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 [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
toss.240.14a-11(c) orss.240.14a-12
SILVERSTAR HOLDINGS, LTD.
--------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined): 4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify vthe filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
SILVERSTAR HOLDINGS, LTD.
CLARENDON HOUSE, CHURCH STREET
HAMILTON HM II, BERMUDA
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 18, 2001
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders
(the "Meeting") of Silverstar Holdings., Ltd. (the "Company") will be held at
the offices of Jenkens & Gilchrist Parker Chapin LLP, The Chrysler Building, 405
Lexington Avenue, Ninth Floor, New York, New York on Tuesday, December 18, 2001,
at 11:30 a.m., Eastern Standard Time, to consider and act upon the following
matters:
1. The election of six 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;
2. To approve the issuance of the Company's common stock pursuant to
an Asset Purchase Agreement dated as of September 24, 2001 (the
"Purchase Agreement") by and among the Company, Student Sports,
Inc., a California corporation, and Student Sports, Inc., a
Delaware corporation; and
3. The transaction of such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on November 16, 2001 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
10 days prior to the meeting at Jenkens & Gilchrist Parker Chapin LLP, The
Chrysler Building, 405 Lexington Avenue, Ninth Floor, New York, New York 10174.
By Order of the Board of Directors,
Dawna Ferguson,
Secretary
Hamilton, Bermuda
November 20, 2001
-------------------------------------------------------------------------------
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.
-------------------------------------------------------------------------------
SILVERSTAR HOLDINGS, LTD
CLARENDON HOUSE, CHURCH STREET
HAMILTON HM II, BERMUDA
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
December 18, 2001
This Proxy Statement is furnished to the holders of our common stock,
par value $.01 per share, and to the holders of our Class B common stock, par
value $.01 per share in connection with the solicitation of proxies by our Board
of Directors for use at our Annual Meeting of Stockholders to be held on
Tuesday, December 18, 2001, at 11:30 a.m., Eastern Standard Time, at the offices
of Jenkens & Gilchrist Parker Chapin LLP, The Chrysler Building, 405 Lexington
Avenue, Ninth Floor, New York, New York, and at any adjournment or postponement
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 November 20, 2001.
The close of business on November 16, 2001 has been fixed by the 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 adjournment or
postponement of such meeting. As of the record date, there were [9,045,964]
shares of our common stock outstanding and 926,025 shares of our Class B common
stock outstanding, which are the only classes of our voting securities issued
and outstanding. Each share of our common stock outstanding on the record date
will be entitled to one vote on all matters to come before the Annual Meeting.
Each share of our Class B common stock outstanding on the record date will be
entitled to five votes on all matters to come before the annual Meeting.
Cumulative voting is not permitted. 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 abstentions or broker nonvotes 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 to elect each director (Proposal
1). The affirmative vote of a majority of the votes cast, in person or by proxy,
but excluding the 900,000 shares of Common Stock issued pursuant to the Purchase
Agreement, will be required to approve the issuance of the Company's common
stock pursuant to the Purchase Agreement (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.
Unless otherwise specified, all proxies received will be voted for the
election of all nominees named herein to serve as directors and in favor of each
of 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.
1
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 31, 2001, certain information
as to the beneficial ownership of the our common stock by:
o each person known by us to own more than five percent (5%) of our
outstanding shares;
o each of our directors;
o each of our executive officers named in the Summary Compensation
Table under "Executive Compensation"; and
o all of our directors and executive officers as a group.
