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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SUNDANCE HOMES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
o 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:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
DOCUMENT #: CHGO02A (72020-00001-3) 357256.1;DATE:01/19/98/TIME:12:26
<PAGE>
(SUNDANCE LOGO)
January 27, 1998
To the Shareholders of
SUNDANCE HOMES, INC.:
You are cordially invited to attend the Annual Meeting of
Shareholders of Sundance Homes, Inc. to be held at the Woodfield
Financial Center, 1375 East Woodfield Road, Suite C-80,
Schaumburg, Illinois 60173, on Wednesday, March 25, 1998 at
9:00 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement
fully describe the formal business to be transacted at the Annual
Meeting, which includes the election of two directors as the
Class I directors of the Company.
Directors and officers of the Company will be present to
help host the Annual Meeting and to respond to any questions that
our shareholders may have. By attending the Annual Meeting, you
will have an opportunity to hear the plans for our Company's
future, to meet your officers and directors and to participate in
the business of the Annual Meeting. If it is not possible for
you to attend, please return the enclosed Proxy immediately to
ensure that your shares will be voted.
We look forward to seeing you at the Woodfield Financial
Center, 1375 East Woodfield Road, Suite C-80, Schaumburg,
Illinois 60173, on Wednesday, March 25, 1998 at 9:00 a.m., local
time.
Sincerely,
MAURICE SANDERMAN
Chairman, President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 25, 1998
To the Shareholders of
SUNDANCE HOMES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders (the "Annual Meeting") of Sundance Homes, Inc. (the
"Company") will be held at the Woodfield Financial Center, 1375
East Woodfield Road, Suite C-80, Schaumburg, Illinois 60173 on
Wednesday, March 25, 1998, at 9:00 a.m., local time. A Proxy and
a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the following purposes:
(1) To elect two directors as the Class I
directors of the Company.
(2) To consider and act upon a proposal to approve an
amendment to the Sundance Homes, Inc. 1993 Directors'
Stock Option Plan which authorizes the addition of
50,000 shares of Common Stock authorized for issuance
under such plan and the increase in the maximum number
of shares any director may be granted an option to
purchase under such plan from 25,000 shares of Common
Stock to 50,000 shares of Common Stock.
(3) To transact such other business as may
properly come before the Annual Meeting or any
adjournments thereof.
The close of business on January 26, 1998 has been fixed as
the record date for determining shareholders entitled to notice
of and to vote at the Annual Meeting or any adjournments thereof.
For a period of at least ten days prior to the Annual Meeting, a
complete list of shareholders entitled to vote at the Annual
Meeting shall be open to the examination of any shareholder
during ordinary business hours at the offices of the Company at
201 North Wells Street, Suite 1800, Chicago, Illinois 60606.
Information concerning the matters to be acted upon at the
Annual Meeting is set forth in the accompanying Proxy Statement.
By Order of the Board of Directors,
DAVID APTER
Corporate Secretary
Schaumburg, Illinois
January 27, 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE ANNUAL
MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
SUNDANCE HOMES, INC.
1375 East Woodfield Road
Suite 600
Schaumburg, Illinois 60173
(847) 255-5555
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
March 25, 1998
The accompanying Proxy is solicited by the Board of
Directors of Sundance Homes, Inc. (the "Company") for use at the
Annual Meeting of Shareholders to be held on March 25, 1998, or
at any adjournments thereof (the "Annual Meeting"). Giving the
Proxy will not in any way affect a shareholder's right to attend
the Annual Meeting and to vote in person. The approximate date
on which this Proxy Statement and the accompanying Proxy will be
mailed to shareholders is January 27, 1998.
A Proxy in the accompanying form which is properly signed,
dated, returned and not revoked will be voted in accordance with
the instructions contained therein. Unless authority to vote for
the election of directors (or for any one or more nominees) is
withheld, Proxies will be voted for the slate of two directors
proposed by the Board and, if no contrary instructions are given,
Proxies will be voted for approval of the remaining items on the
Proxy. Discretionary authority is provided in the Proxy as to
any matters not specifically referred to therein. Management is
not aware of any other matters which are likely to be brought
before the Annual Meeting. However, if any such matters properly
come before the Annual Meeting, it is understood that the Proxy
holder or holders are fully authorized to vote thereon in
accordance with his or their judgment and discretion.
The Proxy may be revoked at any time before it is exercised
by providing written notice of such revocation to Sundance Homes,
Inc., 201 North Wells Street, Suite 1800, Chicago, Illinois
60606, Attn: Corporate Secretary. The Proxy also may be revoked
by the attendance and voting by a shareholder at the Annual
Meeting or by the execution and delivery to the Company of a
Proxy dated subsequent to a prior Proxy.
RECORD DATE
The Board of Directors has fixed the close of business on
January 26, 1998 as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Annual
Meeting. As of the record date of the Annual Meeting there were
outstanding 7,807,000 shares of Common Stock. The outstanding
shares of Common Stock constitute the only outstanding voting
securities of the Company entitled to be voted at the Annual
Meeting.
<PAGE>
REQUIRED VOTE
The vote of a plurality of the shares cast in person or by
proxy is required to elect nominees for directors. With respect
to the election of directors at the Annual Meeting, each holder
of Common Stock is entitled to vote the number of shares owned by
such Shareholder for as many persons as there are directors to be
elected, or to cumulate such votes and give one candidate as many
votes as shall equal the number of directors multiplied by the
number of such shares or to distribute such cumulative votes in
any proportion among any number of candidates. Nominees who
receive the greatest number of votes, up to the number of
directors to be elected, shall be elected. See "Election of
Directors." The vote of a majority of the shares present in
person or by Proxy and entitled to vote is required to approve an
amendment to the Sundance Homes, Inc. 1993 Directors' Stock
Option Plan (the "Directors' Plan") which authorizes the addition
of 50,000 shares of Common Stock authorized for issuance under
the Directors' Plan and the increase in the maximum number any
director may be granted an option to purchase under the
Directors' Plan from 25,000 shares to 50,000 shares.
The presence at the Annual Meeting by person or by Proxy, of
the holders of a majority of the outstanding Common Stock is
necessary to constitute a quorum. Votes cast by proxy or in
person at the Annual Meeting will be tabulated by the election
inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted
for purposes of determining the approval of any matter submitted
to the shareholders for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that
matter.
Maurice Sanderman, Chairman, President and Chief Executive
Officer of the Company, and an irrevocable trust established by
Mr. Sanderman for the benefit of members of his family, together
have sufficient voting power to elect the nominees proposed by
the Board of Directors and to approve the proposed amendment to
the Directors' Plan, and they have advised the Board of Directors
that they will vote their shares in favor of the election of such
nominees and for the approval of such amendment.
PROXIES
Maurice Sanderman and Charles Engles, the persons named as
proxies on the Proxy card accompanying this Proxy Statement, were
selected by the Board of Directors of the Company to serve in
such capacity. Messrs. Sanderman and Engles are each directors
of the Company. Each executed and returned Proxy will be voted
in accordance with the directions indicated thereon, or if no
direction is indicated, such Proxy will be voted in accordance
with the recommendations of the Board of Directors contained in
this Proxy Statement. Unless instructions to the contrary are
given, the shares represented by a Proxy at the Annual Meeting
will be voted pro rata for the Board of Directors' nominees.
ELECTION OF DIRECTORS
(Proposal 1)
The Articles of Incorporation of the Company provide that
the members of the Company's Board of Directors shall be divided
into three classes, with each class having two members. At the
1994 annual meeting of shareholders, as specified in the Articles
of Incorporation of the Company, the directors of the Company
were elected into three classes, with the Class I directors being
elected for a one-year term, Class II directors being elected for
a two-year term and Class III directors being elected for a three-
year term. The Articles of Incorporation of the Company provide
that, at each annual meeting after such election, successors to
the class of directors whose term expires at that annual meeting
shall be elected for a three-year term.
With respect to the election of directors at the Annual
Meeting, each holder of Common Stock is entitled to vote the
number of shares owned by such Shareholder for as many persons as
there are directors to be elected, or to cumulate such votes and
give one candidate as many votes as shall equal the number of
directors multiplied by the number of such shares or to
distribute such cumulative votes in any proportion among any
number of candidates. Nominees who receive the greatest number
of votes, up to the number of directors to be elected, shall be
elected.
