INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant (
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material Pursuant to § 240.14a-12
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SILVERSTAR HOLDINGS, INC.
(Name of Registrant as Specified in Its
Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate
box):
o
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Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set orth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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o
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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SILVERSTAR HOLDINGS, LTD.
___________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE
HELD MARCH 27, 2008
NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Stockholders (the
“
Meeting
”) of Silverstar
Holdings, Ltd. (the
“
Company
”) will be held at
the offices of Troutman Sanders LLP, The Chrysler Building, 405 Lexington Avenue, Ninth
Floor, New York, New York 10174 on Thursday, March 27, 2008, at 10:00 a.m. (local time), to
consider and act upon the following matters:
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1.
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the election of five (5) directors of the Company to serve
as the Board of Directors until the next annual meeting of stockholders and
until their successors are duly elected and qualified;
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2.
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a proposal to ratify the appointment of Rachlin LLP as the
Company’s independent registered public accounting firm for the
fiscal year ending June 30, 2008; and
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3.
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the transaction of such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
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Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on February 20, 2008 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the Meeting
and any adjournment or postponement thereof. A list of such stockholders will be open for
examination by any stockholder for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting at Troutman
Sanders LLP, The Chrysler Building, 405 Lexington Avenue, Ninth Floor, New York, New York
10174.
By Order of the Board of Directors,
Dawn Ferguson
Secretary
Hamilton, Bermuda
February 29, 2008
It is important that your shares be represented at the
Meeting. Each stockholder is urged to sign, date and return the enclosed
form of proxy which is being solicited on behalf of the Board of Directors.
An envelope addressed to the Company’s transfer agent is enclosed for
that purpose and needs no postage if mailed in the United
States.
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SILVERSTAR HOLDINGS, LTD.
Clarendon House
Church Street, Hamilton HM CX, Bermuda
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
March
27, 2008
This Proxy Statement is furnished to the holders of our common stock, par
value $.01 per share, in connection with the solicitation of proxies by and on behalf of
our Board of Directors for use at our 2007 Annual Meeting of Stockholders (the
“
Annual Meeting
”) to be held
on Thursday, March 27, 2008, at 10:00 a.m. (local time), at the offices of Troutman Sanders
LLP, The Chrysler Building, 405 Lexington Avenue, Ninth Floor, New York, New York 10174,
and at any adjournments or postponements of such meeting. The Annual Meeting is being held
for the purposes set forth in the accompanying Notice of Annual Meeting. The approximate
mailing date of this Proxy Statement is February 29, 2008.
The close of business on February 20, 2008 has been fixed by our Board of
Directors as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting and any adjournments or postponements of such meeting.
As of the record date, there were 19,194,280 shares of our common stock outstanding, which
is the only class of our voting securities issued and outstanding. Each share of our common
stock outstanding on the record date will be entitled to one (1) vote on all matters to
come before the Annual Meeting. A majority of our total issued voting shares, represented
in person or by proxy, is required to constitute a quorum for the transaction of business
at the Annual Meeting.
Proxies submitted which contain votes withheld in the election of directors,
abstentions or broker non-votes will be deemed present at the Annual Meeting in determining
the presence of a quorum.
The affirmative vote of a majority of the votes cast, in person or by proxy,
at the Annual Meeting will be required (i) to elect each director (Proposal 1) and (ii) to
ratify the appointment of Rachlin LLP as our independent registered public accounting firm
for our fiscal year ending June 30, 2008 (Proposal 2). Abstentions, broker non-votes and
votes not otherwise cast at the Annual Meeting will not be counted for the purpose of
determining the outcome of the vote on Proposals 1 and 2.
Our Board of Directors has unanimously recommended a vote FOR each
nominee named in the Proxy and FOR Proposal 2
.
It is important that your shares are represented at the Annual Meeting, and,
therefore, all stockholders are cordially invited to attend the Annual Meeting. However,
whether or not you plan to attend the Annual Meeting, you are urged to, as promptly as
possible, mark, sign, date and return enclosed proxy card, which requires no postage if
mailed in the United States in the enclosed pre-paid envelope. If you hold shares directly
in your name and attend the Annual Meeting, you may vote your shares in person, even if you
previously submitted a proxy card.
Unless otherwise specified, all proxies received will be voted
FOR
the election of all nominees named herein
to serve as directors and
FOR
the other
proposal set forth in the accompanying Notice of Annual Meeting of Stockholders and
described below. A proxy may be revoked at any time before its exercise by delivering
written notice of revocation to our Secretary, by executing a proxy bearing a later date or
by attendance at the Annual Meeting and electing to vote in person. Attendance at the
Annual Meeting without voting in person will not constitute revocation of a
proxy.
Our Annual Report on Form 10-K for the 2007 fiscal year, which contains
financial data and other information about us, is also enclosed herewith.
Exhibits to the Form 10-K will be furnished without
charge to any stockholder so requesting by writing to Corporate
Secretary, Silverstar Holdings, Ltd., 1900 Glades Road, Suite 435, Boca Raton, Florida
33431.
2
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 20, 2008, certain information
as to the beneficial ownership of our common stock by:
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•
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each person known by us to own more than five percent (5%)
of our outstanding shares;
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•
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each of our current directors;
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•
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each nominee for director;
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•
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each of our executive officers; and
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•
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all of our current directors and executive officers as a
group.
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Amount and Nature of Beneficial Ownership
(1)
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Name and Address of
Beneficial Stockholder
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Common
Stock
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Percentage of
Ownership
(1)
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Michael Levy
9511 West River Street
Schiller Park, Illinois 60176
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846,126 (2)
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4.4%
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Clive Kabatznik
1900 Glades Road
Suite 435
Boca Raton, Florida 33431
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1,432,174 (3)
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7.5%
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Cornelius J. Roodt
P.O. Box 4001
Kempton Park
South Africa
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89,836 (4)
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*
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Douglas Brisotti
1900 Glades Road
Suite 435
Boca Raton, Florida 33431
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47,931 (5)
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*
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Edward Roffman
64 Milland Drive
Mill Valley, California 94941
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13,227 (6)
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-
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Edward Bernstein
1900 Glades Road
Suite 435
Boca Raton, Florida 33431
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-
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-
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Lawrence R. Litowitz
1900 Glades Road
Suite 435
Boca Raton, Florida 33431
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22,500(7)
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*
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3
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Amount and Nature of Beneficial Ownership
(1)
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Name and Address of
Beneficial Stockholder
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Common
Stock
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Percentage of
Ownership
(1)
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Oberweis Asset Management, Inc.
3333 Warrenville Road
Suite 500
Lisle, Illinois 60532
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1,424,100 (8)
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7.4%
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Steven L. Martin
c/o Slater Capital Management, L.L.C.
825 Third Avenue, 33
rd
Floor
New York, New York 10022
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1,344,302 (9)
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7.0%
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All executive officers and directors as a group (6
persons)
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2,451,794(10)
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12.8%
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* Less than
1%.
(1)
|
Beneficial ownership is calculated in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the
“
Exchange
Act
”). Shares subject to stock options and
warrants, for purposes of this table, are considered beneficially owned
only to the extent currently exercisable or exercisable within 60 days
February 20, 2008.
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(2)
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Includes 60,000 shares of our common stock issuable upon
exercise of options that are immediately exercisable, 48,276 shares of our
common stock issuable upon exercise of warrants and 13,227 shares of
restricted stock.
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(3)
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Includes 750,000 shares of our common stock issuable upon
exercise of options, 500,000 of which are immediately exercisable, 96,552
shares of our common stock issuable upon exercise of warrants, and 10,682
shares of restricted stock.
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(4)
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Includes 40,000 shares of our common stock issuable upon the
exercise of options that are immediately exercisable and 13,227 shares of
restricted stock.
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(5)
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Includes 30,000 shares of our common stock issuable upon
exercise of options that are immediately exercisable and 13,227 shares of
restricted stock.
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(6)
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Consists of 13,227 shares of restricted stock.
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(7)
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Consists of 22,500 shares of our common stock issuable upon
exercise of options that are immediately exercisable.
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(8)
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Includes shares beneficially owned by The Oberweis Funds on
December 31, 2007 with respect to which The Oberweis Funds has delegated to
Oberweis Asset Management, Inc., its investment adviser, voting power and
dispositive power. James D. Oberweis and James W. Oberweis are principal
stockholders of Oberweis Asset Management, Inc. The foregoing information
is derived from a Schedule 13G filed on behalf of Oberweis Asset
Management, Inc., James D. Oberweis and James W. Oberweis on February 14,
2008.
