) is first published or sent or given within the
meaning of Rule 14d-4(a) promulgated under the Securities Exchange Act of 1934,
as amended, 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 our Board of Directors 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
13
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 impact (including impairment of relationships with customers or
impairment of our ability to maintain our competitive position) on our business
or prospects.
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 us 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 us 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 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
14
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 Junior 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 Junior Preferred Stock, (ii) if holders of the
Junior Preferred Stock are granted certain rights or warrants to subscribe for
Junior Preferred Stock or convertible securities at less than the current market
price of the Junior Preferred Stock, or (iii) upon the distribution to holders
of the Junior 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, we 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"). We 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, our 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 our common stock.
The shares of Junior 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 Junior 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 Junior 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 Junior 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 Junior 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 Covered Securities, 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,
15
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
our Board of Directors 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.
CERTAIN DELAWARE LAW AND BYLAW PROVISIONS; ANTI-TAKEOVER EFFECTS
Section 203 of the Delaware General Corporation Law prevents an
"interested stockholder" (defined in Section 203, generally, as a person owning
15% or more of a corporation's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with a publicly held Delaware
corporation for three years following the date such person became an interested
stockholder unless: (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the business
combination; (ii) upon consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced (excluding stock held by directors who are
also officers of the corporation and by employee stock plans that do not provide
employees with the right to determine confidentiality whether shares held
subject to the plan will be tendered in a tender or exchange offer); or (iii)
following the date on which such person became an interested stockholder, the
business combination is approved by the board of directors of the corporation
and authorized at a meeting of stockholders by the affirmative vote of the
holders of 66-2/3% of the outstanding voting stock of the corporation not owned
by the interested stockholder.
Section 2 of our Bylaws, as amended and restated, provides that special
meetings of our stockholders may be called only by the Chairperson of the Board
of Directors or by the President or at the request in writing of stockholders
owning at least 30% of our issued and outstanding shares entitled to vote at the
meeting. That provision will make it more difficult for stockholders to take
action opposed by management.
In addition, the Board of Directors is empowered to issue up to 5,000,000
shares of preferred stock and to determine the price, rights, preferences and
privileges of such shares without further stockholder action. (As previously
described, pursuant to this authority, the Board has issued 689,656 shares of
Convertible Preferred Stock to the selling shareholder.)
These statutory and bylaw provisions, together with the existence of
"blank check" preferred stock, may be deemed to have an anti-takeover effect and
may delay or prevent a tender offer that a stockholder may consider to be in its
best interest, including those that might result in a premium over the market
price for the shares held by the stockholders. These provisions may have a
depressive effect on the market price of our common stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is U.S. Stock
Transfer Corporation.
16
SELLING SHAREHOLDER
We are registering all 689,656 shares of our common stock covered by this
prospectus on behalf of the selling shareholder named in the table below
(including its successors or permitted transferees who receive any of the shares
covered by this prospectus). We will issue these shares of common stock to the
selling shareholder upon the conversion of shares of Convertible Preferred Stock
acquired directly from us in a private placement transaction that was exempt
from the requirements of the Securities Act of 1933, as amended (the "Securities
Act"). Pursuant to the terms of a registration rights agreement between us and
ChrysCapital II, LLC, we agreed to file with the U.S. Securities and Exchange
Commission the registration statement of which this prospectus is a part
covering the sale of all 689,656 shares of our common stock to be issued to
ChrysCapital II, LLC upon conversion of the shares of Convertible Preferred
Stock held thereby. The selling shareholder however, may convert all, some or
none of the shares of Convertible Preferred Stock held thereby in accordance
with the terms of the applicable Certificate of Designations. Moreover, the
selling shareholder may sell all, some or none of the shares covered by this
prospectus. All information with respect to beneficial ownership has been
furnished to us by the selling shareholder. For more information, see "Plan of
Distribution."
The Certificate of Designations creating the Convertible Preferred Stock
expressly provides that, so long as ChrysCapital II, LLC, or an affiliate
thereof, is the holder of 51% or more of the outstanding shares of Convertible
Preferred Stock, the holders of the Convertible Preferred Stock, voting
separately as a class, will have the right to elect one director to our Board of
Directors. Pursuant to this provision, Brahmal Vasudevan has served as a
director of the company since April 8, 2003. In the event that the selling
shareholder converts 337,931 or more shares of Convertible Preferred Stock into
shares of common stock and sells such shares pursuant to this offering, Mr.
