SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to section 240.14a-11(c) or
section 240.14a-12
SAVOIR TECHNOLOGY GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, CA 95008
(408) 379-0177
SAVOIR TECHNOLOGY GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF SAVOIR TECHNOLOGY GROUP, INC.:
The Annual Meeting of Stockholders of Savoir Technology Group, Inc.
(the "Company") will be held at 254 East Hacienda Avenue, Campbell, California
95008, on June 29, 1999 at 10:00 a.m. for the purpose of considering and acting
upon the following proposals:
(1) To elect a Board of seven (7) directors to hold office
until the next annual meeting of stockholders or until their respective
successors have been elected and qualified;
(2) To approve an amendment to the Company's 1994 Stock Option
Plan;
(3) To approve an amendment to the Company's 1995 Employee
Stock Purchase Plan;
(4) To ratify the designation of PricewaterhouseCoopers L.L.P.
as the Company's independent accountants for the period ending December
31, 1999; and
(5) To transact such other business as may properly come
before the meeting or any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on May 28, 1999
as the record date for determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any postponements or adjournments thereof.
A list of stockholders entitled to vote will be available at 254 East Hacienda
Avenue, Campbell, California 95008 for ten days prior to the Annual Meeting.
The Company's December 31, 1998 Annual Report to Stockholders
accompanies this Notice of Annual Meeting of Stockholders and Proxy Statement.
By Order of the Board of Directors
P. Scott Munro
Secretary
Campbell, California
May 28, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED ENVELOPE.
<PAGE>
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, CA 95008
(408) 379-0177
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
June 29, 1999
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Savoir Technology Group, Inc. (the "Company") of
proxies for use at the Annual Meeting of Stockholders of the Company to be held
on June 29, 1999 at 10:00 a.m. at the principal executive offices of the Company
located at 254 East Hacienda Avenue, Campbell, California 95008. This proxy
statement and the accompanying form of proxy are being mailed to stockholders on
or about June 2, 1999.
VOTING RIGHTS
Stockholders of record of the Company as of the close of business on
May 28, 1999 have the right to receive notice of and to vote at the Annual
Meeting. On May 28, 1999, the Company had issued and outstanding 12,247,852
shares of Common Stock and 1,986,000 shares of Series A Preferred Stock. Each
share of Common Stock and Series A Preferred Stock (on an as-converted basis) is
entitled to one vote for as many separate nominees as there are directors to be
elected and for or against all other matters presented. As of the date of this
Proxy Statement, each share of Series A Preferred Stock is convertible into
1.1953125 shares of Common Stock. Shares of the Company's Series B Preferred
Stock are not entitled to vote on the matters presented at the Annual Meeting.
For action to be taken at the Annual Meeting, the majority of the
shares entitled to vote must be represented at the meeting in person or by
proxy. Director nominees receiving the highest number of affirmative votes up to
the number of directors to be elected will be elected as directors of the
Company for the succeeding year. Votes withheld with respect to director
nominees have no legal effect.
The affirmative vote of a majority of the shares voting and a majority
of the required quorum is the minimum approval necessary and is required to
approve amendments to the Company's 1994 Stock Option Plan and 1995 Employee
Stock Purchase Plan and the ratification of PricewaterhouseCoopers L.L.P. as the
Company's independent accountants. Because abstentions with respect to any
matter are treated as shares present or represented and entitled to vote for the
purposes of determining whether that matter has been approved by the
stockholders, abstentions have the same effect as negative votes. If the number
of abstentions is such that the affirmative votes do not constitute the
requisite vote, the proposal will be defeated. Broker non-votes and shares as to
which proxy authority has been withheld with respect to any matter are not
deemed to be present or represented for purposes of determining whether
stockholder approval of that matter has been obtained.
PROXIES
Proxies for use at the Annual Meeting are being solicited by the Board
of Directors of the Company from its stockholders.
Shares represented by properly executed proxies received by the Company
will be voted at the Annual Meeting in accordance with the instructions thereon.
It is intended that shares represented by proxies received by the Company with
no instructions will be voted in favor of all proposals set forth in the Notice
of Meeting and for the nominees for director as described below.
1
<PAGE>
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise by (i) filing with
the Secretary of the Company a signed written statement revoking his or her
proxy or (ii) submitting an executed proxy bearing a date later than that of the
proxy being revoked. A proxy may also be revoked by attending the Annual Meeting
and voting in person at the Annual Meeting. Attendance at the Annual Meeting
will not by itself constitute the revocation of a proxy.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
At the Annual Meeting, seven (7) directors will be elected. The Board
of Directors currently consists of seven (7) directors. Except as set forth
below, unless otherwise instructed, the proxy holders will vote the proxies
received by them for Management's nominees named below. All seven (7) of the
nominees are presently directors of the Company. In the event that any
Management nominee shall become unavailable, the proxy holders will vote in
their discretion for a substitute nominee. It is not expected that any nominee
will be unavailable. The term of office of each person elected as a director
will continue until the next Annual Meeting of Stockholders or until a successor
has been elected and qualified.
THE NAME, AGE AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS OF THE
DIRECTORS NOMINATED BY COMPANY MANAGEMENT ARE:
P. SCOTT MUNRO, 42, has served as Chief Executive Officer, President
and Secretary of the Company since July 1995. Mr. Munro has also served as
Chairman of the Board since January 1998 and served as a Director of the Company
from July 1995. From January 1993 to July 1995, Mr. Munro was President,
Computer Systems Division of the Company, and from July 1990 to January 1993, he
served as Senior Vice President, Computer Systems Division of the Company. Prior
to 1990, Mr. Munro served as a General Manager for both Future Electronics,
Inc., a distributor of electronic components, and Arrow Electronics, Inc., a
distributor of computer products.
CARLTON JOSEPH MERTENS II, 33, has served as a Director of the Company
and as Chief Executive Officer and President of the Company's subsidiary,
Business Partners Solutions, Inc., since September 1997. Since March 1999, Mr.
Mertens has been a director of Network Systems International, Inc., a developer
and marketer of Enterprise Resource Planning software for use in manufacturing
and general business applications. From 1984 to September 1997, Mr. Mertens was
an active member of Star Management System's ("SMS") management team, and served
as Executive Vice President of SMS from 1991 to September 1997 prior to its
acquisition by the Company.
ANGELO GUADAGNO, 57, has served as a Director of the Company since
August 1997. From 1989 to 1997, he was the Vice President of Worldwide Channel
Sales of Data General, a manufacturer of servers, storage systems and related
software. During his tenure at Data General he also served as Vice President of
U.S. Sales from 1994 to 1996; Vice President, American Sales and Services from
1990 to 1994; and Vice President of North American Sales Division from 1989 to
1990.
