<PAGE> 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
ENGLE HOMES, INC.
(Name of Subject Company)
ENGLE HOMES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
---------------------
292896107
(CUSIP Number of Class of Securities)
---------------------
DAVID SHAPIRO
ENGLE HOMES, INC.
123 N.W. 13TH STREET, SUITE 300
BOCA RATON, FL 33432
(561) 391-4012
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
---------------------
With copies to:
BRUCE E. MACDONOUGH
BRIAN H. BLANEY
GREENBERG TRAURIG, LLP
ONE E. CAMELBACK ROAD, SUITE 1100
PHOENIX, ARIZONA 85012
(602) 263-2300
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by Helios Acquisition Corp., a Florida
corporation (the "Purchaser") and a wholly owned subsidiary of Technical Olympic
USA, Inc. ("Technical Olympic"), a Delaware corporation, to purchase all of the
outstanding shares of Common Stock (as defined below) of Engle Homes, Inc., a
Florida corporation (the "Company").
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Engle Homes, Inc., its principal
executive offices are located at 123 N.W. 13th Street, Suite 300, Boca Raton,
Florida 33432 and its phone number is (561) 391-4012. This Schedule 14D-9
relates to the Company's common stock, par value $0.01 per share (the "Common
Stock"). As of October 11, 2000, there were 10,871,539 shares of Common Stock
outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) Name and Address. The name, business address and business telephone
number of the Company, which is the person filing this statement, are set forth
in Item 1 above, which information is incorporated herein by reference.
(b) Tender Offer. This Schedule 14D-9 relates to the tender offer made by
the Purchaser, disclosed in a Tender Offer Statement on Schedule TO dated
October 20, 2000 (as amended or supplemented from time to time, the "Schedule
TO"), to purchase all of the outstanding shares of Common Stock at a price (the
"Offer Price") of $19.10 per share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated October 20, 2000 (as amended or supplemented from time to time, the "Offer
to Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), copies
of which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively, and
incorporated herein by reference.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 12, 2000, among the Company, Technical Olympic, and the Purchaser
(the "Merger Agreement"), which provides for (i) the making of the Offer by the
Purchaser, subject to the conditions set forth in the Offer and to the
conditions and upon the terms of the Merger Agreement, and (ii) the subsequent
merger of the Purchaser with and into the Company (the "Merger"). In the Merger,
each share of Common Stock, except for shares owned by Purchaser and any
shareholder properly exercising dissenters' rights, if available, outstanding at
the Effective Time (as defined in the Merger Agreement) will, by virtue of the
Merger and without any action by the holder thereof, be converted into the right
to receive, without interest, an amount in cash equal to $19.10 per share (the
"Merger Consideration"). The Merger Agreement, a copy of which is filed as
Exhibit (e)(1) hereto, is summarized in Sections 1 and 11 of the Offer to
Purchase and incorporated herein by reference.
In connection with the Merger Agreement, certain senior executives of the
Company as well as certain other shareholders of the Company have entered into a
Stock Voting and Tender Agreement, dated as of October 12, 2000, with Technical
Olympic and the Purchaser (the "Shareholders Agreement"), which, among other
things and subject to certain exceptions, requires each such shareholder to
tender his/her/its shares of Common Stock in the Offer. A copy of the
Shareholders Agreement is filed as Exhibit (e)(2) hereto and incorporated herein
by reference.
As set forth in the Schedule TO, the principal executive offices of the
Purchaser and Technical Olympic are located at 1200 Soldiers Field Drive, Sugar
Land, Texas 77479.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as set forth in the response to this Item 3 or in Annex A attached
hereto or as incorporated by reference herein, to the knowledge of the Company,
there are no material agreements, arrangements, or understandings and no actual
or potential conflicts of interest between the Company or its affiliates on the
one
1
<PAGE> 3
hand and the Purchaser or its affiliates or the Company's executive officers,
directors, or affiliates on the other hand.
A summary of the material provisions of the Merger Agreement is included in
Sections 1 and 11 of the Offer to Purchase, which is incorporated herein by
reference. The summary of the Merger Agreement in the Offer to Purchase is
qualified in its entirety by reference to the Merger Agreement.
Certain contracts, arrangements, or understandings between the Company or
its affiliates and certain of the Company's directors, executive officers, and
affiliates are described in the Information Statement of the Company attached to
this schedule as Annex A (the "Information Statement"). The Information
Statement is being furnished to the Company's shareholders pursuant to Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 issued under the Exchange Act in connection with Purchaser's
right (after acquiring a majority of the Common Stock pursuant to the Offer) to
designate persons to the Board of Directors of the Company (the "Board") other
than at a meeting of the shareholders of the Company. The Information Statement
is incorporated herein by reference.
In connection with the Merger Agreement, each of the Company's executive
officers has entered into a new employment agreement with the Company
(collectively the "New Employment Agreements"). In addition, as noted above,
certain senior executives, as well as certain other shareholders, have entered
into the Shareholders Agreement. Under the Shareholders Agreement, these persons
have agreed to tender their shares of Common Stock into the Offer, have granted
Technical Olympic an option to purchase their shares of Common Stock at a price
of $19.10 per share (or, if applicable, any higher price payable pursuant to the
Offer), have agreed to vote in favor of the Merger, and have granted the
Purchaser a proxy in respect of such shares. For a description of these and
certain other contracts, agreements, arrangements, or understandings and any
actual or potential conflicts of interests between the Company or its affiliates
and (1) the Company's executive officers, directors, or affiliates or (2) the
Purchaser or its respective executive officers, directors, or affiliates, see
Sections 10 and 11 of the Offer to Purchase, which is incorporated herein by
reference.
The Merger Agreement also provides that the rights to indemnification set
forth in the Company's indemnification agreements with directors and the
provisions of the Company's Articles of Incorporation will survive the Merger
and continue in effect in accordance with their terms. In addition, Technical
Olympic has agreed to provide, or to cause the Company to provide for a period
of not less than six years after the Effective Time, the Company's current
directors and officers an insurance and indemnification policy that provides for
coverage for events occurring at or prior to the Effective Time (the "D & O
Insurance") that is no less favorable than the Company's existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that Technical Olympic and the Company will not be
required to pay an annual premium for the D & O Insurance in excess of three
times the annual premium currently paid by the Company for such insurance, but
in such case will purchase as much coverage as possible for such amount.
Each of the members of the Special Committee (as defined below) of the
Board formed to consider the terms of the New Employment Agreements and to
determine whether to recommend them to the full Board of Directors will receive
a fee of $75,000, payable upon consummation of the Offer, for their services in
connection with such committee.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Solicitation Recommendation.
At a meeting held on October 11, 2000, the Board unanimously (i) approved
the Merger Agreement, the Offer, and the Merger, (ii) determined that the Offer
and the Merger are fair to, and in the best interests of, holders of shares of
Common Stock, and (iii) voted to recommend that holders of shares of Common
Stock tender their shares of Common Stock pursuant to the Offer. Accordingly,
the Board unanimously recommends that the shareholders of the Company tender
their shares of Common Stock pursuant to the Offer. Copies of the Company's
letter to the shareholders of the Company communicating the Board's recommenda-
2
<PAGE> 4
tion and the Company's press release announcing the Merger Agreement and the
transactions contemplated thereby are filed as Exhibits (a)(3) and (a)(4)
hereto, respectively, and are incorporated herein by reference.
