<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
February 2, 1999
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 offices of Katten Muchin & Zavis, 525
West Monroe Street, Suite 2200, Chicago, Illinois 60661, on Wednesday, March 3,
1999 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 II 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 offices of Katten Muchin & Zavis, 525
West Monroe Street, Suite 2200, Chicago, Illinois 60661, on Wednesday, March 3,
1999 at 9:00 a.m., local time.
Sincerely,
/s/ Maurice Sanderman
MAURICE SANDERMAN
Chairman, President and Chief Executive
Officer
<PAGE>
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 3, 1999
------------------------
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 offices of
Katten Muchin & Zavis, 525 West Monroe Street, Suite 2200, Chicago, Illinois
60661, on Wednesday, March 3, 1999, 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 II directors of the Company.
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The close of business on February 1, 1999 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 150 West Center Court,
Schaumburg, Illinois 60195.
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,
/s/ David Apter
DAVID APTER
Corporate Secretary
Schaumburg, Illinois
February 2, 1999
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.
150 West Center Court
Schaumburg, Illinois 60195
(847) 255-5555
--------------
PROXY STATEMENT
--------------
ANNUAL MEETING OF SHAREHOLDERS
March 3, 1999
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 3, 1999, 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 February
2, 1999.
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. 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., 150 West Center
Court, Schaumburg, Illinois 60195, 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 February 2, 1999
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 7,813,144 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 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 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 they have advised the Board of Directors that they
will vote their shares in favor of the election of such nominees.
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
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
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<PAGE>
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 the Class
II directors at this Annual Meeting to serve a three year term expiring at the
Annual Meeting in 2002 or until their successors are elected and qualified.
Dennis Bookshester is currently serving as a Director of the Company and Thomas
Small is currently serving as a Director, the President and the Chief Operating
Officer of the Company. Both have consented to serve for a three-year term.
Nominees
The names of the nominees for the office of director in Class II, together
with certain information concerning such nominees, are set forth below:
<TABLE>
<CAPTION> Director
Name Age Position With the Company and Principal Occupation Since
- ------------------- --- -------------------------------------------------- --------
<S> <C> <C> <C>
Dennis Bookshester 60 Director; Chairman of Cutanix Corporation 1993
Thomas Small 49 Director, President and Chief Operating Officer 1998
</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-H\2\0 Plus. From
1991 until joining Hydrotech-H\2\0 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., Arthur Treacher's and Playboy Enterprises, Inc.
Thomas Small has been the President and Chief Operating Officer and a
Director of the Company since August 1998. From April 1997 to August 1998, Mr.
Small was President of Sundance Suburban Properties, Inc., a wholly-owned
subsidiary of the Company. From February 1996 until April 1997, he was Vice
President - Land Acquisition and Development and from July 1994 to February
1996, he was the Company's Vice President - Development. From 1989 to May 1994,
Mr. Small was the Vice President of Construction/Development of Fogelsen
Development Company, a real estate development company.
3
<PAGE>
Other Directors
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.
<TABLE>
<CAPTION>
Class and Year In
Director Which Term Will
Name Age Position With the Company and Principal Occupation Since Expire
- ----------------- --- ---------------------------------------------------------- -------- ---------------
<S> <C> <C> <C> <C>
Charles Engles 51 Director; President and Chief Executive Officer of Cutanix 1994 Class III
Corporation 2000
Maurice Sanderman 58 Chairman of the Board and Chief Executive Officer 1975 Class III
2000
Joseph Atkin 53 Director; Vice President and Chief Financial Officer 1997 Class I
2001
Gerald Ginsburg 57 Director; Managing Director of American Express Tax and 1995 Class I
Business Services; Partner in the public accounting firm of 2001
Checkers, Simon & Rosner
</TABLE>
Charles Engles has served as President and Chief Executive Officer of
Cutanix Corporation since November 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. Mr. Engles is a director of Centaur Pharmaceuticals, Inc., a
development stage biopharmaceutical company.
Maurice Sanderman founded the Company in 1975 and has been the Company's
Chairman of the Board and Chief Executive Officer since that time. Mr.
Sanderman also served as President of the Company from April 1997 to August 1998
and 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.
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.
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.
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 $4.8
million, together with punitive damages against the named individuals for
4
<PAGE>
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 various inspections are underway. The Company is defending the
lawsuit vigorously.
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 (Chairman). The Audit Committee
met on one occasion during fiscal 1998. 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 one occasion during fiscal 1998. 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 1998,
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 150,000 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 50,000 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
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<PAGE>
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.
EXECUTIVE OFFICERS
Jon Tilkemeier is the only executive officer of the Company who is not
identified under the caption "Election of Directors." Mr. Tilkemeier, age 37,
served as the Company's Executive Vice President from September 1997 until his
resignation from the Company effective December 31, 1998.
