UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
COTELLIGENT, INC.
--------------------------------------------------------------------------------
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
--------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
221630106
--------------------------------------------------------------------------------
(CUSIP NUMBER)
RUSSELL SILVESTRI
SKIRITAI CAPITAL LLC
655 MONTGOMERY STREET, SUITE 1438
SAN FRANCISCO, CA 94111
(415) 921-7896
JAMES GLOCKNER
STRUCTURED FINANCING LLC
2860 LAGUNA STREET
SAN FRANCISCO, CA 94123
(415) 921-7896
COPIES TO:
MICHAEL KENNEDY, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
ONE MARKET, SPEAR TOWER, SUITE 3300
SAN FRANCISCO, CA 94105
(415) 947-2000
--------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
MAY 10, 2002
--------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13-1(e), 240.13d-(f) or 240.13d-1(g), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
----------------------- -----------------------
CUSIP NO. 221630106 PAGE 2 OF 12 PAGES
----------------------- -----------------------
------ ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SKIRITAI Capital LLC I.R.S. Identification No.:
------ ----------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
------ ----------------------------------------------------------------------------------------------
3 SEC USE ONLY
------ ----------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, WC
------ ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
N/A
------ ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
------------------- --- -----------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 626,000
OWNED BY EACH --- -----------------------------------------------------------------------------
REPORTING PERSON 8 SHARED VOTING POWER
WITH N/A
--- -----------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
626,000
--- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
N/A
------ ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
626,000
------ ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
------ ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.2%
------ ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
------ ----------------------------------------------------------------------------------------------
SCHEDULE 13D
----------------------- -----------------------
CUSIP NO. 221630106 PAGE 3 OF 12 PAGES
----------------------- -----------------------
------ ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James Glockner I.R.S. Identification No.:
------ ----------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
------ ----------------------------------------------------------------------------------------------
3 SEC USE ONLY
------ ----------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
------ ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
N/A
------ ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
------------------- --- -----------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 122,000
OWNED BY EACH --- -----------------------------------------------------------------------------
REPORTING PERSON 8 SHARED VOTING POWER
WITH N/A
--- -----------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
122,000
--- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
N/A
------ ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
122,000
------ ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
------ ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.8%
------ ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
------ ----------------------------------------------------------------------------------------------
SCHEDULE 13D
----------------------- -----------------------
CUSIP NO. 221630106 PAGE 4 OF 12 PAGES
----------------------- -----------------------
------ ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Russell Silvestri I.R.S. Identification No.:
------ ----------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
------ ----------------------------------------------------------------------------------------------
3 SEC USE ONLY
------ ----------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
------ ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
N/A
------ ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
------ ----------------------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY N/A
OWNED BY EACH --- -----------------------------------------------------------------------------
REPORTING PERSON 8 SHARED VOTING POWER
WITH 30,000
--- -----------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
N/A
--- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
30,000
------ ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,000
------ ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X]
------ ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.2%
------ ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
------ ----------------------------------------------------------------------------------------------
SCHEDULE 13D
----------------------- -----------------------
CUSIP NO. 221630106 PAGE 5 OF 12 PAGES
----------------------- -----------------------
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the
common stock of Cotelligent, Inc., a Delaware corporation
("Cotelligent"). The principal executive offices of Cotelligent
are located at 44 Montgomery Street, Suite 4050, San Francisco,
California 94104.
ITEM 2 IDENTITY AND BACKGROUND.
This statement is being filed by SKIRITAI Capital LLC, a Delaware
limited liability company, James Glockner, an individual, and
Russell Silvestri, an individual, (collectively, the
"Reporting Entities").
SKIRITAI Capital LLC was formed to engage in the business of
acquiring, holding and disposing of investments in various
companies. The address of SKIRITAI Capital LLC's principal office
is 655 Montgomery Street, Suite 1438, San Francisco, CA 94111.
The address of SKIRITAI Capital LLC's executive offices is the
same as the address of its principal office.
Set forth on Schedule A is the name of each member of SKIRITAI
Capital LLC, including Mr. Silvestri, their present principal
occupation or employment, including the name, principal business
and address of any corporation or other organization in which
such employment is conducted, as of the date hereof. To SKIRITAI
Capital LLC's knowledge, no person named on Schedule A is
required to disclose legal proceedings pursuant to Items 2(d) or
2 (e). Except as set forth on Schedule A, each of the individuals
identified on Schedule A is a citizen of the United States.
Mr. Glockner's present principal occupation or employment is as
the Managing Partner of Structured Funding LLC, a California
limited liability company formed for the purpose of investing in
various companies. The principal business address of Structured
Funding LLC is 2860 Laguna Street, San Francisco, California
94123. Mr. Glockner is a citizen of the United States.
None of the Reporting Entities is required to disclose legal
proceedings pursuant to Items 2(d) or 2(e).
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
All purchases of the common stock, par value $0.01, of
Cotelligent ("Common Stock") by the Reporting Entities were made
in the open market and were funded by, in the case of SKIRITAI
Capital LLC, working capital and, in the case of Messrs. Glockner
and Silvestri, personal funds, which may have, at any given time,
included margin loans made by brokerage firms in the ordinary
course of business.
SCHEDULE 13D
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CUSIP NO. 221630106 PAGE 6 OF 12 PAGES
----------------------- -----------------------
The amount of funds expended by the Reporting Entities for such
purchases was as follows:
- $19,414.50 by SKIRITAI Capital LLC;
- $63,894.75 by Mr. Glockner; and
- $254,980.40 by Mr. Silvestri.
Mr. Silvestri contributed a total of 586,000 shares of Common
Stock, for which he expended $242,430.40, to SKIRITAI Capital LLC
on May 10, 2002 as part of his capital contribution as Managing
Partner thereof.
ITEM 4. PURPOSE OF TRANSACTION.
Each of the Reporting Entities acquired beneficial ownership of
the shares of Common Stock to which this statement relates for
the purpose of investment and to gain a significant equity
interest in Cotelligent.
Each of the Reporting Entities may acquire additional shares or
other securities of Cotelligent or sell or otherwise dispose of
any or all of the shares or other securities of Cotelligent they
beneficially own.
The Reporting Entities have engaged and intend to continue to
engage in discussions with the management and members of the
Board of Directors of Cotelligent concerning the business,
operations and future plans of Cotelligent.
On May 15, 2002, SKIRITAI Capital LLC sent a letter to
Cotelligent, a copy of which is attached hereto as Exhibit 1,
urging the Board of Directors of Cotelligent to maximize
stockholder value.
On May 15, 2002, SKIRITAI Capital LLC also sent to Cotelligent a
demand for Cotelligent's stockholder list and related materials,
a copy of which is attached hereto as Exhibit 2.