(b)(i) Background of the Offer.
From time to time, the Company has been the subject of informal inquiries
regarding a possible acquisition or other business combination transaction. As a
result, the Company determined to engage a financial advisor to assist the
Company with these inquiries and any resulting transaction, and subsequently
retained Salomon Smith Barney Inc. ("Salomon Smith Barney") to act as its
exclusive financial advisor.
In February 2000, at the direction of the Company, Salomon Smith Barney
contacted several possible candidates for a business combination transaction.
Two national homebuilders expressed initial indications of interest regarding a
possible transaction and the Company entered into confidentiality agreements
with each of these parties. During March 2000, information was exchanged and
representatives of the Company discussed possible transactions with these
parties.
In April 2000, one of the homebuilders (the "Homebuilder") indicated a
willingness to discuss an acquisition of all outstanding shares of the Company's
Common Stock for $15.75 per share, payable 50% in cash and 50% in an
equity-related security. Representatives of the Homebuilder and the Company
thereafter met in Las Vegas, Nevada, where preliminary discussions were
conducted. In May 2000, the Homebuilder submitted a term sheet and
representatives of both companies commenced negotiation of definitive
agreements. However, in late May, the Homebuilder telephonically informed the
Company that, based on then current economic conditions, it was unwilling to
incur additional indebtedness. As a result, the Company's discussions with the
Homebuilder terminated.
Subsequent to the termination of discussions with the Homebuilder, the
Company received a number of additional inquiries regarding a possible business
combination transaction. With the exception of proposals from Technical Olympic
and another national homebuilder (the "Second Homebuilder"), none of these
inquiries progressed to a serious exploration of any such transaction.
In late June 2000, representatives of Technical Olympic expressed to the
Company's financial advisor Technical Olympic's interest in pursuing discussions
regarding a possible acquisition transaction with the Company. The initial
inquiries of Technical Olympic were regarding a possible acquisition of a
controlling block of the Company's Common Stock.
In July 2000, the Company and Technical Olympic agreed to exchange
information under a confidentiality arrangement. On July 18, 2000,
representatives of Technical Olympic and members of the Company's senior
management team met in Miami, Florida to discuss a potential acquisition
transaction and, shortly thereafter, additional information was provided.
In August 2000, the Second Homebuilder provided a written indication of
interest in a stock-for-stock acquisition transaction that would provide the
Company's shareholders with between approximately $14.30 and $17.05 in value per
share of Company Common Stock. Although the Company indicated such price range
would be inadequate, discussions regarding a possible transaction continued.
On August 24, 2000, Technical Olympic provided the Company with a
non-binding preliminary term sheet indicating a possible purchase price of $215
million for the Company.
In August 2000, the Company, through its financial advisor, had further
discussions with the Second Homebuilder regarding valuation and provided the
Second Homebuilder with the opportunity to increase its initial proposal. The
Second Homebuilder indicated that it would not increase its offer at that time
and discussions were mutually terminated.
On August 28, 2000, the Company executed an agreement to negotiate
exclusively with Technical Olympic through September 30, 2000. A revised
preliminary term sheet was also provided by Technical Olympic, which formed the
basis for further discussions regarding a proposed transaction.
Throughout September 2000, Technical Olympic conducted an extensive due
diligence investigation of the Company and its subsidiaries, and representatives
of the Company and Technical Olympic negotiated the
3
<PAGE> 5
terms of the Merger Agreement. In addition, at the insistence of the Company,
Technical Olympic provided the Company with a firm commitment letter from its
lender with respect to the proposed borrowings required to fund the Offer and
the Merger. On September 30, 2000, the Company extended the Technical Olympic
exclusive negotiating period through October 12, 2000.
As a condition to Technical Olympic's consideration of an acquisition
transaction, Technical Olympic, the Company and representatives of the Company's
executive officers and division presidents entered into negotiations for the New
Employment Agreements. In addition, representatives of Technical Olympic and
certain shareholders of the Company negotiated the Shareholders Agreement.
On October 6, 2000, the Board held a special meeting to review and discuss
with the Company's management and legal and financial advisors the latest terms
of the proposed acquisition and the applicable agreements. The Board also
appointed a special committee (the "Special Committee") of three independent
directors to consider the terms of the New Employment Agreements described in
Item 3 of this Schedule 14D-9 and to determine whether to recommend them to the
full Board.
At a meeting held on October 10, 2000, in Boca Raton, Florida, the Board
met again to consider the proposed transaction with Technical Olympic. At this
meeting, Salomon Smith Barney reviewed with the Board its financial analysis of
the consideration payable in the Offer and the Merger, the process undertaken in
prior months to solicit indications of interest from other potential acquirors
and the results of that process. Also at this meeting, Greenberg Traurig, the
Company's counsel, gave an update with respect to various legal aspects of the
transaction. The Board authorized representatives of the Company to continue
with negotiations. In addition, the Special Committee recommended that the Board
approve the New Employment Agreements, and the Board unanimously approved such
agreements.
On the evening of October 11, 2000, the Board held a telephonic meeting to
further consider the Technical Olympic offer. Representatives of the Company's
senior management team and legal and financial advisors provided an update with
respect to the terms and proposed timing of the transaction, as well as the
terms and status of the financing to be obtained by Technical Olympic for the
Offer and the Merger. In addition, Salomon Smith Barney rendered to the Board an
oral opinion (which opinion was confirmed by delivery of a written opinion dated
October 12, 2000, the date of the Merger Agreement) to the effect that, as of
the date of the opinion and based upon and subject to certain matters stated in
such opinion, the $19.10 per share cash consideration to be received in the
Offer and the Merger by holders of Common Stock (other than Technical Olympic
and its affiliates) was fair, from a financial point of view, to such holders.
At the conclusion of this meeting, the Board unanimously approved the Offer, the
Merger and the Merger Agreement, determined that the Offer, the Merger and the
Merger Agreement are fair to and in the best interests of the Company's
shareholders, and recommended that the shareholders accept the Offer and tender
their shares pursuant thereto.
Early on October 12, 2000, Technical Olympic provided representatives of
the Company with a signed updated commitment letter from Technical Olympic's
lenders for the debt financing required for consummation of the transactions
contemplated by the Merger Agreement, as well as evidence that the required
equity contribution or intercompany loan of at least $80.0 million had been
obtained. The Merger Agreement was thereafter finalized and executed prior to
the opening of trading on October 12, 2000, and a joint press release announcing
the proposed Offer and the Merger was issued.
On October 20, 2000, the Purchaser commenced the Offer.
For additional information regarding the background of the Offer, see
Section 10 of the Offer to Purchase which is incorporated herein by reference.
(b)(ii) Reasons.
