Exhibit 4.04
NONQUALIFIED STOCK OPTION CONTRACT
THIS NONQUALIFIED STOCK OPTION CONTRACT entered into as of
July 1, 2004 (the "Contract") between Silverstar Holdings, Ltd., a Bermuda
corporation (the "Company"), and Xxxxxx Xxxxxx ("Optionee").
1. The Company, subject to the terms and conditions set forth herein,
hereby grants to the Optionee an option to purchase an aggregate of
180,000 shares of common stock, par value $0.01, of the Company (the
"Common Stock") at an exercise price of $0.81 per share (the "Exercise
Price"). This option is not intended to constitute an incentive stock
option within the meaning of section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
2. The term of this option shall expire on August 31, 2007, subject to
earlier termination as provided herein. This option shall vest and
become exercisable immediately upon the date hereof, subject to any
other restrictions on exercise as set forth in this Contract.
3. Upon the termination of the Optionee's employment with the Company (or
its parent or subsidiaries) for any reason other than his death or
Disability (as defined in Paragraph 5), the Optionee may exercise such
option, to the extent exercisable on the date of such termination, at
any time within three months after the date of termination, but not
thereafter and in no event after the date this option would otherwise
have expired; provided, however, that if the Optionee's employment
shall be terminated either (a) for cause, or (b) without the consent of
the Company, this option shall terminate immediately.
4. If the Optionee dies (a) while he is employed by the Company, its
Parent or any of its Subsidiaries, (b) within three months after the
termination of his employment (unless such termination was for cause or
without the consent of the Company) or (c) within one year following
the termination of his employment by reason of Disability, this option
may be exercised, to the extent exercisable on the date of the
Optionee's death, by his executor, administrator or other person at the
time entitled by law to his rights under this option, at any time
within one year after death, but not thereafter and in no event after
the date this option would otherwise have expired.
5. If the Optionee's employment terminates by reason of Disability, the
Optionee may exercise this option, to the extent exercisable upon the
effective date of such termination, at any time within one year after
such date, but not thereafter and in no event after the date this
option would otherwise have expired. The term "Disability" shall mean a
permanent and total disability within the meaning of Section 22(e)(3)
of the Code.
6. This option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its then principal office,
stating that the Optionee is exercising this option, (a) specifying the
number of shares being purchased and accompanied by payment in full of
the aggregate purchase price therefor (i) in cash or by certified
check, (ii) with previously acquired shares of Common Stock having an
aggregate Fair Market Value (as defined below) on the date of exercise
equal to the Exercise Price of all options being exercised, or (iii) a
combination of the foregoing or (b) by delivery of Common Stock
issuable upon exercise of the options in accordance with Paragraph 8
below. Notwithstanding the foregoing, the purchase price may be paid by
delivery by the Optionee of a properly executed notice, together with a
copy of his irrevocable instructions to a broker acceptable to the
Company's Board of Directors (the "Board") to deliver promptly to the
Company the amount of sale or loan proceeds sufficient to pay such
purchase price.
7. Fair Market Value of a share of Common Stock as of a particular date
(the "Determination Date") shall mean:
(a) If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ"), National Market System, the NASDAQ
SmallCap Market or the American Stock Exchange, LLC, then the closing
or last sale price, respectively, reported for the last business day
immediately preceding the Determination Date;
(b) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System, the NASDAQ SmallCap Market or
the American Stock Exchange, Inc., but is traded in the
over-the-counter market, then the average of the closing bid and ask
prices reported for the last business day immediately preceding the
Determination Date;
(c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Optionee and the
Company agree, or in the absence of such an agreement, by arbitration
in accordance with the rules then standing of the American Arbitration
Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be
decided; or
8. If the Fair Market Value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this option for cash, the holder may elect to
receive shares equal to the value (as determined below) of this option
(or the portion thereof being exercised) by surrender of this option at
the principal office of the Company in which event the Company shall
issue to the Optionee a number of shares of Common Stock computed using
the following formula:
X= Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to
the Optionee
Y = the number of shares of Common Stock purchasable
under the option or, if only a portion of the option
is being exercised, the portion of the option being
exercised (at the date of such calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation).