In addition, on May 15, 2002, SKIRITAI Capital LLC and Russell
Silvestri sent letters to Cotelligent, copies of which are
attached hereto as Exhibits 3 and 4, respectively, notifying
Cotelligent of their intent to nominate Russell Silvestri as a
Class I director to Cotelligent's Board of Directors and submit a
stockholder proposal to terminate the Company's rights plan.
The Reporting Entities may also consider other actions to
maximize stockholder value including, without limitation:
SCHEDULE 13D
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CUSIP NO. 221630106 PAGE 7 OF 12 PAGES
----------------------- -----------------------
- Proposing an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving
Cotelligent or any of its subsidiaries; and
- Proposing further change in the present Board of Directors
or management of Cotelligent.
Other than described above, none of the Reporting Entities
currently have any plans or proposals which relate to, or may
result in, any of the matters listed in Items 4(a) - (j) of
Schedule 13D (although they reserve the right to develop such
plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As of the date hereof, the Reporting Entities own an aggregate of
778,000 shares of Common Stock which, based upon the 14,900,891
shares of Common Stock outstanding as of May 10, 2002 (as
disclosed by Cotelligent in its most recent filing with the
Securities and Exchange Commission), represent 5.2 percent of the
outstanding shares of Common Stock.
SKIRITAI Capital LLC beneficially owns and has sole power to vote
and dispose of 626,000 shares of Common Stock, 4.2 percent of the
outstanding shares of Common Stock (as disclosed by Cotelligent
in its most recent filing with the Commission).
Mr. Silvestri and Lyron Bentovim, Managing Partner and Managing
Director, respectively, of SKIRITAI Capital LLC, may also be
deemed to be beneficial owners of the 626,000 shares of Common
Stock held by SKIRITAI Capital LLC. The filing of this statement
shall not be construed as an admission of such beneficial
ownership for purposes of Section 13(d) or 13(g) of the
Securities Exchange Act.
No person listed on Schedule A has a direct ownership interest in
Cotelligent other than Mr. Silvestri.
Mr. Silvestri beneficially owns 30,000 shares of Common Stock,
.2% of the outstanding shares of Common Stock (as disclosed by
Cotelligent in its most recent filing with the Commission),
through a direct investment account. He shares power to vote and
dispose of such shares of Common Stock with his spouse, Elizabeth
Silvestri. Mrs. Silvestri is not required to disclose legal
proceedings pursuant to Items 2(d) or 2(e) and is a citizen of
the United States.
Mr. Glockner beneficially owns and has sole power to vote and
dispose of 122,000 shares of Common Stock, .8 percent of the
outstanding shares of Common Stock (as disclosed by Cotelligent
in its most recent filing with the Commission).
To the knowledge of each of the Reporting Entities, no
transactions in the class of securities reported have been
effected during the past sixty days by any person named pursuant
to Item 2 other than as set forth on Schedule B hereto.
SCHEDULE 13D
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CUSIP NO. 221630106 PAGE 8 OF 12 PAGES
----------------------- -----------------------
To the knowledge of each of the Reporting Entities, no other
person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the
securities of Cotelligent reported on herein.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except as may be set forth in this statement, to the knowledge of
the Reporting Entities, there are no other contracts,
arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such
persons and any person with respect to any securities of
Cotelligent, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of
proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Letter to Cotelligent dated May 15, 2002.
2. Stockholder demand letter to Cotelligent requesting its
stockholder list and related materials, dated May 15,
2002.
3. Notice to Cotelligent of intent by certain of its
stockholders to nominate a director, dated May 15, 2002.
4. Notice to Cotelligent of intent by certain of its
stockholders to submit a stockholder proposal, dated May
15, 2002.
SCHEDULE 13D
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CUSIP NO. 221630106 PAGE 9 OF 12 PAGES
----------------------- -----------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 17, 2002
SKIRITAI CAPITAL LLC
By: /s/ Russell Silvestri
-------------------------
Russell Silvestri
Managing Partner
JAMES GLOCKNER
/s/ James Glockner
-----------------------------
James Glockner
RUSSELL SILVESTRI
/s/ Russell Silvestri
-----------------------------
Russell Silvestri
Schedule A
MEMBERS OF
SKIRITAI Capital LLC
The following table sets forth the name, business address and present
principal occupation or employment of each member of SKIRITAI Capital LLC.
Except as indicated below, the business address of each such person is 655
Montgomery Street, Suite 1438, San Francisco, CA 94111.
NAME TITLE AND PRESENT PRINCIPAL OCCUPATION
---- --------------------------------------
Russell Silvestri Managing Partner of SKIRITAI Capital LLC
Lyron Bentovim* Managing Director of SKIRITAI Capital LLC
*Citizen of Israel
Schedule B
The following tables set forth transactions in the class of securities
reported effected during the past sixty days.
SHARES PURCHASED BY SKIRITAI CAPITAL LLC:
DATE NUMBER OF SHARES PRICE PER SHARE COST (1)
---- ---------------- --------------- --------
05/10/02 15,000.00 $ 0.44430 $ 6,664.50
05/13/02 25,000.00 $ 0.51000 $ 12,750.00
--------------------------------------------------------------------------------
(1) Excludes commissions and other execution-related costs
SHARES PURCHASED BY MR. RUSSELL SILVESTRI:
DATE NUMBER OF SHARES PRICE PER SHARE COST (1)
---- ---------------- --------------- --------
03/22/02 125,000.00 $0.49800 $62,250.00
03/26/02 25,000.00 $0.40060 $10,015.00
03/27/02 77,000.00 $0.41239 $31,754.40
03/28/02 90,000.00 $0.42687 $38,418.00
04/30/02 3,000.00 $0.51000 $ 1,530.00
05/02/02 10,000.00 $0.45150 $ 4,515.00
05/03/02 16,000.00 $0.45094 $ 7,215.00
05/08/02 5,000.00 $0.42300 $ 2,115.00
--------------------------------------------------------------------------------
(1) Excludes commissions and other execution-related costs
Mr. Silvestri contributed the above listed shares of Common Stock to SKIRITAI
Capital LLC as part of the capital contribution he made on May 10, 2002 as its
Managing Partner.
SHARES PURCHASED BY RUSSELL SILVESTRI IRA:
DATE NUMBER OF SHARES PRICE PER SHARE COST (1)
---- ---------------- --------------- --------
03/28/02 10,000.00 $0.48000 $4,800.00
--------------------------------------------------------------------------------
(1) Excludes commissions and other execution-related costs
SHARES PURCHASED BY MR. JAMES GLOCKNER:
DATE NUMBER OF SHARES PRICE PER SHARE COST (1)
---- ---------------- --------------- --------
04/04/02 10,000.00 $0.49000 $ 4,900.00
04/05/02 10,000.00 $0.50500 $ 5,050.00
04/08/02 20,000.00 $0.51500 $10,300.00
04/11/02 32,500.00 $0.53230 $17,299.75
04/16/02 15,000.00 $0.54000 $ 8,100.00
04/18/02 12,500.00 $0.54600 $ 6,825.00
04/22/02 20,000.00 $0.52000 $10,400.00
04/30/02 2,000.00 $0.51000 $ 1,020.00
--------------------------------------------------------------------------------
(1) Excludes commissions and other execution-related costs
EXHIBIT 1
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
May 15, 2002
VIA MESSENGER AND OVERNIGHT COURIER
Board of Directors
Cotelligent, Inc.