JAMES J. HEFFERNAN, 57, has served as a Director of the Company since
October 1995. Since June 1998, Mr. Heffernan has been a director of Xoom.com,
Inc., an internet community services provider. Mr. Herrernan was Chief Financial
Officer of USWeb, an Internet consulting firm, from January 1996 to May 1998 and
served on its board from January 1996 until December 1998. From March 1995 to
January 1996, he was Chief Financial Officer of Interlink Computer Sciences, a
software company. Prior to such time, Mr. Heffernan was Chairman of the Board
and Chief Financial Officer of Panoramic, Inc., a software company. From June
1994 to June 1995, Mr. Heffernan was a director of International Microcomputer
Software, Inc., a software company.
GUY M. LAMMLE, 47, has served as a Director of the Company since August
1998. He has served as Chairman of the Board, Chief Executive Officer and
Director of NXTrend Technology, Inc. since February
2
<PAGE>
1980 and assumed the additional title of President of such Company in October
1996. From 1974 to 1980, Mr. Lammle was employed with The Burroughs Corporation,
a computer hardware company, progressing from Sales Representative to Zone
Manager and finally District Product Manager.
K. WILLIAM SICKLER, 50, has served as a Director of the Company since
July 1993. Mr. Sickler has served as Chief Executive Officer and President of
Gadzoox Networks, Inc., a provider of gigabit fibre channel networking products
since April 1996. From July 1995 to April 1996, he was Executive Director of
Software Business Development for Seagate Technology, a software developer and
manufacturer of disk drives, with responsibility for analysis of potential
software company acquisitions. From December 1992 to July 1995, Mr. Sickler was
President and Chief Executive Officer of Network Computing, Inc., a provider of
network management software for local area networks.
J. LARRY SMART, 50, has served as a Director of the Company since
October 1995. From October 1995 to January 1998, he also served as Chairman of
the Board of the Company. Since March 1999, Mr. Smart has served as President
and CEO of Visioneer, Inc. (formerly Primax V Acquisition Corp.), a developer of
personal desktop management products. Mr. Smart served as a Director of
ScanSoft, Inc. (formerly Visioneer, Inc.) since March 1999. From March 1997 to
March 1999, Mr. Smart served as President and Chief Executive Officer of
Visioneer, Inc. (prior to Visioneer, Inc. merging with ScanSoft, Inc.), and
served as Chairman of the Board of Directors of that company from February 1997
until assuming the position of President and Chief Executive Officer. From July
1995 until March 1997, he was Chairman of the Board, President and Chief
Executive Officer of StreamLogic Corporation, a data storage company. From March
1994 to February 1995, Mr. Smart was President and Chief Executive Officer of
Maxtor Corporation, a data storage company. From July 1991 to February 1995, Mr.
Smart was President and Chief Executive Officer of Southwall Technologies, Inc.,
a materials sciences company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" MANAGEMENT'S
NOMINEES.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The total number of regular and special meetings of the Board of
Directors held in the last fiscal year was fifteen. All directors attended at
least seventy-five percent of the Board meetings and the meetings of the
committees of the Board on which such director served.
The Audit Committee of the Board of Directors, which presently consists
of Messrs. Heffernan and Sickler, met one time during the last fiscal year. The
Audit Committee has the responsibility to review the scope of the annual audit,
recommend to the Board of Directors the appointment of the independent
accountants, and meet with the independent accountants for review and analysis
of the Company's systems, the adequacy of controls and the sufficiency of
financial reporting and legal accounting compliance.
The Compensation Committee of the Board of Directors, which presently
consists of Messrs. Guadagno and Smart, met three times during the last fiscal
year. The Compensation Committee has the responsibility for determining the
compensation to be paid to each of the Company's executive officers.
The Stock Option Committee of the Board of Directors, which presently
consists of Messrs. Guadagno and Sickler, met one time during the last fiscal
year. The Stock Option Committee administers the Company's 1994 Stock Option
Plan (the "1994 Plan").
The Nominating Committee of the Board of Directors, which presently
consists of Messrs. Munro, Lammle and Smart, met one time during the last fiscal
year. The Nominating Committee recommends to the Board of Directors persons for
nomination to the Board. The Nominating Committee will consider recommendations
from stockholders which should be addressed to the attention of the Secretary,
Savoir Technology Group, Inc., 254 East Hacienda Avenue, Campbell, California
95008.
3
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules of the Securities and Exchange Commission (the
"Commission") thereunder require the Company's executive officers, directors and
greater than 10% stockholders to file reports of ownership and changes in
ownership of the Common Stock with the Commission. Based upon a review of such
reports, the Company believes that all reports required by Section 16(a) of the
Exchange Act to be filed by its executive officers and directors during the last
fiscal year were filed on time, except that (1) Angelo Guadagno, James J.
Heffernan, Guy Lammle, J. Larry Smart and K. William Sickler each filed a Form 5
approximately one month late, (2) Astoria Capital Partners, L.P., and Astoria
Capital Management, Inc. have filed a Forms 3 and Forms 4 from one to five
months late and (3) Richard Koe has filed a Form 4 approximately one month late.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial
ownership of the capital stock of the Company as of May 28, 1999, by: (i) each
person known to the Company to beneficially own more than five percent (5%) of
the capital stock of the Company; (ii) each of the Company's directors; (iii)
certain of the Company's executive officers; and (iv) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
Shares
Beneficially
Name of Beneficial Owner(1) Owned(1) Percent(2)
- -------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Astoria Capital Partners, L.P. (3)
6600 SW 92nd Avenue, Suite 370
Portland, OR 97223.............................................. 1,824,620 14.5%
Scott's Cove Capital Management LLC (4)
230 Park Avenue, Suite 455
New York, NY 10169.............................................. 1,408,961 10.6%
Strome Susskind Investment Management, L.P. (5)
100 Wilshire Blvd., 15th Floor
Santa Monica, CA 90401.......................................... 1,259,697 9.8%
John M. Harkins (6)
4955 Corporate Drive
Huntsville, AL 35806............................................ 1,101,661 9.0%
Michael N. Gunnells (7)
4955 Corporate Drive
Huntsville, AL 35806............................................ 1,086,661 8.9%
ROI Capital Management, Inc. (8)
17 E. Sir Francis Drake Blvd., Suite 225
Larkspur, CA 94939.............................................. 921,901 7.4%
Carlton Joseph Mertens II (9).......................................... 471,429 3.8%
P. Scott Munro (10).................................................... 311,080 2.5%
James W. Dorst (11).................................................... 92,586 *
Robert O'Reilly (12)................................................... 40,855 *
Guy M. Lammle.......................................................... 33,537 *
J. Larry Smart (13).................................................... 27,501 *
K. William Sickler (14)................................................ 21,001 *
James J. Heffernan (15)................................................ 13,501 *
Angelo Guadagno (16)................................................... 3,750 *
All executive officers and directors as a group
(10 persons) (17)............................................... 1,036,052 8.1%
- ----------
* Less than one percent (1%).