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 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 1998.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and long-
term compensation for services in all capacities to the Company for fiscal 1996,
1997 and fiscal 1998 for those persons who were at September 30, 1998 (i) the
Chief Executive Officer and (ii) an executive officer of the Company whose
salary and bonus exceeded $100,000 for fiscal 1998 (collectively, the "Named
Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual
Compensation Awards
------------------------ ------------
Securities
Underlying All Other
Name and principal position Period Salary ($) Bonus ($) Options (#) Compensation
- ------------------------------- ------------------ ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Maurice Sanderman, Year ended 9/30/98 $309,230 -- -- --
Chairman and Year ended 9/30/97 420,385 -- -- --
Chief Executive Officer Year ended 9/30/96 300,000 -- -- --
Thomas Small, Year ended 9/30/98 248,807 -- 20,000 --
President and Chief Operating Year ended 9/30/97 167,231 -- 20,000 --
Officer
Joseph Atkin, Year ended 9/30/98 248,461 -- 20,000 --
Vice President and Chief Year ended 9/30/97 114,231/(1)/ -- 40,000 --
Financial Officer
Jon Tilkemeier/(2)/, Year ended 9/30/98 303,461 -- 20,000 --
Executive Vice President Year ended 9/30/97 147,115 -- -- --
</TABLE>
- ------------------
(1) Represents salary earned from the date Mr. Atkin joined the Company,
December 12, 1996, through September 30, 1997.
(2) Mr. Tilkemeier resigned from the Company on December 31, 1998.
7
<PAGE>
Option Grants in Last Fiscal Year
The following table provides information on grants of stock options during
the year ended September 30, 1998 to the Named Officers pursuant to the
Company's Stock Incentive Plan. No stock appreciation rights were granted by
the Company during fiscal 1998.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Percent of Total for Option Term (2)
Number of Shares Options Granted --------------------------
Underlying Options to Employees in Exercise or Expiration
Name Granted (#) Fiscal Year Base Price (1) Date 5% ($) 10% ($)
- ----------------- ------------------ ---------------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Maurice Sanderman -- -- -- -- -- --
Thomas Small 20,000(3) 9.8% $1.125 12/15/07 $14,150 $35,859
Joseph Atkin 20,000(3) 9.8 1.125 12/15/07 $14,150 $35,859
Jon Tilkemeier/(4)/ 20,000(3) 9.8 1.125 12/15/07 $14,150 $35,859
</TABLE>
- ------------------
(1) Represents the fair market value of the Company's common shares as of the
close of business on the grant date.
(2) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains are dependent on the future performance of the common stock and the
option holder's continued employment throughout the vesting period. The
amounts reflected in the table may not necessarily be achieved.
(3) Options are exercisable starting on December 15, 1998, with options to
purchase 25% of the shares covered thereby becoming exercisable at that
time and with options to purchase an additional 25% of the shares becoming
exercisable on each successive December 15 with full vesting occurring on
December 15, 2001.
(4) Mr. Tilkemeier resigned from the Company effective December 31, 1998.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides information on the Named Officers' unexercised
options at September 30, 1998. All such options were granted under the Company's
Stock Incentive Plan. None of the Named Officers exercised any options during
fiscal 1998.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Numbers of Shares Value of Unexercised
Underlying Unexercised In-The-Money
Options at 9/30/98 (#) Options at 9/30/98 ($)(1)
------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
------------------- ------------------------- -------------------------
<S> <C> <C>
Maurice Sanderman -- --
Thomas Small 24,000/43,000 $0/$7,500
Joseph Atkin 10,000/50,000 0/7,500
Jon Tilkemeier/(2)/ 20,000/40,000 0/7,500
</TABLE>
- -------------------
(1) The value per option is calculated by subtracting the exercise price from
the closing price of the Company's Common Stock of $1.50 as reported on the
Nasdaq National Market on September 30, 1998.
(2) Mr. Tilkemeier resigned from the Company effective December 31, 1998.
8
<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.
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 15, 1997, the Company granted to each of Mr. Atkin, Mr. Small
and Mr. Tilkemeier options to purchase 20,000 shares of stock and granted to 15
of the Company's other employees options to purchase a total of 62,500 shares of
stock, all at an exercise price of $1.125 per share. On March 25, 1998, the
Company granted to 11 of its employees options to purchase a total of 62,000
shares of stock at an exercise price of $2.50 per share. As of September 30,
1998, options to purchase a total of 1,053,000 shares had been granted since
April 7, 1993 at exercise prices ranging from $1.125 to $11.25 per share. As of
September 30, 1998, 4,125 of these options had been exercised and options to
purchase 114,375 shares were exercisable. As of September 30, 1998, options to
purchase 676,250 shares had been forfeited upon termination of employment
leaving 248,250 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
9
<PAGE>
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.
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 one occasion during fiscal 1998.
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 reviews from time to time 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. 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 1998 in light of the financial results of the Company over this time
period.
10
<PAGE>
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 1998, the Company granted to then current executive officers options to
purchase a total of 60,000 shares of Common Stock at an exercise price of
$1.125. See "Stock Incentive Plan."