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4
(9)
|
Steven L. Martin is the manager and
controlling shareholder of Slater Capital Management, L.L.C.
(“
CCMl
”), a
Delaware limited liability company and Slater Asset Management, L.L.C.
(
“
SAM
”
), a Delaware limited
liability company. SCM is the investment advisor and has investment
discretion over certain private funds, including Slater Equity Partners,
L.P.
(“
SEP
”), a
Delaware limited partnership. SAM is the general partner of SEP.
Mr. Martin, SCM, SAM and SEP have the shared power to vote or direct
the vote and the shared power to dispose the shares. The foregoing
information is derived from a Schedule 13G filed on behalf of
Mr. Martin, SCM, SAM and SEP on February 15, 2008.
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(10)
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Includes 902,500 shares of our common stock issuable upon
exercise of options, 652,500 shares of which are exercisable immediately,
144,828 shares of our common stock issuable upon exercise of warrants and
63,590 shares of restricted stock.
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5
PROPOSAL 1
ELECTION OF DIRECTORS
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At the Annual Meeting, our stockholders will elect five (5) directors to
serve until the next annual meeting of stockholders and until their respective successors
are elected and qualified. Unless otherwise directed, all proxies will be voted in favor of
the election of Michael Levy, Clive Kabatznik, Cornelius Roodt, Edward Roffman and Edward
Bernstein to serve as directors upon their nomination at the Annual Meeting. All nominees,
other than Edward Bernstein, currently serve on our Board of Directors and their terms
expire at the Annual Meeting. Douglas Brisotti, who was elected at the last annual meeting
of stockholders, has chosen not to stand for re-election.
Each nominee has advised us of his willingness to serve as a director and we
have no reason to expect that any of the nominees will be unable to stand for election at
the date of the Annual Meeting. In the event that any nominee should become unavailable for
election to our Board of Directors for any reason, the persons named in the proxies have
discretionary authority to vote such proxies for one or more alternative nominees who will
be designated by the then existing Board of Directors.
Information About Nominees and Executive Officers
The following table sets forth information regarding the nominees for
director and our executive officers:
Name
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Age
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Director Since
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Positions with the Company
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Michael Levy
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61
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1995
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Chairman of the Board of Directors
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Clive P. Kabatznik
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51
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1995
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Vice Chairman of the Board of Directors, Chief Executive
Officer, President and Director
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Cornelius J. Roodt
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49
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1996
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Director
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Edward Roffman
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59
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2007
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Director
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Edward Bernstein
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57
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N/A
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N/A
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Lawrence R. Litowitz
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57
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N/A
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Chief Financial Officer
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Michael Levy
is our co-founder and has served
as our Chairman of the Board of Directors since our inception in 1995. Since 1987,
Mr. Levy has been the Chief Executive Officer and Chairman of the Board of Arpac L.P,
a Chicago-based manufacturer of plastic packaging machinery.
Clive P. Kabatznik
is our co-founder and has
served as a member of our Board of Directors and as our President since our inception in
1995, as our Vice Chairman and Chief Executive Officer since October 1995 and was Chief
Financial Officer from October 1995 to September 2007. Mr. Kabatznik has served as
President of Colonial Capital, Inc., a Miami-based investment banking company that
specializes in advising middle market companies in areas concerning mergers, acquisitions,
private and public agency funding and debt placements.
6
Cornelius J. Roodt
has served as a member of
our Board of Directors since December 1996 and was appointed Managing Director and Chief
Financial Officer of one of our subsidiaries, First South African, responsible for
overseeing all of the South African operations of First South African Holdings (Pty.), Ltd.
Mr. Roodt led the buyout of First Lifestyle Holdings and he is currently Chief
Executive Officer
of the successor company, First Lifestyle Holdings, (Pty), Ltd. He
is no longer an executive officer of any of our subsidiaries. From February 1994 to June
1996, Mr. Roodt was a senior partner at Price Waterhouse Corporate Finance, South
Africa. From January 1991 to January 1994, he was an audit partner at Price Waterhouse,
South Africa.
Edward Roffman
has served as a member of our
Board of Directors since March 2007 as well as the Chairman of the Audit Committee of the
Board. He has served as the Chief Financial Officer as well as Video Game Developer and
Publisher of Red Mile Entertainment, Inc. in Sausalito, California. Prior to his work at
Red Mile Entertainment, Mr. Roffman served as Chief Financial Officer at Fluent
Entertainment, Inc. in Novato, California and as a member of Creekside, LLC, a consulting
firm in Larkspur, California.
Edward Bernstein
is a nominee for director.
Since October 2006 Mr. Bernstein has been a partner of Creekside LLC, a private
technology consulting company. From April 2002 to October 2006 Mr. Bernstein served as
Chief Executive Officer Photo TLC, Inc. Mr. Bernstein also co-founded Palladium
Interactive, Inc and was an officer of Broderbund, Inc. The Software Toolworks, Inc. (later
Mindscape, Inc.).
Lawrence R. Litowitz
has been our Chief
Financial Officer since September 2007. During the last five years, Mr. Litowitz has
been a Partner/Principal with Tatum. During that period his assignments placed him as the
Chief Financial Officer of Birks and Mayors, Inc. (BMJ), Chief Financial Officer of DHB
Industries, Inc. (DHBT), Chief Executive Officer of SMP Metal Products, Chief Financial
Officer of Campus Management Corp a leading provider of management systems for post
secondary educational institutions as well as Ecometry, Inc a leading software provider of
order management systems as well as several other consultative assignments.
All directors hold office until their respective successors are elected, or
until death, resignation or removal. Officers hold office until the meeting of our Board of
Directors following each Annual Meeting of Stockholders and until their successors have
been chosen and qualified.
Independence of the Board of Directors
As required under the Nasdaq Stock Market
(“
Nasdaq
”) listing
standards, a majority of the members of a listed company’s Board of Directors must
qualify as “independent,” as affirmatively determined by the Board of
Directors. Consistent with these considerations, after review of all relevant transactions
or relationships between each director, or any of his or her family members, and the
Company, its senior management and its independent auditors, the Board of Directors has
determined that all of our directors are independent directors within the meaning of
applicable Nasdaq listing standards, except for Clive Kabatznik.
Board
Meetings and Committees
Our Board of Directors is responsible for our overall management. During the
fiscal year ended June 30, 2007, our Board of Directors held six meetings and acted by
unanimous written consent four times. Each incumbent director attended at least 75% of all
meetings of our Board of Directors and committees on which such director served which were
held during the year.
Our Board of Directors has a separate audit committee, compensation
committee and nominating committee. The audit committee is currently composed of Michael
Levy, Edward Roffman and Cornelius J. Roodt, each of whom are independent directors as
defined in Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”). Our Board
of Directors has determined that Mr. Roodt meets the standards of an audit committee
“financial expert” as defined by the Sarbanes Oxley Act of 2002. Following the
Annual Meeting it is anticipated that the audit committee will be composed of Michael Levy,
Cornelius Roodt and Edward Roffman.
7
The audit committee is responsible for annually selecting and retaining our
independent registered public accounting firm, reviewing with our independent registered
public accounting firm the scope and results of the audit engagement and establishing and
monitoring our financial policies and control procedures. The specific functions and
responsibilities of the audit committee are set forth in an Audit Committee Charter adopted
by our Board of Directors, a copy of which was included as Appendix A hereto. The audit
committee met four times during fiscal year ended June 30, 2007.
The compensation committee is currently composed of Michael Levy and Edward
Roffman. These persons are intended to be non-employee directors within the meaning of Rule
16b-3(b)(3)(i) promulgated under the Exchange Act. Following the Annual Meeting it is
anticipated that the compensation committee will be composed of Michael Levy and Edward
Roffman.
The compensation committee has power and authority with respect to all
matters pertaining to compensation payable and the administration of employee benefits,
deferred compensation and our stock option plans. We do not have a formal Compensation
Committee Charter. The compensation committee met twice during fiscal year ended June 30,
2007.
The Company’s nominating committee is currently composed of Douglas
Brisotti and Edward Roffman, each of whom are independent directors as defined in Rule
4200(a)(15) of the NASAQ’s listing standards. Following the Annual Meeting it is
anticipated that the nominating committee will be composed of Edward Roffman and Edward
Bernstein.
The function of the nominating committee is to consider and recommend to our
Board of Directors candidates for appointment or election as directors. The specific
functions and responsibilities of the nominating committee are set forth in a written
charter of the nominating committee adopted by our Board of Directors, a copy of which was
included as Appendix b hereto.