(1) Unless otherwise indicated, the beneficial owner has sole voting and
dispositive power over the shares reported in the table. Includes
shares of Common Stock and shares of Series A Preferred Stock on an
as-converted basis. Information with respect to beneficial ownership is
based upon information obtained from the stockholders and from the
Company's transfer agent. To the Company's knowledge, 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. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission and includes voting and investment power with
respect to securities. Shares of Common Stock issuable upon conversion
of shares of Series A Preferred Stock, upon exercise of stock options
exercisable within 60 days of May 28, 1999 or upon exercise of warrants
that are currently exercisable or exercisable within 60 days of May 28,
1999 are deemed to be outstanding and to be beneficially owned by the
person presently entitled to 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. Each
5
<PAGE>
share of Series A Preferred Stock is currently convertible at any time
into shares of the Common Stock at a conversion ratio of 1.1953125
shares of Common Stock for each share of Series A Preferred Stock and
is entitled to vote, without conversion, together with the Common Stock
as a single class on an as-converted basis.
(2) Based on 12,247,852 shares of Common Stock and 1,986,500 shares of
Series A Preferred Stock (equivalent to 2,374,488 shares of Common
Stock on an as-converted basis) outstanding as of May 28, 1999.
(3) Includes 1,473,690 shares of Common Stock, 207,000 shares of Series A
Preferred Stock and warrants to purchase 103,500 shares of Common
Stock. Common Stock ownership information is based on a Schedule 13G/A
dated February 11, 1999, filed jointly by Richard W. Koe, Astoria
Capital Management, Inc. ("Astoria Management") and Astoria Capital
Partners L.P. ("Astoria Partners") reporting ownership as follows:
Shares of Common Stock Shared Voting and
Beneficially Owned Dispositive Power
---------------------- -----------------
Astoria Partners 1,162,434 0
Astoria Management 1,473,690 0
Richard W. Koe 1,473,690 0
Astoria Partners is an investment limited partnership, whose general
partners are Richard W. Koe and Astoria Management. Astoria Management
is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940. Richard W. Koe is Astoria Management's president
and sole shareholder. The shares of Series A Preferred Stock and
warrants to purchase shares of Common Stock are owned by Astoria
Partners.
(4) Includes 409,359 shares of Common Stock, 533,000 shares of Series A
Preferred Stock and warrants to purchase 362,500 shares of Common
Stock. Based on a Schedule 13G dated May 13, 1999 filed by Scott's Cove
Capital Management LLC.
(5) Based on a Schedule 13G/A filed March 18, 1999 by Strome Susskind
Investment Management, L.P. ("SSIM"), includes 603,591 shares of Common
Stock, 387,012 shares of Series A Preferred Stock and warrants to
purchase 193,506 shares of Common Stock held by SSIM and its
affiliates, which includes SSCO, Inc. and Mark E. Strome.
(6) Ownership totals are based on a Schedule 13D dated June 5, 1998 filed
by Mr. Harkins, as well as shares issued to Mr. Harkins thereafter.
(7) Ownership totals are based on a Schedule 13D dated June 5, 1998 filed
by Mr. Gunnells, as well as shares issued to Mr. Gunnells thereafter.
(8) Based on a Schedule 13G/A dated February 22, 1999 filed by ROI Capital
Management, Inc. ("ROI"), on behalf of ROI, Mark T. Boyer and Mitchell
J. Soboleski, includes 650,651 shares of Common Stock, 160,000 shares
of Series A Preferred Stock and warrants to purchase 80,000 shares of
Common Stock.
(9) Includes 460,000 shares of Common Stock, as reflected on a Schedule 13D
dated September 30, 1997 filed by Mr. Mertens. Also includes 11,429
shares subject to stock options that are presently exercisable or will
become exercisable within 60 days of May 28, 1999.
(10) Includes 299,218 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(11) Includes 73,750 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(12) Includes 38,750 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(13) Includes 13,501 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(14) Includes 21,001 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
6
<PAGE>
(15) Includes 13,501 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(16) Includes 3,750 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
(17) Includes 494,900 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of May 28, 1999.
</TABLE>
EXECUTIVE COMPENSATION
The following table provides certain summary information for the years
ended December 31, 1996, 1997 and 1998 concerning compensation paid to the
Company's Chief Executive Officer and to the Company's three other named
executive officers whose compensation exceeded $100,000 in 1998 (the "Named
Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------- -------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($) Options(#) Compensation($)
- ------------------------------- -------- ---------- ---------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
P. Scott Munro.............. 1998 400,406 261,049 -- 450,000 --
Chairman of the Board, 1997 302,485 119,398 -- 150,000 --
Chief Executive Officer, 1996 221,286 122,564 -- 125,000 --
President and Secretary
James W. Dorst.............. 1998 227,750 74,610 -- 50,000 --
Chief Financial Officer 1997 192,333 51,872 -- 30,000 --
1996 150,000 47,867 -- 20,000 --
Robert O'Reilly(1).......... 1998 176,000 62,175 -- 50,000 --
Senior Vice President 1997 142,517 36,578 -- 30,000 --
Carlton J. Mertens(2)....... 1998 270,000 148,717 -- -- --
Chief Executive Officer 1997 67,579 32,500 -- 45,716 --
and President of the
Company's subsidiary
Business Partner
Solutions, Inc., and
Director
- ----------
(1) Mr. O'Reilly became an executive officer of the Company during 1997.
(2) Mr. Mertens became an executive officer of the Company during 1997.
</TABLE>
7
<PAGE>
RECENT OPTION GRANTS
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1998 to the Named Executive
Officers.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Exercise Appreciation for Option
Underlying Granted to or Base Term($)(2)
Options Employees in Price Expiration -------------------------
Name Granted(#) Fiscal Year (1) ($/Share) Date 5% 10%
- ------------------------------ ------------- ---------------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
P. Scott Munro............. 150,000(3) 13.37% 10.25 1/16/08 966,925 2,450,379
300,000(3) 26.75% 6.00 9/8/08 1,132,010 2,868,736
James W. Dorst............. 25,000(3) 2.23% 10.25 1/16/08 161,154 408,397
25,000(3) 2.23% 6.00 9/8/08 94,334 239,016
Robert O'Reilly............ 15,000(3) 1.34% 10.25 1/16/08 96,693 245,038
35,000(3) 3.12% 6.00 9/8/08 132,068 334,686
Carlton J. Mertens......... -- -- -- -- -- --
- ----------
(1) Based on options to purchase an aggregate of 1,121,500 shares of Common
Stock granted during fiscal 1998.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date the respective options were granted
to their expiration date and are not presented to forecast possible
future appreciation, if any, in the price of the Common Stock. The
gains shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise of
the options or the sale of the underlying shares of Common Stock. The
actual gains, if any, on the stock option exercises will depend on the
future performance of the Common Stock, the optionee's continued
employment through applicable vesting periods and the date on which the
options are exercised.