Amount and Nature of Beneficial
-------------------------------
Ownership (1)
-------------
Class B Percentage Percentage of
-------- ---------- -------------
Common Common of Voting
Name and Address of ------ ------ -- ------
Beneficial Shareholder Stock Stock(2) Ownership Power
---------------------- ------ --------- --------- -----
(1)(3) (1)(3)
------ ------
Michael Levy 106,666(4) 736,589(5) 10.4% 32%
9511 West River Street
Shiller Park, IL 60176
Clive Kabatznik 608,332(6) 190,000 9.9% 13.1%
6100 Glades Road
Suite 305
Boca Raton, FL 33434
Cornelius J. Roodt 198,333(7) 0 2.4% 1.7%
P.O. Box 4001
Kempton Park
South Africa
American Stock Transfer 354,334(8) 166,452(8) 6.4% 10%
& Trust Company
6201 15th Avenue
Brooklyn, New York 11219
David BenDaniel 20,000(9) 0 * *
6100 Glades Road
Suite 305
Boca Raton, Florida 33434
Chris Matty 20,000(9) 0 * *
6100 Glades Road
Suite 305
Boca Raton, Florida 33434
All executive officers and 1,059,997(10) 1,093,041 29.1% 56.8%
directors as a group (5
persons)
* Less than 1 %.
2
(1) Beneficial ownership is calculated in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934. Shares subject to stock options, for
purposes of this table, are considered beneficially owned only to the
extent currently exercisable or exercisable within 60 days after August
31, 20001.
(2) Except as otherwise indicated, each of the parties listed has sole voting
and investment power with respect to all shares of Class B common stock
indicated above.
(3) For the purposes of this calculation, our common stock and our Class B
common stock are treated as a single class of common stock. Our Class B
common stock is entitled to five votes per share, whereas our common
stock is entitled to one vote per share.
(4) Includes 106,666 shares of our common stock issuable upon exercise of
options that are immediately exercisable.
(5) Includes (i) 570,137 shares of our Class B common stock and (ii) 166,452
shares of our Class B common stock issued to the American Stock Transfer
& Trust Company pursuant to the terms of an escrow agreement, which
shares correspond to a like number of shares of First South African
Holdings (Pty.) Ltd. Class B stock. American Stock Transfer & Trust
Company has granted to Mr. Levy a proxy to vote each of such shares of
our Class B common stock.
(6) Includes 608,332 shares of our common stock issuable upon exercise of
options that are immediately exercisable.
(7) Includes 198,333 shares of our common stock issuable upon exercise of
options that are immediately exercisable.
(8) Based solely upon information contained in a Schedule 13G, Amendment No.
1, dated December 31, 2000 filed with the Securities and Exchange
Commission. All shares are held as escrow agent pursuant to various
escrow agreements. American Stock Transfer & Trust Company holds a proxy
to vote the shares of common stock. Michael Levy holds a proxy to vote
the shares of Class B Common Stock.
(9) Includes 20,000 shares of our common stock issuable upon the exercise of
options that are immediately exercisable.
(10) Represents 1,059,997 shares issuable upon exercise of options that are
immediately exercisable.
3
-------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
-------------------------------
At the Annual Meeting, our stockholders will elect six 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 Messrs. Levy, Kabatznik, Roodt,
Stanley Castleton, Joseph Weil and BenDaniel to serve as directors. Messrs.
Levy, Kabatznik, Roodt and BenDaniel currently serve on our Board of Directors
and their terms expire at the Annual Meeting.
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 a vacancy
among the original nominees occurs prior to the Annual Meeting, the proxies will
be voted for a substitute nominee or nominees, if any are named by our Board of
Directors, and for the remaining nominees.
INFORMATION ABOUT NOMINEES
The following table sets forth information regarding the nominees:
NAME AGE DIRECTOR SINCE POSITIONS WITH THE COMPANY
---- --- -------------- --------------------------
Michael Levy 55 1995 Chairman of the Board of Directors
Clive Kabatznik 44 1995 Vice Chairman of the Board of
Directors, Chief Executive Officer,
President, Chief Financial Officer and
Director
Cornelius J. Roodt 42 1996 Director
Stanley Castelton 54 -- Director Nominee
Joseph Weil 46 -- Director Nominee
David BenDaniel, Ph.D. 69 2000 Director
Ph.D.
All directors hold office until their respective successors are
elected, or until death, resignation or removal. Officers hold office until the
meeting of the Board of Directors following each Annual Meeting of Stockholders
and until their successors have been chosen and qualified.
