SAVOIR TECHNOLOGY GROUP INC/DE, S-3/A, 1998-01-12

SAVOIR TECHNOLOGY GROUP INC/DE
S-3/A, 1998-01-12
ELECTRONIC PARTS & EQUIPMENT, NEC

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As filed with the Securities and Exchange Commission on January 12, 1998.

Registration No. 333-40599
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SAVOIR TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-2414428
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
--------------------
254 East Hacienda Avenue
Campbell, California 95008
(408) 379-0177
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
P. SCOTT MUNRO
Chief Executive Officer and President
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, California 95008
(408) 379-0177
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

With copies to:

KATHARINE A. MARTIN MARC C. KRANTZ
KENT E. SOULE KOHRMAN, JACKSON & KRANTZ P.L.L.
PILLSBURY MADISON & SUTRO LLP One Cleveland Center, 20th Floor
2550 Hanover Street 1375 East 9th Street
Palo Alto, California 94304 Cleveland, Ohio 44114
(650) 233-4500 (216) 736-7204
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE
TO THE PUBLIC: On a delayed or continuous basis pursuant to Rule 415.
--------------------
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, 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. / /

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

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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================

<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed +
+ with the Securities and Exchange Commission. These securities may not +
+ be sold nor may offers to buy be accepted prior to the time the +
+ registration statement becomes effective. This prospectus shall not +
+ constitute an offer to sell or the solicitation of an offer to buy nor +
+ shall there be any sale of these securities in any State in which such +
+ offer, solicitation or sale would be unlawful prior to registration or +
+ qualification under the securities laws of any such State. +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JANUARY 12, 1998

PROSPECTUS

4,440,105 SHARES OF COMMON STOCK

SAVOIR TECHNOLOGY GROUP, INC.

This Prospectus relates to the resale from time to time of 4,440,105 shares
(the "Shares") of Common Stock, $.01 par value per share (the "Common Stock") of
Savoir Technology Group, Inc. (the "Company") held by certain securityholders of
the Company (the "Selling Stockholders").

The Shares being offered by the Selling Stockholders hereunder include (i)
2,242,500 shares of Common Stock issuable upon conversion (the "Conversion
Shares") of the Company's Series A Preferred Stock (the "Series A Preferred
Stock"); (ii) 1,121,250 shares of Common Stock issuable upon the exercise of
warrants issued in connection with the Series A Preferred Stock; (iii) 112,125
shares of Common Stock issuable upon the exercise of warrants issued to the
placement agents in connection with the private placement of the Series A
Preferred Stock and the related Common Stock warrants; (iv) 4,230 shares of
Common Stock issued upon payment of a regular quarterly dividend on the Series A
Preferred Stock; (v) 500,000 shares of Common Stock issuable upon the exercise
of warrants held by other securityholders of the Company; and (vi) 460,000
shares of Common Stock held by a stockholder of the Company. See "Risk
Factors--Potential Volatility of Stock Price."

The Shares may be offered by one or more of the Selling Stockholders from
time to time in transactions (which may include block transactions) on any
exchange or market on which such Shares are listed or quoted, as applicable, in
negotiated transactions, through a combination of such methods of sale, or
otherwise, 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. The Selling Stockholders may effect such transactions by
selling the Shares directly to purchasers, acting as principals for their own
accounts, or by selling the Shares to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they may sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Stockholders. The Company has agreed to
bear all expenses of registration of the Shares, but any commissions, discounts,
concessions or other fees, if any, payable to broker-dealers in connection with
any sale of the Shares will be borne by the Selling Stockholder selling such
Shares. As of the date hereof, there are no special selling arrangements known
to the Company between any broker-dealer or other person and any Selling
Stockholder. See "Selling Stockholders" and "Plan of Distribution."

The Common Stock is traded on the Nasdaq National Market under the symbol
"SVTG." On January 9, 1998, the last reported sale price of the Common Stock
reported on the Nasdaq National Market was $10.125 per share.

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

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

The date of this Prospectus is __________, 1998.

<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits, referred to as the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the Shares
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the Rules and Regulations of the Commission. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules thereto, all of which may be obtained from the Commission in
Washington, D.C., as described below.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street N.W., Room 1034, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: 7 World
Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such reports
and other information may be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, the Company files electronically with the
Commission certain reports, proxy statements and other information, and the
Commission maintains a Web site on the Internet (WWW.SEC.GOV) that contains such
reports, proxy statements and other information regarding the Company.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed with the Commission (File No.
0-11560, except where otherwise indicated) and are incorporated herein by
reference: (i) Annual Report of the Company on Form 10-K, as amended, for the
fiscal year ended December 31, 1996; (ii) Quarterly Reports of the Company on
Form 10-Q, as amended, for the three months ended March 31, 1997, June 30, 1997
and September 30, 1997; (iii) Current Reports of the Company on Form 8-K (A)
dated March 28, 1997, (B) dated June 4, 1997, as amended on June 19, 1997 and
July 17, 1997, (C) dated July 16, 1997, (D) dated July 23, 1997, as amended on
August 11, 1997 and August 14, 1997, (E) dated July 24, 1997, (F) dated August
29, 1997, (G) dated September 30, 1997, as amended on December 12, 1997, (H)
dated October 10, 1997, (I) dated November 19, 1997, (J) dated November 21, 1997
and (K) dated November 22, 1997; and (iv) the description of the Company's
capital stock contained in the Company's Registration Statement on Form S-1
(Registration Statement No. 2-86846), including any amendments and reports filed
for the purpose of updating such description.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted to Savoir Technology Group, Inc., 254 East Hacienda Avenue,
Campbell, California 95008, Attn: Secretary. In order to ensure timely delivery
of the documents, any request should be made at least five business days prior
to the date on which the final investment decision must be made.