In making the determinations and recommendations set forth in subparagraph
(a) above, the Board considered a number of factors, including, without
limitation, the following:
- The Board's knowledge of the Company's business, operations, prospects,
projected financial performance, and competitive position and current
trends in the homebuilding industry;
4
<PAGE> 6
- the financial and other terms and conditions of the Offer and the Merger
Agreement and the fact that they were the product of arm's-length
negotiations between the parties;
- the fact that the $19.10 per share price to be received by the Company's
shareholders in the Offer and the Merger represents a substantial premium
over the historical trading prices for the Company's Common Stock in the
last three years, including a premium over the closing market price of
$15.75 per share on October 11, 2000, the last full trading day prior to
the Board's approval of the Merger Agreement;
- the fact that the Offer and the Merger provide for a prompt cash tender
offer for all of the shares of Common Stock to be followed by the Merger
for the same consideration, thereby enabling the Company's shareholders,
at the earliest possible time, to obtain the benefits of the transaction
in exchange for their shares of Common Stock;
- the results of the process undertaken on behalf of the Company to
identify and solicit indications of interest from selected potential
acquirors with respect to a possible business combination or similar
transaction with the Company, including the fact that no potential
acquiror or strategic partner contacted had expressed an interest in
engaging in a business combination or other strategic transaction that
would likely be on terms as favorable to the Company's shareholders as
those in the Offer and the Merger;
- the financial presentation of Salomon Smith Barney, including its opinion
as to the fairness, from a financial point of view and as of the date of
the opinion, of the $19.10 per share cash consideration to be received in
the Offer and the Merger by the holders of Common Stock (other than
Technical Olympic and its affiliates). The full text of Salomon Smith
Barney's written opinion, dated October 12, 2000, which sets forth the
assumptions made, matters considered and limitations on the review
undertaken by Salomon Smith Barney, is attached hereto as Annex B and is
incorporated herein by reference. SALOMON SMITH BARNEY'S OPINION IS
DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
$19.10 PER SHARE CASH CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE
MERGER BY HOLDERS OF COMMON STOCK (OTHER THAN TECHNICAL OLYMPIC AND ITS
AFFILIATES) AND IS NOT INTENDED TO CONSTITUTE, AND DOES NOT CONSTITUTE, A
RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER SHARES
PURSUANT TO THE OFFER OR AS TO ANY OTHER MATTERS RELATING TO THE OFFER OR
THE MERGER. HOLDERS OF SHARES ARE URGED TO READ SUCH OPINION CAREFULLY IN
ITS ENTIRETY.
- the fact that Alec Engelstein, Harry Engelstein and members of their
families (the Company's principal shareholders and beneficial owners of
approximately 34% of the Company's outstanding Common Stock) indicated
that they were prepared to endorse the Merger Agreement, and that Alec
Engelstein, Harry Engelstein and such other shareholders expressly agreed
to tender all of their shares in the Offer;
- the fact that the Offer and the Merger were not expressly conditioned on
the availability of financing which, combined with the experience,
reputation and financial condition of Technical Olympic, increased the
likelihood that the proposed Offer and Merger would be consummated;
- the advice of the Company's legal advisors with respect to the terms of
the Merger Agreement, the Offer and the Merger;
- the terms of the Merger Agreement, including the parties'
representations, warranties and covenants and the conditions to their
respective obligations;
- the fact that the Company may terminate the Merger Agreement in order to
approve a tender offer for the shares or other proposed business
combination by a third party on terms more favorable to the Company's
shareholders than the Offer and the Merger, upon the payment to Technical
Olympic of a $8.5 million termination fee plus up to $3.0 million in
expenses; and
- the Board's belief, based upon the Company's negotiations with Technical
Olympic, that the Company would continue to operate largely intact after
the Merger, and that the Merger would likely not have an adverse effect
on the Company's relationships with its employees and customers.
5
<PAGE> 7
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it. In addition, it is possible that different
members of the Board assigned different weights to the various factors described
above.
(c) Intent to Tender.
Pursuant to the Shareholders Agreement, Alec Engelstein, Harry Engelstein,
David Shapiro and certain trusts for the benefit of Alec Engelstein's and Harry
Engelstein's children and grandchildren have agreed to tender their shares of
Common Stock and, to the Company's knowledge after reasonable inquiry, the
Company's other executive officers, directors, and affiliates currently intend
to tender all Common Stock held of record or beneficially by them pursuant to
the Offer or to vote in favor of the Merger. Except in the case of the
Shareholders Agreement, the foregoing does not include Common Stock over which,
or with respect to which, any such executive officer, director, or affiliate
acts in a fiduciary or representative capacity or is subject to the instructions
of a third party with respect to such tender.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The Company has retained Salomon Smith Barney to act as its exclusive
financial advisor in connection with the Offer and the Merger. Pursuant to the
terms of Salomon Smith Barney's engagement, the Company has agreed to pay
Salomon Smith Barney for its services, upon consummation of the Offer and the
Merger, an aggregate fee equal to a percentage of the total consideration,
including liabilities assumed, payable in the Offer and the Merger. The
aggregate fee payable to Salomon Smith Barney is currently estimated to be
approximately $4.1 million. The Company also has agreed to reimburse Salomon
Smith Barney for reasonable travel and other out-of-pocket expenses, including
reasonable fees and expenses of its legal counsel, and to indemnify Salomon
Smith Barney and related parties against certain liabilities, including
liabilities under the federal securities laws, arising out of Salomon Smith
Barney's engagement. Salomon Smith Barney in the past has provided services to
the Company unrelated to the Offer and the Merger, for which services Salomon
Smith Barney has received customary compensation. In the ordinary course of
business, Salomon Smith Barney and its affiliates (including Citigroup Inc. and
its affiliates) may actively trade or hold the securities of the Company and
affiliates of Technical Olympic for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to shareholders on its behalf concerning the Offer or the
Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
During the past 60 days, neither the Company nor any subsidiary of the
Company nor, to the best of the Company's knowledge, any executive officer,
director, or affiliate of the Company has effected a transaction in shares of
Common Stock.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Other than as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer that relates
to:
- a tender offer for or other acquisition of the Company's securities by
the Company, any subsidiary of the Company, or any other person;
- an extraordinary transaction, such as a merger, reorganization, or
liquidation, involving the Company or any subsidiary of the Company;
6
<PAGE> 8
- a purchase, sale, or transfer of a material amount of assets of the
Company or any subsidiary of the Company; or
- any material change in the present dividend rate or policy, indebtedness
or capitalization of the Company.
Except as described above or in Item 3 of this Schedule 14D-9, there are no
transactions, board resolutions, agreements in principle, or signed contracts in
response to the Offer that relate to or would result in one or more of the
matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
(a) Florida Business Corporation Act.
Under the Florida Business Corporation Act (the "FBCA"), if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 80% of the outstanding
shares of Common Stock, the Purchaser will be able to effect the Merger after
consummation of the Offer without a vote of the Company's shareholders. However,
if the Purchaser does not acquire at least 80% of the outstanding shares of
Common Stock, a vote of the Company's shareholders is required under the FBCA,
and a longer period of time will be required to effect the Merger.
No appraisal rights are available in connection with the Offer. Appraisal
rights may be available to connection with the Merger. See Section 11 of the
Offer to Purchase, which is incorporated herein by reference.
For information regarding the inapplicability to the Offer and the Merger
of certain anti-takeover provisions of the FBCA. See Section 15 of the Offer to
Purchase, which is incorporated herein by reference.
