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 ss. 240.14a-11(c) or ss. 240.14a-12
SAVOIR TECHNOLOGY GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(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 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.:
3) Filing Party:
4) Date Filed:
<PAGE>
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, California 95008
(408) 379-0177
To the Stockholders of Savoir Technology Group, Inc.:
You are cordially invited to attend a Special Meeting of Stockholders
of Savoir Technology Group, Inc. The Special Meeting will begin at 10:30 a.m.,
local time, at the principal executive offices of the Company, 254 East Hacienda
Avenue, Campbell, California 95008, on April 6, 1999.
At the Special Meeting, you will be asked to consider and vote on a
proposal to amend certain provisions of the Certificate of Designation,
Preferences and Rights of the Series A Preferred Stock of the Company. The Board
of Directors of Savoir has fixed the close of business on February 11, 1999 as
the record date for determination of stockholders entitled to notice of and to
vote at the Special Meeting.
The Board of Directors, after careful consideration, has unanimously
approved the amendments to the Certificate of Designation, Preferences and
Rights of the Series A Preferred Stock and has determined that such amendments
are advisable for the Company. The Board unanimously recommends that you vote
FOR approval of the amendments to the Certificate of Designation, Preferences
and Rights of the Series A Preferred Stock.
IT IS VERY IMPORTANT THAT YOUR SHARES OF CAPITAL STOCK BE REPRESENTED
AT THE SPECIAL MEETING, WHETHER OR NOT YOU PLAN TO ATTEND PERSONALLY. THEREFORE,
YOU SHOULD COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL ENSURE THAT YOUR
SHARES ARE REPRESENTED AT THE SPECIAL MEETING.
The Notice of Special Meeting of Stockholders and the Proxy Statement
describing these important matters are attached. If you require assistance in
completing your proxy or have questions about voting procedures or the Proxy
Statement, please contact James W. Dorst, the Company's Chief Financial Officer,
at (408) 379-0177.
P. Scott Munro
Chairman of the Board
Campbell, California
March 4, 1999
<PAGE>
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, California 95008
(408) 379-0177
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 6, 1999
To the Stockholders of Savoir Technology Group, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders
(including any adjournments or postponements thereof, the "Special Meeting"), of
Savoir Technology Group, Inc., a Delaware corporation (the "Company"), will
begin at 10:30 a.m., local time, at the principal executive offices of the
Company, 254 East Hacienda Avenue, Campbell, California 95008, on April 6, 1999.
The purpose of the Special Meeting, which is more fully described in
the accompanying Proxy Statement, is to approve the proposed Certificate of
Amendment and Restatement of the Certificate of Designation, Preferences and
Rights of Series A Preferred Stock of the Company (the "Amended Certificate of
Designation"). The Amended Certificate of Designation will have the effect of
(i) eliminating the potential annual special dividend payable on the Company's
Series A Preferred Stock, (ii) reducing the conversion price of the Series A
Preferred Stock to $8.00 per share, (iii) deleting certain of the Series A
Preferred Stock conversion price adjustment provisions that are no longer
applicable, and (iv) amending certain of the redemption provisions of the Series
A Preferred Stock.
The presence, in person or by proxy, of a majority of the shares of
Common Stock voting together with the Series A Preferred Stock on an
as-converted basis (together, the "Capital Stock"), is necessary to constitute a
quorum for the transaction of business at the Special Meeting. The affirmative
vote of a majority of the shares of Capital Stock present (in person or by
proxy) and entitled to vote is required to approve the Amended Certificate of
Designation. In addition, under the terms of the existing Certificate of
Designation, Preferences and Rights of Series A Preferred Stock, the approval of
the holders of at least 66 2/3% of the outstanding shares of Series A Preferred
Stock, voting as a separate class, is required to approve the Amended
Certificate of Designation. The Board of Directors of the Company (the "Board")
has fixed the close of business on February 11, 1999 (the "Record Date") for
determination of stockholders entitled to notice of and to vote at the Special
Meeting. Only holders of record of shares of Capital Stock at the close of
business on the Record Date are entitled to notice of, and to vote at, the
Special Meeting. A complete list of stockholders entitled to vote will be
available for examination, for proper purposes, during ordinary business hours
at the Company's principal executive offices, 254 East Hacienda Avenue,
Campbell, California 95008, during the 10 days prior to the Special Meeting.
The holders of approximately 72% of the outstanding Series A Preferred
Stock have previously entered into a Voting Agreement with the Company (the
"Voting Agreement"), whereby such holders have agreed to vote for the adoption
of the Amended Certificate of Designation. Thus, the requirement that the Series
A Preferred Stock approve, separately as a class, any amendments to the existing
Certificate of Designation, Preferences and Rights of Series A Preferred Stock
will be satisfied upon the vote, at the Special Meeting, of the holders of the
Series A Preferred Stock in accordance with the provisions of the Voting
Agreement.
The Board, after careful consideration, has unanimously approved the
Amended Certificate of Designation and determined that the Amended Certificate
of Designation is advisable for the Company. The Board unanimously recommends
that you vote FOR approval of the Amended Certificate of Designation.
<PAGE>
If you would like to attend the Special Meeting and your shares are
held by a broker, bank or other nominee, you must bring to the Special Meeting a
recent brokerage statement or a letter from the nominee confirming your
beneficial ownership of the shares. You must also bring a form of personal
identification. In order to vote your shares at the Special Meeting, you must
obtain from the nominee a proxy issued in your name.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF CAPITAL
STOCK YOU OWN. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU
ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE BY (1) ATTENDING AND VOTING IN PERSON AT THE SPECIAL MEETING, (2)
GIVING NOTICE OF REVOCATION OF THE PROXY AT THE SPECIAL MEETING OR (3)
DELIVERING TO THE SECRETARY OF THE COMPANY (A) A WRITTEN NOTICE OF REVOCATION OR
(B) A DULY EXECUTED PROXY RELATING TO THE SAME SHARES AND MATTERS TO BE
CONSIDERED AT THE SPECIAL MEETING BEARING A DATE LATER THAN THE PROXY PREVIOUSLY
DELIVERED. ATTENDANCE AT THE SPECIAL MEETING WILL NOT IN AND OF ITSELF
CONSTITUTE A REVOCATION OF A PROXY. ALL WRITTEN NOTICES OF REVOCATION AND OTHER
COMMUNICATIONS WITH RESPECT TO REVOCATION OF PROXIES SHOULD BE SENT TO THE
COMPANY'S SECRETARY AT THE COMPANY'S CORPORATE OFFICES AT THE ADDRESS LISTED
ABOVE, AND MUST BE RECEIVED BEFORE THE TAKING OF THE VOTE AT THE SPECIAL
MEETING. UNLESS REVOKED IN ONE OF THE MANNERS SET FORTH ABOVE, PROXIES WILL BE
VOTED AT THE SPECIAL MEETING AS DESCRIBED ABOVE.
If you have any questions or require additional material, please
contact James W. Dorst, the Company's Chief Financial Officer, at (408)
379-0177.
P. Scott Munro
Chairman of the Board
Campbell, California
March 4, 1999
<PAGE>
SAVOIR TECHNOLOGY GROUP, INC.
254 East Hacienda Avenue
Campbell, California 95008
(408) 379-0177
--------------------
PROXY STATEMENT
--------------------
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 6, 1999
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation by the Board of Directors (the "Board") of Savoir
Technology Group, Inc., a Delaware corporation ("Savoir" or the "Company"), of
proxies for use at the Special Meeting of Stockholders (including any
adjournments or postponements thereof, the "Special Meeting") of the Company to
be held at 10:30 a.m., local time, at the offices of the Company, 254 East
Hacienda Avenue, Campbell, California 95008, on April 6, 1999.
The purpose of the Special Meeting, which is more fully described
herein, is to approve the proposed Certificate of Amendment and Restatement of
the Certificate of Designation, Preferences and Rights of Series A Preferred
Stock of the Company (the "Amended Certificate of Designation"). The Amended
Certificate of Designation will have the effect of (i) eliminating the potential
annual special dividend (the "Special Dividend") payable on the Company's Series
A Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"),
(ii) reducing the conversion price (the "Conversion Price") of the Series A
Preferred Stock to $8.00 per share, (iii) deleting certain of the Series A
Preferred Stock Conversion Price adjustment provisions that are no longer
applicable, and (iv) amending certain of the redemption provisions of the Series
A Preferred Stock. Currently, the outstanding shares of Series A Preferred Stock
are convertible into 2,039,828 shares of Common Stock. Because the Amended
Certificate of Designation will have the effect of reducing the Conversion Price
of the Series A Preferred Stock, if the Amended Certificate of Designation is
approved, the outstanding shares of Series A Preferred Stock will be convertible
into 2,438,232 shares of Common Stock.