<PAGE>

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY SELLING
STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY THE SECURITIES DESCRIBED HEREIN BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. UNDER
NO CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT
TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

Page
----

Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 4
Risk Factors................................................................ 4
Use of Proceeds............................................................. 10
Income Tax Considerations................................................... 10
Selling Stockholders........................................................ 11
Plan of Distribution........................................................ 13
Legal Matters............................................................... 14
Experts..................................................................... 14

<PAGE>

THE COMPANY

Savoir Technology Group, Inc. (the "Company") is a value-added distributor
and reseller of commercial mid-range computer systems (file servers and
workstations), peripheral equipment and a full range of storage products and
software. The Company also integrates and configures personal computers,
workstations and servers, as well as provides and remarkets installation and
technical support services. The Company has its headquarters in Northern
California's "Silicon Valley," and serves the entire United States with three
distribution and integration centers and eight sales offices. The Company was
incorporated in California in 1975, and changed its state of incorporation to
Delaware in August 1997. Previously known as Western Micro Technology, Inc., the
Company changed its name to Savoir Technology Group, Inc. in November 1997. The
Company's principal executive office is located at 254 East Hacienda Avenue,
Campbell, California 95008, and its telephone number is (408) 379-0177.

RISK FACTORS

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS REGARDING FUTURE EVENTS
AND THE COMPANY'S PLANS AND EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES.
WHEN USED IN THIS PROSPECTUS, THE WORDS "ESTIMATE," "PROJECT," "INTEND" AND
"EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED BELOW, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED. FACTORS THAT MAY CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW UNDER "RISK
FACTORS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THESE FORWARD-LOOKING STATEMENTS
SPEAK ONLY AS OF THE DATE HEREOF.

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. IN ADDITION TO THE
OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE
CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
PURCHASING ANY OF THE SHARES OFFERED HEREBY.

INTEGRATION RISKS RELATING TO SMS ACQUISITION

On September 30, 1997, the Company completed the acquisition of the systems
distribution business ("SMS") of Star Management Services, Inc., which is now
operated as a wholly-owned subsidiary of the Company, Business Partner
Solutions, Inc. The Company's ability to achieve the anticipated benefits of the
SMS acquisition depends in part upon whether the integration of the businesses
of the Company and SMS is accomplished in an efficient and effective manner, and
there can be no assurance that this will occur. The combination of the two
businesses requires, among other things, integration of the Company's and SMS's
respective management and sales personnel, coordination of their sales and
marketing efforts, conversion of SMS's computer system (including inventory,
order entry and financial reporting) to the Company's system, and integration of
the businesses' products and physical facilities. Among other things,
substantially all of the Company's sales and marketing operations for
International Business Machines Corporation ("IBM") products are being relocated
to SMS's current facilities in San Antonio, Texas and are to be managed
primarily by former SMS personnel. There can be no assurance that such
coordination and integration will be accomplished smoothly or successfully. The
difficulties of such integration may be increased by the necessity of
coordinating geographically separated organizations. The integration of certain
operations will require the dedication of management resources which may
temporarily divert attention away from the day-to-day business of the combined
company. The inability of management to integrate the operations of the two
businesses successfully could have a material adverse effect on the business and
the results of operations of the Company. In addition, as commonly occurs with
mergers and acquisitions of companies in the technology sector, during the
integration phase, aggressive competitors may undertake to attract customers and
to recruit key employees through various incentives. There can be no assurance
that the SMS acquisition will not materially and adversely affect the selling
patterns of manufacturers and the buying patterns of present and potential
customers of the Company and SMS.

<PAGE>

INDUSTRY CONSOLIDATION; ABILITY TO MAINTAIN MOST FAVORABLE VOLUME DISCOUNT
STATUS

The systems distribution industry is currently experiencing a consolidation
of distributors, which has resulted in the mergers of certain of the Company's
major competitors. To the extent that any increased sales volumes resulting from
these mergers relate to the products of IBM, these mergers may result in raising
the sales volume threshold required to maintain most favorable volume discount
status with IBM. In furtherance of its business strategy, and in order to
maintain most favorable volume discount status with IBM, the Company has
recently completed several acquisitions and is actively engaged in an ongoing
search for additional acquisitions. The Company intends to continue to seek
additional acquisitions of service-oriented and other businesses that are
complementary to the Company's business in order to strengthen the Company's
business and market position. The Company is also assessing equity investments
in related businesses for similar purposes. However, there can be no assurance
that the Company will be successful in completing any future acquisitions or in
making any such equity investments. The failure by the Company to complete other
acquisitions, or to otherwise increase its sales volume through internal growth,
could result in the Company's inability to maintain most favorable volume
discount status with IBM, which would, in turn, have a material adverse effect
on the Company's relationship with IBM, its business, financial condition and
results of operations.

SUPPLIER CONCENTRATION AND DEPENDENCE UPON IBM

During the year ended December 31, 1996 and the nine months ended September
30, 1997, approximately 50% of the Company's net sales was generated from the
sale of products purchased from IBM. On a pro forma basis giving effect to the
SMS acquisition, approximately 70% of the Company's net sales was generated from
the sale of IBM products during these periods. The Company's business, financial
condition and results of operations are dependent upon the Company's
relationship with IBM and upon the market for IBM products. Any disruption or
change in the Company's relationship with IBM or in the manner in which IBM
distributes its products, the failure of IBM to develop new products which are
accepted by the Company's customers or the failure by the Company to maintain
sufficient sales volumes of certain IBM products to maintain most favorable
volume discount status, would have a material adverse effect upon the Company's
business, financial condition and results of operations.