44 Montgomery Street
San Francisco, California 94104
Dear Ladies and Gentlemen:
As you may know, SKIRITAI Capital LLC is the beneficial holder of an aggregate
of 626,000 shares of common stock, par value $.01 per share ("Common Stock"), of
Cotelligent, Inc., a Delaware corporation ("Cotelligent" or the "Company").
These shares of Common Stock represent approximately 4.2 percent of the
Company's Common Stock, based upon the 14,900,891 shares of Common Stock issued
and outstanding as of April 24, 2002 as set forth in the Company's Proxy
Statement for its 2002 Annual Meeting of Stockholders to be held on June 11,
2002.
As a stockholder of Cotelligent, we are deeply concerned about the strategic
direction of the Company and the apparent inability of the Company's Board of
Directors and management team to develop and implement a strategic plan that
will maximize the value of the Company's assets for all of its stockholders. We
have met with members of Cotelligent's management team on three separate
occasions and, during each of these meetings, the Company's management described
a different strategic plan for the Company. If we are to accept the Company's
strategic plan as expressed in its Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2001, as amended, Cotelligent currently intends to
pursue a strategy of providing "complete business solutions, specializing in
mobile business and Web services solutions." We believe, however, that such a
strategy is likely to fail in the current business environment due to the
Company's previous and ongoing failure to execute this strategic plan amid
competition from numerous larger industry participants, and many smaller
low-cost solutions providers, who are implementing similar strategies more
effectively. Moreover, recklessly pursuing such a strategic plan will continue
to deplete one of the Company's sole remaining valuable assets, its cash
reserves of approximately $23 million. We further believe that our concerns
regarding Cotelligent's current strategic plan are shared by the investment
community, as reflected in the continuously declining price of the Company's
Common Stock from a high of $5.72 on June 30, 2000 to the current price of $0.52
on May 14, 2002.
-1-
In light of the foregoing, we do not believe that Cotelligent's Board of
Directors or its management team have the ability to develop or implement a
strategic plan that will create long term stockholder value in excess of the
current value of the Company's assets. Accordingly, we are strongly encouraging
the Company's Board of Directors to take immediate steps to consider and take
action that will maximize the value of the Company's assets in the near term.
Such steps could include the replacement of senior management, the dissolution
of the Company and the distribution of its residual cash reserves and other
assets to the Company's stockholders, or an immediate auction and sale of the
Company to the highest bidder.
We further note that Cotelligent has a so-called "poison pill" rights plan,
which we believe may be unjustifiably deterring third parties who would
otherwise be interested in acquiring the Company or its assets. Because we
believe that a sale of Cotelligent could be one method of maximizing the value
of the Company and its assets, we urge the Company's Board of Directors to
terminate the rights plan immediately. To bring this matter to the attention of
the Company's other stockholders, we are also delivering to the Company under
separate letter a stockholder proposal to terminate the Company's rights plan as
promptly as practicable, which we are requesting to have included in the
Company's proxy statement for its 2002 Annual Meeting of Stockholders.
We would like to remind the Company's Board of Directors that it has a fiduciary
responsibility to maximize the value of Cotelligent and its assets for all of
the Company's stockholders. We believe that, by pursuing the Company's current
strategic plan, the Board of Directors is failing to fulfill its fiduciary
obligations to the Company's stockholders. Accordingly, we urge Board of
Directors to consider the establishment of an independent committee of the Board
of Directors charged with the responsibility of considering the matters that we
have raised in this letter and, ultimately, with taking appropriate action to
maximize the value of the Company for the benefit of its stockholders.
We would also like to invite the Company's Board of Directors or any of its
members to meet with us to discuss the matters that we have raised in this
letter. We believe that such matters are of the utmost importance to the Company
and its stockholders and encourage the Board of Directors to afford them the
critical importance they deserve under the present circumstances. We look
forward to hearing from you promptly.
Very truly yours,
SKIRITAI Capital LLC
/s/ Russell Silvestri
------------------------------------
Russell Silvestri
Managing Partner
-2-
EXHIBIT 2
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, CA 94111
May 15, 2002
VIA MESSENGER AND OVERNIGHT COURIER
Cotelligent, Inc.
44 Montgomery Street, Suite 4050
San Francisco, California 94104
Attention: Secretary
RE: REQUEST FOR STOCKHOLDER LISTS
Dear Secretary:
Pursuant to Section 220 of the Delaware General Corporation Law (the
"DGCL"), the undersigned beneficial holder of common stock, par value $.01 per
share (the "Common Stock"), of Cotelligent, Inc., a Delaware corporation (the
"Company"), hereby demands that it be given the opportunity to inspect, during
the Company's usual business hours, the following records and documents of the
Company and to make copies or extracts there from:
(a) A complete record list of the Company's stockholders of record
certified by its transfer agent, which record list sets forth
the name and address of each stockholder of record of the
Company and the number of shares of Common Stock registered in
the name of each stockholder of record of the Company as of
the most recent practicable date.
(b) A magnetic computer tape list of the Company's stockholders of
record as of the most recent practicable date, which sets
forth the name and address of each stockholder of record of
the Company and the number of shares of Common Stock
registered in the name of each stockholder of record of the
Company, together with any computer processing information
that may be relevant to the use of such computer tape, and a
printout of such magnetic computer tape for verification
purposes.
(c) All information in or which comes into the Company's
possession or control, or which can reasonably be obtained
from nominees of any central certificate depository system,
concerning the number and identity of the actual beneficial
owners of Common Stock, including a
list of all owners who hold Common Stock in the name of Cede &
Co. or other similar nominees and any respondent bank listings
obtained pursuant to the requirements of Rule 14b-2
promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and a list or lists containing
the name, address, and number of shares of Common Stock
attributable to participants in any employee stock ownership,
incentive, profit sharing, savings, retirement, stock option,
stock purchase, restricted stock or other comparable plan of
the Company in which the voting of shares held by such plan is
made, directly or indirectly, individually or collectively, by
participants in such plan.
(d) As promptly as practicable, any and all omnibus proxies and
correspondent participant listings with respect to all
nominees and respondent banks which are currently in effect
and which are obtained pursuant to the requirements of Rule
14b-2 promulgated under the Exchange Act.