A copy of the proposed Amended Certificate of Designation is attached
as Annex A to this Proxy Statement and is incorporated herein by reference. This
Proxy Statement describes the material amendments to be effected by the Amended
Certificate of Designation. The description of the Amended Certificate of
Designation set forth herein is subject to, and is qualified in its entirety by
reference to, the text of the Amended Certificate of Designation.
This Proxy Statement, the accompanying Notice of Special Meeting, the
proxy card and the other enclosed documents are first being mailed to the
stockholders on or about March 9, 1999.
The Board has fixed the close of business on February 11, 1999 as the
record date (the "Record Date") for determination of stockholders of the Company
entitled to notice of and to vote at the Special Meeting. Only holders of record
of shares of Common Stock and Series A Preferred Stock at the close of business
on the Record Date are entitled to notice of, and to vote at, the Special
Meeting. A complete list of stockholders entitled to vote will be available for
examination, for proper purposes, during ordinary business hours at the
Company's corporate offices, 254 East Hacienda Avenue, Campbell, California
95008, during the 10 days prior to the Special Meeting.
The date of this Proxy Statement is March 4, 1999.
<PAGE>
On the Record Date, the Company had issued and outstanding 11,874,200
shares of Common Stock and 1,986,500 shares of Series A Preferred Stock
(together, the Common Stock and the Series A Preferred Stock shall be referred
to herein as the "Capital Stock"). Each share of Common Stock and Series A
Preferred Stock (on an as-converted basis) is entitled to one vote for or
against all matters presented at the Special Meeting. As of the date of this
Proxy Statement, each share of Series A Preferred Stock is convertible into
1.02684563758 shares of Common Stock. Accordingly, holders of the outstanding
shares of Series A Preferred Stock currently hold approximately 14.7% of the
Common Stock on an as-converted basis. Shares of the Company's Series B
Preferred Stock are not entitled to vote on the matters presented at the Special
Meeting.
For action to be taken at the Special Meeting, the majority of the
shares of Capital Stock entitled to vote must be represented at the Special
Meeting in person or by proxy. 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 the Amended Certificate of Designation. In addition,
under the terms of the existing Certificate of Designation, Preferences and
Rights of Series A Preferred Stock, the approval of the holders of at least 66
2/3% of the outstanding shares of Series A Preferred Stock, voting as a separate
class, is required to approve the Amended Certificate of Designation. 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 to approve the Amended
Certificate of Designation will be defeated. Broker non-votes and shares as to
which proxy authority has been withheld are not deemed to be present or
represented for purposes of determining whether stockholder approval has been
obtained.
The holders of approximately 72% of the outstanding Series A Preferred
Stock (approximately 10.6% of the outstanding Common Stock on an as-converted
basis) have previously entered into a Voting Agreement with the Company (the
"Voting Agreement"), whereby such holders have agreed to vote for the adoption
of the Amended Certificate of Designation. Thus, the requirement that the Series
A Preferred Stock approve, separately as a class, any amendments to the existing
Certificate of Designation, Preferences and Rights of the Series A Preferred
Stock will be satisfied upon the vote, at the Special Meeting, of the holders of
the Series A Preferred Stock in accordance with the provisions of the Voting
Agreement. A copy of the form of Voting Agreement is attached as Annex B to this
Proxy Statement.
The Company will bear the expense of preparing, printing and mailing
this Proxy Statement and the proxies solicited hereby and will reimburse
brokerage firms and nominees for their reasonable expenses in forwarding
solicitation materials to beneficial owners of shares held of record by such
brokerage firms and nominees. In addition to the solicitation of proxies by
mail, officers and regular employees of the Company may communicate with
stockholders either in person or by telephone for the purpose of soliciting such
proxies; no additional compensation will be paid for such solicitation.
The Board, after careful consideration, has unanimously approved the
Amended Certificate of Designation and determined that the Amended Certificate
of Designation is advisable for the Company. The Board unanimously recommends
that you vote FOR approval of the Amended Certificate of Designation.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS PROXY
STATEMENT IN ITS ENTIRETY.
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<PAGE>
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
Q: When is the Special Meeting? Why has the Special Meeting been called?
A: The Special Meeting will take place April 6, 1999. At the Special
Meeting, Savoir stockholders will be asked to approve the adoption of
the Amended Certificate of Designation. The holders of approximately
72% of the Series A Preferred Stock (approximately 10.6% of the
outstanding Common Stock on an as-converted basis) have already agreed
to vote their shares in favor of the Amended Certificate of
Designation.
Q: Where is the Special Meeting?
A: The Special Meeting will be held at our offices at 254 East Hacienda
Avenue, Campbell, California.
Q: Why is Savoir proposing the amendments to the terms of the Series A
Preferred Stock?
A: The proposed amendments simplify our capital structure by eliminating
the Special Dividend, and the potentially significant costs associated
with the Special Dividend, in exchange for the reduction of the
Conversion Price of the Series A Preferred Stock from $9.3125 to $8.00
per share. We have also deleted a potential Conversion Price
adjustment provision that is no longer applicable, based on the
satisfaction of the condition that would have potentially triggered
such Conversion Price adjustment. Finally, certain of the redemption
provisions have been amended to clarify the trading price of the
Common Stock that is required that will allow Savoir to redeem the
Series A Preferred Stock. We have described these matters in more
detail in this Proxy Statement under the caption "THE SPECIAL MEETING
- Matters to be Considered."
Q: What effect will the Amended Certificate of Designation have on the
rights of Savoir Common Stockholders?
A: Generally, the Amended Certificate of Designation should have no
effect on holders of Savoir Common Stock, because the terms of the
Common Stock are not changed by the Amended Certificate of
Designation. Because the Conversion Price of the Series A Preferred
Stock will be reduced by the Amended Certificate of Designation,
shares of Series A Preferred Stock will be convertible into 2,438,232
shares of Common Stock after the Amended Certificate of Designation
takes effect (as opposed to 2,039,828 shares of Common Stock under the
current Certificate of Designation, Preferences and Rights of Series A
Preferred Stock). Holders of the outstanding shares of Series A
Preferred Stock currently hold approximately 14.7% of the Common Stock
on an as-converted basis. After the Amended Certificate of Designation
takes effect, holders of the outstanding shares of Series A Preferred
Stock will hold approximately 17.0% of the Common Stock on an
as-converted basis.
Q: Why do I need to bother to vote if two-thirds of the shares of Series
A Preferred Stock have already agreed to vote in favor of the Amended
Certificate of Designation?
A: Even though we need the approval of the Series A Preferred Stock
voting separately as a class (which approval we have obtained pursuant
to the Voting Agreements discussed in this Proxy Statement), we still
need your vote because we need the approval of a majority of the
shares of both the Common Stock and the Series A Preferred Stock (on
an as-converted to Common Stock basis), voting together as a single
class, that are present (in person or by proxy) at the Special Meeting
to approve the Amended Certificate of Designation. Also, we need you
to vote so that we will have a sufficient number of shares of Common
Stock and Series A Preferred Stock present (in person or by proxy) at
the Special Meeting to allow us to conduct the meeting. We
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<PAGE>
need at least a majority of the outstanding shares of Common Stock and
Series A Preferred Stock to be present (in person or by proxy) at the
Special Meeting so that we will have the required "quorum" necessary
to conduct the business scheduled for the Special Meeting.
Q: What do I need to do now?
A: Please mail your signed proxy card in the enclosed envelope as soon as
possible, so that your shares may be represented at the Special
Meeting. We prefer that you sign and return your completed proxy card,
whether or not you attend the Special Meeting in person. You can also
attend the Special Meeting and vote in person.
Q: What do I do if I want to change my vote after I have mailed in my
proxy card?
A: Just complete, date and sign a new proxy card and mail it to our
corporate secretary. The new proxy card must arrive before the date of
the Special Meeting. You can also change your vote by attending the
Special Meeting and voting at the Special Meeting in person.
Q: If my shares are held in "street name" by my broker, will my broker
vote my shares for me?
A: Your broker will vote your shares only if you provide instructions on
how to vote. You should instruct your broker to vote your shares,
following the directions provided by your broker. Without
instructions, your shares will not be voted. Shares which are not
voted will have the same effect as votes against the adoption of the
Amended Certificate of Designation.
Q: Who should I call with questions?