Vasudevan may be removed as a director by majority vote of our Board of
Directors (excluding Mr. Vasudevan).
The table below sets forth the selling shareholder and information
regarding its ownership of common stock:
NUMBER OF SHARES OWNED
NUMBER OF SHARES NUMBER OF AFTER THIS OFFERING (1)
OWNED PRIOR TO THIS SHARES BEING -----------------------
NAME OF SELLING SHAREHOLDER OFFERING (1) OFFERED HEREBY NUMBER PERCENTAGE
--------------------------- ------------------- -------------- ------ ----------
ChrysCapital II, LLC 689,656 689,656 --- ---
---------------------
(1) Assumes that the selling shareholder converts all of the shares of
Convertible Preferred Stock into shares of common stock, disposes of
all of the shares of common stock covered by this prospectus and
does not acquire or dispose of any additional shares of common
stock. However, the selling shareholder is not representing that it
will convert any of the shares of Convertible Preferred Stock held
thereby into shares of common stock or that any of the shares
covered by this prospectus will be offered for sale, and the selling
shareholder reserves the right to accept or reject, in whole or in
part, any proposed sale of shares. This prospectus also covers any
additional shares of common stock that become issuable in connection
with the shares being registered by reason of any stock dividend,
stock split, recapitalization nor other similar transaction effected
without the receipt of consideration which results in an increase in
the number of outstanding shares of our common stock.
17
PLAN OF DISTRIBUTION
The selling shareholder may resell or redistribute the shares of our
common stock covered by this prospectus from time to time in one or more
transactions on the NASDAQ National Market System, in privately negotiated
transactions, or in any other legal manner, at fixed prices that may be changed,
at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. Persons who are successors or permitted
transferees of the named selling shareholder may also use this prospectus and
are included when we refer to "selling shareholder" in this prospectus. If
necessary, we would file a supplement to this prospectus under Rule 424(b)(3)
(or other applicable provision of the Securities Act) amending the list of
selling shareholders to include the successors or permitted transferees as
selling shareholders under this prospectus. The selling shareholder may sell the
shares from time to time in one or more of the following ways, without
limitation:
- block trades (which may include cross trades) in which the broker or
dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the
broker or dealer for its own account;
- an exchange distribution or secondary distribution in accordance
with the rules of any stock exchange or market on which the shares
are listed;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- an offering at other than a fixed price on or through the facilities
of any stock exchange or market on which the shares are listed or to
or through a market maker other than on that stock exchange or
market;
- privately negotiated transactions, directly or through agents;
- short sales of shares and sales to cover short sales;
- through the writing of options on the shares, whether the options
are listed on an options exchange or otherwise;
- through the distribution of the shares by the selling shareholder to
its members;
- one or more underwritten offerings;
- agreements between a broker or dealer and the selling shareholder to
sell a specified number of the securities at a stipulated price per
share; and
- any combination of any of these methods of sale or distribution, or
any other method permitted by applicable law.
The selling shareholder may also transfer the securities by gift. We do
not know of any current arrangements by the selling shareholder for the sale or
distribution of any of the shares.
The selling shareholder may engage brokers and dealers, and any brokers or
dealers may arrange for other brokers or dealers to participate in effecting
sales of the securities. These brokers, dealers or underwriters may act as
principals, or as an agent of the selling shareholder. Broker-dealers may agree
18
with the selling shareholder to sell a specified number of the securities at a
stipulated price per security. If the broker-dealer is unable to sell securities
acting as agent for the selling shareholder, it may purchase as principal any
unsold securities at the stipulated price. Broker-dealers who acquire securities
as principals may thereafter resell the securities from time to time in
transactions in any stock exchange or automated interdealer quotation system on
which the securities are then listed, at prices and on terms then prevailing at
the time of sale, at prices related to the then-current market price or in
negotiated transactions. Broker-dealers may use block transactions and sales to
and through broker-dealers, including transactions of the nature described
above. The selling shareholder may also sell the securities in accordance with
Rule 144 under the Securities Act rather than pursuant to this prospectus,
regardless of whether the securities are covered by this prospectus.