(e) All lists, tapes and other data in or which come into the
possession or control of the Company, or which can reasonably
be obtained pursuant to Rules 14b-1 and 14b-2 promulgated
under the Exchange Act, which sets forth the name and address
of, and the number of shares owned by, each beneficial owner
of Common Stock who has not objected to having his or her name
disclosed (the "non-objecting beneficial owners" or "NOBO"
list).
(f) A "stop transfer" list or stop list relating to the shares of
Common Stock.
(g) All additions, changes and corrections to any of the
information requested pursuant to paragraphs (a) through (f)
from the date hereof until the undersigned requests
termination of the transmission of such materials.
The purpose of this demand is to permit the undersigned to communicate
with other stockholders of the Company on matters relating to their interests as
stockholders, including but not limited to, subject to compliance with
applicable law, the composition of the Board of Directors of the Company.
The undersigned agrees to bear the reasonable costs incurred by the
Company in connection with the production of the requested materials.
The undersigned hereby designates and has authorized Wilson Sonsini
Goodrich & Rosati, Professional Corporation, and its partners, employees and
other persons designated by it acting together, singly or in any combination, to
conduct the requested examination and copying of materials.
Please advise Michael Kennedy of Wilson Sonsini Goodrich & Rosati,
Professional Corporation (Tel: 415-947-2008) as to the time and place that the
requested information will be made available in accordance with this demand.
The DGCL requires your response to our requests in subsections (a)
through (f) within five business days of the date of this letter.
An affidavit relating to this stockholder demand pursuant to Section
220 of the DGCL has been attached to this letter.
Please acknowledge receipt of this letter and the enclosed affidavit
by signing and dating the enclosed copy of this letter and returning the same to
the undersigned in the enclosed envelope.
Very truly yours,
SKIRITAI Capital LLC
/s/ Russell Silvestri
-----------------------------
Russell Silvestri
Managing Partner
RECEIPT ACKNOWLEDGED ON MAY __, 2002
COTELLIGENT, INC.
By:
--------------------------------
Name:
Title:
AFFIDAVIT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN FRANCISCO )
Russell Silvestri, on behalf of SKIRITAI Capital LLC, having been duly
sworn, deposes and says that he has executed the stockholder demand to which
this Affidavit is attached on behalf of SKIRITAI Capital LLC and that the facts
and statements contained in such demand are true and correct in all material
respects.
/s/ Russell Silvestri
-------------------------------
Russell Silvestri
SWORN TO AND SUBSCRIBED BEFORE ME
THIS 15th DAY OF MAY, 2002
/s/ Lorna Villanueva
-------------------------------
Notary Public
EXHIBIT 3
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
May 15, 2002
VIA MESSENGER AND OVERNIGHT COURIER
Cotelligent, Inc.
44 Montgomery Street, Suite 4050
San Francisco, California 94104
Attention: Secretary
RE: STOCKHOLDER NOTICE OF NOMINATION OF DIRECTOR
Dear Secretary:
The undersigned stockholders of Cotelligent, Inc., a Delaware
corporation (the "Company"), hereby notify the Company, pursuant to Section 4 of
Article I of the Company's Amended and Restated Bylaws (the "Bylaws"), as
follows:
At the Company's Annual Meeting of Stockholders to be held on June 11,
2002, the undersigned intend to nominate Russell Silvestri as a Class I director
to serve on the Company's Board of Directors for a three-year term to expire at
the Company's Annual Meeting of Stockholders to be held in 2005.
Pursuant to Section 4 of Article I of the Bylaws, the undersigned
hereby set forth the following:
(a) The name of the person to be nominated as a director is
Russell Silvestri.
(b) As of the record date for the Annual Meeting (the "Record
Date"), Russell Silvestri was the beneficial owner of an
aggregate of 582,000 shares of common stock, par value $.01
per share, of the Company ("Common Stock") entitled to vote at
the Annual Meeting. As evidenced by the enclosed broker's
statement, as of the Record Date, such shares of Common Stock
were held by Russell Silvestri and his direct investment
account through a "street name" holder of record. As of the
date hereof, Russell Silvestri is the beneficial owner of an
aggregate of 656,000 shares of Common Stock. As evidenced by
the enclosed broker's statement, as of the date hereof, such
shares of Common Stock are held through a "street name" holder
of record by Russell Silvestri's direct investment
-1-
account and SKIRITAI Capital LLC, a Delaware limited liability
company of which Russell Silvestri is the Managing Partner.
(c) As of the record date for the Annual Meeting (the "Record
Date"), SKIRITAI Capital LLC was the beneficial owner of no
shares of Common Stock entitled to vote at the Annual Meeting.
As of the date hereof, SKIRITAI Capital LLC is the beneficial
owner of an aggregate of 626,000 shares of Common Stock. As
evidenced by the enclosed broker's statement, as of the date
hereof, such shares of Common Stock are held by SKIRITAI
Capital LLC through a "street name" holder of record.
(d) The information regarding Russell Silvestri that is required
to be included in a proxy statement, by the rules and
regulations of the Securities and Exchange Commission, for
nominees for election as directors is set forth in Annex A
hereto.
(e) Russell Silvestri's signed consent to serve as a director of
the Company if elected is attached hereto as Annex B.
(f) The names and addresses of the stockholders intending to make
the above-described nomination are as follows:
Russell Silvestri
c/o SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
(g) Russell Silvestri and SKIRITAI Capital LLC intend to appear in
person at the Annual Meeting to nominate Russell Silvestri to
serve as a Class I director for the term specified above.
We believe that this notice complies in all respects with applicable
provisions of the Bylaws and applicable law. If the Company believes this notice
is incomplete or otherwise deficient in any respect, we request that the Company
contact us immediately so that we may promptly address any alleged deficiencies.
-2-
Please acknowledge receipt of this letter by signing and dating the
enclosed copy of this letter and returning the same to the undersigned in the
enclosed envelope.
Very truly yours,
Russell Silvestri
/s/ Russell Silvestri
----------------------------------------
SKIRITAI Capital LLC
/s/ Lyron Bentovim
----------------------------------------
Lyron Bentovim
Managing Director
RECEIPT ACKNOWLEDGED ON MAY ____, 2002
COTELLIGENT, INC.
By:
-----------------------------
Name:
Title:
-3-
ANNEX A
Russell Silvestri
Mr. Silvestri, age 40, has served as Managing Partner of SKIRITAI Capital LLC
since April of 2002. From October of 2000 to March of 2001, he was Managing
Director of Focus Capital LLC. From October of 1999 to October of 2000 he
competed as an athlete in the Olympics. From February of 1989 to October of 1999
he served as a Managing Director of Robertson Stephens.
Mr. Silvestri holds a Bachelor of Science in Business from the University of
Southern California.