The persons named in the enclosed form of Proxy, unless
otherwise directed therein by the shareholder giving the Proxy,
intend to vote such Proxy FOR the election of the nominees named
below as directors for the terms specified and intend to vote the
number of shares owned by such shareholders for each nominee. If
any nominee becomes unavailable for election or unable to serve
as a director, the persons named in the enclosed form of Proxy
intend to cast votes for a person that will be designated by the
Board of Directors of the Company. Management has no reason to
doubt the availability of any of the nominees to serve and no
reason to believe that any of the nominees will be unavailable or
unwilling to serve if elected to office. To the knowledge of
management, the nominees intend to serve the terms for which
election is sought. In the event that a shareholder withholds
authority to vote for one or more nominees, the persons named in
the enclosed form of Proxy intend to distribute that
shareholder's cumulative votes pro rata among the nominees for
whom authority is not withheld.
The Board of Directors has nominated two persons for
election as Class I directors at this Annual Meeting to serve a
three year term expiring at the Annual Meeting in 2001 or until
their successors are elected and qualified. Both nominees are
currently serving as directors and have consented to serve for
new terms.
Nominees
<TABLE>
The names of the nominees for the office of director in
Class I, together with certain information concerning such
nominees, are set forth below:
<CAPTION>
Name Age Position With the Company and Principal Occupation Director Since
<S> <C> <C> <C>
Gerald Ginsburg 56 Director; Managing Director of American Express Tax and 1995
Business Services; Partner in the public accounting firm
of Checkers, Simon & Rosner
Joseph Atkin 52 Director; Vice President and Chief Financial Officer 1997
</TABLE>
Gerald Ginsburg is a certified public accountant and has
served as a Managing Director of American Express Tax and
Business Services since April, 1997 and has been a partner with
the public accounting firm of Checkers, Simon & Rosner since
1985. Mr. Ginsburg previously was the Managing Director of the
accounting firm of Berman & Berman, Ltd., which merged with
Checkers, Simon & Rosner in 1985. Mr. Ginsburg is a former
Chairman of the Business Management Committee of the Home
Builders Association of Greater Chicago.
Joseph Atkin has been the Company's Vice President and
Chief Financial Officer since December 1996. From February 1996
to December 1996, Mr. Atkin served as President and Chief
Financial Officer of Circle Fine Art Company ("Circle"), a
publisher and retailer of fine art, and from 1980 to February
1996, he served as Vice President and Chief Financial Officer of
Circle. In February 1996, Circle filed for relief under Chapter
11 of the United States Bankruptcy Code.
<PAGE>
Other Directors
<TABLE>
The following persons will continue as directors of the
Company after the Annual Meeting until their terms of office
expire (as indicated below) or until their successors are elected
and qualified.
<CAPTION>
Class and Year
Director In Which Term
Name Age Position With the Company and Principal Occupation Since Will Expire
<S> <C> <C> <C> <C>
Dennis Bookshester 59 Director; Chairman of Cutanix Corporation 1993 Class II
1999
Maurice Sanderman 57 Chairman of the Board, President and Chief Executive Officer 1975 Class III
2000
Charles Engles 50 Director; President and Chief Executive Officer of Cutanix 1994 Class III
Corporation 2000
</TABLE>
Dennis Bookshester has served as the Chairman of Cutanix
Corporation, a biotechnology company primarily developing
advanced skin care products, since September 1997. From January
1997 until September 1997, Mr. Bookshester served as the
President and Chief Executive Officer of Hydrotech-H20 Plus.
From 1991 until joining Hydrotech-H20 Plus, Mr. Bookshester was
an independent business consultant and during 1990 and 1991
served as Chief Executive Officer of Zale Corp., a Texas-based
jewelry store chain. From 1982 to 1989 he served as Chief
Executive Officer of the retail division of Carson Pirie Scott &
Company, a major Chicago department store. He also is a Director
of Evans Inc., Fruit of the Loom, Inc., and Playboy Enterprises,
Inc.
Maurice Sanderman founded the Company in 1975 and has been
the Company's Chairman of the Board and Chief Executive Officer
since that time and has been the Company's President since April
1997. Mr. Sanderman also served as President of the Company from
1975 until December 1995. Prior to forming the Company, Mr.
Sanderman served as Treasurer of Kaufman and Broad Homes Inc. of
Illinois, a homebuilder with developments throughout the United
States. Mr. Sanderman has been and continues to be involved with
numerous associations operating within the homebuilding industry,
including the Home Builders Association of Greater Chicago of
which he was a member of the Board of Governors.
In February 1992, an involuntary bankruptcy proceeding was
initiated against Castle Products, Inc., a manufacturer of wood
railings of which Maurice Sanderman was the sole shareholder.
Charles Engles has served as President and Chief Executive
Officer of Cutanix Corporation since September 1997. From 1994
until March 1997, Mr. Engles served as Chairman and Chief
Executive Officer of Stillwater Mining Company, a platinum and
palladium mining company. From 1989 until 1994, he served as
Senior Vice President, Corporate Development, for Manville
Corporation, Denver, Colorado, a manufacturer of various building
products. From 1984 to 1989, he served as Senior Vice President
of The Trump Group in Menlo Park, California, a leveraged buy-out
firm. Mr. Engles was a Rhodes Scholar at Oxford University in
England.
In November 1994, a lawsuit was brought against the Company
and certain directors and employees of the Company by the Board
of Managers of the Parkside on the Green Condominium Association.
The complaint seeks damages against the Company for alleged
construction defects in the approximate amount of $1.6 million,
together with punitive damages against the named individuals for
alleged breach of fiduciary duty. The Company has assumed the
defense of this lawsuit on behalf of the individual defendants.
The lawsuit is in the discovery process and the Company is
defending the lawsuit vigorously.
<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors has an Audit Committee currently
composed of Charles Engles, Dennis Bookshester and Gerald
Ginsburg. During fiscal 1997, Mr. Engles was the Chairman of the
Audit Committee and currently Mr. Ginsburg serves as Chairman of
the Audit Committee. The Audit Committee met on one occasion
during fiscal 1997. The Audit Committee generally has
responsibility for recommending independent accountants to the
Board for selection, reviewing the plan and scope of the
accountants' audit, reviewing the Company's audit and control
functions and reporting to the full Board of Directors regarding
all of the foregoing.
The Board of Directors also has a Compensation Committee
currently composed of Dennis Bookshester (Chairman), Charles
Engles and Gerald Ginsburg. The Compensation Committee met on
two occasions during fiscal 1997. The Compensation Committee
establishes the overall compensation policies to be followed by
the Board of Directors, recommends the compensation of the
Company's key employees, administers the Stock Incentive Plan and
prepares the report of the Compensation Committee.
The Company does not have a Nominating Committee.
The Board of Directors regularly meets quarterly, and,
during fiscal 1997, the Board of Directors met five times.
Compensation of Directors
Members of the Board of Directors who are not employees of
the Company are paid $15,000 annually for their services as
directors and are paid $500 for each meeting of the Audit
Committee and the Compensation Committee which they attend.
Outside directors are also eligible to receive options under the
Directors' Plan. The Directors' Plan provides for the granting
of options to purchase an aggregate of 100,000 shares (subject to
adjustment in certain circumstances) of Common Stock to members
of the Board of Directors who are not also employees of the
Company (the "Outside Directors"). The Directors' Plan is
designed to promote the interests of the Company by providing an
increased opportunity for existing and potential new directors to
acquire an investment in the Company, thereby maintaining and
strengthening their desire to remain with or join the Company's
Board of Directors and align their interests with those of the
shareholders.
Outside Directors are granted options to acquire 5,000
shares of Common Stock on each of the date on which a person is
first elected as a Director, the date of the first annual meeting
of shareholders held subsequent to such person's election and,
thereafter, on the date of each succeeding annual meeting of
shareholders after which such person is still serving as a
director (with a limit of options to acquire a total of 25,000
shares to be granted to any Outside Director). All options
granted under the Directors' Plan are exercisable at the first
anniversary of the date granted and at a price per share equal to
the closing price of the Common Stock as reported on the Nasdaq
National Market on the date of grant or, if the market is closed
on such date, the next business day. Once granted, options may
be canceled under certain circumstances including death and
termination of directorship.
If any options under the Directors' Plan are surrendered
before exercise or lapse without exercise, in whole or in part,
the shares reserved for grant will revert to the status of
available shares. All options expire on the earlier to occur of
(a) ten years following the Grant Date, (b) two years after the
Outside Director's directorship terminates by reason of
Disability (as defined in the Directors' Plan), death or failure
to be renominated or elected as a director, and (c) six months
after the Outside Director's directorship terminates for any
reason other than disability, death or failure to be renominated
or reelected.
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
The following persons are executive officers of the Company
who are not identified under the caption "Election of Directors."