The balance of the Company's net sales is derived from products of a
relatively limited number of other suppliers, with approximately 25% derived
from systems products manufactured by Data General Corporation, NCR Corporation,
and Unisys Corporation. On a pro forma basis giving effect to the SMS
acquisition, approximately 15% of the Company's net sales are derived from
systems products by these three companies. The loss of a major supplier or the
interruption of certain supplier relationships, the inability of any of these
suppliers to successfully develop, manufacture or sell new products, and any
decrease in the sales or market acceptance of these suppliers' products, could
materially and adversely affect the Company's business, financial condition and
results of operations.

UNCERTAINTY OF FUTURE ACQUISITIONS AND EXPANSION

Acquisitions have played an important role in the implementation of the
Company's business strategy and the Company believes that additional
acquisitions are important to the Company's growth, development and continued
ability to compete effectively in the marketplace. Prior acquisitions and
investments have placed substantial demands on the Company's management and
financial resources. The integration of the acquired companies' operations have
on occasion been slower, more complex and more costly than originally
anticipated. There can be no assurance that the combined companies will realize
the full cost savings or revenue enhancements the Company expects to realize as
a result of the recent acquisitions and the consolidation of certain of the
operations of the acquired companies, or that such savings or enhancements will
be realized at the points in time currently anticipated. Furthermore, there can
be no assurance that any cost savings which are realized will not be offset by
increases in other expenses or operating losses. The Company will encounter
similar uncertainties and risks with respect to any future acquisitions and
investments it may make.

The Company evaluates potential acquisitions and investments on an ongoing
basis. No assurance can be given as to the Company's ability to compete
successfully at favorable prices for available acquisition or investment
candidates or to complete future acquisitions and investments, or as to the
financial effect on the Company of any

<PAGE>

acquired businesses or equity investments. Future acquisitions and investments
by the Company may involve significant cash expenditures and may result in
increased indebtedness and interest and amortization expense and/or decreased
operating income, any of which could have a material adverse effect on the
Company's future operating results. If businesses are acquired through the
issuance of equity securities, the percentage ownership of the stockholders of
the Company will be reduced and stockholders may experience additional dilution.
Should the Company be unable to implement successfully its acquisition and
investment strategy, its business, financial condition and results of operations
could be materially and adversely affected.

MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL

Since the sale of its semiconductor business in July 1995, the Company has
experienced significant growth in the number of its employees and in the scope
of its operating and financial systems, resulting in increased responsibilities
for the Company's management. In addition, the SMS acquisition has increased the
Company's employee base by approximately 140 persons, to approximately 335
employees. To manage future growth effectively, the Company will need to
continue to improve its operational, financial and management information
systems, procedures and controls, and expand, train, motivate, retain and manage
its employee base. There can be no assurance that the Company will be able to
manage its growth effectively, and failure to do so could have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company's future success depends in part on the continued service of
its key sales, marketing and executive personnel, and its ability to identify
and hire additional personnel. As a result of the SMS acquisition, sales of the
Company's IBM product line are being managed primarily by personnel previously
employed by SMS, and the Company's future success with respect to such sales
will depend on the continued service and competent performance of such
personnel. Competition for qualified sales, marketing and executive personnel is
intense and there can be no assurance that the Company can retain and recruit
adequate personnel to operate its business. The loss of key personnel could have
a material adverse effect on the Company's business and operating results. The
Company maintains life insurance on P. Scott Munro, President and Chief
Executive Officer, in the amount of $7,850,000, and C. Joseph Mertens II,
President of the Company's Business Partner Solutions subsidiary, in the amount
of $10,000,000. The Company is contractually obligated to apply any proceeds of
these policies first to repay any amounts outstanding under the Company's notes
(the "Notes") issued pursuant to the note purchase agreement dated September 30,
1997 with Robert Fleming, Inc. and Canpartners Investments IV, LLC (the "Note
Agreement"), which had an outstanding amount due of $15,700,000 as of September
30, 1997.

SUBSTANTIAL COMPETITION

The Company competes with national, regional, and local distributors, such
as Dickens Data Systems, Inc., Gates/Arrow Commercial Systems, a division of
Arrow Electronics, Inc., Hamilton Hall-Mark Computer Products, a subsidiary of
Avnet, Inc., SupportNet, Inc. and, in some limited circumstances, its own
vendors. The Company has experienced and expects to continue to experience
increased competition from current and potential competitors, many of which have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base than
the Company. Accordingly, such competitors or future competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development, promotion and
sales of their products than the Company. Competitors which are larger than the
Company may be able to obtain pricing and terms from vendors that are more
favorable than the pricing and terms accorded to the Company. As a result, the
Company may be at a disadvantage when competing with these larger companies.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING; POTENTIAL FUTURE
DILUTION

The Company's operations to date have required substantial amounts of
capital and as a result the Company maintains a line of credit secured by
substantially all of the Company's assets. In order to pursue the Company's
expansion, acquisition and investment strategy, the Company will need to obtain
additional financing. Although the Company believes it has sufficient funds, or
alternate sources of funds, to carry on its business as presently conducted
through 1998, the Company will need to raise additional amounts through public
or private debt and/or

<PAGE>

equity financings in order to achieve the growth contemplated by the Company's
business plan. There can be no assurance that additional financing of any type
will be available on acceptable terms, or at all and failure to obtain such
financing could have a material adverse effect upon the Company's business,
financial condition and results of operations.

If additional funds are raised by the Company in the future through the
issuance of equity or convertible debt securities, the percentage ownership of
the stockholders of the Company will be reduced and stockholders may experience
additional dilution.