(3) These options have a 10-year term and vest at the rate of 25% per year
over a four-year period.
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table shows the number of shares of Common Stock
represented by outstanding stock options held by each of the Named Executive
Officers as of December 31, 1998. None of the Company's Named Executive Officers
exercised any stock options in 1998.
<TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES(1)
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End ($)
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------ -----------------------------
<S> <C> <C>
P. Scott Munro............... 217,968 / 668,750 682,524 / 1,013,438
James W. Dorst............... 51,250 / 98,750 241,406 / 147,656
Robert O'Reilly.............. 26,250 / 98,750 30,625 / 124,688
Carlton J. Mertens........... 11,429 / 34,287 -- /--
- ----------
(1) Based on a per share price of $8.6875, the closing price of the Common
Stock as reported by The Nasdaq National Market on December 31, 1998,
the last trading day of the fiscal year.
</TABLE>
8
<PAGE>
COMPENSATION OF DIRECTORS
The Company's outside directors (i.e., those who are not employees of
the Company) receive an annual retainer of $20,000, plus $750 for each board
meeting attended. The Company pays for directors' liability insurance and has
entered into indemnification agreements with each of its directors. The
Company's 1994 Plan provides for the grant of an option covering 15,000 shares
of the Common Stock to certain directors who are not employees following their
initial election or appointment to the Board of Directors and the grant of an
option for 4,000 shares at every regular annual meeting thereafter at which they
are re-elected. The exercise price is the fair market value of the Common Stock
on the date of each respective grant and the options vest over a 4 year period.
In April 1997 and September 1998, the Board of Directors made discretionary
grants of nonstatutory stock options to each of the outside directors to
purchase 6,250 and 10,000 shares, respectively, of Common Stock at an exercise
price of $11.00 and $6.00 per share, respectively.
CHANGE IN CONTROL
Stock options held by the Company's directors under the Company's 1994
Plan will become fully vested and exercisable following a change in control of
the Company. A "change in control" means the occurrence of any of the following
events: (i) stockholder approval of a merger or consolidation of the Company
with any other corporation resulting in a change in fifty percent (50%) or more
of the total voting power of the Company; (ii) stockholder approval of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
of all or substantially all of the Company's assets; or (iii) any person becomes
the beneficial owner of more than fifty percent (50%) of the Company's total
outstanding securities.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with P. Scott
Munro dated January 22, 1998. Pursuant to the terms of the agreement Mr. Munro
receives a base salary of $450,000 per year and is eligible to receive a target
bonus of $170,000 a year, subject to achievement of certain performance goals.
If Mr. Munro is terminated without cause or terminates for good reason, he will
be entitled to continuation of his base salary, his stock option vesting and his
most recently paid regular quarterly bonus annualized, payable on a salary
continuation basis, for a period of one year following termination. His health
care benefits will continue until the earlier of the end of the twelve month
period or until he becomes eligible for comparable benefits at another employer.
If Mr. Munro is terminated without cause or terminates for good reason following
a change in control of the Company, he will be entitled to the product of 1.5
times his base salary and most recently paid regular annual bonus in a cash lump
sum, and his health care benefits will continue until the earlier of (i) twelve
months following the termination of employment or (ii) the date he becomes
eligible for comparable benefits at another employer. Mr. Munro's stock options
will fully vest upon a change in control of the Company.
The Company has also entered into employment agreements with other
management personnel as follows: (i) an employment agreement with James W. Dorst
dated January 22, 1998, pursuant to which Mr. Dorst receives a base salary of
$250,000 per year and is eligible to receive a target bonus of $60,000 per year,
subject to achievement of certain performance goals; and (ii) an employment
agreement with Robert O'Reilly dated January 22, 1998, pursuant to which Mr.
O'Reilly receives a base salary of $200,000 per year and is eligible to receive
a target bonus of $50,000 a year subject to achievement of performance goals. In
addition to the foregoing, pursuant to each of their agreements with the
Company, if Mr. Dorst or Mr. O'Reilly is terminated for cause, such person will
be entitled to receive his base salary and bonus due through the date of his
termination. If Mr. Dorst or Mr. O'Reilly is terminated without cause, such
person will be entitled to receive his base salary for a period following his
termination, twelve months for Mr. Dorst and six months for Mr. O'Reilly. If Mr.
Dorst's or Mr. O'Reilly's responsibilities are reduced within twelve months
following a change in control and such reduction in responsibilities is not for
cause, any resignation of employment as a consequence of such reduction in
responsibilities will be treated as a termination of employment without cause.
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The Company has entered into an employment agreement with Carlton
Joseph Mertens II dated September 30, 1997, pursuant to which Mr. Mertens
receives a base salary of $270,000 per year and is eligible to receive a target
bonus of $130,000 a year, subject to achievement of certain performance goals.
If Mr. Mertens is terminated for cause, he will be entitled to receive his base
salary and bonus due through the date of his termination. If Mr. Mertens is
terminated without cause or if Mr. Mertens terminates his employment with the
Company for certain specified reasons, he will be entitled to receive his base
salary for nine months following his termination; such reasons include
assignment or alteration by the Company of Mr. Mertens' duties, responsibilities
or obligations materially inconsistent with his position with the Company after
notice of Mr. Mertens' objections thereto, failure of the Company to provide to
Mr. Mertens the salary or bonuses described above, relocation of the Company's
Business Partner Solutions, Inc.'s principal offices outside of San Antonio,
Texas, any requirement by the Company for Mr. Mertens to relocate anywhere other
than San Antonio, Texas and instructions by the Company given to Mr. Mertens to
violate any applicable law after notice of Mr. Mertens' objections. In addition,
the Company has entered into an noncompetition agreement with Mr. Mertens dated
September 30, 1997 (the "Mertens Non-Compete"). The Mertens Non-Compete was made
in connection with the sale by Mr. Mertens of all of his shares of SMS to the
Company. Under the Mertens Non-Compete, Mr. Mertens agreed that, with respect to
certain geographic areas, including all of the states of the United States of
America (but excluding certain California counties), Canada, Mexico and Puerto
Rico, he would not sell computer hardware, software or services to value-added
resellers, resellers or systems integrators or approach, contract or solicit any
employee of the Company (or any affiliate of the Company) to leave the employ of
the Company (or any of its affiliates) except through general employment
advertising. The Mertens Non-Compete expires on the earlier of September 30,
1999 or the date on which final payment of any salary due to Mr. Mertens is
made. The Mertens Non-Compete may terminate earlier upon the Company's failure
to pay timely accrued interest on certain promissory notes held by Mr. Mertens.