Beneficial Ownership of Russell Silvestri as of May 15, 2002:
======= ============================== ================== ================================== =============================
TITLE OF CLASS NAME OF AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS
BENEFICIAL OWNER OWNERSHIP
------- ------------------------------ ------------------ ---------------------------------- -----------------------------
Common Stock of Cotelligent, Russell Silvestri 656,000 shares(1) 4.4(2)
Inc., $0.01 Par Value
("Common Stock")
======= ============================== ================== ================================== =============================
(1) 626,000 shares of Common Stock are held by SKIRITAI Capital LLC. Mr.
Silvestri is the Managing Partner of SKIRITAI Capital LLC. As Managing
Partner, Mr. Silvestri has shared voting and dispositive power over
such shares. Mr. Silvestri holds the remaining 30,000 shares of Common
Stock through an IRA and shares dispositive and voting power over such
shares with his spouse.
(2) Based on 14,900,981 shares of Common Stock outstanding as of April 24,
2002 as disclosed by Cotelligent, Inc. in its latest Proxy Statement.
Beneficial Ownership of Associates as of May 15, 2002:
Mr. Silvestri, SKIRITAI Capital LLC , and James Glockner are members of a group.
As of May 15, 2002, Mr. Glockner is the beneficial owner of 122,000 shares of
Common Stock which represent .8 percent of the 14,900,981 shares of Common Stock
outstanding as of April 24, 2002 (as disclosed by Cotelligent, Inc. in its
latest Proxy Statement).
-4-
ANNEX B
CONSENT TO SERVE AS A DIRECTOR OF COTELLIGENT, INC.
The undersigned, Russell Silvestri, hereby consents and agrees to be nominated
as a director of Cotelligent, Inc., a Delaware corporation (the "Company"), and
hereby further consents and agrees to serve as a director of the Company if
elected.
/s/ Russell Silvestri
-------------------------------
Russell Silvestri
-5-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri IRA 04/24/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
------ ----------------------
02/14/02 ST 15,000.00 MONT 0.40000 0.50000 25.00 6,000.00 7,500.00 1,500.00 1.20
02/19/02 ST 5,000.00 MONT 0.35000 0.50000 42.86 1,750.00 2,500.00 750.00 0.40
03/28/02 ST 10,000.00 MONT 0.48000 0.50000 4.17 4,800.00 5,000.00 200.00 0.80
--------- ------- ------- ----- --------- --------- -------- ----
30,000.00 0.41833 0.50000 19.52 12,550.00 15,000.00 2,450.00 2.41
-6-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri 04/24/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
-------- ----------------------
01/03/02 ST 15,000.00 MONT 0.33003 0.50000 51.50 4,950.50 7,500.00 2,549.50 0.44
01/18/02 ST 15,000.00 MONT 0.40333 0.50000 23.97 6,050.00 7,500.00 1,450.00 0.44
01/22/02 ST 10,000.00 MONT 0.35500 0.50000 40.85 3,550.00 5,000.00 1,450.00 0.30
01/24/02 ST 65,000.00 MONT 0.40850 0.50000 22.40 26,552.50 32,500.00 5,947.50 1.92
01/25/02 ST 20,000.00 MONT 0.34000 0.50000 47.06 6,800.00 10,000.00 3,200.00 0.59
01/28/02 ST 50,000.00 MONT 0.34200 0.50000 46.20 17,100.00 25,000.00 7,900.00 1.48
01/29/02 ST 5,000.00 MONT 0.33000 0.50000 53.52 1,650.00 2,500.00 850.00 0.15
01/31/02 ST 20,000.00 MONT 0.33000 0.50000 51.52 6,600.00 10,000.00 3,400.00 0.59
02/07/02 ST 5,000.00 MONT 0.32000 0.50000 56.25 1,600.00 2,500.00 900.00 0.15
02/08/02 ST 25,000.00 MONT 0.31000 0.50000 61.29 7,750.00 12,500.00 4,750.00 0.74
02/28/02 ST 5,000.00 CANT 0.40300 0.50000 24.07 2,015.00 2,500.00 485.00 0.15
03/22/02 ST 125,000.00 MONT 0.49800 0.50000 0.40 62,250.00 62,500.00 250.00 3.69
03/26/02 ST 25,000.00 HRZG 0.40060 0.50000 24.81 10,015.00 12,500.00 2,485.00 0.74
03/27/02 ST 77,000.00 HRZG 0.41239 0.50000 21.24 31,754.40 38,500.00 6,745.60 2.27
03/28/02 ST 90,000.00 HERZ 0.42687 0.50000 17.13 38,418.00 45,000.00 6,582.00 2.66
---------- ------- ------- ----- ---------- ---------- --------- -----
552,000.00 0.41133 0.50000 21.56 227,055.40 276,000.00 48,944.60 16.31
-7-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Skiritai Capital LLC 05/15/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
-------- ----------------------
01/03/02 ST 15,000.00 STUP 0.33003 0.52000 57.56 4,950.50 7,800.00 2,849.50 0.59
01/18/02 ST 15,000.00 STUP 0.40333 0.52000 28.93 6,050.00 7,800.00 1,750.00 0.59
01/22/02 ST 10,000.00 STUP 0.35500 0.52000 46.48 3,550.00 5,200.00 1,650.00 0.40
01/24/02 ST 65,000.00 STUP 0.40850 0.52000 27.29 26,552.50 33,800.00 7,247.50 2.57
01/25/02 ST 20,000.00 STUP 0.34000 0.52000 52.94 6,800.00 10,400.00 3,600.00 0.79
01/28/02 ST 50,000.00 STUP 0.34200 0.52000 52.05 17,100.00 26,000.00 8,900.00 1.98
01/29/02 ST 5,000.00 STUP 0.33000 0.52000 57.58 1,650.00 2,600.00 950.00 0.20
01/31/02 ST 20,000.00 STUP 0.33000 0.52000 57.58 6,600.00 10,400.00 3,800.00 0.79
02/07/02 ST 5,000.00 STUP 0.32000 0.52000 62.50 1,600.00 2,600.00 1,000.00 0.20
02/08/02 ST 25,000.00 STUP 0.31000 0.52000 67.74 7,750.00 13,000.00 5,250.00 0.99
02/28/02 ST 5,000.00 STUP 0.40300 0.52000 29.03 2,015.00 2,600.00 585.00 0.20
03/22/02 ST 125,000.00 STUP 0.49800 0.52000 4.42 62,250.00 65,000.00 2,750.00 4.95
03/26/02 ST 25,000.00 STUP 0.40060 0.52000 29.81 10,015.00 13,000.00 2,985.00 0.99
03/27/02 ST 77,000.00 STUP 0.41239 0.52000 26.09 31,754.40 40,040.00 8,285.60 3.05
03/28/02 ST 90,000.00 STUP 0.42687 0.52000 21.82 38,418.00 46,800.00 8,382.00 3.56
04/30/02 ST 3,000.00 STUP 0.51000 0.52000 1.96 1,530.00 1,560.00 30.00 0.12
05/02/02 ST 10,000.00 STUP 0.45150 0.52000 15.17 4,515.00 5,200.00 685.00 0.40
05/03/02 ST 16,000.00 STUP 0.45094 0.52000 15.32 7,215.00 8,320.00 1,105.00 0.63
05/08/02 ST 5,000.00 STUP 0.42300 0.52000 22.93 2,115.00 2,600.00 485.00 0.20
05/10/02 ST 15,000.00 MLCO 0.44430 0.52000 17.04 6,664.50 7,800.00 1,135.50 0.59
05/13/02 ST 25,000.00 MLCO 0.51060 0.52000 1.84 12,765.00 13,000.00 235.00 0.99
---------- ------- ------- ----- ---------- ---------- --------- -----
626,000.00 0.41831 0.52000 24.31 261,859.90 325,520.00 63,660.10 24.77
-8-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri IRA 05/15/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
-------- ----------------------
02/14/02 ST 15,000.00 MONT 0.40000 0.52000 30.00 6,000.00 7,800.00 1,800.00 1.30
02/19/02 ST 5,000.00 MONT 0.35000 0.52000 48.57 1,750.00 2,600.00 850.00 0.43
03/28/02 ST 10,000.00 MONT 0.48000 0.52000 8.33 4,800.00 5,200.00 400.00 0.86
--------- ------- ------- ----- --------- --------- -------- ----
30,000.00 0.41833 0.52000 24.30 12,550.00 15,600.00 3,050.00 2.59
-9-
EXHIBIT 4
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
May 15, 2002
VIA MESSENGER AND OVERNIGHT COURIER
Cotelligent, Inc.