SUBSTANTIAL LEVERAGE AND DEBT SERVICE REQUIREMENTS

The Company has substantial indebtedness. As of September 30, 1997, the
Company had total indebtedness, including current maturities, of $121 million.
The Company's high level of debt and debt service requirements has several
important effects on its operations, including the following: (i) the Company
has significant cash requirements to service debt, reducing funds available for
operations and future business opportunities and increasing the Company's
vulnerability to adverse general economic and industry conditions and
competition; (ii) the Company's leveraged position increases its vulnerability
to competitive pressures; (iii) the financial covenants and other restrictions
contained in agreements relating to the Company's indebtedness require the
Company to meet certain financial tests and restrict its ability to borrow
additional funds, to dispose of assets or to pay cash dividends on, or
repurchase, preferred or common stock; and (iv) funds available for working
capital, capital expenditures, acquisitions and general corporate purposes are
limited. Any default under the documents governing indebtedness of the Company
could have a significant adverse effect on the market value of the Company's
stock. In addition, certain of the Company's competitors currently operate on a
less leveraged basis and may have greater operating and financing flexibility
than the Company.

FLUCTUATIONS IN OPERATING RESULTS

The Company's past operating results have been, and its future operating
results will be, subject to fluctuations from quarter to quarter and on an
annual basis due to a variety of factors, including, without limitation, the
cost and effect of acquisitions, the addition or loss of a key supplier or
customer, price competition, changes in the mix of products sold through
distribution channels and in the mix of products purchased by OEMs, and changes
in the supply and demand for mid-range computer systems, peripheral equipment,
software and related services. Operating results could also be adversely
affected by general economic and other conditions affecting the timing of
customer orders and capital spending, a downturn in the market for computers,
and order cancelations or rescheduling. In addition, historically a substantial
portion of the Company's sales have been made in the last few days of a quarter.
Accordingly, the Company's quarterly results of operations are difficult to
predict and delays in the closings of sales near the end of a quarter could
cause quarterly revenues to fall substantially short of anticipated levels and,
to a greater degree, adversely affect profitability. The Company's future
operating results are expected to fluctuate as a result of these and other
factors, which could have a material adverse effect on the Company's business,
operating results and financial condition.

SEASONALITY

While the Company's business is not generally affected by seasonal trends,
its business is influenced by trends affecting its suppliers and customers. For
example, the Company's largest vendor, IBM, sells approximately 40% of its
products in the last calendar quarter, which in the future could have an effect
on the Company's revenues from quarter to quarter. Due to the Company's recent
significant growth through acquisitions, and IBM's recent prominence as a
supplier to the Company, the Company has not yet experienced any material
seasonal variations in its operating results, but such seasonal variations may
occur in the future, and could have a material adverse effect on the Company's
business, operating results and financial condition.

<PAGE>

RAPID TECHNOLOGICAL CHANGES, PRICE REDUCTIONS AND INVENTORY RISK

The market for products sold by the Company is extremely competitive and is
characterized by declining selling prices over the life of a particular product
and rapid technological changes. Since the Company acquires inventory in advance
of product shipments, and because the markets for the Company's products are
volatile and subject to rapid technological and price changes, there is a risk
that the Company will forecast incorrectly and stock excessive or insufficient
inventory of particular products. Although the Company has stock rotation rights
and price protection with certain vendors permitting it to return discontinued
products, or to receive price protection (should the vendor reduce the price of
product that is already in the Company's inventory) in the form of cash refunds
or credits for the purchase of additional product, if the Company is forced to
sell its inventory for less than its targeted or traditional margins, it could
have a material adverse effect upon the Company's financial condition and
results of operations. The markets in which the Company competes currently are
subject to intense price competition and the Company expects additional price
and product competition as other companies enter these markets and new products
and technologies are introduced. Increased competition may result in further
price reductions, reduced gross margins and loss of market share, any of which
could materially and adversely affect the Company's business, financial
condition and results of operations.

LIMITATIONS UPON INCURRENCE OF ADDITIONAL INDEBTEDNESS

The Company's credit facility with IBM Credit Corporation ("ICC") provides,
among other things, favorable financing for the purchase of IBM products, and
provides a limited amount of additional financing to carry the inventory of
third-party products. The Company presently has no other facility for financing
the purchase of products from third parties. The ICC credit facility enables the
Company to borrow up to $75,000,000 (subject to meeting certain ratios and other
tests). On September 30, 1997, the balance outstanding under this facility was
$59,019,000, with additional availability of $8,701,673. While the ICC credit
facility is adequate for the Company's present purchases of products of
third-party vendors, if the Company increases the purchase of such products, it
may need to obtain additional inventory financing, in which case it will need to
obtain a modification, waiver or replacement of its credit facility agreement
with ICC (which is presently secured by all of the assets of the Company,
including all inventory purchased from third-party vendors). There can be no
assurance that such additional or replacement financing will be available to the
Company when needed or on acceptable terms, or that ICC will consent to
modifying the current credit facility agreement in order to allow such alternate
financing.

The terms of the ICC credit facility and the Note Agreement each require
that the Company obtain the consent of ICC and the holders of the Notes prior to
incurring certain additional indebtedness, including any additional senior or
subordinated debt. The Company can incur additional indebtedness without such
consent through capital leases and general business commitments insofar as the
terms thereof are commercially reasonable and consistent with prior business
practices. The ICC credit facility and the Company's anticipated cash flow may
not be sufficient to provide the necessary funding to achieve the growth
contemplated by the Company's business plan. Accordingly, the Company may need
to obtain the consent of ICC and the holders of the Notes prior to incurring any
additional indebtedness. While the Company has no reason to believe that such
consents will be withheld, there can be no assurance that the Company will
obtain such consents. Failure to obtain such consents and/or to obtain an
alternate credit facility or to refinance the Notes in order to allow the
Company to incur additional indebtedness in an amount sufficient to achieve the
growth contemplated by the Company's business plan could have a material adverse
effect upon the Company's business, financial condition and results of
operations.