<CAPTION>
Name Age Position
<S> <C> <C>
Thomas Small 47 President of Sundance Suburban Properties, Inc., a wholly-owned
subsidiary of the Company
Jon Tilkemeier 35 Vice President - Marketing and Sales
</TABLE>
Thomas Small has been the President of Sundance Suburban
Properties, Inc., a wholly-owned subsidiary of the Company, since
April 1997. From February 1996 until April 1997, Mr. Small was
Vice President - Land Acquisition and Development and from July
1994 to February 1996, he was the Company's Vice President -
Development. Mr. Small was appointed as an executive officer of
the Company in December 1996. From 1989 to May 1994, Mr. Small
was the Vice President of Construction/Development of Fogelsen
Development Company, a real estate development company.
Jon Tilkemeier has been the Company's Vice President -
Marketing and Sales since September 1996 and was appointed as an
executive officer of the Company in December 1996. From 1995
until joining the Company, Mr. Tilkemeier was a Director of
Corporate Strategy and Business Development of Ameritech
Corporation. From 1994 to 1995, he was the General Manager of
Marketing and Sales of New Media Enterprises, a subsidiary of
Ameritech Corporation specializing in development of interactive
television and cable television services. From 1989 to 1994, Mr.
Tilkemeier served in various operations, sales and marketing
managerial positions for Columbia TriStar Home Video, a
subsidiary of Sony Pictures Entertainment.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), requires executive officers and
directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial reports of
ownership and reports of changes in ownership with the Securities
and Exchange Commission ("SEC") and The Nasdaq Stock Market.
Executive officers, directors, and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms
furnished to the Company and written representations from the
executive officers and directors, the Company believes that,
except for the failure to timely file a Form 5 to report the
grant to Thomas Small on May 22, 1997 of an option to purchase
20,000 shares of Common Stock, all Section 16(a) filing
requirements applicable to its executive officers, directors, and
greater than ten percent (10%) beneficial owners were complied
with during fiscal 1997. A report was subsequently filed with
respect to Mr. Small's option grant.
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
The following table provides information concerning the
annual and long-term compensation for services in all capacities
to the Company for 1994, the first nine months of 1995, fiscal
1996 and fiscal 1997 for those persons who were at September 30,
1997 (i) the Chief Executive Officer and (ii) an executive
officer of the Company whose salary and bonus exceeded $100,000
for fiscal 1997 (collectively, the "Named Officers").
Summary Compensation Table
<CAPTION>
Long Term
Compensation
Annual
Compensation Awards
Securities
Underlying All Other
Name and principal position Period Salary ($) Bonus ($) Options (#) Compensation
<S> <C> <C> <C> <C> <C>
Maurice Sanderman, Year ended 9/30/97 $ 420,385 - - -
Chairman, President and Year ended 9/30/96 300,000 -
Chief Executive Officer Nine months ended 9/30/95 298,077 -
Year ended 12/31/94 500,000 $ 260,000
Joseph Atkin, Year ended 9/30/97 114,231 (1) - 40,000 -
Vice President and Chief
Financial Officer
Thomas Small, Year ended 9/30/97 167,231 - 20,000 -
President of Sundance Suburban
Properties, Inc.
Jon Tilkemeier, Year ended 9/30/97 147,115 - - -
Vice President - Marketing
and Sales
<FN>
__________________
(1) Represents salary earned since Mr. Atkin joined the Company on
December 12, 1996 through September 30, 1997.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
<TABLE>
The following table provides information on grants of stock options
during the year ended September 30, 1997 to the Named Officers pursuant to
the Company's Stock Incentive Plan. No stock appreciation rights were
granted by the Company during fiscal 1997.
<CAPTION>
Option Grants In Last Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of
Percent of Total Stock Price Appreciation for
Number of Shares Options Granted Option Term (2)
Underlying Options to Employees in Exercise or Expiration
Name Granted (#) Fiscal Year Base Price (1) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Maurice Sanderman - - - - - -
Joseph Atkin 40,000 (3) 29.6% $2.75 12/12/06 $60,800 $175,200
Thomas Small 20,000 (4) 14.8 2.25 05/21/07 28,400 71,800
Jon Tilkemeier - - - - - -
<FN>
__________________
(1) Represents the fair market value of the Company's common shares as of
the close of business on the grant date.
(2) Potential realizable value is presented net of the option exercise
price but before any federal or state income taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only. Actual gains are dependent on the future performance of the
common stock and the option holder's continued employment throughout the
vesting period. The amounts reflected in the table may not necessarily
be achieved.
(3) Options are exercisable starting on December 13, 1997, with options to
purchase 25% of the shares covered thereby becoming exercisable at that
time and with options to purchase an additional 25% of the shares
becoming exercisable on each successive December 13 with full vesting
occurring on December 13, 2000.
(4) Options are exercisable starting on May 22, 1998, with options to
purchase 25% of the shares covered thereby becoming exercisable at that
time and with options to purchase an additional 25% of the shares
becoming exercisable on each successive May 22 with full vesting
occurring on May 22, 2001.
</FN>
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
The following table provides information on the Named Officers'
unexercised options at September 30, 1997. All such options were granted
under the Company's Stock Incentive Plan. None of the Named Officers
exercised any options during fiscal 1997.
Fiscal Year-End Option Values
<CAPTION>
Numbers of Shares
Underlying Unexercised Value of Unexercised In-The-Money
Options at 9/30/97 (#) Options at 9/30/97 ($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C>
Maurice Sanderman - -
Joseph Atkin 0/40,000 $0/$0
Thomas Small 12,250/34,750 0/0
Jon Tilkemeier 10,000/30,000 0/0
<FN>
__________________
(1) The value per option is calculated by subtracting the exercise price
from the closing price of the Company's Common Stock of $1.625 as
reported on the Nasdaq National Market on September 30, 1997.
</FN>
</TABLE>
<PAGE>
Employment Agreements
Effective December 11, 1996, the Company entered into an agreement
with Mr. Atkin providing for an annual base salary of $150,000 for the
first year of the agreement and an amount not less than $150,000 to be
determined by the Compensation Committee for the second year of the
agreement. The agreement provided for a minimum bonus of $50,000 at the
end of Mr. Atkin's first year of employment. On December 15, 1997, the
Compensation Committee set Mr. Atkin's base salary at $200,000 effective
October 1, 1997. Mr. Atkin was granted options to purchase 40,000 shares
of Common Stock on December 12, 1996, the date of commencement of his
employment. The exercise price of the options is $2.75, the fair market
value on the date of grant, and such options vest in four equal annual
increments beginning on December 13, 1997.
Effective September 26, 1996, the Company entered into an agreement
with Mr. Tilkemeier providing for an annual base salary of $150,000 for the
first year of the agreement and an amount not less than $150,000 to be
determined by the Compensation Committee for the second year of the
agreement. On December 15, 1997, the Compensation Committee set Mr.
Tilkemeier's base salary at $200,000 effective October 1, 1997. The
agreement provided for a minimum bonus of $75,000 at the end of Mr.
Tilkemeier's first year of employment subject to his and the Company
meeting certain performance criteria. Pursuant to the agreement, Mr.
Tilkemeier was granted options to purchase 40,000 shares of Common Stock on
September 26, 1996, the date of commencement of Mr. Tilkemeier's
employment. The exercise price of the options is $3.625, the fair market
value on the date of grant, and such options vest in four equal annual
increments beginning on September 27, 1997. The agreement also provides
that Mr. Tilkemeier will be entitled to options to purchase at least 20,000
shares of Common Stock at the end of each of his first two years of
employment provided he and the Company meet certain performance criteria.
In the event Mr. Tilkemeier's employment with the Company is terminated by
the Company without "cause" (as defined in the agreement) during the year
ending September 30, 1998, Mr. Tilkemeier is entitled to receive a lump sum
severance payment equal to one year's base salary.
Stock Incentive Plan
The Stock Incentive Plan was effective as of April 7, 1993 and was
amended effective as of February 16, 1996 to increase the number of shares
of Common Stock under the Stock Incentive Plan. The purpose of the Stock
Incentive Plan is to enable officers and key employees of the Company to
participate in the Company's future and to enable the Company to attract
and retain these persons by offering them proprietary interests in the
Company. The Stock Incentive Plan is administered by the Company's
Compensation Committee and authorizes the issuance of up to 625,000 shares
of Common Stock pursuant to the grant or exercise of stock options, stock
appreciation rights, restricted stock or deferred stock (generally,
"Awards").