A nominee to our Board of Directors must have such experience in business or
financial matters as would make such nominee an asset to our Board of Directors. In
recommending director candidates, our nominating committee takes into consideration such
factors as it deems appropriate based on our current needs. These factors may include:
professional and personal ethics and integrity; business, professional, or industry
knowledge and contacts; business and financial sophistication, common sense and wisdom, and
the ability to make informed judgments on a wide range of issues; relevant skills and
experience demonstrated through business, professional, charitable or civic affairs; the
ability to exercise independent judgment; and the candidate’s ability to devote the
required time and effort to serve on our Board of Directors.
The nominating committee will consider for nomination candidates recommended
by stockholders if the stockholders comply with the following requirements: the stockholder
must submit in writing to the nominating committee the recommended candidate’s name,
a brief resume setting forth the recommended candidate’s business, educational
background, qualifications for service, and any other information relating to such nominee
that is required to be disclosed in solicitations of proxies for election of directors, or
is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, and
a notarized consent signed by the recommended candidate stating the recommended
candidate’s willingness to be nominated and to serve. This information must be
delivered to our nominating committee at our address and must be received in a timely
manner as specified in our proxy statements (these timing requirements are not applicable
to persons nominated by or at the direction of our Board of Directors). The timing
requirements with respect to next year’s annual meeting are described in the section
of this proxy statement entitled “Stockholder Proposals.” The nominating
committee may request further information if it determines a potential candidate may be an
appropriate nominee. The nomination of Edward Bernstein for election as a director was
recommended and approved by the nominating committee.
The nominating committee met once during the fiscal year ended June 30,
2007.
8
Report of
the Audit Committee
The Audit Committee has reviewed Silverstar’s audited financial
statements for the last fiscal year and discussed them with management.
Silverstar’s independent registered public accounting firm, Rachlin
LLP (“
Rachlin
”), has
discussed with the Audit Committee the quality, in their judgment, as well as the
acceptability of Silverstar’s accounting principles as applied in its financial
reporting. Rachlin, the Audit Committee and management have discussed matters such as the
consistency, clarity and completeness of accounting policies and disclosures, the
reasonableness of significant judgments and accounting estimates, significant audit
adjustments, and such other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards.
Rachlin has discussed with the Audit Committee and has disclosed to the
Audit Committee, in writing, all relationships between Rachlin and its related entities and
Silverstar and its related entities that, in RCH’s professional judgment, may be
reasonably thought to bear on independence and has confirmed that in its professional
judgment, Rachlin is independent of Silverstar within the meaning of the Securities Act of
1933, as amended.
The Audit Committee, based on the review and discussions described above,
has recommended to the Board of Directors that the audited financial statements be included
in Silverstar’s Annual Report on Form 10-K for the last fiscal year.
Michael Levy, Chairman
Edward Roffman
Cornelius Roodt
Stockholder Communications with the Board of Directors
Any stockholder who wishes to send communications to our Board of Directors
should mail them addressed to the intended recipient by name or position in care of:
Corporate Secretary, Silverstar Holdings, Ltd., 1900 Glades Road, Suite 435, Boca Raton, FL
33431. Upon receipt of any such communications, the Corporate Secretary will determine the
identity of the intended recipient and whether the communication is an appropriate
stockholder communication. The Corporate Secretary will send all appropriate stockholder
communications to the intended recipient. An “appropriate stockholder
communication” is a communication from a person claiming to be a stockholder in the
communication, and the subject of which relates solely to the sender’s interest as a
stockholder and not to any other personal or business interest.
In the case of communications addressed to our Board of Directors, the
Corporate Secretary will send appropriate stockholder communications to the Chairman of the
Board. In the case of communications addressed to the independent or outside directors, the
Corporate Secretary will send appropriate stockholder communications to the Chairman of the
audit committee. In the case of communications addressed to committees of the Board, the
Corporate Secretary will send appropriate stockholder communications to the chairman of
such committee.
Our Board of Directors encourages all of its members to attend our annual
meeting of stockholders so that each director may listen to any concerns that stockholders
may have that are raised at the annual meeting.
9
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires our executive officers and
directors, and persons who beneficially own more than 10% of our common stock, to file
initial reports of ownership and reports of changes of ownership with the Securities and
Exchange Commission and furnish copies of those reports to us. Based solely on a review of
the copies of the reports furnished to us to date, or written representations that no
reports were required, we believe that all reports required to be filed by such persons
with respect to our fiscal year ended June 30, 2007 were timely made.
Code
of Ethics
Our Board of Directors adopted a Code of Ethics which applies to all of our
directors, executive officers and employees. A copy of the Code of Ethics is available upon
request to the Corporate Secretary, Silverstar Holdings, Ltd., 1900 Glades Road, Suite 435,
Boca Raton, FL 33431.
Executive Compensation Discussion and Analysis
General
Philosophy and Objectives
Our executive compensation policies are intended to attract, motivate and
retain key executives of superior ability. Our main objectives are to reward individuals
for their contributions to our performance and provide them with a stake in our long-term
success. Compensation programs for our executives are constructed in an effort to reward
them, in the short-term, for individual performance and overall corporate performance
through a combination of base salary, discretionary bonuses, and commission compensation
for those individuals whose primary duties and responsibilities are the sale of our product
offerings, and in the longer-term, by tying a portion of their compensation directly to the
performance of our common stock.
Compensation Process
Our Compensation Committee, comprised of Michael Levy and Edward Roffman,
reviews and expressly approves the compensation of our Chief Executive Officer, and as we
hire them in the future will do so for our other executive officers. For fiscal year 2007,
the Compensation Committee reviewed and approved the compensation of our Chief Executive
Officer whose compensation is fixed under an employment contract dated January 2005. Our
Board of Directors, without the participation of any interested member of the Board,
approves the grant of stock options and any other awards under our 2007 Stock Incentive
Plan, and approves the terms and conditions of any employment, severance, “change of
control” or other written employment agreement with any of our executive
officers.
Elements of Compensation
|
The primary elements of executive compensation for our
executive officers are as follows:
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•
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Bonus compensation, in the discretion of the Compensation
Committee;
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•
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A long-term incentive component, generally consisting of the
grant of stock options, also in the discretion of the Board of Directors;
and
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•
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Perquisites and other benefits.
|
10
We do not objectively allocate compensation between currently paid and
long-term compensation, or between cash and non-cash compensation, and no specific
benchmarks or other quantitative measures typically are used. Instead, the Compensation
Committee and the Board of Directors believe that they should be able to maintain an
overall objective of attracting, motivating and retaining our key executives while at the
same time preserving discretion to increase or decrease variable compensation on a
year-to-year basis depending on individual and corporate performance, or, in fact, not to
pay any suchcompensation in any particular year if that is considered
appropriate.
Base Salary
. Base salary provides an executive
with his basic compensation. It is intended to reflect the skill, experience, and overall
value an individual brings to our business, as well as the individual’s length of
service and historic performance. The base salary for our Chief Executive Officer, as
discussed below, is set by the terms of his employment agreement. The Board has retained
the discretion to increase those base salary levels in its discretion. Annual reviews are
typically made of the base salary of the Chief Executive Officer, and annual adjustments
made if adjustments are considered necessary. However, when warranted by business
considerations, such as profitability, gross margin levels, and/or cash flow
considerations, among others, annual adjustments may either be delayed, or may not be
made.
Bonuses
. Cash bonuses are awarded on a
discretionary basis. Bonuses in the past have occasionally been based on gross profit or
profitability goals and performance metrics. However, we generally believe factors that an
objective performance metric may not permit, or to award available bonus dollars to those
individuals whose contributions to a particular achievement merit special recognition. Cash
bonuses are intended to reward the loyalty of our executives, provide incentive for a
positive performance, and communicate to our executives that when individual and collective
efforts result in positive corporate performance, their performance will be
rewarded.
Long-Term Incentive Compensation
: The long-term
component of our executive compensation is designed to provide a commonality of interests
between our executives and our stockholders. In the past, we have utilized stock options as
the primary method of providing long-term and equity-based compensation. Grants under our
2004 and 2007 Stock Incentive Plan, along with annual bonuses, are the primary methods used
to provide long-term motivation to our executives, and to allow them to participate in the
growth of the Company through increases in the price of our shares of common stock, thereby
linking their interests with those of our stockholders. The 2004 and 2007 Stock Incentive
Plan provides for the grant, in the discretion of the Board of Directors, of stock options,
and restricted stock awards. The Board of Directors may, in connection with the grant of
each option or award, establish one or more objective criteria (which may include reference
to revenues, margin, profits or other goals) to determine whether the options or awards
vest or otherwise will become exercisable, and/or whether any amounts will become
payable.