REQUIREMENT OF CONSENT OF ICC AND HOLDERS OF NOTES TO PAY CASH DIVIDENDS

The ICC credit facility requires that the Company obtain the consent of ICC
prior to declaring or paying any cash dividend or making any redemption of any
shares of any class of capital stock of the Company or prior to making any other
cash distribution in respect thereof. The Note Agreement contains similar
restrictions and requires a similar consent. The Company obtained such consents
in connection with payment of the first quarterly dividend on the Series A
Preferred Stock, to allow a cash payment in lieu of the issuance of fractional
shares as part of a stock dividend, and will be required to obtain additional
consents at the time of each future dividend which is to include a distribution
of cash (dividends on the Series A Preferred Stock are payable quarterly, on the
fifteenth day

<PAGE>

of January, April, July and October). Unless such consents are obtained, the
Company will be unable to pay any cash dividends on the Series A Preferred Stock
or the Common Stock or to redeem the Series A Preferred Stock for cash. Should
the Company fail to pay dividends on the Company's Series A Preferred Stock when
due, the holders thereof may initiate an action against the Company with respect
thereto. Further, unless and until full cumulative dividends are paid on the
Series A Preferred Stock, no dividend (other than stock dividends) may be paid
on any shares of stock, such as the Company's Common Stock, which are junior to
the Series A Preferred Stock as to payment of dividends. If the Company, in the
absence of such consents, (i) pays a cash dividend or pays a stock dividend with
a cash payment in lieu of issuance of fractional shares, (ii) makes any
redemption of any shares of any class of its capital stock for cash, or (iii)
makes any other cash distribution in respect of its capital stock, such actions
may accelerate the Company's obligations under the ICC credit facility agreement
and the Note Agreement, which could have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
upon such acceleration, there can be no assurance that the Company will be able
to secure alternate sources of financing. There can be no assurance that ICC and
the holders of the Notes will consent to the future payment of cash dividends.

LIKELIHOOD OF NO CASH DIVIDENDS ON COMMON STOCK

The Company's current business strategy includes an ongoing search for
additional acquisitions of and equity investments in mid-range systems
distributors, as well as additional internal growth. It is therefore unlikely
that the Company will elect to pay cash dividends on its Common Stock in the
foreseeable future.

EXTENSION OF CREDIT TO CUSTOMERS WITHOUT REQUIRING COLLATERAL

The Company sells products to a broad geographic and demographic base of
customers, extends trade credit, and generally does not require supporting
collateral. To reduce credit risk, the Company performs ongoing credit
evaluations of its customers, maintains an allowance for doubtful accounts and
has credit insurance. Both historically and on a pro forma basis after giving
effect to the SMS acquisition, no single customer accounted for more than 10% of
the outstanding accounts receivable balance at December 31, 1996 and September
30, 1997. Should the Company's customers increase the rate at which they default
on payments due to the Company, and should the Company be unable to collect such
amounts, it could have a material adverse effect upon the Company's business,
financial condition and results of operations.

POSSIBLE VOLATILITY OF STOCK PRICE

The market price of the Common Stock is likely to be highly volatile and
may be significantly affected by factors such as actual or anticipated
fluctuations in the Company's results of operations, announcements of
technological innovations, introduction of new products or services by the
Company or its competitors, developments with respect to patents, copyrights or
proprietary rights, conditions and trends in the networking and other technology
industries, changes in or failure by the Company to meet securities analysts'
expectations, general market conditions and other factors. It is likely that in
some future quarter, the Company's operating results will be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock would likely decline, perhaps substantially. In
addition, the stock market has from time to time experienced significant price
and volume fluctuations that have particularly affected the market prices of the
stock of technology companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock. In the past, following
periods of volatility in the market price of a particular company's securities,
securities class action litigation has often been brought against that company.
There can be no assurance that such litigation will not occur in the future with
respect to the Company. Such litigation could result in substantial costs and a
diversion of management's attention and resources, which could have a material
adverse effect upon the Company's business, financial condition and results of
operations.

<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the sale by the Selling
Stockholders of the Shares.

INCOME TAX CONSIDERATIONS

Each prospective purchaser should consult his or her own tax advisor with
respect to the income tax issues and consequences of holding and disposing of
the Common Stock.

<PAGE>

SELLING STOCKHOLDERS

The following table sets forth certain information as of [December 1, 1997]
regarding the beneficial ownership of Common Stock by each of the Selling
Stockholders and the Shares offered hereby by such Selling Stockholders.

