Document:

exv10w31

 

Exhibit 10.31

TECHTEAM GLOBAL, INC.

NON-EMPLOYEE DIRECTORS

DEFERRED COMPENSATION PLAN

Effective June 1, 2007

     1.     Purpose. The purpose of the Techteam Global, Inc. Non-Employee
Directors Deferred Compensation Plan (the “Plan”) is to enable directors of Techteam Global, Inc.
(the “Company”) who are not also employees of the Company to defer the receipt of certain
compensation earned in their capacity as directors of the Company.

     2.     Effective Date. The Plan is effective June 1, 2007. The Plan is
intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”).

     3.     Eligibility. Directors of the Company who are not also employees
of the Company or any of its subsidiaries (“Directors”) are eligible to elect to participate in the
Plan.

     4.     Administration. The Plan shall be administered by the
Compensation Committee of the Board (the “Committee”). The Committee shall have the authority to
adopt rules and regulations for carrying out the Plan’s intent and to interpret, construe and
implement the provisions thereof. Determinations made by the Committee with respect to the Plan
shall be final and binding on all persons, including but not limited to the Company, each Director
participating in the Plan and such Director’s beneficiaries. The Committee may delegate its
administrative authority hereunder to one or more employees of the Company, or a committee made up
of such employees, and the term “Committee” herein shall mean such delegee to the extent of such
delegation.

     5.     Deferral of Fees. A Director may elect to defer under the Plan
all or a portion of the amounts to be paid to him or her for service as a member of the Board,
including monthly retainer, Board and committee meeting fees (but excluding any payment or
reimbursement with respect to a Director’s expenses arising from his or her service as a member of
the Board) that would otherwise be payable in cash or in shares of the Company’s common stock
(“Company Stock”) in accordance with the Company’s director compensation policies as in effect from
time to time (such compensation, collectively, “Director Fees”). In order to defer Director Fees,
the Director must file a deferral election with the Company in such form, and in such manner, as
the Company shall determine, subject to the following:

(a)     Except as provided in subsection (b) below, a deferral election must be made during the
election period established by the Company, which election

 

 

period shall end no later
December 31 preceding the calendar year in which the Director Fees would otherwise be
earned.

(b)     If a Director first becomes eligible to participate after the first day of a calendar
year, he or she must file a deferral election within thirty (30) days after the date on
which he or she first became eligible. Such deferral election shall only apply to Director
Fees earned after the date on which the deferral election is filed with the Company.

(c)     Once a Director has elected to defer his or her Director Fees, the election may not be
revoked and shall continue in force for the remainder of the Director’s service as a member
of the Board; provided, however, that a Director may, prior to the beginning of a calendar
year and in accordance with such rules as are established by the Company, revoke or modify
his or her deferral election with respect to the entirety of such calendar year.

     6.     Form of Deferral; Investment Options. The Company shall
establish a separate deferred compensation account (an “Account”) on its books in the name of each
Director who has elected to participate in the Plan. The amount deferred shall be credited to the
Director’s Account on the date the amount would have otherwise been paid to the Director (the
“Deferral Date”).

     (a)     All cash deferred into the Plan will be deemed invested in the investment options (as made
available by the Committee from time to time, which investment options shall include Company Stock
units) selected by the Director. Deferrals of Company Stock shall be automatically deemed invested
in Company Stock units.

     (b)     A Director may make an initial investment election at the time of enrollment in the Plan
in whole increments of five percent (5%). A Director may also elect to reallocate his or her
Account, and may elect to allocate any future cash deferrals, among the various investment options
in whole increments of five percent (5%) from time to time as prescribed by the Committee; provided
that deferrals of Company Stock may not be re-allocated out of Company Stock units. Such investment
elections shall remain in effect until changed by the Director. All investment elections shall
become effective as soon as practicable after receipt of such election by the Company, and must be
made in the form and manner and within such time periods as the Company prescribes in order to be
effective. In the absence of an effective election, the Director’s cash deferrals shall be deemed
invested in Company Stock units.

     (c)     The number of Company Stock units credited to a Director’s Account as of each Deferral
Date shall equal (i) the number of shares of Company Stock being deferred, or (ii) if cash is being
deferred into Company Stock units, the number calculated by dividing by the amount so deferred by
the Fair Market Value (as defined in the Company’s 2007 Incentive Stock and Awards Plan (the “2007
Plan”)) of a share of Company Stock as of such Deferral Date.

     (d)     On each valuation date as determined by the Committee, the Committee shall credit the
deemed investment experience with respect to the selected (or required) investment options to each
Director’s Account.

 

 

     (e)     Notwithstanding anything to the contrary herein, all elections under this section by a
Director who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) are subject to review by the Company prior to implementation. The Company may
restrict additional transactions, rescind transactions, or impose other rules and procedures, to
the extent deemed desirable by the Company in order to comply with the Exchange Act or to comply
with any Company policy, including but not limited to, insider trading policies.