Other than those disclosed in the executive compensation table, no options
or other awards were granted in fiscal 2007 to our executives.
Perquisites and Other Benefits
. We structure
our other compensation to provide competitive benefit packages to our executives. We often
offer perquisites to certain of our executives, primarily automobile allowances. We have
used these benefits as a retention tool and as a relatively inexpensive method of rewarding
our executives, particularly when it is viewed as a part of our overall compensation
program that relies in great part on the discretion of the Board of Directors and the
Executive Compensation Committee in assessing individual and corporate
performance.
The only other benefits available to our executives are those that are
generally available to our employees, including health insurance. We do not offer any of
our executives any pension or retirement benefits that are not otherwise enjoyed by our
employees in general.
11
Certain Accounting and Tax
Considerations.
We are aware that base salary, cash bonuses, stock-based
awards, and other elements of our compensation programs generate charges to earnings under
generally accepted accounting principles (including as provided in SFAS 123R). We generally
do not adjust compensation components based on accounting factors.
Report of Compensation Committee
The members of the Compensation Committee have reviewed and discussed the
Compensation Discussion and Analysis section with management. Based on such review and
discussion, the members of the Board of Directors and the Compensation Committee
recommended that the Compensation Discussion and Analysis section be included in the
Company Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
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Compensation Committee:
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Michael Levy
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Edward Roffman
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EXECUTIVE COMPENSATION
Summary
Compensation Table
The following table sets forth certain information concerning the
compensation of our Named Executive Officers.
Name and Principal Position
|
Fiscal Year Ended June 30,
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Salary
|
Bonus
|
Stock Awards
|
Option Awards
|
Non-Equity Incentive Plan Compensation
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings
|
All Other Compensation
|
Total
|
Clive Kabatznik, President and Chief Executive
Officer
|
2007
|
$337,500
|
-
|
$11,880
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-
|
-
|
-
|
-
|
$349,380
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Grant
of Plan-Based Awards
Our 2004 Stock Incentive Plan provides for the grant, in the discretion of
the Board of Directors, of stock options and restricted stock awards. No options were
granted to Mr. Kabatznik during the fiscal year ended June 30, 2007.
The
options granted to Mr. Kabatznik during fiscal year ended June 30, 2006
represent:
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•
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an option granted under our 2004 Stock Incentive Plan to
purchase 15,000 shares of our common stock, which was exercisable at an
exercise price of $1.33 per share. These options were exercised during the
fiscal year ended June 30, 2007.
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The options granted to Mr. Kabatznik
during fiscal year ended June 30, 2005 represent:
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•
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an option granted under our 2004 Stock Incentive
Plan to purchase 15,000 shares of our common stock, which was exercisable at an
exercise price of $1.06 per share; These options were exercised during the fiscal
year ended June 30, 2007.
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•
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an option granted under our 1995 Stock Option Plan
to purchase 50,000 shares of our common stock, which is currently exercisable at an
exercise price of $2.00 per share;
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•
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a non-qualified option granted to purchase 450,000 shares of our
common stock, which is currently exercisable at an exercise price of $2.00 per
share.
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12
Option
Exercises and Stock Vested
The following table presents information concerning the exercise of stock
options and the vesting of stock for our Named Executive Officers during the fiscal year
ended June 30, 2007.
FISCAL 2007 OPTION EXERCISES AND STOCK VESTED
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Option Awards
|
Stock Awards
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Name
|
Number of
Shares
Acquired
on Exercise
|
Value Realized
on Exercise
|
Number of
Shares
Acquired
on Vesting
|
Value Realized
on Vesting
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Clive Kabatznik
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35,000
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$36.600
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7,519*
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$11,880
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*Represents restricted shares that were granted on April 03, 2006 and vested
April 03, 2007.
On June 27, 2007 Mr. Kabatznik was granted $20,000 of restricted shares
that are scheduled to vest on March 27, 2008. The closing market price of the shares of
common stock of the Company on June 27, 2007 was $1.85. Therefore, on March 27, 2008,
Mr. Kabatznik will receive 10,810 restricted shares.
13
Outstanding Equity Awards at Fiscal Year End
The following table presents information concerning the number and value of
unexercised options, nonvested stock (including restricted stock, restricted stock units or
other similar instruments) and incentive plan awards for our Named Executive Officers
outstanding as of the end of the fiscal year ended June 30, 2007.
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Option Awards
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Stock Awards
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Name
(a)
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Number of Securities Underlying Unexercised
Options
(#)
Exercisable
(b)
|
Number of Securities Underlying Unexercised
Options
(#)
Unexercisable
(c)
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Equity Incentive Plan Awards: Number of Securities
Underlying Unexercised Unearned Options
(#)
(d)
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Option Exercise Price
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Option Expiration Date
(f)
|
Number of Shares or Units or Stock That Have Not
Vested
(#)(g)
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Market Value of Shares or Units of Stock That Have Not
Vested
($)
(h)
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Equity Incentive Plan Awards: Number of Unearned Shares,
Units or Other Rights That Have Not Vested
(i)
|
Equity Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested
($)
(j)
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Clive Kabatznik
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500,000
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-
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-
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$2.00
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12/31/2009
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-
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-
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-
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-
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Director Compensation
The following table presents information relating to total compensation of
our non-employee directors for the fiscal year ended June 30, 2007.
Name
|
Fees Earned or Paid in Cash
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Stock Awards*
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Option Awards
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All Other Compensation
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Total
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Michael Levy
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$60,000
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$11,880
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-
|
-
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$71,880
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Cornelius J. Roodt
|
-
|
$11,880
|
-
|
-
|
$11,880
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Edward Roffman
|
$30,000
|
$11,880
|
-
|
-
|
$41,880
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Douglas A. Brisotti
|
-
|
$11,880
|
-
|
-
|
$11,880
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John Grippo**
|
-
|
$11,880
|
-
|
-
|
$11,880
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Each active Board member was granted 7,519 restricted shares on April 3,
2006 which vested April 3, 2007.
**No
longer on Board at June 30, 2007.
Mr. Levy receives an annual consulting fee of $60,000 per year, solely
in connection with his service as Chairman of our Board of Directors. Directors are
reimbursed for their reasonable out-of-pocket expenses incurred in connection with their
duties.
14
Mr. Roffman receives $2,500.00 per month solely in connection with his
service as a member of the Audit Committee of the Board.
On June 27, 2007 Mr. Levy, Mr. Roodt, Mr. Roffman, and
Mr. Brisotti were each granted $25,000 of restricted shares which are scheduled to
vest on March 27, 2008.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
None of the members of our compensation committee of our Board of Directors
is now or ever has been one of our officers or employees. None of our executive officers
serves as a member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our Board of Directors or our compensation
committee.
Employment Agreements
On January 29, 2005, the Company’s Board of Directors approved an
Employment Agreement with Clive Kabatznik (the “
Employment
Agreement
”). Pursuant to the Employment Agreement,
Mr. Kabatznik will serve as the Chief Executive Officer, President and Chief Financial
Officer of the Company beginning as of January 1, 2005 and continuing through and until
December 31, 2009. As compensation for his services, Mr. Kabatznik will receive an
annual base salary of $325,000 increasing by $10,000 in 2006 and increasing to $350,000 per
annum from the beginning of 2007 to the end of 2009. During the term of the agreement, the
employee shall be entitled to an annual bonus in an amount to be determined by the
Company’s Board of Directors and Compensation Committee based on results of
operations of the Company for each fiscal year starting in the fiscal year ending June 30,
2006. Such bonus will be dependant on the Company’s net income from operations
achieving a rate of return on equity of not less than 20% annually.
On December 1, 2006, Empire Interactive entered into employment agreements
with Ian Higgins and Simon Jeffrey. The agreements terminated on January 1, 2008 and
Silverstar and Messrs. Higgins and Jeffrey are currently negotiating new employment
agreements. The agreements called for basic annual salary of £132,000 for each
executive as well as a £12,000 car allowance and a pension contribution equal to 15%
of the basic annual salary. Additionally, each executive received 100,000 two-year options
to acquire shares of Silverstar stock at $1.79. These options vested on December 31, 2007.