(b) Regulatory Approvals.
For information regarding governmental and regulatory approvals required in
order to consummate the Offer and the Merger, see Section 15 of the Offer to
Purchase, which is incorporated herein by reference.
(c) Information Provided Pursuant to Rule 14f-1 Under the Exchange Act.
The Information Statement attached as Annex A to this Schedule 14D-9 is
being furnished to the Company's shareholders in connection with the designation
by the Purchaser of persons to the Board other than at a meeting of the
Company's shareholders, and such information is incorporated herein by
reference.
(d) Forward-Looking Statements.
This Schedule 14D-9 may contain or incorporate by reference certain
"forward-looking statements" which represent the Company's expectations or
beliefs, including, but not limited to, statements concerning the Company's
operations, economic performance, financial condition and growth prospects. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as "may," "should," "will,"
"expect," "believe," "anticipate," "intend," "could," "estimate" or "continue"
or the negative or other variations thereof or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, certain of which are beyond
the Company's control, and actual results may differ materially depending on a
variety of important factors, including uncertainty related to acquisitions,
government regulation, managing and maintaining growth, the effect of adverse
publicity, litigation, availability of raw materials, competition, volatility of
stock price, and those factors described in this and other Company filings with
the SEC.
7
<PAGE> 9
(e) Other Material Information.
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
ITEM 9. EXHIBITS.
<TABLE>
<C> <S>
*+(a)(1) -- Offer to Purchase dated October 20, 2000.
*+(a)(2) -- Letter of Transmittal.
*(a)(3) -- Letter to shareholders of the Company dated October 20,
2000.
++(a)(4) -- Joint Press Release issued by the Company and Technical
Olympic on October 12, 2000.
+(a)(5) -- Joint Press Release issued by the Company and Technical
Olympic on October 20, 2000.
+(a)(5) -- Form of Summary Advertisement dated October 20, 2000.
+(e)(1) -- Agreement and Plan of Merger, dated as of October 12,
2000, by and among the Company, Technical Olympic and the
Purchaser.
+(e)(2) -- Stock Voting and Tender Agreement, dated as of October
12, 2000, by and among the Purchaser, Technical Olympic
and certain shareholders of the Company.
+++*(e)(3) -- Opinion of Salomon Smith Barney Inc. dated October 12,
2000.
+(e)(4) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Alec Engelstein (including a
Non-Competition Agreement in the form attached as Exhibit
A).
+(e)(5) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Harry Engelstein.
+(e)(6) -- Employment Agreement, dated as of October 12, 2000,
between the Company and John A. Kraynick.
+(e)(7) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Lawrence R. Shawe.
+(e)(8) -- Employment Agreement, dated as of October 12, 2000,
between the Company and David Shapiro.
+(e)(9) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Paul M. Leikert.
</TABLE>
---------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule
TO dated October 20, 2000, and incorporated herein by reference.
++ Filed as an exhibit to the Company's Schedule 14D-9-C on October 12, 2000,
and incorporated herein by reference.
+++ Included as Annex B to this Schedule 14D-9.
8
<PAGE> 10
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
ENGLE HOMES, INC.
By: /s/ ALEC ENGELSTEIN
----------------------------------
Name: Alec Engelstein
Title: President and Chief
Executive Officer
October 20, 2000
9
<PAGE> 11
ANNEX A
ENGLE HOMES, INC.
123 N.W. 13TH STREET, SUITE 300
BOCA RATON, FLORIDA 33432
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND RULE 14f-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS IS REQUIRED
IN CONNECTION WITH THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE COMPANY.
This Information Statement is being mailed on or about October 20, 2000, as
a part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Engle Homes, Inc. (the "Company") to the holders of record
of shares of common stock, par value $0.01 per share, of the Company (the
"Common Stock"). You are receiving this Information Statement in connection with
the possible election or appointment of persons designated by the Purchaser (as
defined below) to a majority of the seats on the Board of Directors of the
Company (the "Board"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Schedule 14D-9.
The Company, Technical Olympic USA, Inc. ("Technical Olympic") and Helios
Acquisition Corp. (the "Purchaser") entered into an Agreement and Plan of
Merger, dated as of October 12, 2000 (the "Merger Agreement"), in accordance
with the terms and subject to the conditions of which the Purchaser commenced
the Offer. The Offer is scheduled to expire at 12:00 midnight, New York City
time, on November 17, 2000.
The Merger Agreement requires the Company to cause the directors designated
by the Purchaser to be elected to the Board under the circumstances described
therein following consummation of the Offer.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action at this time.
The information contained in this Information Statement (including
information incorporated by reference) concerning the Purchaser and the
Purchaser Designees (as defined herein) has been furnished to the Company by the
Purchaser, and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
The shares of Common Stock are the only class of voting securities of the
Company outstanding. As of October 11, 2000, there were 10,871,539 shares of
Common Stock outstanding. The Board currently consists of seven members. Each
share of Common Stock is entitled to one vote. The officers of the Company serve
at the discretion of the Board.
INFORMATION WITH RESPECT TO PURCHASER DESIGNEES
Pursuant to the Merger Agreement, promptly upon the acceptance for payment
of and payment for any shares of Common Stock by the Purchaser pursuant to and
subject to the conditions (including the Minimum Condition (as defined in the
Merger Agreement), which condition may not be waived by the Purchaser) of the
Offer, the Purchaser shall be entitled to require the Company to cause persons
designated by Technical Olympic and the Purchaser (the "Purchaser Designees") to
become members of the Board in such numbers rounded up to the next whole number
as is proportionate to the ratio that the number of the shares of Common Stock
accepted for payment by Purchaser or Technical Olympic bears to the number of
A-1
<PAGE> 12
outstanding shares of Common Stock of the Company, subject to compliance with
Section 14(f) of the Exchange Act; provided, however, that prior to the
Effective Time the Board shall always have at least two directors (the
"Independent Directors") who are neither officers of Purchaser or Technical
Olympic nor designees, shareholders, or affiliates of Purchaser or Technical
Olympic or Technical Olympic's affiliates; and, provided further that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of the Merger Agreement or, if no Independent Directors
then remain, the other directors of the Company shall designate two persons to
fill such vacancies who shall not be a current or former officer or affiliate of
Purchaser or Technical Olympic or any of Technical Olympic's affiliates, and
such persons shall be deemed to be Independent Directors for purposes of the
Merger Agreement.
The Purchaser has informed the Company that it will choose the Purchaser
Designees from the persons listed below. The Purchaser has informed the Company
that each of the individuals listed below has consented to act as a director, if
so designated.
The name, age, position with Technical Olympic or an affiliate, and
five-year employment history of each of the Purchaser Designees is set forth
below. The business address of each Purchaser Designee is 20 Solomou Street, Ana
Kalamaki, Athens, Greece 17456.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH PURCHASER OR AFFILIATE AND FIVE-YEAR EMPLOYMENT HISTORY
---- --- ---------------------------------------------------------------------
<S> <C> <C>
Constantinos Stengos................. 64 Chairman and Managing Director, Technical Olympic S.A. since 1965;
Director, Technical Olympic (UK) Plc since November 1999; Director
and President, Technical Olympic USA, Inc. since November 1999;
Director and President, Helios Acquisition Corp. since October 2000;
Chairman, Newmark Homes Corp. since December 1999.