A: If you have any questions about the Special Meeting, please call James
W. Dorst, Chief Financial Officer of Savoir, at (408) 379-0177.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION
OF A PROXY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
ANY SUCH SOLICITATION IN SUCH JURISDICTION.
THE DELIVERY OF THIS PROXY STATEMENT DOES NOT, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
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<PAGE>
TABLE OF CONTENTS
Page
----
THE SPECIAL MEETING...........................................................6
Matters to be Considered.............................................6
Board Recommendation.................................................8
Required Vote........................................................8
Certain Provisions of the Voting Agreement...........................8
Voting and Revocation of Proxies.....................................9
Record Date; Stock Entitled to Vote; Quorum..........................0
Other Matters........................................................0
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................11
STOCKHOLDER PROPOSALS.........................................................13
ANNEX A: PROPOSED AMENDED AND RESTATED CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A PREFERRED STOCK
ANNEX B: VOTING AGREEMENT
5
<PAGE>
THE SPECIAL MEETING
MATTERS TO BE CONSIDERED
At the Special Meeting, the stockholders will be asked to consider and
vote upon a proposal to approve the Amended Certificate of Designation. The
Amended Certificate of Designation will have the effect of (i) eliminating the
potential annual Special Dividend, (ii) reducing the Conversion Price of the
Series A Preferred Stock to $8.00 per share, (iii) deleting certain of the
Series A Preferred Stock Conversion Price adjustment provisions that are no
longer applicable, and (iv) amending certain of the redemption provisions of the
Series A Preferred Stock. A copy of the proposed Amended Certificate of
Designation is attached as Annex A to this Proxy Statement and is incorporated
herein by reference. This Proxy Statement describes the material amendments to
be effected by the Amended Certificate of Designation. The description of the
provisions of the Amended Certificate of Designation set forth herein is subject
to, and is qualified in its entirety by reference to, the text of the Amended
Certificate of Designation.
ELIMINATION OF THE SPECIAL DIVIDEND
Holders of the Series A Preferred Stock are currently entitled to
receive, out of funds of the Company legally available therefor, cumulative
dividends at a rate per annum equal to 8% of the Liquidation Preference (as
defined below), subject to appropriate adjustments in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares (as so adjusted, the "Dividend Rate"), payable in equal quarterly
installments on January 15, April 15, July 15 and October 15 of each year to
holders of record of the Series A Preferred Stock at the close of business on
each January 1, April 1, July 1 and October 1 prior to the respective dividend
payment date (each, a "Dividend Record Date"), payable in preference and
priority to any payment of any dividend on shares of Common Stock when and as
declared by the Board of Directors. The "Liquidation Preference" means an amount
equal to (i) $9.5625 per share (or, in the event of a change of control of the
Company, $9.6581 per share) for each share of Series A Preferred Stock then
outstanding (subject to appropriate adjustments in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), plus (ii) any and all dividends accrued and unpaid thereon, if
any, to the date of final distribution.
At the election of the Company, each dividend may be paid either in
cash or by the issuance of shares of Unrestricted Common Stock (as defined
below) valued at the Current Market Price (as defined below) as of the
applicable Dividend Record Date. "Unrestricted Common Stock" means shares of the
Company's Common Stock which may be sold by the holder thereof without any
applicable restrictions on sale or resale under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules promulgated thereunder. The
"Current Market Price" for the Common Stock shall be deemed to be the average of
the daily closing prices as reported by the Nasdaq Stock Market for the five (5)
business days before the day in question.
In addition to the 8% cumulative dividend, holders of the Series A
Preferred Stock are entitled to receive a Special Dividend each September 19 if
the Current Market Price of the Common Stock at that time is less than $9.5625.
The Special Dividend is also payable, at the election of the Company, in cash or
in shares of Unrestricted Common Stock, valued at the Current Market Price, in
an amount equal to the difference between Current Market Price and $9.5625,
provided that no Special Dividend may exceed $1.9125.
The Amended Certificate of Designation eliminates the Special Dividend.
The Amended Certificate of Designation does not alter any of the other existing
Series A Preferred Stock dividend provisions.
<PAGE>
REDUCTION OF THE CONVERSION PRICE
Each share of Series A Preferred Stock is convertible, at the option of
the holder thereof, at any time and from time to time into the number of fully
paid and nonassessable shares of Common Stock as is determined by dividing
$9.5625 by the Conversion Price in effect at the time of conversion. The
Conversion Price is currently $9.3125, subject to future adjustment as set forth
below, and each share of Series A Preferred Stock is currently convertible into
1.02684563758 shares of Common Stock. Currently, the outstanding shares of
Series A Preferred Stock are convertible into 2,039,828 shares of Common Stock.
The Conversion Price is subject to adjustment upon certain events,
including (i) the issuance of Common Stock or securities by their terms
convertible into or exchangeable for Common Stock, or the issuance of options or
warrants to purchase or rights to subscribe for or purchase Common Stock or
securities by their terms convertible into or exchangeable for Common Stock, in
each case for consideration less than the then effective Conversion Price per
share of Common Stock; (ii) subdivisions or combinations of Common Stock; or
(iii) distributions to holders of Common Stock of evidences of indebtedness
issued by the Company or of assets (excluding cash dividends).
A holder of Series A Preferred Stock is entitled to vote, in the same
manner and with the same effect as holders of Common Stock, with the holders of
the Common Stock on an as-converted to Common Stock basis, and is entitled to
such number of votes as equals the aggregate number of shares of Common Stock
which such holder would receive upon the conversion of all shares of Series A
Preferred Stock held by such holder; provided that voting rights shall not
extend to a resulting fractional share. The proposed Amended Certificate of
Designation will reduce the Conversion Price to $8.00, subject to future
adjustment as set forth above. Accordingly, upon approval (and filing with the
Delaware Secretary of State) of the Amended Certificate of Designation, the
conversion ratio will change from 1.02684563758 to 1.1953125, and the
outstanding shares of Series A Preferred Stock will be convertible into
2,438,232 shares of Common Stock. As a result, holders of Series A Preferred
Stock will have slightly increased voting power, due to the fact that holders of
the outstanding shares of Series A Preferred Stock will hold approximately 17.0%
of the Common Stock on an as-converted basis, as compared to approximately 14.7%
of the Common Stock on an as-converted basis prior to adoption of the Amended
Certificate of Designation. The Amended Certificate of Designation does not
alter any of the other existing Series A Preferred Stock conversion rights.
DELETION OF CONVERSION PRICE ADJUSTMENTS
The Certificate of Designation, Preferences and Rights of Series A
Preferred Stock, as originally adopted, provided for certain decreases in the
Conversion Price if the registration statement filed to register the resale of
the shares of Common Stock to be issued upon conversion of the shares of Series
A Preferred Stock was not declared effective by January 19, 1998. In light of
the fact that such registration statement has been declared effective, the
Conversion Price adjustment provisions related to the effectiveness of the
registration statement have been deleted from the Amended Certificate of
Designation.
AMENDMENT OF REDEMPTION PROVISIONS
Currently, the Company may, at its option, redeem the Series A
Preferred Stock, in whole or in part, (i) at any time or from time to time prior
to September 19, 2001 in the event that the Current Market Price of the Common
Stock (as determined on each of the 30 trading days prior to the date notice of
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<PAGE>
redemption is first given) is at least 150% of the Conversion Price then in
effect and the average daily trading volume of the Common Stock for at least 25
of the 30 trading days prior to the date notice of redemption is first given is
at least 125,000 shares, or (ii) at any time or from time to time after
September 19, 2001, and in either such case to the extent funds are legally
available therefor, at a redemption price equal to, in the case of (i) above,
the Liquidation Preference then in effect or, in the case of (ii) above, at the
Liquidation Preference plus an 8% redemption premium. To the extent that a
redemption is effected by the Company with respect to a portion of the
outstanding Series A Preferred Stock, such redemption shall be effected pro rata
on the basis of the outstanding shares of Series A Preferred Stock.
No redemption may be made and no sum shall be set aside for any such
redemption at any time that the terms or provisions of any indenture or
agreement of the Company, including any agreement relating to its indebtedness,
specifically prohibits such redemption or setting aside for redemption or when
such redemption or setting aside for redemption would constitute (after notice
or lapse of time or otherwise) a breach of or a default under any such indenture
or agreement.