From time to time, the selling shareholder may pledge, hypothecate or
grant a security interest in some or all of the securities owned by it. The
pledgees, secured parties or persons to whom the securities have been
hypothecated will, upon foreclosure in the event of default, be deemed to be
selling shareholders. The number of the selling shareholder's securities offered
under this prospectus will decrease as and when it takes such actions. The plan
of distribution for the selling shareholder's securities will otherwise remain
unchanged. In addition, the selling shareholder may, from time to time, sell the
securities short, and in those instances, this prospectus may be delivered in
connection with the short sales and the securities offered under this prospectus
may be used to cover short sales.
The selling shareholder and any underwriters, brokers, dealers or agents
that participate in the distribution of the securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions.
The selling shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the
securities in the course of hedging the positions they assume with that selling
shareholder, including, without limitation, in connection with distributions of
the securities by those broker-dealers. The selling shareholder may enter into
option or other transactions with broker-dealers that involve the delivery of
the securities offered under this prospectus to the broker-dealers, who may then
resell or otherwise transfer those securities. The selling shareholder may also
loan or pledge the securities offered under this prospectus to a broker-dealer
and the broker-dealer may sell the securities offered under this prospectus so
loaned or upon a default may sell or otherwise transfer the pledged securities
offered under this prospectus.
The selling shareholder and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the related rules and
regulations adopted by the SEC, including Regulation M. This regulation may
limit the timing of purchases and sales of any of the securities by the selling
shareholder and any other person. The anti-manipulation rules under the Exchange
Act may apply to sales of securities in the market and to the activities of the
selling shareholder and its affiliates. Furthermore, Regulation M may restrict
the ability of any person engaged in the distribution of the securities to
engage in market-making activities with respect to the particular securities
being distributed for a period of up to five business days before the
distribution. These restrictions may affect the marketability of the securities
and the ability of any person or entity to engage in market-making activities
with respect to the securities.
Pursuant to the registration rights agreement, we have agreed to indemnify
the selling shareholder, any underwriter for the selling shareholder, any
directors or officers of the selling shareholder and any person who controls
(within the meaning of the federal securities laws ) the selling shareholder or
acts as an investment advisor to the selling shareholder against specified
liabilities, including liabilities under the federal securities laws. Pursuant
to the registration rights agreement, the selling shareholder has agreed to
19
indemnify us, each of our directors, each of our officers who sign the
registration statement, and each person who controls (within the meaning of the
federal securities laws) us against specified liabilities arising from
information provided by the selling shareholder for use in this prospectus,
including liabilities under the federal securities laws. The selling shareholder
may agree to indemnify any brokers, dealers or agents who participate in
transactions involving sales of the securities against specified liabilities
arising under the federal securities laws in connection with the offering and
sale of the securities.
The securities offered under this prospectus are expected to be issued to
the selling shareholder upon the conversion of shares of our Convertible
Preferred Stock originally issued pursuant to an exemption from the registration
requirements of the Securities Act. We agreed to use our reasonable best efforts
to register the securities under the Securities Act and to keep the registration
statement of which this prospectus is a part effective until the earlier of (a)
_________, 2005 (subject to extension in certain circumstances), (b) the date on
which all the shares of common stock subject to this registration statement have
been sold under this registration statement or pursuant to Rule 144 of the
Securities Act, or (c) the date on which all the shares of common stock subject
to this registration statement may be immediately sold by the selling
shareholder without registration and without restriction as to the number of
shares to be sold, pursuant to Rule 144 or otherwise. We have agreed to pay all
expenses in connection with this offering, including fees and expenses of a
single counsel for the selling shareholder, but not including underwriting
discounts, concessions, commissions or fees of the selling shareholder.
We will not receive any proceeds from sales of any securities by the
selling shareholder.
We cannot assure you that the selling shareholder will sell all or any
portion of the securities offered under this prospectus.