Zoi Stengou.......................... 65 Director and Vice President, Technical Olympic S.A. since 1992;
Director and Vice President, Technical Olympic (UK) Plc since
November 1999; Director and Vice President, Technical Olympic USA,
Inc. since January 2000. Mrs. Stengou is the wife of Constantinos
Stengos and the mother of Chrissi Stengou and Marianna Stengou.
Chrissi Stengou...................... 31 Architectural Works Director since 1998 and Public Relations Manager
from 1993 to 1998, Technical Olympic S.A. Ms. Stengou is the daughter
of Constantinos Stengos and Zoi Stengou and the sister of Marianna
Stengou.
Marianna Stengou..................... 23 Public Relations Director, Technical Olympic S.A. since December
1999; student prior to December 1999. Ms. Stengou is the daughter of
Constantinos Stengos and Zoi Stengou and the sister of Chrissi
Stengou.
</TABLE>
A-2
<PAGE> 13
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Biographical information concerning the Company's current directors and
executive officers as of October 10, 2000, is as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Alec Engelstein........................... 70 Chairman of the Board, President, and
Chief Executive Officer
Harry Engelstein.......................... 65 Executive Vice President, Chief
Construction Officer, and Director
John A. Kraynick.......................... 46 Executive Vice President and Director
Lawrence R. Shawe......................... 45 Senior Vice President -- Sales and
Marketing
David Shapiro............................. 45 Vice President -- Finance, Chief Financial
Officer and Director
Paul M. Leikert........................... 44 Senior Vice President -- Chief Accounting
Officer
Henry H. Fishkind, Ph.D................... 51 Director
Ronald J. Korn............................ 60 Director
Alan L. Shulman........................... 68 Director
</TABLE>
Alec Engelstein, a co-founder and Chairman of the Board of the Company, has
served as its President and Chief Executive Officer since its organization in
August 1982. Alec Engelstein has over 37 years of experience in the homebuilding
industry and has been actively engaged as a homebuilder in southeast Florida
since 1969.
Harry Engelstein, a co-founder and director of the Company and Alec
Engelstein's brother, has served as Executive Vice President and Chief
Construction Officer since the Company's inception in August 1982. Harry
Engelstein has over 32 years of experience in home construction.
John A. Kraynick has served as a Vice President of the Company since August
1986, was appointed Senior Vice President in July 1991, and appointed Executive
Vice President in December 1998. Mr. Kraynick is responsible for administrative
matters and coordinating the Company's compliance with federal, state, and local
regulatory requirements. Mr. Kraynick has over 21 years of experience in the
homebuilding industry.
Lawrence R. Shawe has served as the Company's Vice President -- Sales and
Marketing since April 1986, and was appointed Senior Vice President Sales and
Marketing in December 1998. Mr. Shawe joined the Company in April 1984, and
since such time has been responsible for the Company's sales and marketing
efforts. Mr. Shawe has over 19 years of experience in the homebuilding industry.
David Shapiro joined the Company in June 1991, has served as the Company's
Chief Financial Officer since July 1991, was appointed Vice President -- Finance
in October 1991, and was appointed as a director on December 17, 1997. David
Shapiro is Alec Engelstein's son-in-law.
Paul M. Leikert has served as the Vice President -- Chief of Accounting
since March 1994, was appointed Vice President -- Chief Accounting Officer in
January 1995, and was appointed Senior Vice President -- Chief Accounting
Officer in December 1998. Mr. Leikert is a certified public accountant and has
over 15 years of experience in the homebuilding industry.
Henry H. Fishkind, Ph.D., has served as a director of the Company since
October 1991, and is a member of the Compensation and Audit Committees of the
Board of Directors. Dr. Fishkind has served as President of Fishkind &
Associates, Inc., an economic and financing consulting firm based in Orlando,
Florida, since 1988. From January 1984 until December 1987, Dr. Fishkind served
as president of M.G. Lewis Econometrics, Inc., the research subsidiary of an
investment banking firm based in Winter Park, Florida. Dr. Fishkind also serves
as a director of Summit Properties.
Ronald J. Korn, chairman of the Compensation and Audit Committees of the
Board of Directors, has served as a director of the Company since October 1991.
Since July 1991, Mr. Korn has served as President of Ronald Korn Consulting, a
business consulting firm, and as Chairman of the Board of Carole Korn
A-3
<PAGE> 14
Interiors, Inc., an interior design firm. From August 1985 until June 1991, Mr.
Korn served as the managing partner of the Miami office of KPMG Peat Marwick, a
nationally recognized firm of independent public accountants. Mr. Korn serves as
a director of Mansur Industries, Inc., which develops and produces self-
contained recycling industrial parts washers. He is also a director of Horizon
Bank, FSB, a Federal Savings Bank. Mr. Korn served as a director of Magicworks
Entertainment, Inc. from 1996 until September 1998, when Magicworks was acquired
by a subsidiary of SFX Entertainment. Mr. Korn served as a director of Vacation
Break USA, Inc. from December 1995 to December 1997, when Vacation Break merged
with Fairfield Communities, Inc.
Alan L. Shulman was appointed as a director of the Company on December 17,
1997. Mr. Shulman is currently a private investor. Mr. Shulman served on the
board of directors of Island National Bank in Palm Beach, Florida from its
inception in 1989 until April 1, 1997, when the bank was sold, and currently
serves on the board of directors of CV Reit, Inc., a New York Stock Exchange
listed Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended October 31, 1999, the Board held
four meetings and took certain actions by written consent. During the 1999
fiscal year, no director attended fewer than 75% of the aggregate of (1) the
number of meetings of the Board held during the period he served on the Board,
and (2) the number of meetings of committees of the Board held during the period
he served on such committees.
The only committees of the Board are the Audit Committee, the Compensation
Committee and the Special Committee formed to consider the terms of the New
Employment Agreements. The Board does not have a nominating or similar
committee.
AUDIT COMMITTEE
Messrs. Fishkind and Korn are the current members of the Audit Committee,
which held two meetings during the 1999 fiscal year. The duties and
responsibilities of the Audit Committee include (1) recommending to the Board
the appointment of the Company's auditors and any termination of engagement, (2)
reviewing the plan and scope of audits, (3) reviewing the Company's significant
accounting policies and internal controls, (4) having general responsibility for
all related auditing matters, and (5) reporting its recommendations and findings
to the full Board. The members of the Audit Committee are "independent" within
the meaning of the National Association of Securities Dealers' listing
standards.
COMPENSATION COMMITTEE
Messrs. Fishkind and Korn are the current members of the Compensation
Committee, which held one meeting during the 1999 fiscal year. The Compensation
Committee reviews and approves the compensation of the Company's executive
officers and administers the Company's stock option plan and performance bonus
plan.
SPECIAL COMMITTEE
Messrs. Fishkind, Korn, and Schulman are the current members of the Special
Committee, which held no meetings during the 1999 fiscal year. The Special
Committee was formed in October 2000 to consider the terms of the New Employment
Agreements and determine whether to recommend them to the full Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Fishkind and Korn. No
member of the Compensation Committee was during the last fiscal year, nor has
ever been, an officer or employee of the Company.