9. The Company may withhold cash and/or shares of Common Stock to be
issued to the Optionee in the amount that the Company determines is
necessary to satisfy its obligation to withhold taxes or other amounts
incurred by reason of the grant or exercise of this option or the
disposition of the underlying shares of Common Stock. Alternatively,
the Company may require the Optionee to pay the Company such amount in
cash promptly upon demand.
10. This option and the exercisability thereof shall be subject to
compliance with applicable securities laws. The Optionee hereby
represents and warrants to the Company that, unless a registration
statement under the Securities Act of 1933, as amended ("Securities
Act") is effective and current at the time of exercise of this option,
the shares of Common Stock to be issued upon the exercise of this
option will be acquired by the Optionee for his or her own account, for
investment only and not with a view to the resale or distribution
thereof. Any subsequent resale or distribution of shares of Common
Stock by the Optionee shall be made only pursuant to (x) a registration
statement under the Securities Act which is effective and current with
respect to the sale of shares of Common Stock being sold, or (y) a
specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption, the Optionee shall, prior to any
offer of sale or sale of such shares of Common Stock, provide the
Company (unless waived by the Company) with a favorable written opinion
of counsel, in form and substance satisfactory to the Company, as to
the applicability of such exemption to the proposed sale or
distribution. Such representations and warranties shall also be deemed
to be made by the Optionee upon each exercise of this option. Nothing
herein shall be construed as requiring the Company to register the
shares subject to this option under the Securities Act.
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11. Notwithstanding anything herein to the contrary, if at any time the
Board shall determine, in its discretion, that the listing or
qualification of the shares of Common Stock subject to this option on
any securities exchange or under any applicable law, or the consent or
approval of any governmental agency or regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an
option or the issue of shares of Common Stock hereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board.
12. The Company may affix appropriate legends upon the certificates for
shares of Common Stock issued upon exercise of this option and may
issue such "stop transfer" instructions to its transfer agent in
respect of such shares as it determines, in its discretion, to be
necessary or appropriate to (a) prevent a violation of, or to perfect
an exemption from, the registration requirements of the Securities Act,
or (b) implement the provisions of this Contract or any other agreement
between the Company and the Optionee with respect to such shares of
Common Stock. This option and the shares of Common Stock subject
thereto shall be subject to such restrictions, including any lockup
required by the Company's underwriters, as the Board may determine in
its discretion.
13. Nothing herein shall confer upon the Optionee any right to continue in
the employ of the Company, any Parent or any of its Subsidiaries, or
interfere in any way with any right of the Company, any Parent or its
Subsidiaries to terminate such employment at any time for any reason
whatsoever without liability to the Company, any Parent or any of its
Subsidiaries.
14. In the event of any change in the outstanding Common Stock by reason of
a stock dividend, recapitalization, merger or consolidation in which
the Company is the surviving corporation, split-up, spin-off,
combination or exchange of shares or the like, the aggregate number and
kind of shares subject to this option and the Exercise Price thereof
shall be appropriately adjusted by the Board, whose determination shall
be conclusive.
15. The Optionee (by his or her acceptance of this option) represents and
agrees that he or she will comply with all applicable laws relating to
the grant and exercise of this option and the disposition of the shares
of Common Stock acquired upon exercise of this option, including,
without limitation, federal and state securities and "blue sky" laws.
16. This option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution and may be exercised, during
the lifetime of the Optionee, only by the Optionee or the Optionee's
legal representatives.
17. This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled to the
Optionee's rights hereunder.
18. This Contract shall be governed by, and construed and enforced in
accordance with, the laws of New York, without regard to the conflicts
of law rules thereof.
19. The invalidity, illegality or unenforceability of any provision herein
shall not affect the validity, legality or enforceability of any other
provision.
20. The Company makes no representations and offers no advice regarding the
tax consequences relating to the grant or exercise of this option.
21. This Contract may be executed in two counterpart copies of the entire
document or of the signature pages hereto, each of which may be
executed by either of the parties hereto, but both of which, when taken
together, shall constitute a single agreement binding upon both of the
parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Contract as of the day and year first above written.
SILVERSTAR HOLDINGS, LTD.
By:
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Name:
Title:
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Xxxxxx Xxxxxx
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