On December 13, 1996, the Company granted to Mr. Atkin options to
purchase a total of 40,000 shares of stock and granted to two of the
Company's employees options to purchase a total of 30,000 shares of stock,
each at an exercise price of $2.75 per share. On January 3, 1997, the
Company granted to one of its employees options to purchase a total of
15,000 shares of stock at an exercise price of $2.625 per share. On May
22, 1997, the Company granted to Mr. Small options to purchase a total of
20,000 shares of stock and granted to four of its employees options to
purchase a total of 18,500 shares of stock, each at an exercise price of
$2.25. As of January 1, 1998, options to purchase a total of 849,000
shares had been granted since April 7, 1993 at exercise prices ranging from
$1.625 to $11.25 per share. As of January 1, 1998, 2,000 of these options
had been exercised and options to purchase 92,625 shares were exercisable.
As of January 1, 1998, options to purchase 518,000 shares had been
forfeited upon termination of employment leaving 294,500 shares available
for future awards.
In the event of a Change in Control of the Company (as defined in the
Stock Incentive Plan): (1) any Stock Appreciation Rights and Stock Options
outstanding as of the date of such Change in Control which are not then
exercisable and vested will become fully exercisable and vested to the full
extent of the original grant; and (2) the restrictions and deferral
limitations applicable to any shares of Restricted Stock and Deferred Stock
will lapse, and such shares of Restricted Stock and Deferred Stock will
become free of all restrictions and become fully vested and transferable to
the full extent of the original grant.
<PAGE>
A Change in Control includes any transaction which would result in
Maurice Sanderman and an irrevocable trust established by Mr. Sanderman for
the benefit of members of his family owning, directly or indirectly, less
than 50.1%, or any other person owning, directly or indirectly, 20% or more
of the outstanding Common Stock of the Company or the voting power of the
Company; certain changes in the members of the Board of Directors; certain
corporate transactions (such as a merger); and the sale of substantially
all of the Company's assets.
Report of the Compensation Committee on Executive Compensation
The Board of Directors approved a written charter regarding the
mission and functions of the Compensation Committee (the "Compensation
Committee") on August 2, 1995. The Compensation Committee, currently
composed of Dennis Bookshester, Charles Engles and Gerald Ginsburg, met on
two occasions during fiscal 1997. During that time, the Compensation
Committee reviewed and approved the Company's executive compensation
program and policies for executive personnel.
The overall objective of the Company's executive compensation program
is to provide base compensation levels and compensation incentives (in the
form of bonus and stock options) that attract and retain the highest
quality individuals for key executive positions with the company. The
executive compensation program is intended to recognize individual
contributions to corporate performance and to recognize the overall
performance of the Company relative to the performance of other
corporations in the homebuilding industry.
Base Compensation
The Compensation Committee annually reviews base compensation levels
for its executive personnel to determine that such compensation is
competitive with other homebuilders of similar size, based upon the results
of a nation-wide survey conducted by an independent third party. While
there are 36 homebuilders participating in the survey, only one of the
participants is included in the Company's Peer Group Index described below
under the caption "Performance Graph." Base pay ranges are evaluated
against the results of the survey. Individual base compensation levels
within pay ranges vary depending upon performance, experience and the scope
of each particular position.
Bonuses
In 1995, the Company hired a compensation consultant to evaluate its
bonus plan and to make recommendations for its improvement. As a result of
this study a new plan was proposed which established a bonus pool for all
executive officers based upon pre-tax and pre-bonus income, return on
capital, and growth measurements. The new plan was approved by the
Compensation Committee on June 19, 1995. Individual amounts are determined
by an evaluation of individual performance as compared to performance
goals, then adjusted to conform to the bonus pool. The performance goals
address a wide range of objectives that are designed to reflect the ways in
which each person is expected to contribute to the Company's performance.
Examples of these criteria include: achieving orders and delivery quotas,
gaining final subdivision approvals, and reducing operating costs.
The Company did not award any cash bonuses to its executive personnel
for fiscal 1997 in light of the financial results of the Company over this
time period.
Stock Options
Stock options are granted as a means of aligning the economic
interests of executive personnel with those of the shareholders of the
Company. During fiscal 1997, the Company granted to current executive
officers options to purchase a total of 60,000 shares of Common Stock at
exercise prices ranging from $2.25 to $2.75.
<PAGE>
Compensation of the Chief Executive Officer
The bonus plan for Mr. Sanderman was determined by the Compensation
Committee as follows: up to 75% of the maximum bonus is based upon the
Company's attainment of certain financial objectives and up to 25% of the
maximum bonus is based upon other discretionary criteria such as growth and
organization matters. This arrangement was designed by the Compensation
Committee to compensate Mr. Sanderman on terms comparable to the terms of
employment of chief executive officers of other comparably sized, publicly-
owned homebuilders. No cash bonuses were awarded to Mr. Sanderman for
fiscal 1997. Effective April 1, 1997, the Compensation Committee approved
a $150,000 increase in Mr. Sanderman's annual base salary from $350,000 to
$500,000 as a result of his increased duties as the new President of the
Company following the resignation of Arthur Titus, the Company's former
President and Chief Operating Officer. Effective October 1, 1997, the
Compensation Committee approved a reduction in Mr. Sanderman's annual base
salary from $500,000 to $300,000 as part of the Company's cost cutting
measures.
Section 162(m)
The Board of Directors currently intends for all compensation paid to
the Named Officers to be tax deductible to the Company pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Section 162(m) of the Code provides that compensation paid to the Named
Officers in excess of $1,000,000 cannot be deducted by the Company for
Federal income tax purposes unless, in general, such compensation is
performance based, is established by an independent committee of directors,
is objective and the plan or agreement providing for such performance based
compensation has been approved in advance by shareholders. The
requirements of Section 162(m) of the Code, however, are uncertain at this
time and, the Company believes, arbitrary and inflexible. In the future,
the Board of Directors may determine to adopt a compensation program that
does not satisfy the conditions of Section 162(m) of the Code if, in the
Board of Directors' judgment, after considering the additional costs of not
satisfying Section 162(m) of the Code, such program is appropriate.
Compensation Committee
Dennis Bookshester (Chairman)
Charles Engles
Gerald Ginsburg
<PAGE>
PERFORMANCE GRAPH
<TABLE>
The graph set forth below compares the cumulative total shareholder
return on the Common Stock of the Company since its initial public offering
on July 9, 1993 through September 30, 1997 with the cumulative total return
on the Nasdaq Market Index and a Peer Group Index described below over the
same period (assuming the investment of $100 in the Common Stock at its
closing price of $8_ per share on July 9, 1993 and in each index on such
date, and the reinvestment of all dividends, if any).
(Performance graph plotted according to the following table)
<CAPTION>
7/9/93 12/31/93 12/31/94 9/30/95 9/30/96 9/30/97
<S> <C> <C> <C> <C> <C> <C>
Sundance Homes 100.00 134.33 31.72 29.85 47.76 20.90
Peer Group 100.00 120.16 51.14 77.73 76.17 125.60
NASDAQ Composite (U.S.) 100.00 110.57 108.11 150.55 178.60 245.24
<FN>
Sources: Media General Financial Services, Richmond, Virginia.
</FN>
</TABLE>
The Peer Group Index includes the stock performance of the
following homebuilders: Inco Homes Corp., Continental Homes
Holding Corp., Engle Homes, Inc., Dominion Homes, Inc. (f/k/a,
Borror Corp.), Washington Homes, Inc., Crossman Communities,
Inc., and Zaring Homes, Inc. The group of companies included in
the Peer Group Index is broader than the Standard & Poors Index
of Homebuilders, which consists of only three companies, and the
Company believes its Peer Group Index is comprised of companies
with similar operations and is more indicative of the overall
performance of the industry as a whole. Borror Corp. completed
its initial public offering in March 1994 and its performance is
not reflected in the Peer Group data prior to the period ended
December 31, 1994.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
<TABLE>
The following table sets forth, as of January 1, 1998,
certain information with respect to the beneficial ownership of
the Company's Common Stock by (i) each person known by the
Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company,
(iii) the Named Officers, and (iv) all executive officers and
directors as a group.
<CAPTION>
Number of Shares Percent of
Name and Address Beneficially Owned (1) Ownership
<S> <C> <C>
Maurice Sanderman (2)(3) 3,537,500 45.3%
Myra Sanderman, as Investment Adviser of the 1,175,000 15.1
Sanderman Descendants Trust U/A/D 12/29/92 (2)
Wellington Management Company (4) 700,500 9.0
75 State Street
Boston, Massachusetts 02109
First Financial Fund, Inc. (4)(5) 545,300 7.0
One Seaport Plaza - 25th Floor
New York, New York 10292
Dennis Bookshester (6) 32,000 *
Charles Engles (6) 31,000 *
Gerald Ginsburg (6) 24,000 *
Joseph Atkin (6) 10,000 *
Thomas Small (6) 12,250 *
Jon Tilkemeier (6) 10,000 *
All executive officers and directors as a group (7 persons) (6) 3,656,750 46.2%
<FN>
__________________
* Less than 1%.