44 Montgomery Street, Suite 4050
San Francisco, California 94104
Attention: Secretary
RE: STOCKHOLDER NOTICE OF PROPOSAL TO TERMINATE RIGHTS AGREEMENT
Dear Secretary:
The undersigned stockholders of Cotelligent, Inc., a Delaware
corporation (the "Company"), hereby notify the Company, pursuant to Section 4 of
Article I of the Company's Amended and Restated Bylaws (the "Bylaws"), that the
undersigned intend to present the following proposal (the "Proposal") at the
2002 Annual Meeting of Stockholders of the Company (the "Annual Meeting"), and
may (but shall not be required by virtue of this stockholder notice) solicit
proxies from one or more stockholders of the Company authorizing the undersigned
to vote in favor of the Proposal at the Annual Meeting:
"WHEREAS, Cotelligent, Inc., a Delaware corporation, is a party to that
certain Rights Agreement, dated as of September 24, 1997 (the "Rights
Agreement"), between the Company and BankBoston, a national banking
association, as the same may have been amended from time to time.
WHEREAS, the stockholders of the Company have determined that the
Rights Agreement is not in the best interests of the stockholders of
the Company.
NOW, THEREFORE, BE IT RESOLVED, that the stockholders of the Company
urge and recommend that the Board of Directors of the Company order the
redemption of, and take all other action necessary or appropriate to
redeem, all Rights (as defined in the Rights Agreement) issued and
outstanding under the Rights Agreement pursuant to the terms and
conditions thereof, and by so doing, cause the termination of all
rights to exercise the Rights thereunder pursuant to the terms and
conditions
-1-
thereof and not adopt any new or similar plan without stockholder
approval."
Pursuant to Section 4 of Article I of the Bylaws, the undersigned
hereby sets forth the following in support of the Proposal:
(a) The text of the Proposal that the undersigned intends to
present at the Annual Meeting is set forth above and on Annex
A hereto.
(b) The reasons why the undersigned favors the Proposal are set
forth in Annex A hereto.
(c) The names and addresses of the undersigned stockholders that
intend to present the Proposal at the Annual Meeting are as
follows:
Russell Silvestri
c/o SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
(d) As of the record date for the Annual Meeting (the "Record
Date"), Russell Silvestri was the beneficial owner of an
aggregate of 582,000 shares of common stock, par value $.01
per share, of the Company ("Common Stock") entitled to vote at
the Annual Meeting. As evidenced by the broker's statement
attached hereto as Annex B, as of the Record Date, such shares
of Common Stock were held by Russell Silvestri and his direct
investment account through a "street name" holder of record.
As of the date hereof, Russell Silvestri is the beneficial
owner of an aggregate of 656,000 shares of Common Stock. As
evidenced by the broker's statement attached hereto as Annex
B, as of the date hereof, such shares of Common Stock are held
through a "street name" holder of record by Russell
Silvestri's direct investment account and SKIRITAI Capital
LLC, a Delaware limited liability company of which Russell
Silvestri is the Managing Partner.
As of the Record Date, SKIRITAI Capital LLC was the beneficial
owner of no shares of Common Stock entitled to vote at the
Annual Meeting. As of the date hereof, SKIRITAI Capital LLC is
the beneficial owner of an aggregate of 626,000 shares of
Common Stock. As evidenced by the
-2-
broker's statement attached hereto as Annex B, as of the date
hereof, such shares of Common Stock are held by SKIRITAI
Capital LLC through a "street name" holder of record.
(e) SKIRITAI Capital LLC has no material interest in the Proposal
other than as a stockholder of the Company.
The undersigned believe that this stockholder notice complies in all
respects with the applicable provisions of the Bylaws and applicable law. If the
Company determines that this notice is incomplete or otherwise deficient in any
respect, the undersigned request that the Company contact the undersigned
immediately so that any alleged deficiencies may be addressed promptly.
Please acknowledge receipt of this letter by signing and dating the
enclosed copy of this letter and returning the same to the undersigned in the
enclosed envelope.
Very truly yours,
SKIRITAI Capital LLC
/s/ Lyron Bentovim
---------------------------
Lyron Bentovim
Managing Director
Russell Silvestri
/s/ Russell Silvestri
---------------------------
RECEIPT ACKNOWLEDGED ON MAY ___, 2002
COTELLIGENT, INC.
By:
---------------------------
Name:
Title:
-3-
ANNEX A
STOCKHOLDER PROPOSAL TO TERMINATE RIGHTS AGREEMENT
Text of the Proposal
WHEREAS, Cotelligent, Inc., a Delaware corporation, is a party to that
certain Rights Agreement, dated as of September 24, 1997 (the "Rights
Agreement"), between the Company and BankBoston, a national banking
association, as the same may have been amended from time to time.
WHEREAS, the stockholders of the Company have determined that the
Rights Agreement is not in the best interests of the stockholders of
the Company.