A-4
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended October 31,
1999, 1998, and 1997, respectively, the aggregate compensation paid to the
Company's Chief Executive Officer and the four other most highly compensated
officers of the Company (the Chief Executive Officer and such other executive
officers are sometimes referred to herein as the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) ---------------
FISCAL ----------------------- NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS GRANTED COMPENSATION(2)
--------------------------- ------ ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Alec Engelstein.................... 1999 $500,000 $500,000 -- $5,353
Chairman of the Board, 1998 $370,833 $300,000 -- $5,353
President and Chief Executive 1997 $338,417 $193,750 -- $4,700
Officer
Harry Engelstein................... 1999 $293,333 $295,000 25,000 $2,725
Executive Vice President and 1998 $254,167 $147,500 -- $2,725
Chief Construction Officer 1997 $223,200 $105,000 -- $2,775
John A. Kraynick................... 1999 $245,000 $300,000 20,000 $7,183
Executive Vice President 1998 $216,667 $227,500 80,000 $7,183
1997 $195,227 $105,000 -- $6,381
Lawrence R. Shawe.................. 1999 $230,000 $120,000 20,000 $8,006
Senior Vice President -- 1998 $175,000 $117,500 80,000 $8,006
Sales & Marketing 1997 $161,667 $ 60,000 -- $5,936
Paul M. Leikert.................... 1999 $205,000 $110,000 25,000 $2,256
Senior Vice President -- 1998 $175,000 $ 91,250 20,000 $2,947
Chief Accounting Officer 1997 $147,950 $ 41,250 -- $6,400
</TABLE>
---------------
(1) The column for "Other Annual Compensation" has been omitted because there is
no compensation required to be reported in such column. The aggregate amount
of perquisites and other personal benefits provided to each Named Executive
Officer is less than 10% of the total of annual salary and bonus of such
officer.
(2) Represents contributions made by the Company to the Company's 401(k) plan.
PRIOR EMPLOYMENT AGREEMENT
Effective November 1, 1998, the Company entered into an employment
agreement with Alec Engelstein, the Chairman of the Board, President and Chief
Executive Officer of the Company (the "Employment Agreement"). The Employment
Agreement has a term of five years and expires in October 2003. As amended
effective July 1, 2000, the Employment Agreement provides for an annual base
salary to Mr. Engelstein of $750,000, subject to increases at the discretion of
the Compensation Committee. In addition, the Employment Agreement provides that
the base salary will be increased, but not decreased, by that percentage by
which the Consumer Price Index, for the Palm Beach, Florida area, for the
immediately preceding calendar year exceeds such index for the next preceding
calendar year.
The Employment Agreement provides for an annual bonus to Mr. Engelstein
based on objective performance standards. Mr. Engelstein would be eligible to
receive bonuses for each fiscal year of the Company only in the event that the
Company's Adjusted Pre-Tax Income (as defined below) equals or exceeds 10% of
the Average Stockholders' Equity (as defined below) for such fiscal year (the
"Goal"). If the Goal is met, Mr. Engelstein would receive a bonus for such
fiscal year equal to the sum of (1) 1% of 10% of the Company's Adjusted Pre-Tax
Income for the year plus (2) 2.5% of the amount by which the Adjusted Pre-Tax
Income exceeds 10% of the Adjusted Pre-Tax Income for such fiscal year.
"Adjusted Pre-Tax
A-5
<PAGE> 16
Income" means the Company's income or loss before income taxes, extraordinary
gains or losses and cumulative effect of the accounting changes plus any amounts
paid or accrued for bonuses payable to Mr. Engelstein pursuant to the Employment
Agreement. "Average Stockholders' Equity" means the average of the Company's
year-end stockholders' equity for the two fiscal years preceding the fiscal year
of the Company for which the bonus is being determined.
Under the Employment Agreement, Mr. Engelstein may elect to receive payment
of all or any portion of the incentive compensation payable for any fiscal year
in the form of cash or shares of Common Stock of the Company, valued based upon
the average closing price for the Company's Common Stock as reported on the
Nasdaq National Market during the last calendar month of the fiscal year for
which the bonus is being determined. The incentive compensation shall be paid to
Mr. Engelstein within two and one-half months after the end of the fiscal year
for which it is payable.
At the 1999 annual meeting of the Company, the shareholders approved the
material terms of the performance goals relating to the incentive compensation
provisions of the Employment Agreement. Therefore, all incentive compensation
paid to Mr. Engelstein pursuant to the Employment Agreement would be deductible
by the Company for purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Employment Agreement also contains certain
non-competition covenants and covenants against solicitation of clients and
employees for a competitive business and provides for certain payments to Mr.
Engelstein upon his termination.
NEW EMPLOYMENT AGREEMENTS
In connection with the Merger Agreement, a number of officers of the
Company, including those described above, have entered into New Employment
Agreements with the Company. For a description of these New Employment
Agreements, see Section 11 of the Offer to Purchase, which is incorporated
herein by reference.
STOCK OPTION PLAN
Under the Company's 1991 Stock Option Plan (as amended, the "Plan"),
1,000,000 shares of Common Stock are reserved for issuance upon the exercise of
stock options. The Plan is designed as a means to retain and motivate key
employees. The Compensation Committee administers and interprets the Plan and is
authorized to grant options thereunder to all eligible employees of the Company,
including officers and directors who are employees of the Company.
The Plan provides for the granting of both incentive stock options (as
defined in Section 422 of the Code) and nonqualified stock options. Options are
granted under the Plan on such terms and at such prices as determined by the
Compensation Committee, except that the per share exercise price of incentive
stock options cannot be less than the fair market value of the Common Stock on
the date of grant. Each option is exercisable after the period or periods
specified in the option agreement, but no option may be exercisable after the
expiration of ten years from the date of grant. Options granted under the Plan
are not transferable other than by will or by the laws of descent and
distribution. The Plan also authorizes the Company to make loans to optionees to
enable them to exercise their options. Such loans must (1) provide for recourse
to the optionee, (2) bear interest at a rate not less than the prime rate of
interest of the Company's principal lender, and (3) be secured by the shares of
Common Stock purchased.
A-6
<PAGE> 17
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during the 1999 fiscal year to the Named
Executive Officers.
INDIVIDUAL OPTION GRANTS IN FISCAL YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
---- ---------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Harry Engelstein............. 25,000 20.8% $10.88 3/15/09 $171,000 $433,500
John A. Kraynick............. 20,000 16.7% $10.88 3/15/09 $136,800 $346,800
Lawrence A. Shawe............ 20,000 16.7% $10.88 3/15/09 $136,800 $346,800
Paul M. Leikert.............. 25,000 20.8% $10.88 3/15/09 $171,000 $433,500
</TABLE>
---------------
(1) All such options were granted under the Company's 1991 Stock Option Plan and
become exercisable at the rate of 20% per year commencing one year from the
date of grant, with full vesting occurring on the fifth anniversary of the
grant date.