     (f)     Company Stock units shall be adjusted in accordance with the adjustment provisions of
Section 14 of the 2007 Plan.

     7.     Dividend Equivalents. Additional Company Stock units shall be
credited to a Director’s Account as of each date (a “Dividend Date”) on which cash dividends and/or
special dividends and distributions are paid with respect to Company Stock. The number of Company
Stock units to be credited pursuant to this Section 7 shall equal the quotient obtained by dividing
(a) the product of (i) the number of the Company Stock units credited to such Account on the record
date for such dividend or distribution and (ii) the per share dividend (or distribution value)
payable on such Dividend Date, by (b) the Fair Market Value of a share of Company Stock as of such
Dividend Date.

     8.     Restrictions on Transfer. The right of a Director or that of any
other person to the payment of deferred compensation or other benefits under the Plan may not be
assigned, transferred, pledged or encumbered except by will or by the laws of descent and
distribution.

     9.     Payment of Account.

     (a)     General Payment. At the time of making a deferral election
for a calendar year (or portion thereof for a newly eligible Director), a Director shall
elect the date that payment of the amount deferred for such year (as adjusted for earnings
or losses thereon) will be made. In the absence of an election, the amount deferred will
be paid on the first day of the month (or as soon as practicable thereafter) following the
month in which the Director incurs a separation from service from the Company and its
affiliates (within the meaning of Code Section 409A).

     (b)     Acceleration Upon Separation from Service. In the event a
Director separates from service prior to the date all amounts credited to his Account are
distributed, the balance of the Director’s Account shall be paid on the first day of the
month (or as soon as practicable thereafter) following the month in which the Director
incurs a separation from service from the Company and its affiliates (within the meaning of
Code Section 409A).

     (c)     Manner of Payment. All distributions from the Plan shall be
made in a single sum. Each whole Company Stock unit credited to the Account shall be paid
in the form of one share of Company Stock, and any fractional Company Stock unit and the
balance of the remainder of the Account shall be paid in cash. The value of a fractional
Company Stock unit shall be calculated using the Fair

 

 

     Market Value of a share of Company
Stock as determined on the date immediately preceding the payment date.

     (d)     Acceleration of Payments. Notwithstanding any other
provision of the Plan, if the Committee determines that all or any portion of a Director’s
Account is required to be included in the Director’s income as a result of a failure to
comply with the requirements of Code Section 409A and the regulations promulgated
thereunder, the Company shall immediately make distribution from the Plan to the Director
or beneficiary, in one lump sum, of the amount (but not exceeding the amount) that is so
taxable.

     10.     Designation of Beneficiary. Each Director may designate a
beneficiary to receive the balance of the Director’s Account in the event of the Director’s death
prior to payment thereof. Such designation shall be made in such form and manner and within such
time periods as the Company may prescribe. A Director can change his beneficiary designation at
any time, provided that each beneficiary designation shall revoke the most recent designation, and
the last designation received by the Company while the Director was alive shall be given effect.
If a Director designates a beneficiary without providing in the designation that the beneficiary
must be living at the time of distribution, the designation shall vest in the beneficiary the
distribution payable after the Director’s death, and such distribution if not paid by the
beneficiary’s death shall be made to the beneficiary’s estate. In the event there is no valid
beneficiary designation in effect at the time of the Director’s death, in the event the Director’s
designated beneficiary does not survive the Director, or in the event that the beneficiary
designation provides that the beneficiary must be living at the time of distribution and such
designated beneficiary does not survive to the distribution date, the Director’s estate will be
deemed the beneficiary and will be entitled to receive payment.

     11.     Change of Control. Notwithstanding any provisions of the Plan
to the contrary, upon the occurrence of a Change of Control, the balance of a Director’s Account
under the Plan shall be immediately payable in cash. For purposes of the Plan, “Change of Control”
shall have the meaning set forth in the 2007 Plan; provided, however, that an event shall not
constitute a Change of Control hereunder unless the event qualifies as a “change in control event”
as defined in proposed or final regulations issued under Code Section 409A.

     12.     Unfunded Plan; Creditor’s Rights. The Plan is intended to be an
“unfunded” plan. The obligation of the Company under the Plan is purely contractual and shall not
be funded or secured in any way. A Director or any beneficiary shall have only the interest of an
unsecured general creditor of the Company in respect of the amounts credited to such Director’s
Account under the Plan.

     13.     Successors in Interest. The obligations of the Company under
the Plan shall be binding upon any successor or successors of the Company, whether by merger,
consolidation, sale of assets or otherwise, and for this purpose reference herein to the Company
shall be deemed to include any such successor or successors.