10
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COMPENSATION COMMITTEE REPORT ON COMPENSATION
The compensation of the Company's executive officers is determined by
the Compensation Committee of the Board of Directors (the "Compensation
Committee") on an annual basis. The Chief Executive Officer's recommendations of
compensation to be paid to other executive officers of the Company are
considered by the Compensation Committee in its decision-making process. The
Compensation Committee is currently composed of two non-employee directors.
The Stock Option Committee of the Board of Directors administers the
Company's 1994 Plan and determines grants to executive officers. The Stock
Option Committee is composed of two non-employee directors, as defined by Rule
16b-3 under the Exchange Act.
The Compensation Committee's policy on executive compensation is to
attract and retain highly qualified personnel while tying compensation to
performance. Consequently, the Compensation Committee seeks to establish
compensation that will reward individuals for Company performance as well as
individual performance and motivate and reward executives for achievement of
strategic business objectives.
The primary factors used by the Compensation Committee in determining
the compensation of the Company's executive officers are as follows:
1. The executive officer's individual performance and
contributions to the Company;
2. The financial results of the Company, including return on
assets; and
3. The compensation of executive officers employed by companies
in similar industries with similar revenue levels. The
Compensation Committee takes into account surveys of
competitive pay practices prepared by an independent
consulting firm, Westward Pay Strategies.
EXECUTIVE COMPENSATION GENERALLY
The compensation of executive officers is composed of (i) base salary,
(ii) a cash bonus and (iii) stock options.
BASE SALARY. The base salaries of the Company's executive officers are
set forth in the employment agreements negotiated by each such officer. See
"Employment Agreements" beginning on page 9 of this Proxy Statement. In each
case, the Compensation Committee determined the appropriate amount of
competitive base pay on the basis of a report prepared by Westward Pay
Strategies of competitive practices of comparable companies, the majority of
which were not members of the Company's Self-Determined Peer Group.
BONUS. All of the executive officers were eligible to receive a cash
bonus. The bonus amount was based on the degree to which specific financial
performance, e.g., return on assets, was achieved in relation to targeted goals.
The target bonus amounts for these executive officers were designed to represent
a percentage of annual base salary: 38%, 25% and 20%, for Mr. Munro, Mr. Dorst
and Mr. O'Reilly, respectively.
STOCK OPTIONS. In fiscal 1998, the Company's current executive officers
received stock options which are set forth in the Summary Compensation Table on
page 7 of this Proxy Statement. Stock options were granted to the Company's
current executive officers on the basis of a report prepared by Westward Pay
Strategies of competitive practices of comparable companies, the majority of
which were not members of the Company's Self-Determined Peer Group.
CHIEF EXECUTIVE OFFICER COMPENSATION
In January 1998, Mr. Munro's base salary was increased to $450,000
based on a compensation survey conducted by Westward Pay Strategies of
comparable companies. The Company also entered into a new
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employment agreement with Mr. Munro, which superseded his then-existing
employment agreement. See "Employment Agreements" on page 9 of this Proxy
Statement.
Based on the Company's 1998 performance, Mr. Munro was paid a bonus of
$261,049. Mr. Munro's target bonus was $170,000 and his actual bonus exceeded
his target due to the Company's performance based on return on assets.
Based on a report of competitive annual stock option grants, prepared
by Westward Pay Strategies, Mr. Munro received options in 1998 to purchase
450,000 shares of Company stock that vest over four years. See "Summary
Compensation Table" on page 7 of this Proxy Statement.
OTHER
The Company generally intends to qualify compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended, however, the Company
reserves the right to pay compensation that may not be deductible.
COMPENSATION COMMITTEE
ANGELO GUADAGNO
J. LARRY SMART
May 28, 1999
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PERFORMANCE GRAPH
The Commission requires that the Company include in this Proxy
Statement a line-graph presentation comparing cumulative, five year stockholder
returns on an indexed basis with (i) a broad equity market index and (ii) an
industry index or peer group. Set forth below is a line graph comparing
cumulative total stockholder return on the Common Stock against the Center for
Research in Security Prices ("CRSP") Index for the Nasdaq Stock Market (U.S.
companies) and a Self-Determined Peer Group assuming $100 was invested on
December 31, 1993 in the Company's Common Stock and both of the indices. "Total
return," for the purpose of this graph, assumes reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
[LINE GRAPH]
Date Company Index Market Index Peer Index
12/31/1993 100.000 100.000 100.000
01/31/1994 108.108 103.035 110.691
02/28/1994 89.189 102.073 112.007
03/31/1994 91/892 95.798 102.643
04/29/1994 105.405 94.553 99.517
05/31/1994 78.378 94.785 92.408
06/30/1994 59.459 91.318 84.153
07/29/1994 83.784 93.192 83.058
08/31/1994 81.081 99.135 93.938
09/30/1994 71.622 98.881 94.809
10/31/1994 89.189 100.824 95.866
11/30/1994 86.487 97.479 89.758
12/30/1994 68.919 97.752 89.914
01/31/1995 54.054 98.310 86.981
02/28/1995 51.351 103.509 88.044
03/31/1995 58.108 106.579 87.254
04/28/1995 35.135 109.937 96.873
05/31/1995 28.378 112.774 99.493
06/30/1995 35.135 121.914 108.352
07/31/1995 35.135 130.876 118.712
08/31/1995 45.946 133.531 113.241
09/29/1995 64.865 136.600 117.750
10/31/1995 59.459 135.813 109.190
11/30/1995 62.162 139.004 113.524
12/29/1995 56.757 138.265 109.264
01/31/1996 51.351 138.949 103.685
02/29/1996 74.324 144.239 115.909
03/29/1996 66.216 144.714 117.895
04/30/1996 109.460 156.716 133.602
05/31/1996 113.514 163.913 140.537
06/28/1996 90.541 156.523 126.623
07/31/1996 67.568 142.565 126.484
08/30/1996 77.703 150.553 147.217
09/30/1996 91/892 162.069 153.944
10/31/1996 93.243 160.278 153.971
11/29/1996 109.459 170.186 176.674
12/31/1996 132.432 170.033 173.304
01/31/1997 139.189 182.117 156.757
02/28/1997 109.460 172.012 150.185
03/31/1997 118.919 160.780 133.240
04/30/1997 97.297 165.806 137.545
05/30/1997 144.595 184.597 155.413
06/30/1997 130.405 190.250 156.925
07/31/1997 109.459 210.318 179.465
08/29/1997 95.946 209.993 191.600
09/30/1997 120.270 222.383 197.256
10/31/1997 108.108 210.833 186.143
11/28/1997 110.811 211.901 184.889
12/31/1997 112.162 208.277 172.377
01/30/1998 110.811 214.892 169.196
02/27/1998 121.622 235.102 185.812
03/31/1998 128.378 243.738 162.622
04/30/1998 115.541 247.759 186.502
05/29/1998 109.459 233.983 170.156
06/30/1998 124.324 250.385 166.904
07/31/1998 114.865 247.402 158.050
08/31/1998 78.378 198.564 131.244
09/30/1998 58.784 226.182 138.651
10/30/1998 99.324 235.947 143.089
11/30/1998 91.892 259.827 156.079
12/31/1998 93.919 293.489 151.096
[Graphic Omitted] SAVOIR TECHNOLOGY GROUP, INC.