(2) In accordance with the rules of the Securities and Exchange Commission (the
"SEC"), the potential realizable values for such options shown in the table
are based on the exercise price per share and assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date the respective
options were granted to their expiration date. These assumed rates of
appreciation do not represent the Company's estimate or projection of the
appreciation of shares of Common Stock of the Company.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED
OCTOBER 31, 1999 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the exercise
in fiscal 1999 of options to purchase Common Stock by the Named Executive
Officers and the unexercised options to purchase Common Stock held by such
individuals at October 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT 1999 OPTIONS AT 1999
ON VALUE FISCAL YEAR END FISCAL YEAR END ($)(1)
EXERCISE REALIZED --------------------------- ---------------------------
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alec Engelstein............. 0 0 272,000 8,000 $36,160 $9,040
Harry Engelstein............ 0 0 111,000 29,000 $18,080 $4,520
John A. Kraynick............ 0 0 54,900 88,000 $10,057 $4,520
Lawrence R. Shawe........... 0 0 62,000 88,000 $18,080 $4,520
Paul M. Leikert............. 0 0 12,000 43,000 $ 9,040 $2,260
</TABLE>
---------------
(1) Based on the closing price of the Common Stock on October 29, 1999 ($10.13)
as reported on the Nasdaq National Market System.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the SEC, the Compensation Committee is required
to provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year.
The three primary components of the Company's executive compensation are
salary, bonus, and stock options. These components are designed to facilitate
fulfillment of the compensation objectives of the Board and the Compensation
Committee, which objectives include (1) attracting and retaining competent
manage-
A-7
<PAGE> 18
ment, (2) rewarding management for short and long term accomplishments, (3)
aligning the interests of management with those of the Company's shareholders,
and (4) relating management compensation to the achievement of Company goals and
the Company's performance.
Fiscal 1999 salary and bonus for the Company's executive officers were
determined and approved by the Compensation Committee in December 1998. The
Compensation Committee's determination of fiscal 1999 salary and bonus for the
Company's executive officers other than Alec Engelstein was made after reviewing
and considering a number of factors, including each officer's level of job
responsibility, each officer's level of performance (with respect to specific
areas of responsibility and on an overall basis), achievement of Company goals,
Company performance during the 1998 fiscal year, compensation levels at
competitive companies, the Company's historical compensation levels, and the
Chief Executive Officer's recommendations regarding fiscal 1999 compensation.
Although Company performance was one of the factors considered, the Compensation
Committee's decisions were based upon an overall review of the relevant factors,
and there was no specific relationship or formula by which compensation was tied
to Company performance. The Compensation Committee's decisions were generally in
accordance with the Chief Executive Officer's recommendations.
It is the Compensation Committee's practice periodically to grant stock
options to executive officers and other key management employees. The
Compensation Committee believes that stock options serve to link closely
management and shareholder interests and motivate executives to make long-term
decisions and investments that will serve to increase the long-term total return
to shareholders. Vesting provisions also serve to provide long-term incentives
to retain key executive officers. Awards of stock options to executive officers
are intended to be consistent with competitive practice, with the ultimate value
received by option holders directly linked to increases in the Company's stock
price. In determining the grant of stock options, the Compensation Committee
considers various subjective factors primarily relating to the responsibilities
of the individual officers, and also to their expected future contributions and
the number of shares owned by the officer or which continue to be subject to
vesting under outstanding options. During fiscal 1999, stock options were
granted to the Named Executive Officers listed in the Option Grants Table above
and to certain other key management employees.
In December 1998, the Compensation Committee adopted, and in February 1999
the shareholders approved, the Employment Agreement which governs the terms and
conditions of the employment of Alec Engelstein, the Company's Chairman of the
Board, President, and Chief Executive Officer, including Alec Engelstein's
salary and bonus for fiscal 1999. The Employment Agreement is designed to
provide Mr. Engelstein with annual incentive compensation based on the
achievement of specific performance objectives linked to shareholder return and
provide for exemption from limits on the ability of the Company to deduct
executive compensation. Accordingly, Mr. Engelstein's base salary for fiscal
1999 was determined pursuant to the terms of the Employment Agreement. The
Compensation Committee considered the Company's fiscal 1998 earnings and other
performance measures in determining Alec Engelstein's bonus, but there was no
specific relationship or formula by which Mr. Engelstein's bonus compensation
was tied to Company performance. For fiscal 1999 and years subsequent, the bonus
will be determined based on the goals set forth in the Employment Agreement.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
outstanding Common Stock, to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock. Such persons are required by
SEC regulations to furnish the Company with copies of all such reports they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors, and greater than ten percent beneficial owners have been
complied with.
A-8
<PAGE> 19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock of the Company as of October 10, 2000, by
(1) each of the "Named Executive Officers" (as defined above in "Executive
Compensation -- Summary Compensation Table"), (2) each other director of the
Company, (3) all directors and executive officers of the Company as a group, and
(4) each person known by the Company to be a beneficial owner of more than 5% of
the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING SHARES
------------------------ ----------------------- ------------------
<S> <C> <C>
Alec Engelstein........................................... 3,188,780(2) 28.6%
Harry Engelstein.......................................... 762,219(3) 6.9%
John A. Kraynick.......................................... 105,455(4) *
Lawrence R. Shawe......................................... 102,000(5) *
David Shapiro............................................. 288,875(6) *
Paul M. Leikert........................................... 29,300(7) *
Henry H. Fishkind, Ph.D................................... 1,400 *
Ronald J. Korn............................................ 7,499 *
Alan Shulman.............................................. 5,000 *
All directors and executive officers as a group (9
persons)................................................ 4,490,528(8) 38.9%
FMR Corp. ................................................ 1,458,700(9) 13.4%
82 Devonshire Street
Boston, Massachusetts 02109
Heartland Advisors, Inc. ................................. 1,259,100(9) 11.6%
789 North Water Street
Milwaukee, Wisconsin 53202
Dimensional Fund Advisors, Inc. .......................... 638,100(9) 5.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
---------------
* Represents less than 1%.
(1) Unless otherwise indicated, each person has sole voting and investment
power with respect to such shares. Unless otherwise indicated, each
person's address is 123 N.W. 13th Street, Suite 300, Boca Raton, Florida
33432.
(2) Includes 232,468 shares held of record by Sheila Engelstein, Alec
Engelstein's wife, and 280,000 shares issuable upon exercise of outstanding
options.
(3) Includes 120,000 shares issuable upon exercise of outstanding options.
(4) Includes 94,900 shares issuable upon exercise of outstanding options.
(5) Reflects 102,000 shares issuable upon exercise of outstanding options.
(6) Includes 36,000 shares issuable upon exercise of outstanding options,
60,825 shares held of record by Debra Shapiro, David Shapiro's wife, and
190,550 shares held in irrevocable trusts for the benefit of Alec
Engelstein's and Harry Engelstein's children and grandchildren. David
Shapiro is a trustee of such trusts with shared voting and dispositive
power.
(7) Includes 27,000 shares issuable upon exercise of outstanding options.
(8) Includes an aggregate of 659,900 shares issuable upon exercise of
outstanding options and 190,550 shares held in irrevocable trusts for the
benefit of Alec Engelstein's and Harry Engelstein's children and
grandchildren. David Shapiro is a trustee of such trusts with shared voting
and dispositive power.