(1) Unless otherwise indicated below, the persons in the above
table have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
(2) The address of the shareholder listed is c/o Sundance Homes,
Inc., 1375 East Woodfield Road, Suite 600, Schaumburg,
Illinois 60173.
(3) Excludes 1,175,000 shares beneficially owned by Maurice
Sanderman's wife, Myra Sanderman, as investment adviser of the
Sanderman Descendants Trust U/A/D 12/29/92, of which shares
Maurice Sanderman disclaims beneficial ownership.
(4) Based on a Schedule 13G filed with the SEC dated February
14, 1997. According to the Schedule 13G, Wellington
Management Company has shared voting power with respect to
155,200 shares and shared dispositive power with respect to
all 700,500 shares, including 545,300 shares beneficially
owned by First Financial Fund, Inc. as described in Note 6
below.
(5) Based on a Schedule 13G filed with the SEC dated February
18, 1997. According to the Schedule 13G, First Financial
Fund, Inc. has sole voting power and shared dispositive power
with respect to all 545,300 shares.
(6) Includes the following number of shares issuable on or
before March 2, 1998 pursuant to the exercise of stock
options: Dennis Bookshester and Charles Engles, 25,000 each;
Gerald Ginsburg, 20,000; Joseph Atkin and Jon Tilkemeier,
10,000 each; and Thomas Small, 12,250.
</FN>
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
Due to the closely held nature of the Company prior to its
initial public offering in July 1993, the Company engaged in a
number of transactions with Maurice Sanderman, the President of
the Company, and affiliates.
In 1993, the Company issued promissory notes (collectively,
the "Dividend Notes") to Mr. Sanderman as distributions for
periods prior to 1993 when the Company elected under Subchapter S
of the Internal Revenue Code of 1986, as amended, to have its net
taxable income taxed directly to Mr. Sanderman. As of January 1,
1998, the principal balance outstanding on the Dividend Notes was
$4,193,000 plus accrued and unpaid interest of approximately
$75,000. During fiscal 1997, all previously accrued and unpaid
interest was paid to Mr. Sanderman. The Dividend Notes are
subordinated to all of the Company's bank indebtedness and bear
interest at a rate of 7.5% per year, compounded daily. Mr.
Sanderman is obligated to pledge the proceeds of the Dividend
Note to secure the Company's debt to its principal lenders,
LaSalle National Bank and Bank One, Milwaukee, N.A. Effective
September 30, 1997, the maturity date of the Dividend Notes was
extended to September 30, 1998.
The Company has entered into a tax indemnification agreement
with Mr. Sanderman which provides for, among other things, the
indemnification of Mr. Sanderman for any losses or liabilities
with respect to any additional taxes (including interest,
penalties and legal fees) resulting from the Company's operations
during the period in which it was an S Corporation.
The Company has entered into an indemnity agreement with
each of its directors and certain of its officers providing for
indemnification of such director or officer by the Company to the
maximum extent permitted under Illinois law. Such indemnity
agreements provide, among other things, indemnity for judgments
and settlements in derivative actions, prompt payment of legal
expenses in advance of indemnification and equitable contribution
by the Company in certain instances in the event such director or
officer is not entitled to full indemnification.
* * * * *
APPROVAL OF AMENDMENT TO
THE 1993 DIRECTORS' STOCK OPTION PLAN
(Proposal 2)
The shareholders are asked to consider and vote to approve
the proposal to amend the Directors' Plan to authorize the
addition of 50,000 shares of Common Stock authorized for issuance
under the Directors' Plan and the increase in the maximum number
of shares any director may be granted an option to purchase under
the Directors' Plan from 25,000 shares of Common Stock to 50,000
shares of Common stock.
The Board of Directors recommends approval of the Directors'
Plan Amendment. Unless otherwise directed, Proxies will be voted
"FOR" approval of the Directors' Plan Amendment. Abstentions and
broker-non votes will not constitute or be counted as "votes"
cast for purposes of the Annual Meeting.
<PAGE>
Background
The Company's Board of Directors and shareholders adopted
the Directors' Plan, effective as of April 7, 1993 and an
amendment to the Directors' Plan was adopted effective February
16, 1996. A total of 100,000 shares of Common Stock has been
authorized and reserved for issuance under the Directors' Option
Plan.
On December 15, 1997, the Board of Directors voted to
present the Second Amendment to the Directors' Stock Option Plan
(the "Directors' Plan Amendment") for shareholder approval at the
March 25, 1998 Annual Meeting of Shareholders. The Directors'
Plan Amendment will not be implemented if it is not approved by a
majority of the votes cast, in person or by proxy, at the Annual
Meeting. The Amendment provides for the issuance of an
additional 50,000 shares under the Directors' Plan and an
increase in the maximum number of shares any director may be
granted an option to purchase under such plan from 25,000 shares
to 50,000 shares.
The Directors' Plan provides for the grant of options to
acquire shares of the Company's Common Stock to the non-employee
directors of the Company (the "Outside Directors"). The Board of
Directors believes that the Directors' Plan will better align the
interests of the Outside Directors with the interests of the
Company's shareholders. In adopting the Directors' Plan
Amendment, the Board of Directors noted that many other companies
have adopted equity plans to compensate their Outside Directors
and believes that such a plan is appropriate to attract and
retain well-qualified persons for service as Outside Directors.
The following brief summary of certain features of the
Directors' Plan is qualified in its entirety by reference to the
full text of the Directors' Plan and the Directors' Plan
Amendment, which are set forth in Exhibit B to this Proxy
Statement.
Terms of the Directors' Stock Option Plan
Assuming shareholder approval of the Directors' Plan
Amendment, the Directors' Plan will provide for the issuance of
options to purchase up to 150,000 shares of Common Stock, which
shares are reserved and available for purchase upon the exercise
of such options granted under the Directors' Plan. As of January
1, 1998, options to purchase 70,000 shares of Common Stock had
been granted under the Directors' Plan, leaving 30,000 shares
available for future awards. As of January 1, 1998, none of
these options had been exercised. Only directors who are not
employees of the Company, any parent or any subsidiary of the
Company are eligible to participate in the Directors' Plan.
Outside Directors are granted nonqualified stock options
("NQSOs") to purchase 5,000 shares of Common Stock on each of the
date on which such person is first elected as an Outside
Director, the date of the first annual meeting of shareholders
held subsequent to such person's election and, thereafter, on the
date of each succeeding annual meeting of the shareholders after
which such person is still serving as an Outside Director (with a
limit of options to acquire a total of 50,000 shares to be
granted to any Outside Director, assuming shareholder approval of
the Directors' Plan Amendment).
<PAGE>
All options granted under the Directors' Plan are
exercisable one year after the grant date or upon the Outside
Director's death or disability, or by reason of failure to be
renominated or reelected as a director, whichever is earlier. If
any options under the Directors' Plan are surrendered before
exercise or lapse without exercise, in whole or in part, the
shares reserved for grant will revert to the status of available
shares. All options expire on the earlier to occur of (a) ten
years following the grant date, (b) two years after the
termination of the Outside Director's directorship by reason of
Disability (as defined in the Directors' Plan), death or failure
to be renominated or reelected, and (c) six months after the
termination of the Outside Director's directorship for any reason
other than Disability, death or failure to be renominated or
reelected.
Except as provided in any option agreement, options may only
be transferred under the laws of descent and distribution or, if
permitted without liability under applicable law, pursuant to a
qualified domestic relations order. Otherwise, options will be
exercisable only by the Outside Director during such Outside
Director's lifetime. The option exercise price is payable by the
Outside Director (i) in cash, (ii) in previously owned whole
shares of Common Stock (for which the director has good title
free and clear of all liens and encumbrances) having a fair
market value determined as of the date of exercise, (iii) by
authorizing the Company to retain whole shares of Common Stock
which would otherwise be issuable upon exercise of the option
having a fair market value determined as of the date of exercise,
or (iv) by any combination of the foregoing.
In the event of any stock dividend, stock split, combination
or exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or
division of the Company, sale by the Company of all or a
substantial portion of its assets, reorganization, rights
offering, a partial or complete liquidation, or any other
corporate transaction, Company share offering or event involving
the Company and having an effect similar to any of the foregoing,
the Board of Directors will adjust or substitute, as the case may
be, the aggregate number of shares of Common Stock subject to the
Directors' Plan and the number and exercise price of shares
subject to outstanding awards; provided, however, that any
fractional shares resulting from such adjustment will be
eliminated by rounding to the next lower whole number of shares
with appropriate payment for such fractional share as may be
determined by the Board of Directors.