[Graphic Omitted] Nasdaq Stock Market (U.S. Companies)
[Graphic Omitted] Self-Determined Peer Group
Companies in the Self-Determined Peer Group
AVNET INC COMPUCOM INC
INACOM CORP MICROAGE INC
PIONEER STANDARD ELECTRONICS INC. POMEROY COMPUTER RESOURCES INC
TECH DATA CORP VANSTAR CORP
13
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PROPOSAL NUMBER 2
AN AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN
The stockholders are being asked to vote on a proposal to approve an
amendment to the Company's 1994 Stock Option Plan (the "1994 Plan") that will
(i) increase the number of shares available for issuance under the 1994 Plan by
500,000 shares and (ii) increase the limitation on the number of shares that can
be granted to any officer of the Company in any year from 300,000 shares to
1,000,000 shares. The Board believes the amendment is necessary in order to
provide the Company with the ability to grant a sufficient amount of options to
attract and retain the services of key individuals to serve as officers of the
Company which is in turn essential to its long-term success, and to ensure the
deductibility of compensation attributable to stock options granted under the
1994 Plan, notwithstanding the deduction limit of Section 162(m) of the Internal
Revenue Code (the "Code").
The principal terms and provisions of the 1994 Plan as modified by the
recent amendment are summarized below. The summary however, is not intended to
be a complete description of all the terms of the 1994 Plan. A copy of the 1994
Plan as amended will be furnished by the Company to any stockholder upon written
request to the Secretary of the Company.
SHARES SUBJECT TO THE 1994 PLAN
A total of 2,663,034 shares are authorized under the Plan. The Company
is seeking stockholder approval to increase the authorized number by 500,000
shares to a total number of 3,163,034 shares. Shares issuable in connection with
the 1994 Plan are subject to adjustment in the event of stock splits, stock
dividends and other situations.
As of April 30, 1999, under the 1994 Plan there were options
outstanding to purchase an aggregate of 2,646,899 shares of Common Stock, at
exercise prices ranging from $2.00 to $13.00 per share, or a weighted average
per share exercise price of $8.16. If any option granted under the 1994 Plan
expires or terminates for any reason without having been exercised in full, then
the unpurchased shares subject to that option will once again be available for
additional option grants. As of April 30, 1999, a total of 16,135 shares of
Common Stock were available for future issuance under the 1994 Plan.
PARTICIPANTS
Any person who is an employee of the Company is eligible to receive
options under the 1994 Plan. Optionees will be selected by the Stock Option
Committee.
The 1994 Plan also provides for automatic formula grants for
non-employee directors. Non-employee directors will automatically receive
nonstatutory options to purchase 15,000 shares of the Common Stock upon their
initial appointment or election as a non-employee director and will receive
nonstatutory options to purchase 4,000 shares of the Common Stock for every
regular annual meeting thereafter at which they are elected. The non-employee
director options will have ten (10) year terms and will be exercisable ratably
at twenty-five percent (25%) a year from the date of the annual meeting of
stockholders on which date the options are granted. Such options will become one
hundred percent (100%) vested upon death, disability or a change in control of
the Company. If a non-employee director or advisory director dies or becomes
disabled, his or her option shall be fully exercisable during the twelve (12)
months following the date of his or her death or disablement. If a non-employee
director or advisory director voluntarily retires from service as a director or
advisory direct, or at or after age 60, his or her options that are vested shall
be exercisable for a period of twelve (12) months following retirement. In all
other cases, a non-employee director's or advisory director's options that are
vested upon termination of service shall remain exercisable for ninety (90) days
following the date of his or her termination of service. The 1994 Plan also
permits discretionary grants of nonstatutory options to be made to non-employee
directors by the Board of Directors.
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ADMINISTRATION
The 1994 Plan is administered by the Stock Option Committee. The Stock
Option Committee consists of two directors appointed by the Board of Directors
and has the power and authority to grant options to participants in the 1994
Plan. The Stock Option Committee may delegate certain of its responsibilities to
other persons; provided, however, the Stock Option Committee may not delegate
matters relating to the Company's officers subject to Section 16 of the Exchange
Act. The members of the Stock Option Committee are non-employee directors as
defined in Rule 16b-3 promulgated under the Exchange Act. The Board of Directors
may fill vacancies on the Stock Option Committee and may from time to time
remove or add members and may also administer the 1994 Plan.
The Stock Option Committee may periodically adopt rules and regulations
for carrying out the 1994 Plan. The Board of Directors may amend the 1994 Plan,
as desired, without further action by the Company's stockholders except as
required by applicable law.
TERMS OF STOCK OPTIONS
Awards under the 1994 Plan consist of nonstatutory stock options
("NSOs") and incentive stock options ("ISOs"). Except with respect to options
automatically granted to non-employee directors, options granted pursuant to the
1994 Plan need not be identical.
The purchase price under each option is established by the Stock Option
Committee but in no event can the option price for ISOs and non-employee
director options be less than one hundred percent (100%) of the fair market
value of the stock on the date of grant. The last sale price per share of the
Common Stock as reported on the Nasdaq Stock Market on May 26, 1999 was $10.00.
The option price must be paid in full at the time of exercise. The price may be
paid in cash or, if permitted by the Stock Option Agreement, by delivery of an
irrevocable direction to a securities broker to sell shares and to deliver part
of the sale proceeds to the Company, by the surrender of shares of the Company
owned by the participant exercising the option and having a fair market value on
the date of exercise equal to the option price, or by any combination of the
foregoing.
Except with respect to automatic options for non-employee directors,
options have such terms and are exercisable in such manner and at such times as
the Stock Option Committee may determine. In addition, no optionee may be
granted options in any calendar year in excess of 1,000,000 shares of the Common
Stock. However, each option must expire within a period of not more than ten
(10) years from the grant date.
Unless the Option Agreement otherwise provides, each option is
transferable only by will or the law of descent and distribution and shall only
be exercisable by the participant during his or her lifetime.