NOW, THEREFORE, BE IT RESOLVED, that the stockholders of the Company
urge and recommend that the Board of Directors of the Company order the
redemption of, and take all other action necessary or appropriate to
redeem, all Rights (as defined in the Rights Agreement) issued and
outstanding under the Rights Agreement pursuant to the terms and
conditions thereof, and by so doing, cause the termination of all
rights to exercise the Rights thereunder pursuant to the terms and
conditions thereof and not adopt any new or similar plan without
stockholder approval.
Reasons that SKIRITAI Capital LLC and Russell Silvestri Favor the Proposal
As set forth more fully in the letter to the Company attached hereto as
Annex C, the Company's common stock price per share has continuously declined
from a high of $5.72 on June 30, 2000 to the current price of $0.52 on May 14,
2002.
We believe this is an appropriate time for the Board of Directors of
the Company to eliminate the Company's Rights Agreement, commonly known as a
poison pill. We do not share the view of the Board of Directors that our Company
should have put a poison pill into effect without stockholder approval.
We believe the Company should liquidate or sell its assets to maximize
stockholder value. A Rights Plan is an impediment to that goal. We believe that
the Rights Plan may be unjustifiably deterring third parties who would otherwise
be interested in acquiring the Company from submitting proposals to do so.
While management and the Board of Directors should have appropriate
tools to ensure that all stockholders benefit from any proposal to buy the
Company, we do not believe that the future possibility of an unsolicited bid
justifies the unilateral implementation of a poison pill.
-4-
The effect of poison pills on the value of companies' stock has been
the subject of extensive research. A 1986 study by the Office of the Chief
Economist of the U.S. Securities and Exchange Commission on the economics of
rights plans states that "The stock-returns evidence suggests that the effect of
poison pills to deter prospective hostile takeover bids outweighs the beneficial
effects that might come from increased bargaining leverage of the target
management." A 1992 study by Professor John Pound of Harvard University's
Corporate Research Project and Lilli A. Gordon of the Gordon Group found a
correlation between high corporate performance and the absence of poison pills.
Material Interests of SKIRITAI Capital LLC and Russell Silvestri in the Proposal
Neither SKIRITAI Capital LLC nor Russell Silvestri has any material interest in
the Proposal other than as a stockholder of the Company.
-5-
ANNEX B
EVIDENCE OF OWNERSHIP OF SHARES AND
RIGHT TO VOTE AT THE ANNUAL MEETING
-6-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri IRA 04/24/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
02/14/02 ST 15,000.00 MONT 0.40000 0.50000 25.00 6,000.00 7,500.00 1,500.00 1.20
02/19/02 ST 5,000.00 MONT 0.35000 0.50000 42.86 1,750.00 2,500.00 750.00 0.40
03/28/02 ST 10,000.00 MONT 0.48000 0.50000 4.17 4,800.00 5,000.00 200.00 0.80
--------- ------- ------- ----- --------- --------- -------- ----
30,000.00 0.41833 0.50000 19.52 12,550.00 15,000.00 2,450.00 2.41
-7-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri 04/24/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
01/03/02 ST 15,000.00 MONT 0.33003 0.50000 51.50 4,950.50 7,500.00 2,549.50 0.44
01/18/02 ST 15,000.00 MONT 0.40333 0.50000 23.97 6,050.00 7,500.00 1,450.00 0.44
01/22/02 ST 10,000.00 MONT 0.35500 0.50000 40.85 3,550.00 5,000.00 1,450.00 0.30
01/24/02 ST 65,000.00 MONT 0.40850 0.50000 22.40 26,552.50 32,500.00 5,947.50 1.92
01/25/02 ST 20,000.00 MONT 0.34000 0.50000 47.06 6,800.00 10,000.00 3,200.00 0.59
01/28/02 ST 50,000.00 MONT 0.34200 0.50000 46.20 17,100.00 25,000.00 7,900.00 1.48
01/29/02 ST 5,000.00 MONT 0.33000 0.50000 53.52 1,650.00 2,500.00 850.00 0.15
01/31/02 ST 20,000.00 MONT 0.33000 0.50000 51.52 6,600.00 10,000.00 3,400.00 0.59
02/07/02 ST 5,000.00 MONT 0.32000 0.50000 56.25 1,600.00 2,500.00 900.00 0.15
02/08/02 ST 25,000.00 MONT 0.31000 0.50000 61.29 7,750.00 12,500.00 4,750.00 0.74
02/28/02 ST 5,000.00 CANT 0.40300 0.50000 24.07 2,015.00 2,500.00 485.00 0.15
03/22/02 ST 125,000.00 MONT 0.49800 0.50000 0.40 62,250.00 62,500.00 250.00 3.69
03/26/02 ST 25,000.00 HRZG 0.40060 0.50000 24.81 10,015.00 12,500.00 2,485.00 0.74
03/27/02 ST 77,000.00 HRZG 0.41239 0.50000 21.24 31,754.40 38,500.00 6,745.60 2.27
03/28/02 ST 90,000.00 HERZ 0.42687 0.50000 17.13 38,418.00 45,000.00 6,582.00 2.66
---------- ------- ------- ----- --------- ---------- --------- -----
552,000.00 0.41133 0.50000 21.56 227,055.40 276,000.00 48,944.60 16.31
-8-
BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Skiritai Capital LLC 05/15/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
01/03/02 ST 15,000.00 STUP 0.33003 0.52000 57.56 4,950.50 7,800.00 2,849.50 0.59
01/18/02 ST 15,000.00 STUP 0.40333 0.52000 28.93 6,050.00 7,800.00 1,750.00 0.59
01/22/02 ST 10,000.00 STUP 0.35500 0.52000 46.48 3,550.00 5,200.00 1,650.00 0.40
01/24/02 ST 65,000.00 STUP 0.40850 0.52000 27.29 26,552.50 33,800.00 7,247.50 2.57
01/25/02 ST 20,000.00 STUP 0.34000 0.52000 52.94 6,800.00 10,400.00 3,600.00 0.79
01/28/02 ST 50,000.00 STUP 0.34200 0.52000 52.05 17,100.00 26,000.00 8,900.00 1.98
01/29/02 ST 5,000.00 STUP 0.33000 0.52000 57.58 1,650.00 2,600.00 950.00 0.20
01/31/02 ST 20,000.00 STUP 0.33000 0.52000 57.58 6,600.00 10,400.00 3,800.00 0.79
02/07/02 ST 5,000.00 STUP 0.32000 0.52000 62.50 1,600.00 2,600.00 1,000.00 0.20
02/08/02 ST 25,000.00 STUP 0.31000 0.52000 67.74 7,750.00 13,000.00 5,250.00 0.99
02/28/02 ST 5,000.00 STUP 0.40300 0.52000 29.03 2,015.00 2,600.00 585.00 0.20
03/22/02 ST 125,000.00 STUP 0.49800 0.52000 4.42 62,250.00 65,000.00 2,750.00 4.95
03/26/02 ST 25,000.00 STUP 0.40060 0.52000 29.81 10,015.00 13,000.00 2,985.00 0.99
03/27/02 ST 77,000.00 STUP 0.41239 0.52000 26.09 31,754.40 40,040.00 8,285.60 3.05
03/28/02 ST 90,000.00 STUP 0.42687 0.52000 21.82 38,418.00 46,800.00 8,382.00 3.56
04/30/02 ST 3,000.00 STUP 0.51000 0.52000 1.96 1,530.00 1,560.00 30.00 0.12
05/02/02 ST 10,000.00 STUP 0.45150 0.52000 15.17 4,515.00 5,200.00 685.00 0.40
05/03/02 ST 16,000.00 STUP 0.45094 0.52000 15.32 7,215.00 8,320.00 1,105.00 0.63
05/08/02 ST 5,000.00 STUP 0.42300 0.52000 22.93 2,115.00 2,600.00 485.00 0.20
05/10/02 ST 15,000.00 MLCO 0.44430 0.52000 17.04 6,664.50 7,800.00 1,135.50 0.59
05/13/02 ST 25,000.00 MLCO 0.51060 0.52000 1.84 12,765.00 13,000.00 235.00 0.99
---------- ------- ------- ----- ---------- ---------- --------- -----
626,000.00 0.41831 0.52000 24.31 261,859.90 325,520.00 63,660.10 24.77
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BANC OF AMERICA SECURITIES LLC
WORKING APPRAISAL BY ASSET CLASS
Russ Silvestri IRA 05/15/02
DATE TAX SHARES/ BROKER UNIT CURRENT PCT TOTAL MARKET UNREALIZED PCT OF
OPENED TERM FACE COST PRICE G/L COST VALUE GAIN/LOSS ASSETS
CGZT COTELLIGENT GROUP INC.