The Amended Certificate of Designation will allow the Company to redeem
the Series A Preferred Stock, in whole or in part, (i) at any time or from time
to time prior to September 19, 2001 in the event that the Current Market Price
of the Common Stock (as determined on each of the 30 trading days prior to the
date notice of redemption is first given) is at least $13.96875 (150% of the
present Conversion Price of $9.3125, as opposed to 150% of the new Conversion
Price of $8.00) and the average daily trading volume for at least 25 of the 30
trading days prior to the date notice of redemption is first given is at least
125,000 shares or (ii) at any time or from time to time after September 19,
2001, and in either such case to the extent funds are legally available
therefor, at a redemption price equal to, in the case of (i) above, the
Liquidation Preference then in effect or, in the case of (ii) above, at the
Liquidation Preference plus an 8% redemption premium. The Amended Certificate of
Designation will not alter any of the other existing Series A Preferred Stock
redemption provisions.
BOARD RECOMMENDATION
The Board, after careful consideration, has unanimously approved the
Amended Certificate of Designation and determined that it is advisable for the
Company. The Board unanimously recommends that you vote FOR approval of the
Amended Certificate of Designation.
REQUIRED VOTE
The presence, in person or by proxy, of a majority of the shares of
Capital Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Special Meeting. The affirmative vote of a
majority of the shares of Capital Stock present, in person or by proxy and
entitled to vote, is required to approve the Amended Certificate of Designation.
In addition, under the terms of the Certificate of Designation, Preferences and
Rights of Series A Preferred Stock of the Company, the approval of the holders
of at least 66-2/3% of the outstanding shares of the Series A Preferred Stock,
voting as a separate class, is required to approve the Amended Certificate of
Designation. Pursuant to the Voting Agreement (discussed below), this approval
has already been obtained.
CERTAIN PROVISIONS OF THE VOTING AGREEMENT
The following summary describes the material provisions of the Voting
Agreement. A copy of the form of Voting Agreement is attached as Annex B to this
Proxy Statement and is incorporated herein by reference. This summary is
qualified in its entirety by reference to the Voting Agreement.
8
<PAGE>
VOTING AGREEMENTS
Pursuant to the Voting Agreement, holders of approximately 72% of the
outstanding Series A Preferred Stock (the "Series A Holders"), severally and
jointly, have agreed that at any meeting of the Company's stockholders called to
vote upon the approval of the Amended Certificate of Designation or in any other
circumstances upon which a vote, consent or other approval (including by written
consent) with respect to the approval of the Amended Certificate of Designation
is sought, each such holder shall vote the number of shares of Series A
Preferred Stock it owns in favor of the approval of the Amended Certificate of
Designation. Such holders further agreed not to take any action inconsistent
with the foregoing.
RESTRICTIONS ON TRANSFER
Under the Voting Agreement, the Series A Holders have agreed not to (i)
transfer, sell, pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
Transfer of any of their shares of Series A Preferred Stock to any person,
unless such transferee agrees to be bound by all of the terms of the Voting
Agreement and delivers a written instrument to the Company evidencing such
agreement prior to the date of the proposed Transfer or (ii) enter into any
voting arrangement, whether by proxy, power-of-attorney, voting agreement,
voting trust or otherwise.
GRANT OF IRREVOCABLE PROXY
Under the Voting Agreement, the Series A Holders revoked all previous
proxies (if any) with respect to their shares of Series A Preferred Stock.
Further, the Series A Holders agreed that if they fail to comply with the voting
agreements discussed above, such failure shall result, without any further
action by a Series A Holder, in the irrevocable appointment of the Company, and
any person or persons who may be designated by the Company as permitted under
applicable law, and each of such person(s) individually, as the Series A
Holder's proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of the Series A Holder, to vote the Series A
Holder's shares of Series A Preferred Stock, or grant a consent or approval in
respect of such shares, in favor of the approval of the Amended Certificate of
Designation, and to execute and deliver an appropriate instrument irrevocably
granting such proxy. The proxy terminates upon any termination of the Voting
Agreement in accordance with its terms.
TERMINATION OF THE VOTING AGREEMENT
The Voting Agreement shall terminate upon the later to occur of: (i)
the approval of the Amended Certificate of Designation by a majority vote of
holders of the Company's Capital Stock and (ii) September 30, 1999.
VOTING AND REVOCATION OF PROXIES
Shares of Capital Stock that are entitled to vote and that are
represented by a proxy properly signed and received at or prior to the Special
Meeting, unless subsequently properly revoked, will be voted in accordance with
the instructions indicated thereon.
You may revoke your proxy at any time prior to its exercise by (i)
attending the Special Meeting and voting in person (although attendance at the
Special Meeting will not in and of itself constitute revocation of a proxy),
(ii) giving notice of revocation of your proxy at the Special Meeting or (iii)
delivering to the Secretary of the Company (A) a written notice of revocation or
(B) a duly executed
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<PAGE>
proxy relating to the same shares and matters to be considered at the Special
Meeting, bearing a date later than the proxy previously delivered. Attendance at
the Special Meeting will not in and of itself constitute a revocation of a
proxy. All written notices of revocation and other communications with respect
to revocation of proxies should be sent to the Company's Secretary at the
Company's corporate offices at the address on the cover of this Proxy Statement,
and must be received before the taking of the votes at the Special Meeting.
Unless revoked in one of the manners set forth above, proxies will be voted at
the Special Meeting as described above.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Stockholders of record of the Company as of the close of business on
the Record Date have the right to receive notice of and to vote at the Special
Meeting. On the Record Date, the Company had issued and outstanding 11,874,200
shares of Common Stock and 1,986,500 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 or against all matters presented at the Special
Meeting. As of the date of this Proxy Statement, each share of Series A
Preferred Stock is convertible into 1.02684563758 shares of Common Stock. The
presence, in person or by proxy, of a majority of the shares of Capital Stock
entitled to vote is necessary to constitute a quorum for the transaction of
business at the Special Meeting. Votes cast by proxy or in person at the Special
Meeting will be tabulated by the judges of election appointed for the Special
Meeting who will also determine whether or not a quorum is present. The
affirmative vote of a majority of the shares of Capital Stock present, in person
or by proxy, and entitled to vote is required to approve the Amended Certificate
of Designation. In addition, under the terms of the existing Certificate of
Designation, Preferences and Rights of Series A Preferred Stock, the approval of
the holders of at least 66 2/3% of the outstanding shares of Series A Preferred
Stock, voting as a separate class, is required to approve the Amended
Certificate of Designation. Because abstentions will be counted as present for
the purpose of determining whether a quorum is present but will not be counted
as votes cast in favor of the Amended Certificate of Designation, abstentions
have the same effect as negative votes. 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 relating to "street name"
shares that are voted by brokers will be counted as shares of Capital Stock
present for purposes of determining the presence of a quorum on all matters, but
will not be treated as shares having voted at the Special Meeting as to any
proposal as to which authority to vote is withheld by the broker.
If you have any questions or require additional material, please
contact James W. Dorst, the Company's Chief Financial Officer, at (408)
379-0177.
OTHER MATTERS
Management knows of no business that will be presented for
consideration at the Special Meeting other than as stated in the Notice of
Special Meeting. If, however, other matters are properly brought before the
Special 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.
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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 February 11, 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 of the Company as a group.
Shares
Beneficially
Name of Beneficial Owner (1) Owned (1) Percent (2)
----------------------------------------------------------------- -----------
Astoria Capital Partners, L.P. (3)
6600 SW 92nd Avenue, Suite 370
Portland, OR 97223.......................... 1,789,747 14.7%
Robert Fleming, Inc. (4)
320 Park Avenue, 11th Floor
New York, NY 10022.......................... 1,773,808 13.9%
Strome Susskind Investment Management, L.P. (5)
100 Wilshire Blvd., 15th Floor
Santa Monica, CA 90401...................... 1,194,498 9.6%
John M. Harkins (6)
4955 Corporate Drive
Huntsville, AL 35806........................ 1,101,661 9.3%
Michael N. Gunnells (7)
4955 Corporate Drive
Huntsville, AL 35806........................ 1,086,661 9.2%
ROI Capital Management, Inc. (8)
17 E. Sir Francis Drake Blvd., Suite 225
Larkspur, CA 94939.......................... 894,946 7.4%
Carlton Joseph Mertens II (9) ..................... 471,429 4.0%
P. Scott Munro (10) ............................... 277,330 2.3%
James W. Dorst (11) ............................... 76,336 *
Robert O'Reilly (12) .............................. 37,105 *
Guy M. Lammle...................................... 33,537 *
J. Larry Smart (13) ............................... 25,313 *
K. William Sickler (14) ........................... 23,813 *
James J. Heffernan (15) ........................... 11,313 *
Angelo Guadagno (16) .............................. 3,750 *
All executive officers and directors as a group
(10 persons) (17) .......................... 980,738 8.0%
- ----------
* 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
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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 February 11, 1999 or upon exercise of
warrants that are currently exercisable or exercisable within 60 days
of February 11, 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 share of Series A
Preferred Stock is currently convertible at any time into shares of
the Common Stock at a conversion ratio of 1.02684563758 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 11,874,200 shares of Common Stock and 1,986,500 shares of
Series A Preferred Stock (equivalent to 2,039,828 shares of Common
Stock on an as-converted basis) outstanding as of February 11, 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 864,000 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 February 10, 1999 filed by Robert
Fleming, Inc.