The Stock Option Committee may modify, extend or renew outstanding
options or may accept the cancellation of outstanding options in return for the
grant of new options at the same or a different price, except the optionee must
consent to any modification, extension or renewal which impairs his or her
rights or increases his or her obligations under such option.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
1994 Plan is intended to be a summary of applicable federal law. State and local
tax consequences may differ. Because the federal income tax rules governing
options and related payments are complex and subject to frequent change,
optionees are advised to consult their tax advisors prior to exercise of options
or dispositions of stock acquired pursuant to option exercise.
ISOs and NSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Code.
NSOs need not comply with such requirements.
An employee is not subject to ordinary income tax on the grant or
exercise of an ISO. The difference between the exercise price and the fair
market value on the exercise date of the shares acquired under an ISO will,
however, be a preference item for purposes of the alternative minimum tax. If an
optionee holds the shares
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<PAGE>
acquired upon exercise of an ISO for at least two (2) years following grant and
at least one (1) year following exercise, the optionee's gain, if any, upon a
subsequent disposition of such shares is capital gain. The measure of the gain
is the difference between the proceeds received on disposition and the
optionee's basis in the shares (which generally equals the exercise price). If
an optionee disposes of stock acquired pursuant to exercise of an ISO before
satisfying the one (1) and two (2) year holding periods described above, the
optionee may recognize both ordinary income and capital gain in the year of
disposition. The amount of the ordinary income will be the lesser of (i) the
amount realized on disposition less the optionee's adjusted basis in the stock
(usually the option exercise price) or (ii) the difference between the fair
market value of the stock on the exercise date and the option exercise price.
The balance of the consideration received on such a disposition will be capital
gain (long-term capital gain if the stock had been held for more than one (1)
year following exercise of the ISO). The Company is not entitled to an income
tax deduction on the grant or exercise of an ISO or on the optionee's
disposition of the shares after satisfying the holding period requirement
described above. If the holding periods are not satisfied, the Company will be
entitled to a deduction in the year the optionee disposes of the shares, in an
amount equal to the ordinary income recognized by the optionee, provided it
satisfies a reporting obligation with respect to the gain.
An employee is not taxed on the grant of an NSO. On exercise, however,
the optionee recognizes ordinary income equal to the difference between the
option price and the fair market value of the shares on the date of exercise.
The Company is entitled to an income tax deduction in the year of exercise in
the amount recognized by the optionee as ordinary income, provided it satisfies
a reporting obligation with respect to the gain, and subject to the limitations
of Section 162(m) of the Code. Any gain on subsequent disposition of the shares
is long-term capital gain if the shares are held for more than one (1) year
following exercise. The Company does not receive a deduction for this gain.
Code Section 162(m) denies a deduction to any publicly held corporation
for compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to awards under the 1994 Plan, when combined with all
other types of compensation received by a covered employee from the Company, may
cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m) of the Code,
compensation attributable to stock options will qualify as performance-based
compensation, provided that: (i) the stock option plan contains a per-employee
limitation on the number of shares for which stock options may be granted during
a specified period; (ii) the per employee limitation is approved by the
stockholders; (iii) the award is granted by a compensation committee comprised
solely of two or more "outside directors"; and (iv) the exercise price of the
option is no less than the fair market value of the stock on the date of grant.
Options granted under the 1994 Plan that have an exercise price at least equal
to the fair market value of the Company's Common Stock on the date of grant
should qualify as performance-based compensation that is exempt form the $1
million deduction limitation.
NEW PLAN BENEFITS
With respect to all future grants, the Stock Option Committee has full
discretion to determine the number and amount of options to be granted to
employees under the 1994 Plan, subject to an annual limitation on the total
number of options that may be granted to any employee. Therefore, other than as
described in this paragraph, the benefits and amounts that will be received by
each of the officers named in the Summary Compensation Table above, the
executive officers as a group and all other employees under the 1994 Plan are
not presently determinable. The number of options to be received automatically
by each non-employee director is fixed under the 1994 Plan.
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REQUIRED APPROVAL
The affirmative vote of the holders of a majority of shares of capital
stock represented and voting at a duly held meeting at which a quorum is present
is required to approve the amendment of the 1994 Plan as it relates to the
increase in the amount of shares the Company can grant during any calendar year.
Unless marked to the contrary, proxies received will be voted "FOR" approval of
the amendment of the 1994 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENT OF THE 1994 PLAN.
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PROPOSAL NUMBER 3
AN AMENDMENT TO THE COMPANY'S 1995 EMPLOYEE STOCK PURCHASE PLAN
The stockholders are being asked to vote on a proposal to approve an
amendment to the Company's 1995 Employee Stock Purchase Plan (the "1995 Plan")
that will (1) increase the number of shares reserved for purchase under the 1995
Plan by 500,000 shares, and (2) change the offering period under the 1995 Plan
from six months to three months. The Board believes these amendments are
necessary in order to continue the Company's policy of equity ownership by
employees as an incentive for employees to exert maximum efforts.
The principal terms and provisions of the 1995 Plan as modified by the
recent amendment are summarized below. The summary, however, is not intended to
be a complete description of all terms of the 1995 Plan. A copy of the 1995 Plan
as amended will be furnished by the Company to any stockholder upon written
request to the Secretary of the Company.
1995 EMPLOYEE STOCK PURCHASE PLAN
In August 1995, the Board of Directors of the Company approved the
adoption of an Employee Stock Purchase Plan (the "ESPP"), subject to shareholder
approval, to provide eligible employees of the Company and adopting subsidiaries
with an opportunity to purchase Common Stock through payroll deductions.
Initially, 175,000 shares of Common Stock were reserved for purchase under the
ESPP. The increase of the number of shares reserved for purchase under the ESPP
by 500,000 shares (subject to anti-dilution adjustments) is being submitted to
the shareholders of the Company for approval at the 1999 Annual Meeting of
Shareholders.
Eligible employees are those individuals employed by the Company or
adopting subsidiaries who have been employed for at least three months before
the beginning of an offering period, and are employed at least twenty hours per
week and five months per year. As of May 1, 1999, approximately 470 employees
would be eligible to participate in the ESPP.
Each offering period under the ESPP will be three months long, although
the Board of Directors will have the authority to determine the duration of
offering periods, up to a maximum of 27 months. Eligible employees may
participate in the ESPP by authorizing payroll deductions of an amount
determined by the Board of Directors. The amount of authorized payroll
deductions is not less than one percent (1%) or more than ten percent (10%) of
an employee's initial cash compensation, not to exceed $25,000 per year. Amounts
withheld are applied at the end of every three-month accumulation period to
purchase shares of Common Stock, but not more than 2,500 shares, or such other
number of shares as the Board of Directors shall determine. Participants may
withdraw their contributions at any time before stock is purchased, and such
contributions will be returned to the participants without interest. The
purchase price is equal to eighty-five percent (85%) of the lower of (i) the
market price of Common Stock immediately before the beginning of the applicable
period or (ii) the market price of Common Stock at the time of the purchase. The
new plan benefits to employees derived from the ESPP will depend upon such
employee's level of participation and the Company's stock price performance.