The Directors' Plan is administered by the Company's Board
of Directors. The Board of Directors is authorized to construe
the provisions of the Directors' Plan and to adopt and amend
rules and regulations for administering the Directors' Plan only
to the extent consistent with Rule 16b-3(c)(2)(ii) under the 1934
Act.
The Board of Directors may amend the Directors' Plan,
subject to shareholder approval if required by applicable law.
No amendment may impair the rights of a holder of an outstanding
option without the consent of such holder, nor may an amendment
be made in any manner which fails to comply with Rule 16b-
3(c)(2)(ii)(B) under the 1934 Act.
Change in Control
Upon the occurrence of a Change in Control (as defined in
the Directors' Plan), all unexercised stock options will become
immediately exercisable. In addition, after the Change in
Control a director will have the right to surrender all or part
of the outstanding options and receive cash from the Company in
the following amount for each option: (i) the excess of the
Change in Control Price (as defined in the Directors' Plan) over
the exercise price of the option multiplied by (ii) the number of
shares of Common Stock subject to the option.
<PAGE>
New Plan Benefits
<TABLE>
The table below sets forth certain information concerning
options granted and outstanding, as of January 1, 1998, under the
Directors' Plan.
New Plan Benefits
1993 Directors' Stock Option Plan
<CAPTION>
Name and Position Dollar Value ($)(1) Number of Shares (2)
<S> <C> <C>
Maurice Sanderman, - -
Chairman, President and
Chief Executive Officer
Joseph Atkin, - -
Vice President and Chief
Financial Officer
Thomas Small, - -
President of Sundance
Suburban Properties, Inc.
Jon Tilkemeier, - -
Vice President - Marketing
and Sales
Executive Group - -
Non-Executive Director Group - 70,000
Non-Executive Officer - -
Employee Group
<FN>
__________________
(1) The dollar value of the grants is indeterminate at this time
as these grants are subject to a vesting schedule and the
value of the grants are dependent on the price of the Common
Stock achieving levels above the grant price. All of the
grants were granted at the fair market value of the Common
Stock on the date of grant.
(2) These options were granted since April 7, 1993 pursuant to
the Directors' Plan. As of January 1, 1998, options to
purchase 30,000 shares of Common Stock were available for
issuance under the Directors' Plan.
</FN>
</TABLE>
Discussion of Federal Income Tax Consequences
The following summary of tax consequences is not
comprehensive and is based on laws and regulations in effect on
January 1, 1998. Such laws and regulations are subject to
change.
A director granted an option under the Directors' Plan does
not recognize taxable income upon grant, and the Company is not
entitled to a deduction for Federal income tax purposes upon such
grant. Upon exercise of the option, the amount by which the fair
market value of the shares on the date of exercise exceeds the
option exercise price (the "spread") will generally be taxable to
the director as compensation income and will generally be
deductible for tax purposes by the Company. In determining the
amount of the spread or the amount of consideration paid to the
director, the fair market value of the Common Stock on the date
of exercise is used. The Company, in computing its Federal
income tax, will be entitled to a deduction in an amount equal to
the compensation taxable to the director. The dispositions of
shares acquired upon exercise of a stock option will generally
result in a capital gain or loss for the director, but will have
no tax consequences for the Company.
<PAGE>
In the event any payments or rights accruing to a director
upon a Change in Control, or any other payments awarded under the
Directors' Plan, constitute "parachute payments" under Section
280G of the Code, depending upon the amount of such payments
accruing and the other income of the director from the Company,
the director may be subject to an excise tax (in addition to
ordinary income tax) and the Company may be disallowed a
deduction for the amount of the actual payment.
The Board of Directors recommends approval of the Directors'
Plan Amendment. Unless otherwise directed, Proxies will be voted
"FOR" approval of the Directors' Plan Amendment. Abstentions and
broker-non votes will not constitute or be counted as "votes"
cast for purposes of the Annual Meeting.
* * * * *
INDEPENDENT AUDITORS
The Company's Board of Directors, upon recommendation of the
Audit Committee, has selected Price Waterhouse to audit the
financial statements of the Company for the fiscal year ended
September 30, 1998. It is expected that representatives of Price
Waterhouse will be present at the Annual Meeting and available to
respond to questions. Such representatives will be given an
opportunity to make a statement if they desire to do so.
OTHER MATTERS
Solicitation
The cost, if any, of soliciting Proxies in the accompanying
form has been, or will be, paid by the Company. In addition to
the solicitation of Proxies by the use of the mails, certain
officers and associates (who will receive no compensation
therefor in addition to their regular salaries) may be used to
solicit Proxies personally and by telephone and telegraph. In
addition, banks, brokers and other custodians, nominees and
fiduciaries will be requested to forward copies of the Proxy
material to their principals and to request authority for the
execution of Proxies. The Company will reimburse such persons
for their expenses in so doing.
Proposals of Shareholders
Proposals of shareholders intended to be considered at the
1999 Annual Meeting of Shareholders must be received by the
Corporate Secretary of the Company not less than 120 days nor
more than 150 days prior to January 27, 1999.
Shareholder List
A list of shareholders entitled to vote at the Annual
Meeting, arranged in alphabetical order, showing the address of
and number of shares registered in the name of each shareholder,
will be open to the examination of any shareholder, for any
purpose germane to the Annual Meeting, during ordinary business
hours, for a period of at least ten days prior to the Annual
Meeting and continuing through the date of the Annual Meeting, at
the offices of the Company, 201 North Wells Street, Suite 1800,
Chicago, Illinois 60606.
<PAGE>
Annual Report to Shareholders
The Company's Annual Report to Shareholders for the year
ended September 30, 1997, containing financial and other
information pertaining to the Company is enclosed with this Proxy
Statement which is being mailed to Shareholders on or about
January 27, 1998. The Annual Report to Shareholders does not
constitute a part of this Proxy Statement. The Financial
Statements of the Company contained in the Annual Report are
incorporated herein by reference. (The remainder of the Annual
Report is not deemed to have been filed with the Securities and
Exchange Commission.)
Annual Report on Form 10-K
The Company will furnish, without charge, to each person
whose Proxy is being solicited, upon request of any such person,
a copy of the Annual Report of the Company on Form 10-K for the
year ended September 30, 1997 as filed with the Securities and
Exchange Commission, including the financial statements and
schedules. Such report was filed with the Securities and
Exchange Commission on December 23, 1997. Requests for copies of
such reports should be directed to Sundance Homes, Inc.,
Attention: Investor Relations, 201 North Wells Street, Suite
1800, Chicago, Illinois 60606.
Please date, sign and return the enclosed Proxy at your
earliest convenience in the enclosed envelope. No postage is
required for mailing in the United States. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors,
DAVID APTER
Corporate Secretary
<PAGE>
EXHIBIT A
Second Amendment to the
Sundance Homes, Inc.
1993 Directors' Stock Option Plan
RESOLVED, that the Sundance Homes, Inc. 1993 Directors'
Stock Option Plan (the "Plan") be and hereby is amended, subject
to shareholder approval, effective March 25, 1998, as follows:
I.
Section 5(a)(iii) hereby is amended by deleting the section
in its entirety and inserting in its place the following:
"The maximum number of shares any person may be granted
an Option to purchase over their lifetime under (i) and
(ii) above combined shall be 50,000 shares."
II.
Section 3(a) is amended by deleting the second sentence
thereof and inserting in its place the following sentence:
"There shall be 150,000 shares of Common Stock, subject to
adjustment under Section 6(b), reserved and available for
purchase upon the exercise of options granted under the
Plan."
III.
In all other respects the Plan shall continue in full force
and effect.
Dated: December 15, 1997
By order of the Board of Directors,
DAVID APTER
Corporate Secretary
DOCUMENT #: CHGO02A (72020-00001-3) 350533.5;DATE:01/23/98/TIME:14:46
<PAGE>
PROXY SUNDANCE HOMES, INC. This proxy is solicited
1375 East Woodfield Road, Suite 600, on behalf of
Schaumburg, Illinois 60173 Board of Directors
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held On March 25, 1998
TO VOTE AT THE ANNUAL MEETING IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF SUNDANCE HOMES,
INC., SIGN AND DATE THE REVERSE SIDE OF THIS CARD WITHOUT
CHECKING ANY BOX.
The undersigned holder of Common Stock, par value $.01 per
share, of Sundance Homes, Inc. (the "Company") hereby appoints
Maurice Sanderman and Charles Engles, or either of them, with
full power of substitution in each, as proxies to cast all votes
which the undersigned shareholder is entitled to cast at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held
on Wednesday, March 25, 1998, at 9:00 a.m. local time, at the
Woodfield Financial Center, 1375 East Woodfield Road, Suite C-80,
Schaumburg, Illinois 60173, and at any adjournments thereof, upon
the following matters. The undersigned shareholder hereby
revokes any proxy or proxies heretofore given.