Mr. Higgins serves as the Chief Executive Officer of that company and Mr. Jeffrey
as Managing Director in charge of product development and acquisition.
On April 21, 2005, Strategy First entered into employment agreements with
Don McFatridge, Brian Clarke and Richard Therrien. The employment agreements are on an
at-will basis and call for salaries of Canadian $180,000, $160,000 and $75,000,
respectively. Each employee is entitled to a bonus of up to 30% of their salary at the
discretion of Silverstar. Mr. McFatridge served as Chief Executive Officer of Strategy
First and received options to acquire 75,000 shares of Silverstar’s common stock.
Mr. McFatridge’s contract was terminated during the fiscal year ended June 30,
2007 and all of his options have expired. Mr. Clarke, who died in June 2006, served as
Chief Operating Officer of Strategy First and received options to acquire 75,000 shares of
Silverstar’s common stock which terminated upon his death. Mr. Therrien serves
as Chief Technology Officer of Strategy First and received options to acquire 25,000 shares
of Silverstar’s common stock. These options vest annually over a three-year
period.
On October 3, 2005, the Company entered into an employment agreement with
Sheldon Reinhart to serve as Vice President of Finance. The employment agreement is on an
at-will basis and calls for an annual salary of Canadian $120,000 and entitles the employee
to a bonus of up to 30% of his salary at the discretion of the Company. Mr. Reinhardt
will also received stock options to acquire 20,000 shares of the Company’s common
stock at the completion of fiscal year 2007 which will vest annually over a three-year
period.
15
1995
Stock Option
Our Board of Directors has adopted and our shareholders, prior to our
initial public offering, approved our 1995 Stock Option Plan. Our 1995 Stock Option Plan
provides for the grant of:
• options that are intended to qualify as incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of 1986 to key
employees; and
• options not intended to so qualify to key employees,
including our directors and officers, and to directors and consultants who are not
employees.
The total number of shares of our common stock for which options may be
granted under our 1995 Stock Option Plan is 850,000 shares.
Our 1995 Stock Option Plan is administered by the compensation committee of
our Board of Directors. The compensation committee will determine the terms of options
exercised, including the exercise price, the number of shares subject to the option and the
terms and conditions of exercise. No option granted under our 1995 Stock Option Plan is
transferable by the optionee other than by will or the laws of descent and distribution and
each option is exercisable during the lifetime of the optionee only by such optionee or his
legal representatives.
The exercise price of incentive stock under our 1995 Stock Option Plan must
be at least equal to 100% of the fair market value of such shares on the date of grant, or
110% of fair market value in the case of an optionee who owns or is deemed to own stock
possessing more than 10% of the voting rights of our outstanding capital stock. The term of
each option will be established by the compensation committee, in its sole discretion.
However, the maximum term for each incentive stock option granted under our 1995 Stock
Option Plan is ten years, or five years in the case of an optionee who owns or is deemed to
own stock possessing more than 10% of the total combined voting power of our outstanding
capital stock. Options will become exercisable at such times and in such installments as
the compensation committee will provide in the terms of each individual option. The maximum
number of shares for which options may be granted to any individual in any fiscal year is
210,000.
Our 1995 Stock Option Plan also contains an automatic option grant program
for our directors. Each of our non-employee directors is automatically granted an option to
purchase 10,000 shares of our common stock following each annual meeting of shareholders.
In addition, each of our employee directors is automatically granted an option to purchase
5,000 shares of our common stock following each annual meeting of shareholders. Each grant
has an exercise price per share equal to the fair market value of the our common stock on
the grant date, is immediately exercisable and has a term of five years measured from the
grant date, subject to earlier termination if an optionee’s service as a Board member
is terminated for cause.
2004
Stock Incentive Plan
Our board of directors has adopted and our shareholders approved our 2004
Stock Incentive Plan (the “
2004
Plan
”). The 2004 Plan is intended to provide an incentive
to employees (including executive officers), and directors of and consultants to the
Company and its affiliates, and is intended to be the successor plan to the 1995 Stock
Option Plan (which terminates in November 2005). The 2004 Plan authorizes the issuance of a
maximum of 1,000,000 shares of our common stock (subject to adjustment as described in the
2004 Plan) pursuant to stock grants or options to purchase common stock to employees
(including officers and directors who are employees) and non-employee directors of, and
consultants to, us.
The 2004 Plan provides for the grant of (i) “incentive stock
options” (“
ISOs
”)
within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the
“
Code
”), (ii) non-qualified
stock options (which are stock options that do not qualify as ISOs), and (iii) stock
awards.
16
The 2004 Plan will be administered by our board of directors or a committee
of our board of directors consisting of at least two members of our board, each of whom is
a “non-employee director” within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934. It is also intended that each member of any such
committee will be an “outside director” within the meaning of Section 162(m) of
the Code.
Options granted under the 2004 Plan will be subject to, among other things,
the following terms and conditions:
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•
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The exercise price of each option will be determined
by the administrator; provided, however, that the exercise price of an ISO may not
be less than the fair market value of our common stock on the date of grant (110%
of such fair market value if the optionee owns (or is deemed to own) more than 10%
of our voting power).
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•
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Options may be granted for terms determined by the
administrator; provided, however, that the term of an ISO may not exceed 10 years
(5 years if the optionee owns (or is deemed to own) more than 10% of our voting
power).
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•
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The maximum number of shares of our common stock for
which options may be granted to an employee in any calendar year is 230,000. In
addition, the aggregate fair market value of shares with respect to which ISOs may
be granted to an employee which are exercisable for the first time during any
calendar year may not exceed $100,000.
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•
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The exercise price of each option is payable in full
upon exercise or, if the applicable stock option contract entered into by us with
an optionee permits, in installments.
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•
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Options may not be transferred other than by will or
by the laws of descent and distribution, and may be exercised during the
optionee’s lifetime only by the optionee or his or her legal
representatives.
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•
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Except as may otherwise be provided in the
applicable option contract, if the optionee’s relationship with us as an
employee or consultant is terminated for any reason (other than the death or
disability of the optionee), the option may be exercised, to the extent exercisable
at the time of termination of such relationship, within three months thereafter,
but in no event after the expiration of the term of the option.
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•
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We may withhold cash and/or shares of our common
stock having an aggregate value equal to the amount which we determine is necessary
to meet its obligations to withhold any federal, state and/or local taxes or other
amounts incurred by reason of the grant or exercise of an option, its disposition
or the disposition of shares acquired upon the exercise of the option.
Alternatively, we may require the optionee to pay us such amount, in cash, promptly
upon demand.
|
Through September 28, 2005, we have granted options to purchase 255,000
shares of our common stock under our 1995 Stock Option Plan, 165,000 of which have been
exercised. Through September 28, 2006, we have granted options to purchase 95,000 shares of
our common stock under our 2004 Stock Option Plan, 95,000 of which none has been
exercised.
2007
Stock Incentive Plan:
The Company’s board of directors has adopted and the Company’s
shareholders approved the Company’s 2007 Stock Incentive Plan (the
“
2007 Plan
”). The 2007 Plan
is intended to provide an incentive to employees (including executive officers), and
directors of and consultants to the Company and its affiliates, and is intended to be the
successor plan to the 2004 Stock Option Plan The 2007 Plan authorizes
17
the
issuance of a maximum of 2,000,000 shares of the Company’s common stock (subject to
adjustment as described in the 2007 Plan) pursuant to stock grants or options to purchase
common stock to employees (including officers and directors who are employees) and
non-employee directors of, and consultants to the Company.
The 2007 Plan provides for grant of “incentive stock options”
(“
ISOs
”) within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock
options (“
NQSOs
”), and stock
awards (“
Stock Awards
”)
;
The 2007 Plan will be administered by our board of directors or a committee
of the Company’s board of directors consisting of at least two members of the
Company’s board, each of whom is a “non-employee director” within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934. It is also
intended that each member of any such committee will be an “outside director”
within the meaning of Section 162(m) of the Code.
Options granted under the 2007 Plan will be subject to, among other things,
the following terms and conditions:
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•
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The exercise price of each option will be determined
by the administrator; provided, however, that the exercise price of an ISO may not
be less than the fair market value of our common stock on the date of grant (110%
of such fair market value if the optionee owns (or is deemed to own) more than 10%
of our voting power).
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•
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Options may be granted for terms determined by the
administrator; provided, however, that the term of an ISO may not exceed 10 years
(5 years if the optionee owns (or is deemed to own) more than 10% of our voting
power).