For federal income tax purposes, an employee does not realize income at
the time of entry into the ESPP or purchase of a share. If no disposition of the
stock is made within two (2) years from the beginning of an offering period, and
one (1) year from the date the share is transferred to the employee, upon
subsequent disposition of the stock, ordinary income will be realized to the
extent of the lesser of (1) the excess of the fair market value at the time of
disposition over the actual purchase price, or (2) the excess of the fair market
value at the beginning of the purchase period over the option price. Any further
gain is treated as capital gain. No income tax deduction will be allowed the
Company for shares transferred to an employee, provided such shares are held for
the periods described above. If the shares are disposed of within the periods
described above, the employee will recognize ordinary income for the taxable
year of the disposition equal to the excess of the fair market value of the
shares on the date of purchase over the price paid, and, generally, the Company
will be entitled to a deduction equal to the amount of ordinary income
recognized by the employee.
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Except to the extent required by applicable law, the ESPP may be
amended by the Board of Directors without shareholder approval. The proceeds of
the sale of stock received under the ESPP will constitute general funds of the
Company and may be used by it for any purpose. The ESPP provides for
proportionate adjustments to reflect stock splits, stock dividends or other
changes in the capital stock.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of shares of capital
stock represented and voting at a duly held meeting at which a quorum is present
is required to approve the amendment of the 1995 Plan as it relates to the
500,000 new shares available for issuance and change in the offering period.
Unless marked to the contrary, proxies received will be voted "FOR" approval of
the amendment of the 1995 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENT OF THE 1995 PLAN.
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PROPOSAL NUMBER 4
RATIFICATION OF DESIGNATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has approved the retention of
PricewaterhouseCoopers L.L.P. as independent accountants for the Company until
revoked by further action. PricewaterhouseCoopers L.L.P. has been the Company's
independent accountants since 1977.
The stockholders are being asked to ratify the designation of
PricewaterhouseCoopers L.L.P. as independent accountants for the Company for the
fiscal year ending December 31, 1999. A representative of PricewaterhouseCoopers
L.L.P. is expected to be present at the Annual Meeting to make a statement if he
or she desires to do so, and such representative is expected to be available to
respond to appropriate questions.
Should the stockholders fail to ratify the designation of
PricewaterhouseCoopers L.L.P. as independent accountants, retention of the firm
for the fiscal year ending December 31, 1999 will be reconsidered by the Board
of Directors.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of shares of capital
stock represented and voting at a duly held meeting at which a quorum is present
is required to approve the designation of PricewaterhouseCoopers L.L.P. as
independent accountants for the Company for the fiscal year ending December 31,
1999. Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the designation of PricewaterhouseCoopers L.L.P. as independent
accountants for the Company's fiscal year ending December 31, 1999.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
PROPOSALS INTENDED TO BE PRESENTED AT NEXT ANNUAL MEETING. Proposals of
security holders intended to be presented at the Company's 2000 Annual Meeting
of Stockholders must be received by the Company for inclusion in the Company's
proxy statement and form of proxy no later than February 2, 2000.
OTHER MATTERS. Management knows of no business that will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares represented thereby on such matters in accordance with their best
judgment.
PROXY SOLICITATION. The expense of solicitation of proxies will be
borne by the Company. In addition to solicitation of proxies by mail, certain
officers, directors and Company employees who will receive no additional
compensation for their services may solicit proxies by telephone, telegraph or
personal interview. The Company is required to request brokers and nominees who
hold stock in their name to furnish this proxy material to beneficial owners of
the stock and will reimburse such brokers and nominees for their reasonable
out-of-pocket expenses in so doing.
20
<PAGE>
ANNUAL REPORT. The Company will provide a copy of its 1998 Annual
Report to Stockholders, without charge, to any stockholder who makes a written
request to Mr. P. Scott Munro, Secretary, Savoir Technology Group, Inc., 254
East Hacienda Avenue, Campbell, California 95008.
By Order of the Board of Directors,
P. Scott Munro
Secretary
Campbell, California
May 28, 1999
21
<PAGE>
APPENDIX
PROXY
SAVOIR TECHNOLOGY GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING - JUNE 29, 1999
The undersigned, revoking all previous proxies relating to its shares of
capital stock (the "Shares") of SAVOIR TECHNOLOGY GROUP, INC. (the "Company"),
hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
in connection with the Annual Meeting of Stockholders of the Company to be held
at 10:00 a.m. on June 29, 1999 at SAVOIR TECHNOLOGY GROUP, INC., 254 East
Hacienda Avenue, Campbell, California 95008 and hereby appoints P. SCOTT MUNRO
and JAMES W. DORST, and each of them, the attorneys and proxies of the
undersigned, each with the power of substitution, to vote all the Shares which
the undersigned is entitled to vote at said Annual Meeting, and any adjournments
or postponements thereof, upon all matters that may properly come before the
meeting with all the powers the undersigned would have if personally present.
Without otherwise limiting the foregoing general authorization, the proxies are
instructed to vote or act as indicated herein.
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WILL BE
VOTED FOR THE MATTERS DESCRIBED HEREIN UNLESS THE STOCKHOLDER SPECIFIES
OTHERWISE, IN WHICH CASE IT WILL BE VOTED AS SPECIFIED.
SEE REVERSE SIDE. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS, PLEASE MARK THE "FOR" BOX AND SIGN
THE PROXY.
(continued and to be dated and signed on reverse side)
--Fold and Detach Here--
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING MATTERS TO COME
BEFORE THE ANNUAL MEETING:
1. To elect a Board of seven (7) directors. NOMINEES: P. Scott Munro; Carlton
J. Mertens II; Angelo Guadagno; James J. Heffernan; Guy M. Lammle; K.
William Sickler; and J. Larry Smart.
INSTRUCTION: To withhold authority to
vote for any individual nominee, write name or names here
---------------------------------------------------------------------------
FOR ALL NOMINEES WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for nominees listed
/ / / /
2. To approve the amendment to the Company's 1994 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve the amendment to the Company's 1995 Employee Stock Purchase
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. To ratify the designation of PricewaterhouseCoopers LLP as independent
accountants of the Company for the period ending December 31, 1999.
FOR AGAINST ABSTAIN
/ / / / / /
<PAGE>
Please sign exactly as your name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: , 1999
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Signature(s) of Stockholder or Stockholders
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