We will supply the selling shareholder and any stock exchange upon which
the securities are listed with reasonable quantities of copies of this
prospectus. To the extent required by Rule 424 under the Securities Act in
connection with any resale or redistribution by the selling shareholder, we will
file a prospectus supplement setting forth:
- the aggregate number of shares to be sold;
- the purchase price;
- the public offering price;
- if applicable, the names of any underwriter, agent or broker-dealer;
and
- any applicable commissions, discounts, concessions, fees or other
items constituting compensation to underwriters, agents or
broker-dealers with respect to the particular transaction (which may
exceed customary commissions or compensation).
If the selling shareholder notifies us that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange, distribution or secondary distribution or a
purchase by a broker or dealer, then we will file a prospectus supplement that
includes any other facts that are material to the transaction. If applicable,
this may include a statement to the effect that the participating broker-dealers
did not conduct any investigation to verify the information set out or
incorporated by reference in this prospectus. We will also file a supplement to
this prospectus upon our being notified by the selling shareholder that a
successor or permitted transferee intends to sell more than 500 shares or as
otherwise required by law.
20
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. We also filed a registration statement on Form S-3,
including exhibits, under the Securities Act with respect to the securities
offered by this prospectus. This prospectus is a part of the registration
statement, but does not contain all of the information included in the
registration statement or the exhibits. You may read and copy the registration
statement and any other document that we file at the SEC's public reference room
at 450 Fifth Street, N.W., Washington D.C. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference room. You can
also find our public filings with the SEC on the internet at a web site
maintained by the SEC located at http://www.sec.gov.
INCORPORATION OF INFORMATION BY REFERENCE
We are "incorporating by reference" specified documents that we file with
the SEC, which means:
- incorporated documents are considered part of this prospectus;
- we are disclosing important information to you by referring you to
those documents; and
- information we file with the SEC will automatically update and
supersede information contained in this prospectus.
We incorporate by reference the documents listed below and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus and before the
end of the offering of the securities pursuant to this prospectus:
- our Annual Report on Form 10-K for our fiscal year ended December
31, 2004;
- our Current Reports on Form 8-K or 8-K/A filed on May 14, 2004, July
27, 2004, January 5, 2005, February 10, 2005, February 23, 2005, and
March 21, 2005;
- our Proxy Statement, dated April 4, 2005, relating to our 2005
Annual Meeting of Stockholders to be held on May 25, 2005;
- the description of our common stock contained in the Registration
Statement on Form 8-A filed by us with the Securities and Exchange
Commission on or about October 7, 1987, which incorporated such
information by reference from Amendment No. 2 to our Registration
Statement, File No. 33-9524-LA, filed January 21, 1987; and
- the description of our Preferred Stock Purchase Rights (which are
attached to shares of our common stock) contained in our
Registration Statement on Form 8-A, dated May 6, 1997, as amended
pursuant to a Form 8-A/A filed on September 23, 1999 and a Form
8-A/A filed on May 22, 2003.
Information in this prospectus supersedes related information in the
documents listed above, and information in subsequently filed documents
supersedes related information in both this prospectus and the incorporated
documents.
21
We will promptly provide, without charge to you, upon written or oral
request, a copy of any or all of the documents incorporated by reference in this
prospectus, other than exhibits to those documents, unless the exhibits are
specifically incorporated by reference in those documents. Requests should be
directed to:
Corporate Secretary
TechTeam Global, Inc.
27335 West 11 Mile Road
Southfield, MI 48034
(248) 357-2866
LEGAL MATTERS
Michael A. Sosin, our Vice President, General Counsel and Secretary, has
passed upon the validity of the common stock on behalf of TechTeam Global, Inc.
EXPERTS
The consolidated financial statements and schedule of TechTeam Global,
Inc. as of December 31, 2004 and 2003, and for each of the three years in the
period ended December 31, 2004, incorporated by reference in this prospectus and
registration statement, have been audited by Ernst & Young LLP, independent
registered public accounting firm, as set forth in their report incorporated by
reference therein, and incorporated herein by reference (which report expresses
an unqualified opinion and includes an explanatory paragraph relating to the
adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets," effective January 1, 2002). Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Sytel, Inc. as of December 31,
2004 and for the year then ended, incorporated by reference in this prospectus,
have been audited by Rubino & McGeehin, Chartered, an independent registered
public accounting firm, as stated in their report (which report expresses an
unqualified opinion), which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of Advanced Network Engineering CVBA as of March
31, 2004 and for the fiscal year then ended, incorporated by reference in this
prospectus, have been audited by Bvba Van Cauter - Saeys & Co., an independent
public accounting firm, as stated in their report (which report expresses an
unqualified opinion), which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
22
[OUTSIDE BACK COVER]
________________________________________________________________________________
________________________________________________________________________________
689,656 SHARES
TECHTEAM GLOBAL, INC.