MICHAEL LEVY is our co-founder and has served as Chairman of our Board
of Directors since our inception. 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 KABATZNIK is our co-founder and has served as a director and our
President since inception and as our Vice Chairman, Chief Executive Officer and
Chief Financial Officer since October 1995. 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.
4
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 Holdings (Pty.) Ltd., in
July 1996. Mr. Roodt was 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 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.
STANLEY CASTLETON is, and for the past five years has been, the
President of DDRM, Inc., the managing general partner and asset manager of the
Hilton Anaheim, and he is currently also the Managing Member of DDRM Greatplace
LLC, a real estate development company.
JOSEPH WEIL has served as the President and Chief Executive Officer of
Joseph Weil & Sons, Inc. since 1985. Joseph Weil & Sons is an independent
wholesale distributor of paper products, packaging supplies and equipment,
sanitary products, janitorial supplies and equipment, as well as food service
products and office equipment. He also serves as an active member of many
business associations including Afflink Worldwide Trade Group which he serves as
Chairman of the Board of Directors. Since 1996 he has also served as an
Executive Board Member of the Greater Illinois chapter of the National Multiple
Sclerosis Society.
DAVID BENDANIEL, PH.D. has been a professor at Cornell University
since 1985 and is currently the Berens Professor of Entrepreneurship at the
Johnson Graduate School of Management at Cornell University. Dr. BenDaniel is
the co-editor of International M&A, Joint Ventures and Beyond - Doing the Deal,
printed in 1998. Dr. BenDaniel holds a B.A. and M.S. in Physics from the
University of Pennsylvania and a Ph.D. in Engineering from the Massachusetts
Institute of Technology.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors is responsible for our overall management.
During the fiscal year ended June 30, 2001, our Board of Directors held three
(3) meetings and acted by unanimous written consent _____ (_) times. Each
incumbent director, except for Chris Matty, attended at least 75% of all
meetings of the Board and committees on which the person served which were held
during the year.
Our Board of Directors has an audit committee and a compensation
committee. The audit committee is composed of Cornelius Roodt, David BenDaniel
and Michael Levy. The audit committee is responsible for recommending annually
to the Board of Directors the independent auditors to be retained, reviewing
with the independent auditors the scope and results of the audit engagement and
establishing and monitoring our financial policies and control procedures. The
audit committee met once during fiscal year ended June 30, 2001.
The compensation committee is currently composed of Michael Levy and
Chris Matty. These persons are intended to be non-employee directors within the
meaning of Rule 16b-3(b)(3)(i) promulgated under the Securities Exchange Act of
1934. 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. The Compensation
Committee did not meet during fiscal year ended June 30, 2001.
COMPENSATION OF DIRECTORS AND NOMINEES
Except for Mr. Levy, our directors do not receive fixed compensation
for their services as directors other than options to purchase 10,000 shares of
our common stock granted to each non-employee director under our 1995 Stock
Option Plan. Messrs. Castleton and Weil, however, are each being granted options
to purchase 15,000 share of our common stock under our 1995 Stock Option Plan.
Mr. Levy receives an annual consulting fee of $60,000 and options to purchase
10,000 shares of our common stock for every year of service as a director. All
directors will be reimbursed for their reasonable out-of-pocket expenses
incurred in connection with their duties.
5
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation we paid or accrued to our Chief Executive Officer during the fiscal
years ended June 30, 1999, June 30, 2000 and June 30, 2001. Apart from Mr.
Kabatznik, whose annual salary is $315,000, none of our executive officers or
any of our subsidiaries received compensation in excess of $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
FISCAL
NAME AND YEAR SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES
PRINCIPAL POSITION ENDED COMPENSATION STOCK AWARDS UNDERLYING
JUNE 30, STOCK OPTIONS
------------------ -------- ------- ------------ ------------ ------------ -----------
$ $
Clive Kabatznik, 2001 303,750 0 --- --- 5,000
President and Chief 2000 230,000 0 255,000
Executive Officer 1999 180,000 0 5,000
OPTIONS GRANTED IN FISCAL 2001
The following table sets forth the details of options to purchase common
stock we granted to our executive officers during fiscal year ended June 30,
2001, including the potential realized value over the 5 year term of the option
based on assumed rates of stock appreciation of 5% and 10%, compounded annually.