(5) Based on a Schedule 13G filed February 16, 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.
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<PAGE>
(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 February 11, 1999.
(10) Includes 265,468 shares subject to stock options that are
presently exercisable or will become exercisable within 60 days
of February 11, 1999.
(11) Includes 57,500 shares subject to stock options that are
presently exercisable or will become exercisable within 60 days of
February 11, 1999.
(12) Includes 35,000 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
(13) Includes 11,313 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
(14) Includes 23,813 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
(15) Includes 11,313 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
(16) Includes 3,750 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
(17) Includes 439,586 shares subject to stock options that are presently
exercisable or will become exercisable within 60 days of
February 11, 1999.
STOCKHOLDER PROPOSALS
As specified in the Company's Proxy Statement dated July 7, 1998 for
its 1998 Annual Meeting of Stockholders, any stockholder proposals to be
considered for presentation at the 1999 Annual Meeting of Stockholders must be
received by the Company not later than March 9, 1999.
13
<PAGE>
ANNEX A
PROPOSED AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
OF
SAVOIR TECHNOLOGY GROUP, INC.
(the "Corporation")
1. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock" (the "Series A Preferred Stock"), and
the number of shares constituting such series shall be Two Million Two Hundred
Forty-Two Thousand Five Hundred (2,242,500).
2. Definitions. The following capitalized terms shall have the meanings
set forth below:
(a) "Change of Control" shall have the meaning set forth in Section
4(b) hereof.
(b) The "Closing Price" for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the principal national securities exchange or The Nasdaq Stock Market's
National Market on which the security is listed or admitted to trading, or if
not so listed or admitted to trading, the average of the highest reported bid
and lowest reported asked prices as furnished by The Nasdaq Stock Market's
SmallCap Market, or the nearest comparable system, or, in the absence of either,
as determined by the Board of Directors in its good faith discretion.
(c) "Commission" shall mean the Securities and Exchange Commission.
(d) "Common Stock" shall mean the common stock, par value $0.01 per
share, of the Corporation.
(e) "Conversion Date" shall have the meaning set forth in Section 5(b)
hereof.
(f) "Conversion Price" shall have the meaning set forth in Section 5(f)
hereof.
(g) "Convertible Securities" shall have the meaning set forth in
Section 5(f)(ii)(B) hereof.
(h) The "Current Market Price" at the date of determination for any
security (including, without limitation, Common Stock), shall be deemed to be
the average of the daily Closing Prices for the five (5) business days before
the day in question.
(i) "Dividend Rate" shall have the meaning set forth in Section 3(a)
hereof.
(j) "Junior Stock" shall mean the Common Stock and all other equity
securities of the Corporation ranking junior to the Series A Preferred Stock in
respect of the payment of dividends, liquidation preference, voting or
otherwise, as applicable.
(k) "Liquidation Preference" shall have the meaning set forth in
Section 4(a) hereof.
(l) Record Date" shall mean each January 1, April 1, July 1 and
October 1 prior to the applicable dividend payment date.
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(m) "Redemption Date" shall mean the date of the redemption of the
Series A Preferred Stock pursuant to Section 6 hereof.
(n) "Redemption Price" shall have the meaning set forth in Section 6(a)
hereof.
(o) "Related Rights" shall have the meaning set forth in Section
5(f)(ii)(B) hereof.
(p) "Rights" shall have the meaning set forth in Section 5(f)(ii)(A)
hereof.
(q) "Securities" shall have the meaning set forth in Section 5(f)(i)
hereof.
(r) "Securities Act" shall mean the Securities Act of 1933, as amended.
(s) "Series A Preferred Stock" shall mean the Series A Preferred
Stock, par value $0.01 per share, of the Corporation.
(t) "Unrestricted Common Stock" shall mean shares of Common Stock which
may be sold by the holder thereof without any applicable restrictions on sale or
resale under the Securities Act and the rules promulgated thereunder.
3. Dividends.
(a) The holders of Series A Preferred Stock shall be entitled to
receive, out of funds legally available therefor, cumulative dividends at a rate
per annum equal to eight percent (8%) of the Liquidation Preference (subject to
appropriate adjustments in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares (as so
adjusted, the "Dividend Rate")), payable in equal quarterly installments on
January 15, April 15, July 15 and October 15 of each year to holders of record
of the Series A Preferred Stock at the close of business on each Record Date
prior to the respective dividend payment date, payable in preference and
priority to any payment of any dividend on shares of Junior Stock when and as
declared by the Board of Directors. If dividends are not paid in full on the
Series A Preferred Stock and on any other series of Preferred Stock ranking on a
parity as to dividends with the Series A Preferred Stock, all dividends paid
upon shares of Series A Preferred Stock and on such other series of Preferred
Stock will be paid pro rata so that in all cases the amount of dividends paid
per share on the Series A Preferred Stock and on such other series of Preferred
Stock bear to each other the same ratio that accrued and unpaid dividends per
share on the shares of the Series A Preferred Stock and on such other series of
Preferred Stock bear to each other. 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 which are junior to the Series A
Preferred Stock as to payment of dividends.
(b) At the election of the Corporation, each dividend payable pursuant
to this Section 3 shall be paid either in cash or by the issuance of shares of
Unrestricted Common Stock having a Current Market Price as of the applicable
Record Date equal to the dividend; provided, however, that in the event that the
Corporation elects to pay a dividend by issuing shares of Unrestricted Common
Stock, no fractional shares of Unrestricted Common Stock shall be issued and the
Corporation shall pay cash in lieu of any fractional share to which the holder
would otherwise be entitled.
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<PAGE>
4. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, the holders of the shares of Series A
Preferred Stock shall be entitled to receive out of the assets of the
Corporation, before any payment or distribution shall be made with respect to
any Junior Stock, securities, property or cash, or any combination thereof,
valued as to (i) securities, at the Current Market Price thereof, (ii) property,
as determined in the good faith discretion of the Board of Directors, and (iii)
cash at the face value thereof, in an amount equal to (x) $9.5625 per share (or,
in the event of a Change of Control (as hereinafter defined), $9.6581 per share)
for each share of Series A Preferred Stock then outstanding (subject to
appropriate adjustments in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares), plus (y)
any and all dividends accrued and unpaid thereon, if any, to the date of final
distribution (the "Liquidation Preference"). If the assets of the Corporation
available for distribution to the holders of the Series A Preferred Stock and
any other securities ranking on a parity with the Series A Preferred Stock shall
be insufficient to permit the payment of the full preferential amount set forth
in this Section 4, then all of the assets of the Corporation available for
distribution shall be distributed to the holders of Series A Preferred Stock and
any other securities ranking on a parity with the Series A Preferred Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive.
(b) A "Change of Control" shall mean: (i) a sale, conveyance, exchange
or transfer of all or substantially all of the property and assets of the
Corporation, (ii) the sale of all or substantially all of the capital stock of
the Corporation or the merger or consolidation of the Corporation into or with
any other corporation or an affiliate thereof (except if such merger or
consolidation does not result in the transfer of more than fifty percent (50%)
of the voting securities of the Corporation or if such merger or consolidation
is effected solely to change the Corporation's jurisdiction of incorporation);
or (iii) any sale or transfer of any capital stock of the Corporation, following
which more than fifty percent (50%) of the combined voting power of the
Corporation becomes beneficially owned by one person or group acting together.
For purposes of this definition, "group" shall have the meaning as such term is
used in section 13(d)(1) of the Securities Exchange Act of 1934, as amended.
5. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows:
(a) Each share of Series A Preferred Stock shall be convertible, at the
option of the holder thereof, at any time and from time to time into the number
of fully paid and non-assessable shares of Common Stock of the Corporation as is
determined by dividing $9.5625 by the Conversion Price (as defined in Section
5(f) below).