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•
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The exercise price of each option is payable in full
upon exercise or, if the applicable stock option contract entered into by us with
an optionee permits, in installments. The maximum number of shares of the
Company’s common stock for which options may be granted to an employee in any
calendar year is 210,00. In addition, the aggregate fair market value of shares
with respect to which ISOs may be granted to an employee which are exercisable for
the first time during any calendar year may not exceed $100,000.
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•
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Options may not be transferred other than by will or
by the laws of descent and distribution, and may be exercised during the
optionee’s lifetime only by the optionee or his or her legal
representatives.
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•
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Except as may otherwise be provided in the
applicable option contract, if the optionee’s relationship with the Company
as an employee or consultant is terminated for any reason (other than the death or
disability of the optionee), the option may be exercised, to the extent exercisable
at the time of termination of such relationship, within one year thereafter, but in
no event after the expiration of the term of the option.
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•
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The Company may withhold cash and/or shares of the
Company’s common stock having an aggregate value equal to the amount which we
determine is necessary to meet its obligations to withhold any federal, state
and/or local taxes or other amounts incurred by reason of the grant or exercise of
an option, its disposition or the disposition of shares acquired upon the exercise
of the option. Alternatively, the Company may require the optionee to pay us such
amount, in cash, promptly upon demand.
|
Through February 20, 2008, we have granted options to purchase 180,000
shares of our common stock under our 2007 Plan, none of which have been
exercised.
18
Non-Plan Stock Options
At various times since 1996, we have granted non-plan stock options to
purchase 1,205,000 shares of our common stock at a weighted exercise price of $2.97 per
share
Required Vote
Directors are elected by a majority of the votes cast at the Meeting. Votes
withheld in the election of directors and abstentions or broker non-votes, if any, will be
deemed as present for the purposes of determining the presence of a quorum at the Meeting.
Vote withheld will be counted against the election of a director, but abstentions or broker
non-votes, if any, will not be counted towards the election of any person as a director.
Brokers who hold shares of common stock as nominees will have discretionary authority to
vote such shares of common stock as nominees if they have not received voting instructions
from the beneficial owner by the tenth day before the meeting, provided that this proxy
statement has been transmitted to the beneficial holder at least fifteen (15) days prior to
the Meeting. In the event that any of the nominees should become unavailable before the
Meeting, it is intended that shares represented by the enclosed proxy will be voted for one
or more substitute nominees as may be nominated by the current Board of
Directors.
The Board of Directors unanimously recommends that stockholders vote
FOR
the election of each nominee listed in this
proxy statement.
19
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
The firm of Rachlin LLP audited our financial statements for the fiscal year
ended June 30, 2007 and has acted for us in such capacity since 2001. The audit committee
has appointed that firm to act as our independent registered public accounting firm for the
fiscal year ending June 30, 2008. The Board of Directors believes it is appropriate to
present to the Annual Meeting a resolution ratifying the appointment of Rachlin LLP as our
independent registered public accounting firm for the fiscal year ending June 30, 2008. A
representative of Rachlin LLP is not expected to be present at the Annual Meeting and thus
is not expected to be available to respond to questions or have the opportunity to make a
statement if he desires to do so.
Principal Accountant Fees and Services
Audit fees billed to us by Rachlin LLP for its audit of the our financial
statements and for its review of the financial statements included in the Company’s
Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission for fiscal
years 2007 and 2006 totaled approximately $154,000 and approximately $70,000,
respectively.
Fees billed and expected to be billed by Rachlin LLP for assurance and
related services performed by Rachlin LLP and reasonably related to the audit and review
services performed by Rachlin LLP and described above under the caption “Audit
Fees” for fiscal years 2007 and 2006 were approximately $154,000 and $70,000,
respectively.
Tax fees billed to the Company by Rachlin LLP for its tax returns for the
fiscal years 2007 and 2006 were approximately $3,600 and approximately $6,000,
respectively.
No other fees were billed to the Company by Rachlin LLP for all other
non-audit or tax services rendered to the Company for the fiscal years 2007 and 2006,
respectively.
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Audit Committee Pre-Approval Policies
|
The Audit Committee has adopted a procedure under which all fees charged by
Rachlin LLP must be pre-approved by the Audit Committee, subject to certain permitted
statutory de minimus exceptions.
20
Required Vote
The affirmative vote of a majority of the votes cast at the Meeting is
required to ratify the appointment of Rachlin LLP as the registered public accounting firm
of the Company for the fiscal year ending June 30, 2008. Abstentions or broker non-votes,
if any, will not be counted as votes “cast” with respect to this matter.
Brokers who hold shares of common stock as nominees will have discretionary authority to
vote such shares of common stock as nominees if they have not received voting instructions
from the beneficial owner by the tenth day before the meeting, provided that this proxy
statement has been transmitted to the beneficial holder at least fifteen (15) days prior to
the Annual Meeting.
|
The Board of Directors unanimously recommends that
stockholders vote
FOR
this Proposal.
|
21
MISCELLANEOUS
Proposals for 2008 Annual Meeting
Under Rule 14a-8(e) of the Securities Exchange Act of 1934, a stockholder
proposal intended for inclusion in next year’s proxy statement must be received by
the Company at its principal executive offices no later than October 31, 2008, which is 120
calendar days prior to the anniversary of the mailing date of this proxy statement, and
must be in compliance with applicable laws and regulations in order to be considered for
possible inclusion in the proxy statement and form of proxy for that meeting.
Rule 14a-4(c)(1) establishes a different deadline for submission of
stockholder proposals that are not intended to be included in the Company’s proxy
statement. Rule 14a-4(c)(1) relates to the discretionary voting authority retained by the
Company with respect to proxies. With respect to any stockholder proposal for next
year’s Annual Meeting submitted after January 14, 2009 (45 calendar days prior to the
anniversary of the mailing date of this proxy statement), the Company retains discretion to
vote proxies it receives as the Board of Directors sees fit. With respect to proposals
submitted before January 14. 2009, the Company retains discretion to vote proxies it
receives as the Board of Directors sees fit, only if (i) the Company includes in its proxy
statement advice on the nature of the proposal and how it intends to exercise its voting
discretion and (ii) the proponent does not issue a proxy statement with respect to the
proposal in compliance with Rule 14a-4(c)(2).
Solicitation of Proxies
We are bearing the cost of preparing, assembling, printing and mailing the
Notice of Annual Meeting, this Proxy Statement and proxies. We will also reimburse brokers
who are holders of record of our common stock for their reasonable out-of-pocket expenses
in forwarding proxies and proxy soliciting material to the beneficial owners of such
shares. In addition to the use of the mails, proxies may be solicited without extra
compensation by our directors, officers and employees by telephone, telecopy, telegraph,
email or personal interview.
Other Matters
Management does not intend to bring before the Annual Meeting for action any
matters other than those specifically referred to above and is not aware of any other
matters which are proposed to be presented by others. If any other matters or motions
should properly come before the Annual Meeting, the persons named in the proxy intend to
vote thereon in accordance with their judgment on such matters or motions, including any
matters or motions dealing with the conduct of the Annual Meeting.
Proxies
All stockholders are urged to fill in their choices with respect to the
matters to be voted upon, sign and promptly return the enclosed form of proxy.
22
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The SEC allows us to “incorporate by reference”
the information we file with them, which means that we can disclose important information
to you about us by referring you to those documents. The information incorporated by
reference is considered to be part of this Proxy Statement. We incorporate by reference in
this Proxy Statement our Annual Report on Form 10-K for the fiscal year ended June 30,
2007, including financial statements and reports thereon of Rachlin LLP, filed on September
28, 2007.
By Order of the Board of Directors,
Dawna Ferguson
Secretary
February
29, 2008
23
Appendix A
Silverstar Holdings, Ltd.
Amended and Restated Audit Committee Charter
ARTICLE I
PURPOSES
The purposes of the Audit Committee (the “Committee”) of the
Board of Directors (the “Board”) of Silverstar Holdings, Ltd. (the
“Company”) is to oversee the accounting and financial reporting processes of
the Company and the audits of the financial statements of the Company and to assist the
Board in fulfilling the Board’s oversight responsibilities with respect
to:
|
•
|
the integrity of the Company’s financial
statements;
|
|
•
|
the Company’s compliance with legal and regulatory
requirements;
|
|
•
|
the independent auditors’ qualifications and
independence; and
|
|
•
|
the performance of the independent auditors.
|
The Committee shall also have the responsibility for the Committee’s
report, made pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to be included in the Company’s annual proxy
statement.