These assumed rates of appreciation comply with the rules of the Securities and
Exchange Commission and do not represent our estimate of future stock price.
Actual gains, if any, on stock option exercises will be dependent on the future
performance of our common stock. Each option is immediately exercisable.
Options Granted
---------------
Potential Realizable
Number of Percent of Total Per Value at Assumed Annual
Name Securities to Share Rate of Stock Price
Underlying Employees in Exercise Expiration Date Appreciation
Options Fiscal Year Price For Option Term
-------------------------- ------------ ----------------- ---------- ---------------- ---------------------------
5% 10%
--------- ------------
Clive Kabatznik 5,000 7.00% $.75 December 1, $1,036.06 $2,239.40
2005
6
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
During the fiscal year ended June 30, 2001, no options were exercised
by our executive officers. The following table sets forth the number of shares
of our common stock underlying unexercised stock options granted by us to our
executive officers and the value of those options at June 30, 2001. The value of
each option is based on the positive difference, if any, of the closing bid
price for our common stock on the Nasdaq National Market on June 29, 2001, or
$0.80, over the exercise price of the option.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN THE MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL YEAR-END
FISCAL YEAR-END
------------------------------------ --------------------------------------
NAME OF EXECUTIVE OFFICER EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------- ----------------- ------------------ ---------------- ---------------------
Clive Kabatznik 652,249 83,333 $300 $0
EMPLOYMENT AGREEMENTS
On April 12, 2000, the Company's Board of Directors approved an Amended and
Restated 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 February 1, 2000 and continuing through and until January 31,
2005. As compensation for his services, Mr. Kabatznik will receive an annual
base salary of $300,000 (with five percent increases each year), and an annual
bonus of five percent of net realized capital gains upon the sale, liquidation
or distribution by the Company of any Portfolio Company (as defined in the
Employment Agreement). A Portfolio Company does not include any of the South
African entities currently owned by the Company. In the event of a Change in
Control (as defined in the Employment Agreement), Mr. Kabatznik may also be
entitled to a payment of five percent of any net unrealized capital gains on any
Portfolio Company, which gains may, at the option of the Company, be paid in
cash, stock of the Portfolio Company or any combination of the foregoing.
On November 30, 2000, Fantasy Sports Inc. entered into Employment Agreement
with Gregory S. Liegey (the "Employment Agreement"). Pursuant to the Employment
Agreement, Mr. Liegey will serve as the Chief Executive Officer, of Fantasy
Sports Inc. beginning as of November 30, 2000 and continuing through and until
November 30, 2003. As compensation for his services, Mr. Liegey will receive an
annual base salary of $100,000 with increases at the discretion of the board of
directors of Fantasy Sports Inc. In addition, Mr. Liegey received a three-year
option to acquire 5% of the shares of Fantasy Sports, Inc. outstanding as of
November 16, 2000, at a price equal to that paid by Silverstar Holdings upon
acquisition of the assets of Fantasy Sports Inc. A similarly priced performance
based three-year option to acquire a further 2.5% of the outstanding shares of
Fantasy Sports Inc. as of November 16, 2000 was also issued to Mr. Liegey. This
performance based option will vest on the earlier of Fantasy Sports Inc.
achieving an aggregate EBITDA of $4 million for calendar years 2001 and 2002 or
an aggregate EBITDA of $9 million for calendar years 2001, 2002 and 2003.
STOCK OPTION PLAN
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:
o 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
7
o 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 options 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 for 10,000 shares of our common stock. In addition, 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. Each
employee director is automatically granted an option for 5,000 shares of our
common stock. 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 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.
Through September 28, 2001, we have granted options to purchase 741,666
shares of our common stock under our 1995 Stock Option Plan, 110,000 of which
have been exercised.
NON-PLAN STOCK OPTIONS
We have granted non-plan stock options to purchase 1,100,000 shares of our
common stock, 500,000 of which were granted at an exercise price of $4.75 per
share and 600,000 of which were granted at $4.06 per share. Options with respect
to 100,000 shares of our common stock have been exercised pursuant to the
foregoing non-plan stock options.