(b) In order for a holder of Series A Preferred Stock to convert shares
of Series A Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates representing such shares of Series A
Preferred Stock, at the office of the transfer agent for the Series A Preferred
Stock, together with written notice that such holder elects to convert all or
any number of the shares of the Series A Preferred Stock represented by such
certificate or certificates. Such notice shall state such holder's name or the
names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
reasonably satisfactory to the Corporation, duly executed by the registered
holder or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent is referred to herein as the
"Conversion Date." The Corporation shall, as soon as practicable after the
Conversion Date but no later than ten (10) days thereafter, issue and deliver to
such holder, or to its nominee, at such holder's address as shown in the records
of the Corporation or as otherwise instructed in writing by the
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<PAGE>
holder, a certificate or certificates for the number of whole shares of Common
Stock (and any shares of Series A Preferred Stock represented by the certificate
delivered to the transfer agent by the holder thereof which are not converted
into Common Stock) issuable upon such conversion in accordance with the
provisions hereof, together with cash in lieu of fractional shares calculated in
accordance with paragraph (c) of this Section 5. If less than all of the shares
of Series A Preferred Stock represented by any certificate are converted into
shares of Common Stock, the Corporation shall issue a new Series A Preferred
Stock certificate in the amount of the shares not so converted.
(c) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series A Preferred Stock and the Corporation shall pay
cash in lieu of any fractional share to which the holder would otherwise be
entitled.
(d) The Corporation shall at all times when the Series A Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series A
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock.
(e) All shares of Series A Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding, and all rights with respect to such shares shall immediately cease
and terminate on the Conversion Date, except only the right of the holders
thereof to receive shares of Common Stock in exchange therefor and payment of
any declared and unpaid dividends thereon. On the Conversion Date, the shares of
Common Stock issuable upon such conversion shall be deemed to be outstanding,
and the holder thereof shall be entitled to exercise and enjoy all rights with
respect to such shares of Common Stock. All shares of Series A Preferred Stock
tendered for conversion shall, from and after the Conversion Date, be deemed to
have been retired and canceled and shall not be reissued as Series A Preferred
Stock, and the Corporation may thereafter take such appropriate action as may be
necessary to reduce accordingly the authorized number of shares of Series A
Preferred Stock.
(f) The Conversion Price at which shares of Common Stock shall be
deliverable upon conversion of the Series A Preferred Stock shall be $8.00 per
share, subject to adjustment from time to time, and such conversion price as
adjusted shall likewise be subject to further adjustment, all as hereinafter set
forth. The term "Conversion Price" shall mean, as of any time, the conversion
price of the Series A Preferred Stock at that time, as specified in the first
sentence of this paragraph in case no adjustment shall have been required, or
such conversion price as adjusted pursuant to this paragraph (f) of this Section
5, as the case may be:
(i) If at any time the Corporation shall issue any shares of
Common Stock or any Convertible Securities, Rights or Related Rights
(as herein defined) (such Convertible Securities, Rights or Related
Rights being hereinafter referred to collectively as "Securities")
(other than a dividend or other distribution payable in Common Stock or
such Securities) for a consideration per share of Common Stock (the
consideration in each case to be determined in the manner provided in
(E) and (F) below) less than the Conversion Price in effect immediately
prior to the issuance of such Common Stock or Securities, then the
Conversion Price in effect immediately prior to each such issuance
shall forthwith be decreased to a Conversion Price, calculated to the
nearest cent, obtained by dividing:
(A) an amount equal to the sum of
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<PAGE>
(1) the total number of shares of Common Stock
outstanding plus the number of shares of
Common Stock which would be issued upon the
exercise or conversion of all outstanding
Securities (including the number of shares
of Common Stock into which the outstanding
shares of Series A Preferred Stock are then
convertible) immediately prior to such
issuance multiplied by the Conversion Price
in effect immediately prior to such
issuance, plus
(2) the consideration received by the
Corporation upon such issuance,
by
(B) the total number of shares of Common Stock
outstanding plus the number of shares of Common Stock
which would be issued upon the exercise or conversion
of all outstanding Securities (including the number
of shares of Common Stock into which the outstanding
shares of Series A Preferred Stock are then
convertible) immediately after such issuance
(including the number of shares of Common Stock into
which such newly issued Securities are then
convertible).
(ii) For the purpose of any adjustment of the Conversion Price
pursuant to this paragraph (f) of this Section 5, the following
provisions shall be applicable:
(A) In the case of the issuance of options or warrants to
purchase or rights to subscribe for Common Stock
(collectively, such "Rights"), the aggregate maximum
number of shares of Common Stock deliverable upon
exercise of such Rights shall be deemed to have been
issued at the time such Rights were issued, for a
consideration equal to the consideration (determined
in the manner provided in (E) and (F) below), if any,
received by the Corporation upon the issuance of such
Rights, plus the minimum purchase price provided in
such Rights for the Common Stock covered thereby.
(B) In the case of the issuance of securities by their
terms convertible into or exchangeable for Common Stock
(collectively, such "Convertible Securities"), or
options or warrants to purchase or rights to subscribe
for securities by their terms convertible into or
exchangeable for Common Stock (collectively, such
"Related Rights"), the aggregate maximum number of
shares of Common Stock deliverable upon conversion,
exchange or exercise of any such Convertible Securities
or such Related Rights shall be deemed to have been
issued at the time such Convertible Securities or such
Related Rights were issued and for a consideration
equal to the consideration received by the Corporation
upon issuance of such Convertible Securities or such
Related Rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the
additional minimum consideration, if any, to be
received by the Corporation upon the conversion,
exchange or exercise of such Convertible Securities or
Related Rights (the consideration in each case to be
determined in the manner provided in (E) and (F)
below).
(C) Upon any change in the number of shares of Common Stock
deliverable upon the exercise of such Rights or Related
Rights or upon the conversion, exchange or exercise of
such Convertible Securities or on any change in the
minimum purchase price of such Rights, Related Rights
or Convertible Securities other
A-5
<PAGE>
than any change resulting from the anti-dilution
provisions of such Rights, Related Rights or
Convertible Securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as
would have been in effect had the adjustment that was
made upon the issuance of such Rights, Related Rights
or Convertible Securities not converted, exchanged or
exercised prior to such change been made on the basis
of such change, but no further adjustment shall be made
for the actual issuance of Common Stock upon the
exercise or conversion of any such Right, Related Right
or Convertible Security.
(D) Upon the expiration of any such Rights, Related Rights
or Convertible Securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as
would have been obtained had the adjustment made upon
the issuance of such Rights or Related Rights or the
issuance of any such Convertible Securities been made
upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the
exercise of such Rights or Related Rights or the
conversion, exchange or exercise of any such
Convertible Securities.
(E) In the case of the issuance of such Common Stock or
Securities for cash, the consideration shall be
deemed to be the amount of cash paid therefor.
(F) In the case of the issuance of such Common Stock or
Securities for a consideration in whole or in part
other than cash, the consideration other than cash
shall be deemed to be the fair value thereof as
determined in good faith by the Board of Directors of
the Corporation.
(G) In the event of any adjustment to the Conversion
Price resulting from the issuance of any Securities,
no further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or
conversion of any such Securities.
(iii) Anything to the contrary contained in this paragraph (f)
of Section 5 notwithstanding, no adjustment shall be made in the
Conversion Price as a result of or pursuant to (1) the granting of any
Right or Related Right, or the issuance of Common Stock to, officers,
employees or directors of, or consultants to, the Corporation, pursuant
to any agreement, plan or arrangement approved by the Board of
Directors of the Corporation, (2) a provision in any existing agreement
between the Corporation and any third party in respect of an
acquisition by the Corporation in which all or a portion of the
consideration in connection with such acquisition is payable by the
issuance of shares of Common Stock or Securities, (3) the issuance of
warrants in connection with any subordinated debt or other financing or
refinancing undertaken in connection with the acquisition of Star
Management Services, Inc., (4) the conversion of shares of Series A
Preferred Stock or (5) the exercise of any option or warrant currently
outstanding.
(g) In case the Corporation shall effect a reorganization, shall merge
with or consolidate into another corporation, or shall sell, transfer or
otherwise dispose of all or substantially all of its property, assets or
business and, pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, shares of stock or other securities,
property or assets of the Corporation, successor or transferee or an affiliate
thereof are to be received by or distributed to the holders of Common Stock,
then each holder of Series A Preferred Stock shall be provided with written
notice from the Corporation informing each holder of Series A Preferred Stock of
the terms of such reorganization, merger, consolidation or disposition of assets
and of the record date thereof for any distribution pursuant thereto, at least
thirty (30) days in advance of such record date, and each holder of Series A
Preferred Stock shall have, in addition to
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<PAGE>
the rights provided for herein, the right to receive, at the holder's election,
either (i) upon conversion of such Series A Preferred Stock, the number of
shares of stock or other securities, property or assets of the Corporation,
successor or transferee or affiliate thereof or cash receivable by the holders
of the Common Stock upon or as a result of such reorganization, merger,
consolidation or disposition of assets or (ii) the securities into which the
shares of Series A Preferred Stock are converted, upon, or as a result of such
reorganization, merger, consolidation or disposition of assets. The provisions
of this paragraph (g) of this Section 5 shall similarly apply to successive
reorganizations, mergers, consolidations or dispositions of assets.