COMMON STOCK
_____________________, 2005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the issuance
and distribution of the securities being registered.
Securities and Exchange Commission filing fee........ $ 897
Printing and mailing expenses........................ 2,000
Accounting fees and expenses......................... 10,000
Legal fees and expenses.............................. 18,000
Miscellaneous........................................ 1,000
--------
Total expenses............................. $ 31,897
========
All of the above fees and expenses will be paid by TechTeam Global, Inc.
(the "Registrant"). Other than the Securities and Exchange Commission filing
fee, all fees and expenses are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Delaware law and the Registrant's Bylaws, as Amended and
Restated October 28, 2003 ("Bylaws"), the Registrant is required to indemnify
any person who was or is a party or is threatened to be made a party to an
action (other than an action by or in the right of the Registrant) by reason of
the fact that such person is or was a director, officer, employee or agent of
the Registrant or is or was serving, at the Registrant's request, as a director,
officer, employee or agent of another corporation or other enterprise, against
expenses (including attorneys' fees) that are actually and reasonably incurred
by such person in connection with the defense or settlement of such action;
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the Registrant's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that such person's conduct was unlawful. Indemnification shall not be
made for any claim except to the extent that the adjudicating court (or the
court in which the action was brought) determines that, despite the adjudication
of liability, such person is entitled to indemnification for the expenses as the
court deems proper.
The determination as to whether a person seeking indemnification has met
the required standard of conduct is to be made (1) by a majority vote of a
quorum of disinterested members of the board of directors, or (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders. The Registrant's
Bylaws also provide for mandatory indemnification of any director, officer,
employee or agent against expenses to the extent such person has been successful
in any proceeding covered by Delaware statute. In addition, the Bylaws also
permit the Registrant to pay expenses incurred by an officer or director in
defending an action, suit or proceeding for which indemnification may be made in
advance of its final disposition upon receipt of an undertaking by or on behalf
of the officer or director to repay the expenses if it is ultimately determined
that the person is not entitled to be indemnified. Delaware law and the
Registrant's Bylaws provide that indemnification and advancement of expenses set
forth above shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
II-1
The Registrant's Bylaws provide that the Registrant may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent against any liability asserted against him or her and incurred
by him or her in such capacity or arising out of his or her status as such,
whether or not the Registrant would have the power to indemnify him or her
against such liability under indemnification provisions of the Registrant's
Bylaws.
The Registrant maintains a policy of directors and officers liability
insurance.
The indemnification provisions contained in the Registrant's Bylaws, as
amended and restated, are expressly permitted by Section 145 of the Delaware
Corporation Law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
ITEM 16. EXHIBITS.
The exhibits listed in the accompanying Exhibit Index are filed or
incorporated by reference as part of this Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to
II-2
Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions set forth
or described in Item 15 of this Registration Statement, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities, the information omitted from the form of
prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Southfield, State of Michigan, on April 8, 2005.
TECHTEAM GLOBAL, INC.
By: /s/ William F. Coyro, Jr.
------------------------------
William F. Coyro, Jr.
President, Chief Executive Officer and
Director (Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints William F. Coyro, Jr., David W. Morgan, and Michael A.