PERFORMANCE GRAPH
The following graph compares the cumulative return to holders of our common
stock for the period commencing January 1, 1997 and ending September 30, 2001
with the Nasdaq Index and the Standard & Poor's Conglomerate Index as a peer
group index for the same period. The comparison assumes $100 was
8
invested on January 1, 1997 in our common stock and in each of the comparison
groups. We have paid no dividends to shareholders to date.
Jan-96 Mar-96 Jun-96 Sep-96 Dec-96 Mar-97 Jun-97 Sep-97 Dec-97
SSTR Stock Price 5.00 3.13 5.75 6.00 4.00 5.38 8.75 8.75 6.31
Nasdaq Composite Index 1059.79 1101.38 1185.02 1226.91 1291.03 1221.70 1442.07 1685.69 1570.35
S@P Leisure Index 198.71 209.95 232.7 235.25 243.73 282.23 301.65 330.43 274.44
Jan-96 Mar-96 Jun-96 Sep-96 Dec-96 Mar-97 Jun-97 Sep-97 Dec-97
SSTR Stock Price 100 62.5 115 120 100 134.375 218.75 218.75 157.8125
Nasdaq Composite Index 100.00 103.92 111.82 115.77 121.82 115.28 136.07 159.06 148.17
S@P Leisure Index 100 105.6565 117.1053 118.3886 122.6561 142.0311 151.8041 166.2876 138.1108
Mar-98 Jun-98 Sep-98 Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00
SSTR Stock Price 7.56 4.19 0.94 0.938 2.188 4.813 3.94 12.50 9.00
Nasdaq Composite Index 1835.68 1894.74 1693.84 2192.69 2461.41 2686.12 2746.16 4069.3 4572.8
S@P Leisure Index 306.46 255.4 173.8 185.27 225.22 255.25 190.71 183.12 172.76
Mar-98 Jun-98 Sep-98 Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00
SSTR Stock Price 189.0625 104.7 23.45 23.45 54.7 120.325 98.45 312.5 225
Nasdaq Composite Index 173.21 178.78 159.83 206.90 232.25 253.46 259.12 383.97 431.48
S@P Leisure Index 154.2247 128.529 87.46414 93.23637 113.341 128.4535 95.97403 92.154 86.941
Jun-00 Sep-00 Dec-00 Mar-01 Jun-01
SSTR Stock Price 3.25 1.00 0.75 0.875 0.8
Nasdaq Composite Index 3966.1 3672.8 2470.5 1840.3 2160.5
S@P Leisure Index 175.24 225.87 186.81 183.12 226.78
Jun-00 Sep-00 Dec-00 Mar-01 Jun-01
SSTR Stock Price 81.25 25 18.75 21.875 20
Nasdaq Composite Index 374.23 346.56 233.11 173.64 203.86
S@P Leisure Index 88.1888 113.67 94.011 92.154 114.13
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocks or insider participation with any of our executive
directors or with any member of our compensation committee.
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 auditors, Rachlin Cohen & Holtz LLP ("RCH") have
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. RCH, the Audit Committee and management have discussed
matters such as the consistency, clarity and completeness of accounting plocies
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.
RCH has discussed with the Audit Committee and has disclosed to the Audit
Committee, in writing, all relationships between RCH 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, RCH 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
David BenDaniel
Cornelius Roodt
AUDIT FEES
Audit Fees billed to the Company by Rachlin Cohn & Holtz LLP for its audit
of the Company's financial statements for the year ended June 30, 2001 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 that
year totaled $107,540.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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, 2001 were timely made.
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PROPOSAL 2
TO APPROVE THE ISSUANCE OF THE COMPANY'S COMMON STOCK PURSUANT TO AN ASSET
PURCHASE AGREEMENT DATED SEPTEMBER 24, 2001
NASDAQ NATIONAL MARKET REQUIREMENT
Silverstar's common stock is listed on the Nasdaq National Market (the
"NNM") operated by Nasdaq. Nasdaq has established rules of corporate governance
which must be followed by all issuers whose securities are listed on the NNM.