(h) If the Corporation shall effect a subdivision of the outstanding
shares of Common Stock, the Conversion Price then in effect immediately before
such subdivision shall be proportionately decreased. If the Corporation shall
combine the outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased. If
the Corporation shall make or issue a dividend or other distribution payable in
securities, then and in each such event provision shall be made so that the
holders of shares of the Series A Preferred Stock shall receive upon conversion
thereof in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities that they would have received had their
Series A Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter during the period from the date of such event to
and including the Conversion Date, retained such securities receivable by them
as aforesaid during such period giving effect to all adjustments called for
during such period under this paragraph, with respect to the rights of the
holders of the Series A Preferred Stock.
(i) In case the Corporation shall distribute to the holders of Common
Stock evidences of indebtedness issued by the Corporation or assets (excluding
cash dividends) then, in each such case, immediately following the record date
fixed for the determination of the holders of Common Stock entitled to receive
such distribution, the Conversion Price in effect thereafter shall be determined
by multiplying the Conversion Price in effect immediately prior to such record
date by a fraction (i) the numerator of which shall be an amount equal to (A)
the Current Market Price of one share of Common Stock immediately prior to the
record date less (B) the difference between the Current Market Price of one
share of Common Stock immediately prior to such record date and the Current
Market Price of one share of Common Stock five days after such record date and
(ii) the denominator of which shall be the Current Market Price of one share of
Common Stock immediately prior to such record date; provided, however, that the
Conversion Price shall not be increased as a result of this paragraph (i) of
Section 5. Such adjustment shall become effective as of the opening of business
on the business day following the record date for the determination of
stockholders entitled to such distribution.
(j) Whenever the Conversion Price shall be adjusted as provided in this
Section 5, the Corporation shall forthwith file, at the office of the transfer
agent for the Series A Preferred Stock, at the principal office of the
Corporation or at such other place as may be designated by the Corporation, a
statement, certified by the chief financial officer of the Corporation, showing
in detail the facts requiring such adjustment and the Conversion Price that
shall be in effect after such adjustment. The Corporation shall also cause a
copy of such statement to be sent by first class mail, postage prepaid, to each
holder of record of Series A Preferred Stock at such holder's address as shown
in the records of the Corporation.
(k) If a state of facts shall occur which, without being specifically
controlled by the provisions of this Section 5, would not fairly protect the
conversion rights of the holders of the Series A Preferred Stock in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Corporation shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such conversion rights.
A-7
<PAGE>
6. Redemption.
(a) The Corporation may, at its option, redeem the Series A Preferred
Stock, in whole or in part, (i) at any time or from time to time after September
19, 1998 and prior to September 19, 2001 in the event that the Current Market
Price of the Common Stock as determined on each of the thirty (30) trading days
prior to the date notice of the redemption is first given is at least $13.96875
and the daily trading volume of the Common Stock for at least twenty-five (25)
of the thirty (30) trading days prior to the date notice of redemption is first
given is at least 125,000 shares, or (ii) at any time or from time to time on or
after September 19, 2001, and in either such case to the extent funds are
legally available therefor, at a redemption price equal to, in the case of (i)
above, the Liquidation Preference then in effect or, in the case of (ii) above,
at the Liquidation Preference plus an eight percent (8%) redemption premium (the
"Redemption Price") together with any accrued and unpaid dividends thereon to
the date fixed for redemption. To the extent that a redemption is effected by
the Corporation with respect to a portion of the outstanding Series A Preferred
Stock, such redemption shall be effected pro rata on the basis of the
outstanding shares of Series A Preferred Stock.
(b) No redemption shall be made pursuant to this Section 6 and no sum
shall be set aside for any such redemption when the terms or provisions of any
indenture or agreement of the Corporation, including any agreement relating to
its indebtedness, specifically prohibits such redemption or setting aside for
redemption or when such redemption or setting aside for redemption would
constitute (after notice or lapse of time or otherwise) a breach of or a default
under any such indenture or agreement.
7. Procedure for Redemption.
(a) In the event the Corporation shall redeem shares of Series A
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than sixty (60) days prior to the Redemption
Date, to each holder of record of the shares to be redeemed at such holder's
address as the same appears on the share register of the Corporation. Each such
notice shall include (i) the Redemption Date, (ii) the Redemption Price, (iii)
the place or places where certificates for such shares are to be surrendered for
payment of the Redemption Price, (iv) a statement that dividends on the shares
to be redeemed will cease to accrue on the Redemption Date and (v) if the
redemption is pursuant to clause (i) of Section 6(a) hereof, a certificate of
the chief financial officer of the Corporation to the effect that the Current
Market Price of the Common Stock as determined on each of the thirty (30)
trading days prior to the date notice of the redemption is first given was at
least $13.96875 and the daily trading volume of the Common Stock for at least
twenty-five (25) of the thirty (30) trading days prior to the date notice of
redemption is first given was at least 125,000 shares.
(b) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption), dividends on the shares of Series A Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, and shall not be reissued as shares of Series A Preferred Stock
and all rights of the holders thereof as stockholders of the Corporation with
respect to said shares (except the right to receive from the Corporation the
Redemption Price and accrued but unpaid dividends) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Redemption Price as aforesaid.
(c) Anything in this Section 7 to the contrary notwithstanding, the
holder of shares of Series A Preferred Stock to be redeemed in accordance with
this Section shall have the right, exercisable
A-8
<PAGE>
at any time up to the close of business on the Redemption Date (unless the
Corporation is legally prohibited from redeeming such shares on such date, in
which event such right shall be exercisable until the removal of such legal
disability), to convert all or any part of such shares to be redeemed as herein
provided into shares of Common Stock pursuant to Section 5 hereof.
8. Voting.
(a) In addition to any rights provided by applicable law, the holders
of the Series A Preferred Stock shall be entitled to vote on all matters as to
which holders of Common Stock shall be entitled to vote, in the same manner and
with the same effect as such holders of Common Stock, voting together with the
holders of the Common Stock as a single class. A holder of shares of Series A
Preferred Stock shall be entitled to such number of votes as shall equal the
aggregate number of shares of Common Stock which such holder would receive upon
the deemed conversion of all shares of Series A Preferred Stock held by such
holder; provided that voting rights shall not extend to a fractional share
resulting from the deemed conversion of all shares of Series A Preferred Stock
held by such holder of Series A Preferred Stock.
(b) The Corporation shall not, without the affirmative consent or
approval of the holders representing at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding shares of Series A Preferred Stock, acting
separately as one class:
(i) in any manner authorize, create or issue any class or
series of capital stock or any securities convertible into or
exchangeable for, or having optional rights to purchase, any class or
series of capital stock, in any such case ranking, as to payment of
dividends, liquidation preference, voting or otherwise, senior to the
Series A Preferred Stock;
(ii) in any manner alter or change the designation, powers,
preferences or rights of, or the qualifications, limitations or
restrictions upon, the Series A Preferred Stock; or
(iii) reclassify the shares of Common Stock or any other
shares of Junior Stock hereafter created into shares of any class or
series of capital stock ranking, as to payment of dividends,
liquidation preference, voting or otherwise, senior to the Series A
Preferred Stock.