<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering(1) Number of After Offering(1)
-------------------------- Shares Being -------------------------
Number Percent(2) Offered Number Percent(2)
---------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Hymie Akst................................ 3,604 * 3,604 -- *
Joan F. Albrecht.......................... 3,604 * 3,604 -- *
Neil T. Anderson.......................... 75,095 1.38% 75,095 -- *
Chaim I. Anfang........................... 3,604 * 3,604 -- *
Argonaut Investors Fund Ltd............... 4,806 * 4,806 -- *
Argonaut Partnership, L.P................. 8,410 * 8,410 -- *
Astoria Capital Partners L.P.............. 310,894 5.47 310,894 -- *
Ballina Trading Services Limited.......... 7,509 * 7,509 -- *
Daniel M. Bogard Revocable Trust.......... 3,604 * 3,604 -- *
Richard M. Brooks......................... 7,509 * 7,509 -- *
Michael E. Bushey and Martha L. Bushey.... 3,604 * 3,604 -- *
Canpartners Investments IV, LLC........... 512,396 8.71 512,396 -- *
Central Fill Pharmacy, Inc................ 6,308 * 6,308 -- *
Brian M. Chait............................ 3,604 * 3,604 -- *
Phyllis J. Cohen.......................... 4,505 * 4,505 -- *
Commonwealth Life Ins. Co.
(Teamsters - Cambden)................... 105,133 1.92 105,133 -- *
Irving Davies............................. 3,604 * 3,604 -- *
Abraham Debbi............................. 7,509 * 7,509 -- *
Jack Diener Living Trust.................. 4,505 * 4,505 -- *
Duck Partners, L.P........................ 15,619 * 15,619 -- *
Burton I. Epstein and Elaine G. Epstein... 2,403 * 2,403 -- *
Fahnestock & Co. Inc...................... 90,453 1.66 90,453 -- *
Dr. Edward R. Falkner Inc. Profit Sharing
TR DTD 2-1970........................... 3,604 * 3,604 -- *
S. Marcus Finkle.......................... 30,038 * 30,038 -- *
Gerstenhaber Investors L.P................ 1,802 * 1,802 -- *
Dennis A. Gleicher........................ 2,403 * 2,403 -- *
Gruber & McBaine International............ 18,022 * 18,022 -- *
Larry Horn................................ 23,129 * 23,129 -- *
J.M. Hull Associates, L.P................. 31,239 * 31,239 -- *
Hull Overseas, Ltd........................ 31,239 * 31,239 -- *
IBM Credit Corporation.................... 100,000 1.83 100,000 -- *
JMG Capital Partners L.P.................. 114,144 2.08 114,144 -- *
KA Investments LDC........................ 78,099 1.43 78,099 -- *
David J. Katz............................. 3,604 * 3,604 -- *
Ivan Kaufman.............................. 22,528 * 22,528 -- *
Kodiak Opportunity, L.P................... 61,710 1.14 61,710 -- *
Kodiak Opportunity Offshore, Ltd.......... 54,068 * 54,068 -- *
Marvin Kogod & Muriel Kogod............... 3,604 * 3,604 -- *
Lagunitas Partners, L.P................... 57,072 1.05 57,072 -- *
Avy Lahav and Vered S. Lahav.............. 3,604 * 3,604 -- *
Janet Lehr................................ 3,604 * 3,604 -- *
Moshe Levy................................ 69,087 1.27 69,087 -- *
Hanka Lew................................. 12,015 * 12,015 -- *
Lew Lieberbaum & Co., Inc................. 21,672 * 21,672 -- *
Sheldon Lieberbaum........................ 7,509 * 7,509 -- *
Richard A. Lippe.......................... 30,038 * 30,038 -- *
William Lippe............................. 7,509 * 7,509 -- *
Marc Loveman, IRA......................... 3,604 * 3,604 -- *
Michael G. Lucci.......................... 3,604 * 3,604 -- *
Arthur Luxenberg.......................... 23,129 * 23,129 -- *
Irwin Luxemberg and Michael Luxemberg..... 3,604 * 3,604 -- *
MDA Financial, Inc........................ 6,007 * 6,007 -- *
Virginia Meade Trust...................... 3,003 * 3,003 -- *
Carlton Joseph Mertens II(3).............. 460,000 8.57 460,000 -- *
Beno Michel, M.D. Trust................... 3,604 * 3,604 -- *
Microcap Partners, L.P.................... 22,528 * 22,528 -- *

<PAGE>

Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering(1) Number of After Offering(1)
-------------------------- Shares Being -------------------------
Number Percent(2) Offered Number Percent(2)
---------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Microcap Partners Limited Partnership
(Astoria)............................... 154,696 2.80 154,696 -- *
Millennium Trading Co., LP................ 39,049 * 39,049 -- *
Gee Gee Morgan............................ 3,003 * 3,003 -- *
NAV LLC................................... 15,019 * 15,019 -- *
James M. Persky........................... 3,003 * 3,003 -- *
Pleiades Investment Partners, L.P......... 22,528 * 22,528 -- *
Puck Trading Limited...................... 7,509 * 7,509 -- *
R Capital II, Ltd......................... 12,015 * 12,015 -- *
R&J Trust Dtd 7-1-93...................... 3,604 * 3,604 -- *
Kenneth M. Reichle, Jr.................... 6,007 * 6,007 -- *
Gerald Richter IRA........................ 2,403 * 2,403 -- *
Robert Fleming Inc........................ 432,795 7.46 432,795 -- *
Francine Rodin............................ 3,003 * 3,003 -- *
ROI Offshore Fund Ltd..................... 90,114 1.65 90,114 -- *
ROI Partners, L.P......................... 150,190 2.72 150,190 -- *
Robert Rosin.............................. 3,604 * 3,604 -- *
Corey K. Ruth............................. 3,604 * 3,604 -- *
Jay Salomon and Bernice Salomon........... 15,019 * 15,019 -- *
Esther Schachner TTEE U/A DTD: 11/2/95.... 3,604 * 3,604 -- *
Harry Schwartz............................ 6,308 * 6,308 -- *
Mark Schwartz IRA......................... 4,806 * 4,806 -- *
Beverly Segal............................. 7,509 * 7,509 -- *
Seneca Capital International Ltd.......... 102,129 1.87 102,129 -- *
Seneca Capital L.P........................ 153,194 2.77 153,194 -- *
E. Donald Shapiro......................... 7,509 * 7,509 -- *
Sidelmar Partnership...................... 3,604 * 3,604 -- *
Irwin Simon............................... 3,604 * 3,604 -- *
SoundShore Partners L.P................... 15,019 * 15,019 -- *
Strome Hedgecap Limited................... 46,969 * 46,969 -- *
Strome Offshore Limited................... 190,519 3.43 190,519 -- *
Strome Partners, L.P...................... 155,879 2.82 155,879 -- *
Strome, Susskind Hedgecap Fund, L.P....... 187,884 3.38 187,884 -- *
Bruce Toll................................ 15,019 * 15,019 -- *
Triton Capital Investments Ltd............ 57,072 1.05 57,072 -- *
Wesley T. Wood............................ 3,604 * 3,604 -- *

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

* Less than 1%.