1. ELECTION OF DIRECTORS TO CLASS I
" One vote for each share owned FOR "WITHHOLD AUTHORITY to vote for
each nominee listed below (except all nominees listed below
as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below. Shareholders have cumulative voting
rights in the election of directors. Unless authority is
withheld in accordance with these instructions, the proxies
will vote the shares covered by this proxy equally to elect
the two nominees hereinafter named. In the event that a
shareholder withholds authority to vote for one or more
nominees, that shareholder's cumulative votes will be
distributed equally among the nominees for whom authority is
not withheld.)
Gerald Ginsburg
Joseph Atkin
If a nominee becomes unavailable for election or unable to
serve as a director, the votes will be cast for a person that
will be designated by the Board of Directors of the Company.
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE SUNDANCE HOMES,
INC. 1993 DIRECTORS' STOCK OPTION PLAN WHICH AUTHORIZES THE
ADDITION OF 50,000 SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER SUCH PLAN AND THE INCREASE IN THE MAXIMUM
NUMBER OF SHARES OF COMMON STOCK WHICH MAY BE GRANTED TO ANY
DIRECTOR UNDER SUCH PLAN FROM 25,000 SHARES OF COMMON STOCK
TO 50,000 SHARES OF COMMON STOCK.
" FOR " AGAINST " ABSTAIN
3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
Annual Meeting, or any adjournments thereof.
(continued, and to be signed, on reverse side)
(continued from other side)
This proxy, when properly executed, will be voted in the manner
as directed herein by the undersigned shareholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AND IN ACCORDANCE WITH THE UNANIMOUS
DETERMINATION OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS. The
undersigned shareholder may revoke this proxy at any time before
it is voted by delivering to the Corporate Secretary of the
Company either a written revocation of the proxy or a duly
executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting in person. The undersigned shareholder
hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. If you receive more than one proxy card,
please sign and return ALL cards in the enclosed envelope.
DATED:
Signature
Signature (if held jointly)
Please date and sign exactly as
the name appears hereon. When
signing as executor, administrator,
trustee, guardian, attorney-in-fact
or other fiduciary, please give
title as such. When signing as
corporation, please sign in full
corporate name by President or
other authorized officer. If
you sign for a partnership, please
sign in partnership name by an
authorized person.
DOCUMENT #: CHGO02A (72020-00016-1) 354627.1;DATE:01/23/98/TIME:14:49
<PAGE>
SUNDANCE HOMES, INC.
1993 DIRECTORS' STOCK OPTION PLAN
<PAGE>
SUNDANCE HOMES, INC.
1993 DIRECTORS' STOCK OPTION PLAN
PAGE
1. GENERAL 1
(a) Purpose 1
(b) Options 1
(c) Effective Date 1
2. ADMINISTRATION OF THE PLAN 1
3. SHARES SUBJECT TO THE PLAN 1
(a) Number of Shares 1
(b) Release of Shares 1
(c) Restrictions on Shares 2
(d) Shareholder Rights 2
(e) Stock Valuation 2
4. ELIGIBILITY 2
5. OPTION PROVISIONS 2
(a) Grants of Options 2
(i) Initial Options 2
(ii) Subsequent Options 2
(iii) Lifetime Maximum 3
(b) Option Agreement 3
(c) Option Period and Exercisability 3
(d) Method of Exercise 3
(e) Method of Payment 3
(f) Termination of Directorship 3
(i) Disability, Death or Failure to Be Renominated or Reelected 3
(ii) Other Termination 4
(g) Nonassignability 4
6. PROVISIONS APPLICABLE TO THE PLAN 4
(a) Duration of the Plan 4
(b) Effect of Certain Changes 4
(i) Adjustments 4
(ii) Effect of Change in Control 5
(iii) Definition of Change in Control 5
(c) Amendment of the Plan 5
7. WITHHOLDING 5
8. INTERPRETATION 5
(a) Gender and Number 5
(b) Governing Law 6
(c) No Effect on Term of Directorship 6
(d) Registration Rights 6
<PAGE>
SUNDANCE HOMES, INC. 1993 DIRECTORS' STOCK OPTION PLAN
1. GENERAL.
(a) Purpose.
The purpose of the Sundance Homes, Inc. 1993 Directors' Stock Option Plan
("Plan") is to promote the overall financial objectives of Sundance Homes,
Inc. ("Company") and its shareholders by aligning the interests of the
Company's shareholders and its non-employee directors through the grant of
options to acquire shares of the Company's Common Stock and any other stock
or security resulting from the adjustment thereof or substitution therefor
as described in Section 6(b) ("Common Stock"). The Plan is intended to
attract and retain well-qualified persons for service as non-employee
directors. The Plan is designed to comply with the provisions of Rule 16b-3
("Rule 16b-3") under Section 16 of the Securities Exchange Act of 1934, as
in effect from time to time ("Exchange Act").
(b) Options.
For purposes of this Plan, the right to acquire at a stated price a
specified number of shares of Common Stock in accordance with the terms
of this Plan and an Option Agreement (as defined in Section 5(b)) shall
be referred to as an "Option." Options granted under the Plan will be
options not qualified as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as may be amended
("Code").
(c) Effective Date.
The Plan shall be effective as of April 7, 1993 ("Effective Date"),but
shall be subject to the approval of the Company's security holders.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be implemented and administered by the Company's Board
of Directors ("Board"). Subject to the terms and conditions of the Plan,
the Board shall have the power to construe the provisions of the Plan, to
determine all questions arising thereunder, and to adopt and amend such
rules and regulations for administering the Plan as the Board deems
desirable. In construing, amending and administering the Plan, the Board
shall have full and final discretion in all of its actions under the Plan
only to the extent consistent with Rule 16b-3(c)(2)(ii).
3. SHARES SUBJECT TO THE PLAN.
(a) Number of Shares.
The stock subject to the Options granted under this Plan shall be the
Company's Common Stock. There shall be 100,000 shares of Common Stock,
subject to adjustment under Section 6(b), reserved and available for
purchase upon the exercise of Options granted under the Plan. The shares
issued upon exercise of an Option may be authorized and unissued shares,
or shares issued and reacquired by the Company.
(b) Release of Shares.
If any Option granted hereunder shall be cancelled, expire or terminate
for any reason without having been exercised in full, the shares of Common
Stock subject to such Option shall again be available thereafter to be
granted under this Plan.
<PAGE>
(c) Restrictions on Shares.
Shares of Common Stock issued upon exercise of an Option shall be subject
to the terms and conditions specified herein and applicable federal and
state laws, rules and regulations. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to (i)
the listing of such shares on any stock exchange on which the Common Stock
may then be listed and (ii) the completion of any required (A) registration
or qualification of such shares under federal or state law, or (B) ruling
or regulation of a governmental body. The Company may cause any Common Stock
to be delivered to be properly marked with a legend or other notation
reflecting any limitations on transfer of such Common Stock.
(d) Shareholder Rights.
No person shall have any rights of a shareholder as to shares of Common
Stock subject to an Option until, after proper exercise of the Option, such
shares shall have been recorded on the Company's official shareholder
records as having been issued or transferred to the party exercising the
Option. No adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date such shares are recorded as issued
or transferred (to the party exercising the Option), in the Company's
official shareholder records, except as provided in Section 6(b). The
Company shall cause its transfer agent to record the shares as issued or
transferred in an expeditious manner.
(e) Stock Valuation.
If and when the value or closing price of Common Stock shall be required
to be determined, it shall be the closing price reported on the principal
securities exchange on which the Common Stock may then be traded, including
the NASDAQ National Market System ("NASDAQ/NMS") if quoted in such system,
if there is no such sale on the relevant date, then on the last previous day
on which a sale was reported (which value or closing price shall be referred
to herein as the "Fair Market Value per Share", or for a group of shares, a
total "Fair Market Value").
4. ELIGIBILITY.
Each member of the Board of Directors of the Company who is not an
employee, either full-time or part-time, of (i) the Company, (ii) any
parent of the Company, or (iii) any subsidiary of the Company, (each a
"non-employee director") shall be granted Options to purchase shares of
Common Stock in accordance with Section 5. (A person to whom an Option
hereunder is granted shall be referred to hereinafter as an "Optionee"
and such term shall include any person who is appointed as a guardian of
the Optionee's estate, any legal representative of the Optionee's estate
and any person to whom the Option is transferred pursuant to the applicable
laws of descent and distribution.)
5. OPTION PROVISIONS.
(a) Grants of Options.