02/14/02 ST 15,000.00 MONT 0.40000 0.52000 30.00 6,000.00 7,800.00 1,800.00 1.30
02/19/02 ST 5,000.00 MONT 0.35000 0.52000 48.57 1,750.00 2,600.00 850.00 0.43
03/28/02 ST 10,000.00 MONT 0.48000 0.52000 8.33 4,800.00 5,200.00 400.00 0.86
--------- ------- ------- ----- -------- --------- -------- ----
30,000.00 0.41833 0.52000 24.30 12,550.00 15,600.00 3,050.00 2.59
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ANNEX C
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SKIRITAI Capital LLC
655 Montgomery Street
Suite 1438
San Francisco, California 94111
May 15, 2002
VIA MESSENGER AND OVERNIGHT COURIER
Board of Directors
Cotelligent, Inc.
44 Montgomery Street
San Francisco, California 94104
Dear Ladies and Gentlemen:
As you may know, SKIRITAI Capital LLC is the beneficial holder of an aggregate
of 626,000 shares of common stock, par value $.01 per share ("Common Stock"), of
Cotelligent, Inc., a Delaware corporation ("Cotelligent" or the "Company").
These shares of Common Stock represent approximately 4.2 percent of the
Company's Common Stock, based upon the 14,900,891 shares of Common Stock issued
and outstanding as of April 24, 2002 as set forth in the Company's Proxy
Statement for its 2002 Annual Meeting of Stockholders to be held on June 11,
2002.
As a stockholder of Cotelligent, we are deeply concerned about the strategic
direction of the Company and the apparent inability of the Company's Board of
Directors and management team to develop and implement a strategic plan that
will maximize the value of the Company's assets for all of its stockholders. We
have met with members of Cotelligent's management team on three separate
occasions and, during each of these meetings, the Company's management described
a different strategic plan for the Company. If we are to accept the Company's
strategic plan as expressed in its Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2001, as amended, Cotelligent currently intends to
pursue a strategy of providing "complete business solutions, specializing in
mobile business and Web services solutions." We believe, however, that such a
strategy is likely to fail in the current business environment due to the
Company's previous and ongoing failure to execute this strategic plan amid
competition from numerous larger industry participants, and many smaller
low-cost solutions providers, who are implementing similar strategies more
effectively. Moreover, recklessly pursuing such a strategic plan will continue
to deplete one of the Company's sole remaining valuable assets, its cash
reserves of approximately $23 million. We further believe that our concerns
regarding Cotelligent's current strategic plan are shared by the investment
community, as reflected in the continuously declining price of the Company's
Common Stock from a high of $5.72 on June 30, 2000 to the current price of $0.52
on May 14, 2002.
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In light of the foregoing, we do not believe that Cotelligent's Board of
Directors or its management team have the ability to develop or implement a
strategic plan that will create long term stockholder value in excess of the
current value of the Company's assets. Accordingly, we are strongly encouraging
the Company's Board of Directors to take immediate steps to consider and take
action that will maximize the value of the Company's assets in the near term.
Such steps could include the replacement of senior management, the dissolution
of the Company and the distribution of its residual cash reserves and other
assets to the Company's stockholders, or an immediate auction and sale of the
Company to the highest bidder.
We further note that Cotelligent has a so-called "poison pill" rights plan,
which we believe may be unjustifiably deterring third parties who would
otherwise be interested in acquiring the Company or its assets. Because we
believe that a sale of Cotelligent could be one method of maximizing the value
of the Company and its assets, we urge the Company's Board of Directors to
terminate the rights plan immediately. To bring this matter to the attention of
the Company's other stockholders, we are also delivering to the Company under
separate letter a stockholder proposal to terminate the Company's rights plan as
promptly as practicable, which we are requesting to have included in the
Company's proxy statement for its 2002 Annual Meeting of Stockholders.
We would like to remind the Company's Board of Directors that it has a fiduciary
responsibility to maximize the value of Cotelligent and its assets for all of
the Company's stockholders. We believe that, by pursuing the Company's current
strategic plan, the Board of Directors is failing to fulfill its fiduciary
obligations to the Company's stockholders. Accordingly, we urge Board of
Directors to consider the establishment of an independent committee of the Board
of Directors charged with the responsibility of considering the matters that we
have raised in this letter and, ultimately, with taking appropriate action to
maximize the value of the Company for the benefit of its stockholders.
We would also like to invite the Company's Board of Directors or any of its
members to meet with us to discuss the matters that we have raised in this
letter. We believe that such matters are of the utmost importance to the Company
and its stockholders and encourage the Board of Directors to
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afford them the critical importance they deserve under the present
circumstances. We look forward to hearing from you promptly.
Very truly yours,
SKIRITAI Capital LLC
/s/ Russell Silvestri
---------------------------
Russell Silvestri
Managing Partner
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