(1) Information with respect to beneficial ownership is based upon
information obtained from the Selling Stockholders and from the Company's
transfer agent. Unless otherwise indicated, the persons and entities
named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property
laws, where applicable. Shares of Common Stock receivable upon conversion
of Series A Preferred Stock or upon exercise of warrants that are
currently exercisable or exercisable within 60 days of ___________ ___,
1998 are deemed to be outstanding and to be beneficially owned by the
person presently entitled to exercise the right of conversion or exercise
for the purpose of computing the percentage ownership of such person but
are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.

(2) Based on 5,369,004 shares of Common Stock outstanding as of December 4,
1997.

(3) Mr. Mertens is a director of the Company, and is President of Business
Partner Solutions, Inc., a wholly-owned subsidiary of the Company. The
Company acquired Business Partner Solutions, Inc. (then named Star
Management Services, Inc.) in September 1997. Prior to its acquisition,
Mr. Mertens was Executive Vice President of Star Management Services,
Inc.

</TABLE>

Because a Selling Stockholder may offer by this Prospectus all or some
part of the Common Stock which he or she holds, no estimate can be given as of
the date hereof as to the amount of Common Stock actually to be offered for sale
by a Selling Stockholder or as to the amount of Common Stock that will be held
by a Selling Stockholder upon the termination of such offering. See "Plan of
Distribution."

<PAGE>

PLAN OF DISTRIBUTION

Sales of the Shares may be effected by or for the account of one or more
of the Selling Stockholders from time to time in transactions (which may include
block transactions) on any exchange or market on which such securities are
listed or quoted, as applicable, in negotiated transactions, through a
combination of such methods of sale, or otherwise, 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. The Selling Stockholders may
effect such transactions by selling the Shares directly to purchasers, acting as
principals for their own accounts, or by selling their Shares to or through
broker-dealers acting as agents for the Selling Stockholders, or to
broker-dealers who may purchase Shares as principals and thereafter sell such
securities from time to time in transactions on any exchange or market on which
such securities are listed or quoted, as applicable, in negotiated transactions,
through a combination of such methods of sale, or otherwise. In effecting sales,
broker-dealers engaged by Selling Stockholders may arrange for other
broker-dealers to participate. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they may sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).

To the extent required, the amount of the Shares to be sold, purchase
prices, public offering prices, the names of any agents, dealers or
underwriters, and any applicable commissions or discounts with respect to a
particular offer will be set forth by the Company in a Prospectus Supplement
accompanying this Prospectus or, if appropriate, a post-effective amendment to
the Registration Statement. The Selling Stockholders and agents who execute
orders on their behalf may be deemed to be underwriters as that term is defined
in Section 2(11) of the Securities Act and a portion of any proceeds of sales
and discounts, commissions or other seller's compensation may be deemed to be
underwriting compensation for purposes of the Securities Act.

Offers or sales of the Shares have not been registered or qualified
under the laws of any country, other than the United States. To comply with
certain states' securities laws, if applicable, the Shares will be offered or
sold in such jurisdictions only through registered or licensed brokers or
dealers.

Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Shares may be limited in its ability to
engage in market activities with respect to such Shares. In addition and without
limiting the foregoing, each Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders. The foregoing may affect the marketability of the
Shares.

The Company has agreed to bear all expenses of registration of the
Shares. Any commissions, discounts, concessions or other fees, if any, payable
to broker-dealers in connection with any sale of the Shares will be borne by the
Selling Stockholder selling such Shares. Under agreements entered into with the
Company, the Selling Stockholders will be indemnified by the Company against
certain liabilities, including liabilities under the Securities Act.

<PAGE>

LEGAL MATTERS

Certain matters with respect to the legality of the securities offered
hereby will be passed upon for the Company by Pillsbury Madison & Sutro LLP,
2550 Hanover Street, Palo Alto, California.

EXPERTS

The consolidated balance sheets as of December 31, 1996 and 1995, and
the consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996, incorporated
by reference in this Prospectus, have been incorporated herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing. The audited
consolidated financial statements of Star Management Services, Inc., included in
the Company's Current Report on Form 8-K dated September 30, 1997, and
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto and are included herein in reliance upon the authority of said
firm as experts in giving said reports.

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses payable by the Registrant in
connection with the sale and distribution of the securities being registered
hereby. The Selling Stockholders will not share in the payment of any portion of
these expenses. The table omits any applicable selling commissions or discounts,
which are payable solely by the Selling Stockholders. All the amounts shown are
estimates, except for the registration fee and the Nasdaq National Market
listing fee.

Registration fee......................................... $ 13,539.00
Nasdaq National Market listing fee....................... 17,500.00
Printing expenses........................................ 1,000.00
Legal fees and expenses.................................. 10,000.00
Accounting fees and expenses............................. 20,000.00
Transfer agent and registrar fees........................ 1,000.00
Miscellaneous............................................ 1,000.00
------------------
Total...................................... $ 64,039.00
==================

</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "Delaware GCL")
permits the Company's board of directors to indemnify any person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any
threatened pending or completed action, suit or proceeding in which such person
is made a party by reason of his being or having been a director, officer,
employee or agent of the Company, in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). The Delaware GCL provides that indemnification pursuant
to its provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise.

The Company's Certificate of Incorporation and Bylaws provide for
indemnification of the Company's directors, officers, employees and other agents
to the maximum extent permitted by law.

As permitted by Sections 102 and 145 of the Delaware GCL, the Company's
Restated Certificate of Incorporation eliminates a director's personal liability
for monetary damages to the Company and its stockholders arising from a breach
or alleged breach of such director's fiduciary duty, except for liability under
Section 174 of the Delaware GCL or liability for any breach of the director's
duty of loyalty to the Company or its stockholders, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law
or for any transaction which the director derived an improper personal benefit.