A-9
<PAGE>
ANNEX B
VOTING AGREEMENT
----------------
THIS VOTING AGREEMENT (this "Agreement") dated as of December 31, 1998,
among SAVOIR TECHNOLOGY GROUP, INC., a Delaware corporation ("Savoir"), on the
one hand, and certain holders of the Series A Preferred Stock of Savoir listed
on Schedule A hereto (each a "Stockholder" and, collectively, the
"Stockholders"), on the other hand,
W I T N E S S E T H:
WHEREAS, Savoir proposes to amend and restate the Certificate of
Designation, Preferences and Rights of the Series A Preferred Stock of Savoir
(the "Series A Preferred Stock") to eliminate the potential annual special
dividend of the Series A Preferred Stock; and
WHEREAS, each Stockholder owns beneficially or of record the number of
shares of Series A Preferred Stock set forth opposite its name on Schedule A
attached hereto (the "Subject Shares"); and
WHEREAS, Savoir and each Stockholder have entered into a letter
agreement whereby each Stockholder has agreed to vote its shares of Series A
Preferred Stock to approve and adopt the Certificate of Amendment and
Restatement of the Certificate of Designation, Preferences and Rights of the
Series A Preferred Stock substantially in the form attached hereto as Exhibit A
(the "Amended Certificate of Designation"), and Savoir has requested that each
Stockholder enter into this Agreement reflecting such agreement; and
WHEREAS, Savoir also has shares of its Series B Preferred Stock (the
"Series B Preferred Stock") outstanding, which Savoir wishes to redeem; and
WHEREAS, the terms of the Series B Preferred Stock require the written
consent of the holders of the Series A Preferred Stock prior to any redemption
of the Series B Preferred Stock; and
WHEREAS, Savoir hereby seeks the consent of the holders of the Series A
Preferred Stock to the redemption of the Series B Preferred Stock.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:
1. Representations and Warranties of each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Savoir as of the
date hereof in respect of itself as follows:
(a) Authority. The Stockholder has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Stockholder and constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, any trust agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
B-1
<PAGE>
franchise, license, judgment, order, notice, decree, statute, law, ordinance,
rule or regulation applicable to the Stockholder or to the Stockholder's
property or assets the effect of which, in any case, would be material and
adverse to the ability of the Stockholder to consummate the transactions
contemplated hereby or to comply with the terms hereof.
(b) The Subject Shares. The Stockholder is the beneficial owner of and has
the sole right to vote the Subject Shares set forth opposite such Stockholder's
name on Schedule A attached hereto. None of such Subject Shares is subject to
any voting trust or other agreement, arrangement or restriction, except as
contemplated by this Agreement.
2. Covenants of each Stockholder. Until the termination of this Agreement
in accordance with Section 6, each Stockholder, severally and not jointly,
agrees as follows:
(a) Vote for the Adoption of the Amended Certificate of Designation and the
Redemption of the Series B Preferred Stock. At any meeting of stockholders of
Savoir called to vote upon (i) the adoption of the Amended Certificate of
Designation or (ii) the approval of the redemption of the Series B Preferred
Stock, or at any adjournment thereof or in any other circumstances upon which a
vote, consent or other approval (including by written consent) with respect to
(i) the adoption of the Amended Certificate of Designation or (ii) the approval
of the redemption of the Series B Preferred Stock is sought, the Stockholder
shall vote (or cause to be voted), or execute a written consent in respect of,
the Subject Shares (and all shares of Savoir Common Stock deemed issued upon
conversion of the Subject Shares) in favor of (i) the adoption by Savoir of the
Amended Certificate of Designation and the approval of the terms thereof and
(ii) the approval of the redemption of the Series B Preferred Stock. Each
Stockholder further agrees not to commit or agree to take any action
inconsistent with the foregoing. Each Stockholder hereby waives any appraisal
rights granted pursuant to Section 262 of the General Corporation Law of the
State of Delaware (the "DGCL") (or any successor provision), if any, to which it
may otherwise be entitled as a result of (i) the adoption of the Amended
Certificate of Designation or (ii) the redemption of the Series B Preferred
Stock.
(b) No Transfer of Subject Shares. Each Stockholder agrees not to (i)
convert, transfer, sell, pledge, assign or otherwise dispose of (including by
gift) (collectively, "Transfer"), or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
Transfer of, any of the Subject Shares to any person or (ii) enter into any
voting arrangement, whether by proxy, power-of-attorney, voting agreement,
voting trust or otherwise. Notwithstanding the foregoing, each Stockholder may
Transfer Subject Shares if the proposed transferee agrees to be bound by all of
the terms of this Agreement and delivers a written instrument to Savoir
evidencing such agreement prior to the date of the proposed Transfer.
3. Grant of Irrevocable Proxy.
(a) Existing Proxies Revoked. Each Stockholder hereby represents that any
proxies heretofore given in respect of the Subject Shares are not irrevocable,
and that any such proxies are hereby revoked.
(b) Grant of Irrevocable Proxy to Savoir. Each Stockholder hereby agrees
that, in the event Stockholder shall fail to comply with the provisions of
Section 2(a) hereof, as determined by Savoir in its sole discretion, such
failure shall result, without any further action by Stockholder, in the
irrevocable appointment of Savoir, and any person or persons who may hereafter
be designated by Savoir as permitted under applicable law, and each of such
person(s) individually, as the Stockholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
Stockholder, to vote the Subject Shares, or grant a consent or approval in
respect of such Subject Shares, in favor of or
B-2
<PAGE>
against, as the case may be, the matters set forth in Section 2(a). The proxy
granted hereby shall terminate upon any termination of this Agreement in
accordance with its terms.
(c) Affirmations. Each Stockholder hereby affirms that any irrevocable
proxy granted pursuant to Section 3(b) will be given in connection with the (i)
adoption of the Amended Certificate of Designation and (ii) the redemption of
the Series B Preferred Stock, and that such irrevocable proxy will be given to
secure the performance of the duties of the Stockholders under this Agreement.
If so granted, the Stockholders hereby ratify and confirm all that such
irrevocable proxy may lawfully do or cause to be done by virtue thereof. This
proxy and power of attorney is irrevocable and coupled with an interest and is
intended to be irrevocable in accordance with the provisions of Section 212(e)
of the DGCL.
4. Further Assurances. Each Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Savoir may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement.
5. Assignment. Except as provided herein, neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
6. Termination. This Agreement shall terminate upon the later to occur of
(a) the adoption of the Amended Certificate of Designation by a majority vote of
all of the stockholders of Savoir (including the Common Stockholders of Savoir)
and (b) September 30, 1999.
7. General Provisions.
(a) Amendments. This Agreement may not be amended except by an instrument
in writing signed by Savoir and the Stockholder.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to Savoir
at its corporate headquarters and to the Stockholders at their respective
addresses set forth on the books of Savoir (or at such other address for a party
as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties hereto and delivered to the other parties, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
B-3
<PAGE>
hereof and (ii) is not intended to confer upon any person other than the parties
hereto, any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
(g) Severability. If any term, provision, covenant or restriction herein,
or the application thereof to any circumstance, shall, to any extent, be held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law, and the parties hereto shall
reasonably negotiate in good faith a substitute term or provision that comes as
close as possible to the invalidated and unenforceable term or provision, and
that puts each party in a position as nearly comparable as possible to the
position each such party would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
8. Stockholder Representatives. Each Stockholder signs solely in its
capacity as the record holder and/or beneficial owner of such Stockholder's
Subject Shares and nothing contained herein shall limit or affect any actions
taken by any officer, director, partner, trustee, affiliate or representative of
a Stockholder who is or becomes an officer or a director of Savoir or serves
Savoir in any other fiduciary capacity in his or her capacity as an officer,
director or other fiduciary of Savoir and none of such actions in such capacity
shall be deemed to constitute a breach of this Agreement.
9. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (b) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that such party will not bring
any action relating to this Agreement or the transactions contemplated hereby in
any court other than a Federal court sitting in the state of Delaware or a
Delaware state court, (d) waives any right to trial by jury with respect to any
claim or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby, and (e) appoints The Corporation Trust Company
as such party's agent for service of process in the state of Delaware.
B-4
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above.
SAVOIR TECHNOLOGY GROUP, INC.
By_______________________________
Title____________________________
STOCKHOLDERS
By_______________________________
Print Name_______________________
Title____________________________
B-5
<PAGE>
SCHEDULE A
Astoria Capital Partners, L.P.
Microcap Partners Limited Partnership
ROI Partners, L.P.
ROI Offshore Fund Ltd.
NAV LLC
Microcap Partners, L.P.
Pleiades Investment Partners, L.P.
Strome HedgeCap Limited
Strome, Susskind HedgeCap Fund, L.P.
Strome Partners, L.P.
Strome Offshore Limited
Robert Fleming and Co.
Fleming American Investment Trust
Robert Fleming Inc.
Scott's Cove Special Credits Fund I L.P.
Scott's Cove Special Credits Master Fund Inc.
BA-1
<PAGE>
APPENDIX
PROXY
- -----
SAVOIR TECHNOLOGY GROUP, INC.
-----------------------------
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 Special Meeting and Proxy Statement
in connection with the Special Meeting of Stockholders of the Company to be held
at 10:30 a.m. on April 6, 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 Special 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--
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The Board of Directors recommends a vote FOR the following matter to come before
the Special Meeting:
1. To approve the amendment of the Certificate of Designation, Preferences and
Rights of the Series A Preferred Stock of Savoir Technology Group, Inc.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
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
_________________________________________
Signature(s) of Stockholder or Stockholders
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