 

 

     14.     Governing Law; Interpretation. The Plan shall be construed and
enforced in accordance with, and governed by, the laws of the State of Michigan. The Company
intends that transactions under the Plan shall be exempt under Rule 16b-3 promulgated under the
Exchange Act, unless otherwise determined by the Company.

     15.     Termination and Amendment of the Plan. The Board may terminate
the Plan at any time; provided, that termination of the Plan shall not adversely affect the rights
of a Director or beneficiary thereof with respect to amounts previously deferred under the Plan
without the consent of such Director or that of such Director’s beneficiary, as applicable. The
Board or Committee may amend the Plan at any time and from time to time; provided, however, that no
such amendment shall adversely affect the rights of any Director or beneficiary thereof with
respect to amounts previously deferred under the Plan. Upon termination of the Plan, the Committee
may, in its discretion, direct early payment of Directors’ Accounts; provided, however, (i) no
payments, other than payments that would have been payable under the terms of the Plan if
termination of the Plan had not occurred, may be made within twelve (12) months of the Plan’s
termination date, (ii) all payments are made within twenty-four (24) months of the Plan’s
termination date, and (iii) no other actions are taken by the Company or the Committee that would
cause the payment of Accounts to be treated as an impermissible acceleration of benefits under Code
Section 409A.exv10w32

 

TECHTEAM GLOBAL, INC.

COMPENSATION POLICY FOR NON-EMPLOYEE DIRECTORS

BOARD COMPENSATION. Compensation for the non-employee members (the “Eligible Directors”)
of the Board of Directors (the “Board”) of Techteam Global, Inc. (the “Company”), effective June
23, 2006, consists of the payment of:

     1.     Monthly Retainer: A monthly retainer of $3,000, plus an additional monthly retainer
as follows:

	 	 	 	 	 
	Chairperson of the Board
	 	$	3,250	 
	Chair of a Board Committee
	 	$	1,000	 

          If an Eligible Director serves on the Board for less than a full month, the monthly retainer
shall be pro-rated according to the number of days served in such month.

     2.     Board Meeting Fee: A fee for each Board meeting attended of 100 shares of the
Company’s Common Stock (“Shares”) if attendance is in person or 50 Shares if attendance is by
telephone or video conference.

     3.     Committee Meeting Fee: A fee for each committee meeting attended of $1,000 if the
attendance is in person or $500 if attendance is by telephone or video conference.

     4.     Options: Stock options as provided in Section 8 of the Company’s 2006 Incentive
Stock and Awards Plan (the “2006 Plan”).

PAYMENT OF FEES

     1.     Payment of Monthly Retainer in Common Stock. Twenty-five percent (25%) of the
monthly retainer will be accumulated and paid at the end of each fiscal quarter in shares of the
Company’s common stock. The number of Shares to be issued will equal the amount accumulated
divided by the Fair Market Value of a Share (as defined in the 2006 Plan) determined on the last
business day in such fiscal quarter. Any resulting fractional Share will be paid in cash. The
Shares will be issued (and cash for any fractional Share will be paid) by the 10th day
of the first month of a fiscal quarter.

     2.     Payment of Cash Fees. The remaining 75% of the monthly retainer and 100% of the
committee meeting fees will be paid in cash. Such fees shall be paid made on or about the
10th day of each month. The payment shall include that month’s retainer payment for
services as a Board member and chair of a committee of the Board, and payment for committee
meetings from the previous month.

 

 

ELECTION TO RECEIVE SHARES

     A director may elect to receive his cash-denominated monthly retainer and/or committee meeting
attendance fees in Shares. The number of Shares to be issued will equal the cash amount
accumulated divided by the Fair Market Value of a Share (as defined in the 2006 Plan) determined on
the last business day in such fiscal quarter. Any resulting fractional Share will be paid in cash.
The Shares will be issued (and cash for any fractional Share will be paid) by the 10th
day of the first month of a fiscal quarter. The director’s election must be made when the window
for trading in the Company’s stock is open. Pursuant to the Company’s trading policy the window is
open, barring the absence of material non-public information, from the second trading day after the
issuance of quarterly earnings through the 10th day of the last month of each quarter.

MISCELLANEOUS

     1.     Payment will not be accelerated in the event an Eligible Director ceases to serve on the
Board.

     2.     All Shares to be issued to Eligible Directors as contemplated above will be issued pursuant
to the 2006 Plan.

     3.     Eligible Directors are permitted to defer all or any part of their monthly retainer and
meeting fees under the Company’s Director Deferred Compensation Plan.

     4.     The Company will also reimburse non-employee directors for any expenses related to their
service on the Board.

     5.     An Eligible Director shall have no rights as a shareholder with respect to Shares granted
under this Compensation Policy until the date of issuance of the stock certificate to him or her.
No adjustment will be made for dividends or other rights for which the record date is prior to the
date such Shares are issued.

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