In addition, the Company has entered into separate indemnification
agreements with its directors and officers that will require the Company, among
other things, to indemnify them against certain liabilities that may arise by
reason of their status or service as directors or officers to the fullest extent
not prohibited by law. The directors and officers of the Registrant have a
policy of insurance under which they are insured, within limits and subject to
limitations, against certain expenses in connection with the defense of actions,
suits or proceedings, and certain liabilities which might be imposed as a result
of such actions, suits or proceedings, in which they are parties by reason of
their being or having been directors or officers.

II-1

<PAGE>

ITEM 16. EXHIBITS

Exhibit
Number Description of Document
------- -----------------------

3.1(a) Certificate of Incorporation of the Savoir Technology Group,
Inc., a Delaware corporation, filed as Exhibit 3(i) to the
Company's Current Report on Form 8-K dated July 23, 1997, and
incorporated herein by this reference.

3.1(b) Restated Certificate of Incorporation of Savoir Technology
Group, Inc., a Delaware corporation, filed as Exhibit 3(ii) to
the Company's Current Report on Form 8-K/A dated July 23,
1997, filed on August 14, 1997, and incorporated herein by
this reference.

3.1(c) Certificate of Designation, Preferences and Rights of the
Company's Series A Preferred Stock, filed as Exhibit 3.2 to
the Company's Current Report on Form 8-K dated October 10,
1997, and incorporated herein by this reference.

3.1(d) Certificate of Ownership and Merger dated as of November 21,
1997, filed as Exhibit 2.1 to the Company's Current Report on
Form 8-K dated November 21, 1997, and incorporated herein by
this reference.

3.2(a) Amended and Restated Bylaws of Savoir Technology Group, Inc.,
a Delaware corporation, filed as Exhibit 3(ii) to the
Company's Current Report on Form 8-K dated November 21, 1997,
and incorporated herein by this reference.

*5.1 Opinion of Pillsbury Madison & Sutro LLP.

*23.1 Consent of Pillsbury Madison & Sutro LLP.

*23.2 Consent of Coopers & Lybrand L.L.P. dated November 19, 1997.

23.3 Consent of Coopers & Lybrand L.L.P. dated January 9, 1998.

23.4 Consent of Arthur Andersen LLP.

*24 Powers of Attorney.

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

* Previously filed.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described in Item 15 above, 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 Act
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 Act and will be governed by the final adjudication of
such issue.

II-2

<PAGE>

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:

(a) To include any prospectus required by Section 10(a)(3)
of the Act;

(b) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration Statement; and

(c) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;

provided, however, that paragraphs (1)(a) and (1)(b) 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 Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that are incorporated by reference
in this Registration Statement.

(2) That, for the purpose of determining any liability under the Act,
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.

The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this 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.

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Campbell, State of California on January 9, 1998.

SAVOIR TECHNOLOGY GROUP, INC.

By /s/ P. SCOTT MUNRO*
----------------------------------
P. Scott Munro
President, Chief Executive
Officer and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ P. SCOTT MUNRO* President, Chief Executive Officer January 9, 1998
- ------------------------------ Secretary and Director (Principal
P. Scott Munro Executive Officer)

/s/ JAMES W. DORST Chief Financial Officer (Principal January 9, 1998
- ------------------------------ Financial and Accounting Officer)
James W. Dorst

/s/ ANGELO GUADAGNO* Director January 9, 1998
- ------------------------------
Angelo Guadagno

/s/ JAMES J. HEFFERNAN* Director January 9, 1998
- ------------------------------
James J. Heffernan

/s/ CARLTON JOSEPH MERTENS II* Director January 9, 1998
- ------------------------------
Carlton Joseph Mertens II

/s/ K. WILLIAM SICKLER* Director January 9, 1998
- ------------------------------
K. William Sickler

/s/ J. LARRY SMART* Director January 9, 1998
- ------------------------------
J. Larry Smart

*By /s/ JAMES W. DORST
---------------------------
James W. Dorst
Attorney-in-Fact
</TABLE>

II-4

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description of Document
------- -----------------------

3.1(b) Restated Certificate of Incorporation of Savoir Technology
Group, Inc., a Delaware corporation, filed as Exhibit 3(ii) to
the Company's Current Report on Form 8-K/A dated July 23,
1997, and filed on August 14, 1997, and incorporated herein by
this reference.

*5.1 Opinion of Pillsbury Madison & Sutro LLP.

*23.1 Consent of Pillsbury Madison & Sutro LLP.

*23.2 Consent of Coopers & Lybrand L.L.P. dated November 19, 1997.

23.3 Consent of Coopers & Lybrand L.L.P. dated January 9, 1998.

23.4 Consent of Arthur Andersen LLP.

*24 Powers of Attorney.

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* Previously filed.

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
on Form S-3 (File No. 333-40599) of our reports dated January 31, 1997 on our
audits of the consolidated financial statements and financial statement schedule
of Savoir Technology Group, Inc. (formerly named Western Micro Technology, Inc.)
as of December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, which reports are included in the 1996 Annual Report on
Form 10-K. We also consent to the reference to our firm under the caption
"Experts."

COOPERS & LYBRAND L.L.P.

/s/ COOPERS & LYBRAND L.L.P.

San Jose, California
January 9, 1998

EXHIBIT 23.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated November 26,
1997, included in the Savoir Technology Group, Inc.'s Form 8-K/A dated September
30, 1997 (filed on December 12, 1997), and to all references to our firm
included in this Registration Statement.

ARTHUR ANDERSEN LLP

/s/ ARTHUR ANDERSEN LLP

San Antonio, Texas
January 7, 1998