ARTICLE II
COMPOSITION OF THE COMMITTEE
Section 1. Number
. The Committee shall consist
of no fewer than three members of the Board, as determined by the Board.
|
Section 2. Qualifications
. Each
Committee member shall have all of the following qualifications:
|
A. Each Committee member shall meet the independence criteria of the Nasdaq
Marketplace rules for audit committees and Rule 10A-3 of the Exchange Act, as amended,
modified or supplemented from time to time.
B. Each Committee member shall, at the time of his or her appointment,
satisfy all other requirements imposed by the securities exchange on which the
Company’s common stock is principally traded.
|
Section 3. Appointment and Removal.
The Board shall appoint Committee members
|
and appoint
a Committee Chairman from among those members. Each Committee member shall serve at the
pleasure of the Board for such term as the Board may decide or until such Committee member
is no longer a member of the Board.
ARTICLE III
DUTIES
OF THE COMMITTEE
The Committee is responsible for overseeing the Company’s financial
reporting process on behalf of the Board. The Company’s management is responsible for
the preparation, presentation and integrity of the Company’s financial statements and
for the appropriateness of the accounting and reporting policies that are used by the
Company. The independent auditors are responsible for auditing the Company’s
financial statements and for reviewing the Company’s interim financial statements.
The independent auditors are ultimately accountable to the Board and the Committee, as
representatives of the Company’s stockholders. As used in this Charter, the term
“independent auditor” means any independent auditor, including one constituting
a “registered public accounting firm” (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act of 2002), engaged for the purpose of preparing or issuing an audit
report or performing other audit review or attest services for the Company.
A-1
ARTICLE IV
RESPONSIBILITIES OF THE COMMITTEE
Section 1. Retain the Independent Auditors.
The
Committee shall directly (1) appoint, retain, terminate and determine the compensation of
and oversee the work of the independent auditors, (2) oversee the resolution of
disagreements between the Company’s management and the independent auditors, (3)
preapprove all audit services provided by the independent auditors, and (4) preapprove any
non-audit services with the independent auditors, subject to the de minimus exception
contained in Section 10A of the Exchange Act. The Committee may delegate the authority to
grant preapprovals and approvals required by Section 10A of the Exchange Act for services
provided by independent auditors to one or more independent members of the Committee,
subject to the delegated member or members reporting any such pre-approvals to the
Committee at its next scheduled meeting.
Section 2. Review and Discuss the Auditors’ Quality
Control.
The Committee shall, at least annually, receive from the
Company’s independent auditors (1) a summary of the results of the most recent
internal quality control review, or peer review, of the firm, (2) a summary of significant
inquiries or investigations by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by the firm,
and (3) a summary of any steps taken to deal with any such issues.
Section 3. Review and Discuss the Independence of the
Auditors.
In connection with the retention of the Company’s
independent auditors, the Committee shall, at least annually, review and discuss the
information provided by management and the independent auditors relating to the
independence of the audit firm, including, among other things, information related to the
non-audit services provided and expected to be provided by the auditors, rotation of lead
and concurring audit partners and restrictions on hiring of employees or partners of the
independent auditors. The Committee shall be responsible for (1) ensuring that the
independent auditors submit at least annually to the Committee a formal written statement
delineating all relationships between the auditors and the Company consistent with
applicable independence standards, (2) actively engaging in a dialogue with the auditors
with respect to any disclosed relationship or service that may impact the objectivity and
independence of the auditors, and (3) taking appropriate action in response to the
auditors’ report to satisfy itself of the auditors’ independence.
Section 4. Review and Discuss the Audit Plan.
The Committee shall review and discuss with the independent auditors the
plans for, and the scope of, the annual audit and other examinations, including the
adequacy of staffing and compensation.
Section 5. Review and Discuss Conduct of the Audit.
The Committee shall review and discuss with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, as well as any audit problems or difficulties and management’s
response, including (1) any restriction on audit scope or on access to requested
information, (2) any significant disagreements with management, and (3) significant issues
discussed with the independent auditors’ national office. The Committee shall seek to
resolve all disagreements between management and the independent auditors regarding
financial reporting.
Section 6. Review and Discuss Financial Statements and
Disclosures.
The Committee shall review and discuss with
appropriate officers of the Company and the independent auditors the annual audited and
quarterly financial statements of the Company, including the Company’s disclosures
under “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and the disclosures regarding internal controls and other matters
required to be reported to the Committee by Section 302 of the Sarbanes-Oxley Act of 2002
and all rules promulgated thereunder by the Securities and Exchange Commission
(“SEC”).
A-2
Section 7. Review and Discuss the Systems of Internal Accounting
Controls.
The Committee shall review and discuss with the
independent auditors the adequacy of the Company’s internal accounting controls, the
Company’s financial, auditing and accounting organizations and personnel, and the
Company’s policies and compliance procedures with respect to business practices which
shall include the disclosures regarding internal controls and matters required to be
reported to the Committee by Section 302 of the Sarbanes-Oxley Act of 2002 and all rules
promulgated thereunder by the SEC.
Section 8. Review and Discuss the Audit Results.
The Committee shall review and discuss with the independent auditors (1) the
report of their annual audit, or proposed report of their annual audit, (2) the
accompanying management letter, if any, (3) the reports of their reviews of the
Company’s interim financial statements conducted in accordance with Statement on
Auditing Standards No. 100, and (4) the reports of the results of such other examinations
outside of the course of the independent auditors’ normal audit procedures that the
independent auditors may from time to time undertake. The foregoing shall include the
reports required by Section 204 of the Sarbanes-Oxley Act of 2002 and, as appropriate, (1)
a review of major issues regarding (a) accounting principles and financial statement
presentations, including any significant changes in the Company’s selection or
application of accounting principles and (b) the adequacy of the Company’s internal
controls and any special audit steps adopted in light of material control deficiencies, (2)
a review of analyses prepared by management or the independent auditors setting forth
significant financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the effects of alternative
generally accepted accounting principles (“GAAP”) on the financial statements,
and (3) a review of the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the Company.
Section 9. Discuss Risk Management Policies.
The Committee shall discuss policies with respect to risk assessment and
risk management to assess and manage the Company’s exposure to risk, including the
Company’s major financial risk exposures and the steps management has taken to
monitor and control these exposures.
Section 10. Establish Procedures for Complaints
Regarding Financial Statements
or Accounting Policies.
The Committee shall establish procedures for (1) the receipt, retention, and
treatment of complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and (2) the confidential, anonymous submission by employees
of the Company of concerns regarding questionable accounting or auditing matters. The
Committee shall discuss with management and the independent auditors any correspondence
with regulators or governmental agencies and any complaints or concerns regarding the
Company’s financial statements or accounting policies.
Section 11. Review and Discuss Other Matters.
The Committee shall review and discuss with management or the independent
auditors such other matters that relate to the accounting, auditing and financial reporting
practices and procedures of the Company as the Committee may, in its own discretion, deem
desirable in connection with the review functions described above.
Section 12. Make Board Reports.
The Committee
shall report its activities to the Board in such manner and at such times, but at least
quarterly, as the Committee or the Board deems appropriate. Such report shall include the
Committee’s conclusions with respect to its evaluation of the independent
auditors.
Section 13. Other Duties.
The Committee shall
perform any other duties or responsibilities delegated to the Committee by the Board from
time to time.
A-3
ARTICLE V
MEETINGS OF THE
COMMITTEE
The Committee shall meet in person or telephonically at least quarterly, or
more frequently as it may determine necessary, to comply with its responsibilities as set
forth herein. The Committee Chairman shall, in consultation with the other members of the
Committee, the Company’s independent auditors and the appropriate officers of the
Company, be responsible for calling meetings of the Committee, establishing an agenda
therefor and supervising the conduct thereof. Any Committee member may submit items to be
included on the agenda. Committee members may also raise subjects that are not on the
agenda at any meeting. The Committee Chairman or a majority of the Committee members may
call a meeting of the Committee at any time. A majority of the number of Committee members
shall constitute a quorum for conducting business at a meeting of the Committee. The act of
a majority of Committee members present at a Committee meeting at which a quorum is in
attendance shall be the act of the Committee, unless a greater number is required by law,
the Company’s certificate of incorporation or bylaws, or this Charter.
The Committee may request any officer or employee of the Company or the
Company’s outside legal counsel or independent auditors to attend a meeting of the
Committee or to meet with any member, consultant or retained expert of the Committee. The
Committee shall meet with the Company’s management and the independent auditors
periodically in separate private sessions to discuss any matter that the Committee believes
should be discussed privately.