Sosin, and each of them individually, his attorneys-in-fact and agents, with
full power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to the Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Signature Title Date
---------------------------- ------------------------------ -------------
/s/ William F. Coyro, Jr. President, Chief Executive April 8, 2005
----------------------------
William F. Coyro, Jr. Officer and Director
(Principal Executive Officer)
/s/ David W. Morgan Chief Financial Officer and April 8, 2005
----------------------------
David W. Morgan Treasurer (Principal Financial
Officer)
/s/ Marc J. Lichtman Chief Accounting Officer April 8, 2005
----------------------------
Marc J. Lichtman (Principal Accounting Officer)
/s/ Kim A. Cooper Director April 8, 2005
----------------------------
Kim A. Cooper
/s/ G. Ted Derwa Director April 8, 2005
----------------------------
G. Ted Derwa
/s/ Peter T. Kross Director April 8, 2005
----------------------------
Peter T. Kross
S-1
Signature Title Date
---------------------------- ------------------------------ -------------
/s/ Conrad L. Mallett, Jr. Director April 8, 2005
----------------------------
Conrad L. Mallett, Jr.
/s/ Wallace D. Riley Director April 8, 2005
----------------------------
Wallace D. Riley
/s/ Gregory C. Smith Director April 8, 2005
----------------------------
Gregory C. Smith
/s/ Richard G. Somerlott Director April 8, 2005
----------------------------
Richard G. Somerlott
/s/ Brahmal Vasudevan Director April 8, 2005
----------------------------
Brahmal Vasudevan
/s/ Ronald T. Wong Director April 8, 2005
----------------------------
Ronald T. Wong
S-2
EXHIBIT INDEX
EXHIBIT NUMBER DOCUMENT DESCRIPTION
-------------- --------------------
4.1 Certification of Incorporation of TechTeam Global, Inc., as
filed with the Delaware Secretary of State on September 14,
1987. (1)
4.2 Certificate of Amendment, dated November 27, 1987, to our
Certificate of Incorporation. (1)
4.3 Certificate of Amendment, dated May 8, 2002, to Certificate of
Incorporation. (1)
4.4 Bylaws of TechTeam Global, Inc., as Amended and Restated
October 28, 2003. (2)
4.5 Certificate of Designations of the Series A Convertible
Preferred Stock, dated April 7, 2003. (3)
4.6 Certificate of Correction of Certificate of Designations of
the Series A Convertible Preferred Stock, dated May 5, 2003.
(4)
4.7 Rights Agreement, dated as of May 6, 1997, between TechTeam
Global, Inc. and U.S. Stock Transfer Corporation, as Rights
Agent, which includes as Exhibit A thereto the Form of
Certificate of Designations, as Exhibit B thereto the Form of
Right Certificate, and as Exhibit C thereto the Summary of
Rights to Purchase Preferred Stock. (5)
4.8 First Amendment of Rights Agreement, dated as of May 6, 1997.
(6)
4.9 Second Amendment of Rights Agreement, dated as of May 6, 1997.
(7)
4.10 Registration Rights Agreement, dated April 8, 2003, by and
between TechTeam Global, Inc. and ChrysCapital II, LLC. (3)
4.11 Securities Purchase Agreement, dated April 8, 2003, between
TechTeam Global, Inc. and ChrysCapital II, LLC (excluding
Exhibits and Schedules thereto) (3).
5 Opinion of Michael A. Sosin, Vice President, General Counsel
and Secretary of TechTeam Global, Inc.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Rubino & McGeehin, Chartered.
23.3 Consent of Bvba Van Cauter - Saeys & Co.
23.4 Consent of Michael A. Sosin, Vice President, General Counsel,
and Secretary of TechTeam Global, Inc. (filed as part of
Exhibit (5)).
24 Powers of Attorney (included on the signature page to this
Registration Statement).
--------------------------
(1) Incorporated by reference to our Annual Report on Form 10-K
for the fiscal year ended December 31, 2002, as filed March
18, 2003.
(2) Incorporated by reference to our Quarterly Report on Form 10-Q
for the three months ended September 30, 2003, as filed
November 7, 2003.
(3) Incorporated by reference to our Current Report on Form 8-K,
as filed April 9, 2003.
(4) Incorporated by reference to our Annual Report on Form 10-K
for the fiscal year ended December 31, 2003, as filed March
24, 2004.
(5) Incorporated by reference to our Registration Statement on
Form 8-A, as filed May 9, 1997.
(6) Incorporated by reference to our Registration Statement on
Form 8-A/A, as filed September 23, 1999.
(7) Incorporated by reference to our Registration Statement on
Form 8-A12G/A, as filed May 22, 2003.
E-1