Pursuant to these rules, Silverstar is required to obtain shareholder approval
prior to the issuance of securities in connection with the acquisition of the
stock or assets of another company involving the sale or issuance by Silverstar
of Common Stock (or securities convertible into or exercisable for Common Stock)
equal to or in excess of 20% or more of either the voting power, or the number
of shares of Common Stock, outstanding before the issuance.
PURPOSE OF THIS PROPOSAL
On September 24, 2001, the Company acquired, through a wholly-owned
subsidiary, substantially all of the assets of Student Sports, Inc. The
acquisition was effected pursuant to an Asset Purchase Agreement (the "Purchase
Agreement"), dated September 24, 2001 (the "Closing Date") by and among the
Company, Student Sports, Inc., a California corporation ("Seller"), the
Shareholders (as defined in the Purchase Agreement) and Student Sports Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company. As partial
payment for the Seller's assets, under the terms of the Purchase Agreement,
Silverstar issued 900,000 shares of its common stock to the Seller on the
Closing Date. The Purchase Agreement also requires that, to complete payment for
the Seller's assets, Silverstar issue between 500,000 and 1,500,000 shares of
its common stock to the Seller on March 31, 2004, depending on the market price
of Silverstar's common stock on that date. Therefore, Silverstar could
potentially issue at total of 2,400,000 shares in connection with the Purchase
Agreement.
On the Closing Date, Silverstar had 8,145,964 shares of Common Stock issued
and outstanding, 20% of which is 1,629,193 shares. Silverstar, therefore, may be
required to issue an aggregate number of shares in connection with the Purchase
Agreement that exceeds 20% of the number of shares of its common stock
outstanding on the Closing Date.
In view of the requirements of the NNM, Silverstar is requesting that its
stockholders approve the issuance by Silverstar of that number of shares as may
be necessary to allow Silverstar to comply with its obligations to issue Common
Stock pursuant to the Purchase Agreement in March 2004.
CONSEQUENCES OF THIS PROPOSAL
Should Silverstar's stockholders fail to approve this second proposal,
Silverstar may be unable to issue shares of Common Stock in complete fulfillment
of its deferred payment obligations under the Purchase Agreement. In addition to
the 900,000 shares issued on the Closing Date, if stockholders fail to approve
this proposal 2, under the NNM rules Silverstar would only be authorized to
issue an additional 729,192 shares of its common stock to the Seller. Under the
terms of the Purchase Agreement, if Silverstar is unable to fulfill its
obligations by issuing Common Stock, Silverstar will be required to make a cash
payment to the Seller of between $364,596 and $770,807, the potential market
value of the Common Stock Silverstar would otherwise have been authorized issue
to the Seller had Silverstar's stockholders approved this proposal.
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Should Silvestar's stockholders approve this proposal, than Silverstar
would be able to fulfill its potential obligations under the Purchase Agreement
by issuing between 500,000 and 1,500,000 shares of Common Stock to the Seller on
March 31, 2004.
VOTE REQUIRED
A vote of the holders of a majority of the voting power issued and
outstanding Common Stock of the Company excluding the 900,000 shares of Common
Stock issued pursuant to the Purchase Agreement, present in person or
represented by proxy at the Annual Meeting and entitled to vote at the Annual
Meeting, is required to approve the issuance of Common Stock pursuant to the
Purchase Agreement.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
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MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 2002 Annual
Meeting of Stockholders must be received by us not later than August 20, 2002
for inclusion in our proxy statement and form of proxy for that meeting.
SOLICITATION OF PROXIES
We are bearing the cost of preparing, assembling 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
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 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.
Our 2001 Annual Report, including financial statements and reports
thereon of Rachlin, Cohen & Holtz LLP and PricewaterhouseCoopers Inc,
accompanies this Proxy Statement but is not incorporated in and is not to be
deemed a part of this Proxy Statement.
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.
By Order of the Board of Directors,
Dawna Ferguson
Secretary
November 20, 2001
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