ARTICLE VI
RESOURCES AND AUTHORITY OF THE COMMITTEE
The Committee shall have the resources and authority appropriate, in the
Committee’s discretion, to discharge its responsibilities and carry out its duties as
required by law, including access to all books, records, facilities and personnel of the
Company and the authority to engage outside auditors for special audits, reviews and other
procedures and to engage independent counsel and other advisors, experts or consultants. In
addition, by adoption of this Charter, the Board authorizes funding for the Committee
appropriate, in the Committee’s discretion, for the discharge of the
Committee’s functions and responsibilities.
ARTICLE VII
AUDIT
COMMITTEE REPORT
|
The Committee, with the assistance of management and advice
from the independent
|
auditors
and outside legal counsel, shall prepare the audit committee report to be included in the
Company’s proxy statement relating to the Company’s annual meeting of
stockholders.
ARTICLE VIII
REVIEW
OF CHARTER
The Committee shall periodically conduct a review and reassessment of the
adequacy of this Charter, and recommend any changes to the Board. The Committee shall
conduct this charter review and reassessment in such manner as the Committee, in its
business judgment, deems appropriate.
A-4
Appendix B
SILVERSTAR HOLDINGS, LTD.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE CHARTER
Purpose
The function of the Nominating/Corporate Governance Committee (the
“Committee”) is to identify individuals qualified to become board members and
to select, or to recommend that the Board of Directors select, the director nominees for
the next annual meeting of stockholders, to oversee the selection and composition of
committees of the Board of Directors, to oversee management continuity planning processes
and to develop and implement the Company’s Corporate Governance
Guidelines.
Composition
The Committee shall consist of two or more members of the Board of
Directors, each of whom is determined by the Board of Directors to be
“independent” in accordance with the rules of the NASDAQ Stock Market and the
SEC.
Appointment and Removal
The members of the Committee shall be appointed by the Board of Directors
and shall serve until such member’s successor is duly elected and qualified or until
such member’s earlier resignation or removal. The members of the Committee may be
removed, with or without cause, by a majority vote of the Board of Directors.
Chairperson
Unless a Chairperson is elected by the full Board of Directors, the members
of the Committee shall designate a Chairperson by majority vote of the full Committee
membership. The Chairperson will chair all regular sessions of the Committee and set the
agendas for Committee meetings.
Delegation to Subcommittees
In fulfilling its responsibilities, the Committee shall be entitled to
delegate any or all of its responsibilities to a subcommittee of the Committee.
Meetings
The Committee shall meet as frequently as circumstances dictate. The
Chairman of the Board or any member of the Committee may call meetings of the Committee.
The Committee may invite to its meetings any director, member of management of the Company,
and such other persons as it deems appropriate in order to carry out its
responsibilities.
Duties
and Responsibilities
|
The Committee shall have the following duties and
responsibilities:
|
|
•
|
Establish criteria for the selection of new directors to
serve on the Board of Directors, taking into account at a minimum all
applicable laws, rules, regulations and listing standards, a potential
candidate’s experience, areas of expertise and other factors relative
to the overall composition of the Board of Directors.
|
B-1
|
•
|
Identify individuals believed to be qualified as candidates
to serve on the Board of Directors and select, or recommend that a majority
of independent members of the Board of Directors select, the candidates for
all directorships to be filled by the Board of Directors or by the
shareholders at an annual or special meeting.
|
|
•
|
Monitor the orientation and continuing education program for
directors.
|
|
•
|
Review the Board of Director’s committee structure and
recommend to the Board of Directors to serve on the committees of the
Board, giving consideration to the criteria for service on each committee
as set forth in the charter for such committee, as well as to any other
factors the Committee deems relevant, and when appropriate, make
recommendations regarding the removal of any member of any
committee.
|
|
•
|
Recommend members of the Board of Directors to serve as the
Chair of the committees of the Board of Directors.
|
|
•
|
Oversee and approve the management continuity planning
process. Annually review and evaluate the succession plans relating to the
CEO and other executive officer positions and make recommendations to the
Board of Directors with respect to the selection of individuals to occupy
these positions.
|
|
•
|
Develop and recommend to the Board of Directors for its
approval an annual self-evaluation process of the Board of Directors and
its committees. Based on the results of the annual evaluation, as well as
on any other matters the Committee shall deem relevant, the committee shall
make such recommendations to the Board of Directors regarding board
processes and other items deemed appropriate to improve or ensure the
effective functioning of the Board of Directors as the Committee shall from
time to time deem advisable or appropriate.
|
|
•
|
Develop and recommend to the Board of Directors for its
approval a set of Corporate Governance Guidelines. The Committee shall
review the Guidelines on an annual basis, or more frequently if
appropriate, and recommend changes as necessary.
|
|
•
|
Perform any other activities consistent with this Charter,
the Company’s Bylaws and governing law as the Committee or the Board
of Directors deem appropriate.
|
Advisors
The Committee shall have the authority to retain a search firm to assist in
identifying director candidates, and retain outside counsel and other advisors as the
Committee may deem appropriate in its sole discretion. The Committee shall have sole
authority to approve related fees and retention terms.
Reports
and Performance Review
The Committee shall report its actions and any recommendations to the Board
of Directors after each Committee meeting and shall conduct and present to the Board of
Directors an annual performance evaluation of the Committee. The Committee shall review at
least annually the adequacy of this Charter and recommend any proposed changes to the Board
of Directors for approval.
Disclosure of Charter
This
Charter will be made available in accordance with applicable rules and
regulations.
B-2
SILVERSTAR HOLDINGS, LTD.
ANNUAL MEETING OF STOCKHOLDERS
This
Proxy is solicited on behalf of the Board of Directors
The
undersigned holder of common stock of Silverstar Holdings, Ltd. (the
“
Company
”) hereby revokes
all previous proxies, acknowledges receipt of the Notice of the Stockholders’ Meeting
to be held on March 27, 2008, and hereby appoints Clive Kabatznik and Lawrence R. Litowitz,
and each of them, as proxies of the undersigned, with full power of substitution, for the
undersigned and in the name, place and stead of the undersigned, to vote as designated on
the reverse side of this proxy, and otherwise represent all of the shares of the
undersigned at said meeting and at any adjournments or postponements thereof with the same
effect as if the undersigned were present and voting the shares.
[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
The
Board of Directors recommends a vote
FOR
all listed nominees and
FOR
Proposal 2
PLEASE MARK YOUR CHOICES LIKE THIS IN BLUE OR BLACK
INK
|
x
|
(1)
|
Election of directors
|
|
o
|
FOR ALL NOMINEES
|
NOMINEES:
|
o
|
Michael Levy
|
|
o
|
WITHHOLD AUTHORITY
|
o
|
Cornelius J. Roodt
|
|
FOR ALL NOMINEES
|
o
|
Edward Roffman
|
(see instructions below)
|
*INSTRUCTION:
|
To withhold authority for any individual nominee(s), mark
“FOR ALL EXCEPT” and fill in the circle next to each nominee
you wish to withhold, as shown here:
o
|
(2) Ratification of the appointment
of Rachlin LLC, as independent registered public accounting firm for the Company for the
fiscal year ending June 30, 2008.
FOR
|
|
AGAINST
|
|
ABSTAIN
|
o
|
|
o
|
|
o
|
|
|
|
|
|
THE
SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED
FOR
EACH OF THE ABOVE NOMINEES
AND
FOR
PROPOSAL 2, AND IN ACCORDANCE
WITH THE DISCRETION OF THE PERSONS APPOINTED AS PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING. IN CASE ANY NOMINEE SHOULD BECOME UNAVAILABLE FOR
ELECTION TO THE BOARD OF DIRECTORS FOR ANY REASON, THE PERSONS APPOINTED AS PROXIES SHALL
HAVE DISCRETIONARY AUTHORITY TO VOTE THIS PROXY FOR ONE OR MORE ALTERNATIVE NOMINEES WHO
WILL BE DESIGNATED BY THE THEN EXISTING BOARD OF DIRECTORS.
TO
ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK YOUR
B-1
CHOICE
ON ALL PROPOSALS, AND SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
_____________________________
_____________________________
To
change the address on your account, please check the box at right and
indicate
your new address in the address space above. Please note that
changes
to registered name(s) on the account may not be submitted via
__________________ Date: ______________ _____________________ Date:
______________
Note:
Please sign exactly as your name or names appear on this Proxy. Where shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer is a corporation, please
sign full corporate name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
B-2
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