(9) This disclosure is based solely upon information set forth in a Schedule
13G with respect to the indicated shareholder's ownership as of December
31, 1999.
A-9
<PAGE> 20
CHANGE IN CONTROL ARRANGEMENTS
The Merger Agreement and the Shareholders Agreement executed in connection
with such agreement are expected to result in a change in control of the
Company. See Section 11 of the Offer to Purchase, which is incorporated herein
by reference.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock from October 29, 1994 through October 31, 1999, based on
the market price of Common Stock and assuming reinvestment of dividends, with
(1) the Nasdaq Stock Market index prepared by the Center for Research in
Security Prices ("CRSP") and (2) CRSP's index for General Building
Contractors -- Residential Buildings (SIC Industry Group No. 152).
[Performance Graph]
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
10/94 10/95 10/96 10/97 10/98 10/99
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Engle Homes 100 104.2 84.9 184.9 160.5 128.3
CRSP Index for
Nasdaq Stock
Market (US Companies) 100 134.6 158.9 209.2 234.1 390.8
CRSP Index for General
Building Contractors--
Residential Buildings 100 106.7 112.3 135.8 140.5 97.2
--------------------------------------------------------------------------------
</TABLE>
Notes:
A. The lines represent annual index levels derived from compounded daily
returns that include all dividends.
B. If the annual interval, based on the fiscal year end, is not a trading
day, the preceding trading day is used.
C. The index level for all series was set to 100 on October 31, 1994.
A-10
<PAGE> 21
ANNEX B
[LETTERHEAD OF SALOMON SMITH BARNEY INC.]
October 12, 2000
The Board of Directors
Engle Homes, Inc.
123 N.W. 13th Street, Suite 300
Boca Raton, Florida 33432
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of Engle Homes, Inc. ("Engle") of the
consideration to be received by such holders pursuant to the terms and subject
to the conditions set forth in the Agreement and Plan of Merger, dated as of
October 12, 2000 (the "Merger Agreement"), among Technical Olympic USA, Inc.
("Technical Olympic"), Helios Acquisition Corp., a wholly owned subsidiary of
Technical Olympic ("Sub"), and Engle. As more fully described in the Merger
Agreement, (i) Technical Olympic will cause Sub to commence a tender offer to
purchase all outstanding shares of the common stock, par value $0.01 per share,
of Engle ("Engle Common Stock") at a purchase price of $19.10 per share, net to
the seller in cash without interest (the "Cash Consideration" and, such tender
offer, the "Tender Offer"), and (ii) subsequent to the Tender Offer, Sub will be
merged with and into Engle (the "Merger" and, together with the Tender Offer,
the "Transaction") and each outstanding share of Engle Common Stock not
previously tendered will be converted into the right to receive the Cash
Consideration.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of Engle concerning the business, operations and prospects of
Engle. We examined certain publicly available business and financial information
relating to Engle as well as certain financial forecasts and other information
and data for Engle which were provided to or otherwise discussed with us by the
management of Engle. We reviewed the financial terms of the Transaction as set
forth in the Merger Agreement in relation to, among other things: current and
historical market prices and trading volumes of Engle Common Stock; the
historical and projected earnings and other operating data of Engle; and the
capitalization and financial condition of Engle. We considered, to the extent
publicly available, the financial terms of certain other similar transactions
recently effected which we considered relevant in evaluating the Transaction and
analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of Engle. In connection with our
engagement, we were requested to approach, and we held discussions with, certain
third parties to solicit indications of interest in the possible acquisition of
Engle. In addition to the foregoing, we conducted such other analyses and
examinations and considered such other information and financial, economic and
market criteria as we deemed appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the management of Engle that such forecasts and other information and
data were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of Engle as to the future financial
performance of Engle. We have not made or been provided with an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Engle nor have we made any physical inspection of the properties or assets of
Engle. We express no view as to, and our opinion does not address, the relative
merits of the Transaction as compared to any alternative business strategies
that might exist for Engle or the effect of any other transaction in which Engle
might engage. Our opinion is necessarily based upon information
B-1
<PAGE> 22
The Board of Directors
Engle Homes, Inc.
October 12, 2000
Page 2
available to us, and financial, stock market and other conditions and
circumstances existing and disclosed to us, as of the date hereof.
Salomon Smith Barney Inc. has acted as financial advisor to Engle in connection
with the proposed Transaction and will receive a fee for such services, a
significant portion of which is contingent upon the consummation of the
Transaction. We also will receive a fee upon the delivery of this opinion. We
have in the past provided investment banking services to Engle unrelated to the
proposed Transaction, for which services we have received compensation. In the
ordinary course of our business, we and our affiliates may actively trade or
hold the securities of Engle and Technical Olympic for our own account or for
the account of our customers and, accordingly, may at any time hold a long or
short position in such securities. In addition, we and our affiliates (including
Citigroup Inc. and its affiliates) may maintain relationships with Engle,
Technical Olympic and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of Engle in its evaluation of the proposed
Transaction, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to whether such stockholder should tender
shares of Engle Common Stock in the Tender Offer or how such stockholder should
vote on any matters relating to the proposed Transaction.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Cash Consideration to be received in
the Transaction by the holders of Engle Common Stock (other than Technical
Olympic and its affiliates) is fair, from a financial point of view, to such
holders.
Very truly yours,
/s/ SALOMON SMITH BARNEY INC.
SALOMON SMITH BARNEY INC.
B-2
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
-------------------
<C> <S>
*+(a)(1) -- Offer to Purchase dated October 20, 2000.
*+(a)(2) -- Letter of Transmittal.
*(a)(3) -- Letter to shareholders of the Company dated October 20,
2000.
++(a)(4) -- Joint Press Release issued by the Company and Technical
Olympic on October 12, 2000.
+(a)(5) -- Joint Press Release issued by the Company and Technical
Olympic on October 20, 2000.
+(a)(5) -- Form of Summary Advertisement dated October 20, 2000.
+(e)(1) -- Agreement and Plan of Merger, dated as of October 12,
2000, by and among the Company, Technical Olympic and the
Purchaser.
+(e)(2) -- Stock Voting and Tender Agreement, dated as of October
12, 2000, by and among the Purchaser, Technical Olympic
and certain shareholders of the Company.
+++*(e)(3) -- Opinion of Salomon Smith Barney Inc. dated October 12,
2000.
+(e)(4) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Alec Engelstein (including a
Non-Competition Agreement in the form attached as Exhibit
A).
+(e)(5) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Harry Engelstein.
+(e)(6) -- Employment Agreement, dated as of October 12, 2000,
between the Company and John A. Kraynick.
+(e)(7) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Lawrence R. Shawe.
+(e)(8) -- Employment Agreement, dated as of October 12, 2000,
between the Company and David Shapiro.
+(e)(9) -- Employment Agreement, dated as of October 12, 2000,
between the Company and Paul M. Leikert.
</TABLE>
---------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule
TO dated October 20, 2000, and incorporated herein by reference.
++ Filed as an exhibit to the Company's Schedule 14D-9-C on October 12, 2000,
and incorporated herein by reference.
+++ Included as Annex B to this Schedule 14D-9.