(i) Initial Options. On the Effective Date or on the date on which a
person is first elected as a non-employee director, each non-employee
director shall be granted an Option to purchase 5,000 shares of Common Stock
at a purchase price per share equal to the Fair Market Value per Share of
the Common Stock on the date of grant of such Option.
(ii) Subsequent Options. On the date of the Company's annual meeting
of shareholders next succeeding the date on which a non-employee director
received an initial Option and, thereafter, on the date of each succeeding
annual meeting of shareholders of the Company at which the person is
elected as a non-employee director or after which a person continues
as a non-employee director, such non-employee director shall be granted an
Option to purchase 5,000 shares of Common Stock at a purchase price per share
equal to the Fair Market Value per Share of the Common Stock on the date of
grant of such Option.
<PAGE>
(iii) Lifetime Maximum. The maximum number of shares any person may be
granted an Option to purchase over their lifetime under (i) and (ii) above
combined shall be 25,000 shares.
(b) Option Agreement.
Each Option granted under this Plan shall be evidenced by an option
agreement ("Option Agreement"), which shall embody the terms and conditions
of such Option and which shall be subject to the express terms and conditions
set forth in this Plan.
(c) Option Period and Exercisability.
Subject to the provisions of Sections 5(f) and 6(b) hereof, each Option
granted under the Plan shall be fully exercisable on and after the first
anniversary date of its grant for a period of ten (10) years from such grant
date ("Option Period"). An exercisable Option, or portion thereof, may be
exercised in whole or in part only with respect to whole shares of Common
Stock.
(d) Method of Exercise.
An Option may be exercised (i) by giving written notice to the Company,
specifying the number of whole shares to be purchased and accompanied by
payment therefor in full in a method provided in Section 5(e) below and (ii)
by executing such documents as the Company may reasonably request to satisfy
the Optionee's obligations under the Plan and the Option Agreement. No
shares of Common Stock shall be issued until the full purchase price has
been paid.
(e) Method of Payment
The purchase price of the shares of Common Stock as to which an Option
shall be exercised shall be paid to the Company (1) in cash, (2) in
previously owned whole shares of Common Stock (for which the director has
good title free and clear of all liens and encumbrances) having a Fair
Market Value determined as of the date of exercise, (3) by authorizing
the Company to retain whole shares of Common Stock which would otherwise
be issuable upon exercise of the Option having a Fair Market Value
determined as of the date of exercise, or (4) a combination of (1), (2)
and (3).
(f) Termination of Directorship
(i) Disability, Death or Failure to Be Renominated or Reelected. If
a non-employee director's directorship terminates by reason of Disability
(as defined herein) or death, or by reason of such director's failing to
be renominated or reelected as a director, any Option granted under the
Plan and held by the non-employee director (including any option which, as
of the date of the termination of directorship, was not then exercisable)
may thereafter be exercised by such director (or the duly appointed guardian
of the director's estate or the legal representative of the director's
estate or the person to whom the Option is transferred pursuant to applicable
laws of descent and distribution) for a period of two (2) years from the
date of such termination of the non-employee's director's directorship
or until the expiration of the Option Period, whichever period is shorter.
If a non-employee director dies during the two (2) year period following
termination of such director's directorship by reason of Disability, any
Option held by the non-employee director may thereafter be exercised by the
legal representative of the director's estate (or the person to whom the
Option is transferred pursuant to applicable laws of descent and distribution)
for a period of six (6) months from the date of death or until the second
anniversary of the termination of directorship, whichever period is longer.
A Disability shall mean a permanent physical or mental incapacity which, in
the reasonable determination of the Board, renders the Optionee unable to
perform the duties of a director of the Company.
(ii) Other Termination. If a non-employee director's directorship
terminates for any reason other than disability, death or failure to be
renominated or reelected, any Option held by the non-employee director
(including any option which, as of the date of the termination of
directorship, was not then exercisable) may thereafter be exercised for a
period of six (6) months and one (1) day from such date or until the
expiration of the Option Period, whichever period is shorter.
(g) Nonassignability.
Except to the extent specifically provided in a domestic relations order
which is determined to be a qualified domestic relations order described
in the Code or in Title I of the Employee Retirement Income Security Act
of 1974, as amended, Options are not transferable otherwise than by will or
the laws of descent and distribution, and are exercisable during an
Optionee's lifetime only by the Optionee (including the duly appointed
guardian of the estate of the Optionee). In the event of the death of an
Optionee, any Option theretofore granted to such Optionee shall be exercisable
by the legal representative of the estate of the Optionee or the person to
whom the Option is transferred pursuant to the applicable laws of descent
and distribution.
6. PROVISIONS APPLICABLE TO THE PLAN.
(a) Duration of the Plan.
The Plan shall continue in effect until it is terminated by action of the
Board, but such termination shall not affect the terms of any then-
outstanding Options.
(b) Effect of Certain Changes.
(i) Adjustments. In addition to the other provisions set forth below in
this Section 6(b), in the event of any Company stock dividend, stock split,
combination or exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company shareholders other than a normal cash dividend),
sale by the Company of all or a substantial portion of its assets (if
measured on either a stand-alone or consolidated basis), reorganization, rights
offering, partial or complete liquidation, or any other corporate transaction
or event involving the Company and having an effect similar to any of the
foregoing, then the Board shall adjust or substitute, as the case may be, the
number of shares of Common Stock available for Options under the Plan, the
number of shares of Common Stock covered by outstanding Options, the exercise
price per share of outstanding Options, and any other characteristics or terms
of the Options as the Board shall deem necessary or appropriate to reflect
equitably the effects of such changes to the Optionees; provided, however,
that any fractional shares resulting from such adjustment shall be
eliminated by rounding to the next lower whole number of shares with
appropriate payment for such fractional share as shall reasonably be
determined by the Board.
(ii) Effect of Change in Control. If while unexercised Options remain
outstanding under the Plan there is a Change in Control (as defined below)
of the Company, then each Option which is not otherwise exercisable on the
date of the Change of Control shall immediately become exercisable from the
date of such Change in Control through the expiration of the Option Period or
such other period as is provided for in Section 5 hereof. In addition, each
Optionee shall have the right, by giving notice to the Company during the
60-day period from and after a Change in Control, to elect to surrender all
or part of the Option to the Company and to receive cash, within 30 days of
such notice, in an amount equal to the amount by which the "Change in Control
Price" (as defined below) per share of Common Stock on the date of such
election shall exceed the amount which the Optionee must pay to exercise
the Option, multiplied by the number of shares of Common Stock granted under
the Option to which the right granted hereunder applies ("Spread"); provided,
however, if the end of such 60-day period from and after the date of the
Change in Control is within six months of the date of grant of the Option,
such Option shall be cancelled in exchange for cash payment to the Optionee
equal to the Spread, effective on the date which is six months and one day
after the date of grant of such Option. In addition, the 60-day period
shall be extended if necessary, to include the "window period" of Rule 16(b)-3
which first commences on or after the date of the Change in Control, and the
Board shall have sole discretion, if necessary, to approve the Optionee's
exercise hereunder.
(iii) Definition of Change in Control. A Change in Control shall occur if
a "change in control" shall occur as defined in the Sundance Homes, Inc.
1993 Stock Incentive Plan ("Incentive Plan") and "Change in Control" shall
be defined in the Incentive Plan. The Change in Control Price shall be
defined the same as in the Incentive Plan.
(c) Amendment of the Plan.
The Board may amend this Plan as it shall deem advisable, subject to any
requirement of shareholder approval imposed by applicable law; provided,
however, that this Plan shall not be amended in a manner which fails to comply
with Rule 16b-3(c)(2)(ii)(B). No amendment may impair the rights of a holder
of an outstanding Option without the consent of such holder.
7. WITHHOLDING.
The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock hereunder, payment by the Optionee
of any federal, state, local and other taxes which may be required to be
withheld or paid in connection with the exercise of an Option hereunder.
To the extent such tax withholding is required, it may be effected in any
way permitted under Rule 16b-3.
8. INTERPRETATION.
(a) Gender and Number.
Whenever necessary or appropriate in this Plan and where the context
admits, the singular term and the related pronouns shall include the plural
and the masculine and feminine gender.
(b) Governing Law.
The Plan shall be construed and enforced according to the laws of the
State of Illinois (other than its laws respecting choice of law).
(c) No Effect on Term of Directorship.
Nothing contained herein shall be construed to constitute a promise or
other undertaking that a non-employee director shall be continued in office
as a director.
(d) Registration Rights.
The Company agrees to register shares of Common Stock received pursuant
to the exercise of an Option on the same terms and conditions, and to the
extent that, the Company registers shares of Common Stock issued pursuant
to the Incentive Plan.