Compensation of the Chief Executive Officer
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. No cash bonuses were awarded to
Mr. Sanderman for fiscal 1998. Effective October 1, 1998, the Compensation
Committee accepted Mr. Sanderman's recommendation to eliminate his annual base
compensation and in return base his compensation for fiscal 1999 on the
Company's performance as determined in the Company's fiscal 1999 Board approved
budget. Mr. Sanderman's compensation for 1999 will be $500,000 provided the
Company meets or exceeds its projected pre-tax profit for the 1999 budget,
otherwise Mr. Sanderman will forego compensation for fiscal 1999.
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
11
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total shareholder return
on the Common Stock of the Company for the years ended September 30, 1998, 1997,
1996 and 1995 and for the years ended December 31, 1994 and 1993 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 $11.25 per share on December 31, 1993 and
in each index on such date, and the reinvestment of all dividends, if any).
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
12/31/93 12/31/94 9/31/95 9/30/96 9/30/97 9/30/98
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sundance Homes 100.00 23.61 22.22 35.56 15.56 13.33
- -----------------------------------------------------------------------------------
Peer Group 100.00 45.94 72.73 73.18 119.60 118.90
- -----------------------------------------------------------------------------------
NASDAQ Composite (U.S.) 100.00 97.75 136.60 162.05 222.44 227.37
- -----------------------------------------------------------------------------------
Sources: Media General Financial Services, Richmond, Virginia.
</TABLE>
The Peer Group Index includes the stock performance of the following
homebuilders: Crossman Communities, Inc., Dominion Homes, Inc., D.R. Horton,
Inc., Engle Homes, Inc., Inco Homes Corp., Washington Homes, Inc., and Zaring
Homes, Inc. Continental Homes Holding Corp., which was a member of the Peer
Group Index for the year ended September 30, 1997 was acquired by D.R. Horton,
Inc., which has been added to the list. The group of companies included in the
Peer Group Index is broader than the Standard & Poor's Index of Homebuilders,
which consists of only four 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. Dominion Homes, Inc.
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.
12
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of December 31, 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.
<TABLE>
<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 Sanderman
Descendants Trust U/A/D 12/29/92 (2)........................... 1,175,000 15.0%
Franklin Resources Inc. (4)...................................... 720,000 9.2%
Wellington Management Company, LLP (5)........................... 700,500 9.0%
Dennis Bookshester (6)........................................... 37,000 *
Charles Engles (6)............................................... 36,000 *
Thomas Small (6)................................................. 29,000 *
Gerald Ginsburg (6).............................................. 29,000 *
Joseph Atkin (6)................................................. 25,000 *
Jon Tilkemeier (6)(7)............................................ 25,000 *
All executive officers and directors as a group (7 persons) (6).. 3,721,000 47.6%
</TABLE>
__________________
* 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., 150 West
Center Court, Schaumburg, Illinois 60195.
(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 10, 1998.
According to the Schedule 13G, Franklin Resources, Inc. ("FRI") grants all
voting and dispositive power with respect to all 720,000 shares to its
investment advisor, Templeton Global Advisors Limited (a subsidiary of
FRI). Charles B. Johnson and Rupert H. Johnson, Sr. each own in excess of
10% of FRI and may therefore be deemed to be the beneficial owner of the
720,000 shares of Common Stock of the Company. The address of FRI, Charles
B. Johnson and Rupert H. Johnson, Sr. is 777 Mariners Island Boulevard, San
Mateo, California 94404. The address of Templeton Global Advisors Limited
is Lyford Cay, P.O. Box N-7759, Nassau, Bahamas.
(5) Based on a Schedule 13G filed with the SEC dated February 11, 1998.
According to the Schedule 13G, Wellington Management Company, LLP
("Wellington") 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. ("First
Financial"). The address of Wellington is 5300 Keystone Court, Rolling
Meadows, Illinois 60008. First Financial, based on a Schedule 13G filed
with the SEC dated February 10, 1998, has sole voting power and shared
dispositive power with respect to all 545,300 shares. The address of First
Financial is Gateway Center Three, 100 Mulberry Street, 9/th/ Floor, Newark,
New Jersey 07102-4077.
(6) Includes the following number of shares issuable within 60 days of December
31, 1998 pursuant to the exercise of stock options: Dennis Bookshester and
Charles Engles, 30,000 each; Gerald Ginsburg, 25,000; Joseph Atkin and Jon
Tilkemeier, 25,000 each; and Thomas Small, 29,000.
(7) Jon Tilkemeier resigned from the Company on December 31, 1998.
13
<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 Chairman and Chief Executive Officer of the Company, and
affiliates.
As part of the initial public offering and recapitalization, the Company
issued promissory notes to the Company's Chairman and principal shareholder, Mr.
Sanderman. The notes, with a principal balance outstanding of $4,193,000, are
subordinate to the Company's bank indebtedness, bear interest at 7 1/2% per
annum, compounded daily, and originally matured in two equal annual payments on
the first and second anniversaries of the offering. On September 30, 1997, the
maturity date of the notes was extended to September 30, 1998. On April 30,
1998 these notes were extended to February 1, 2000.
On February 24, 1998, the Company borrowed $487,000 on an unsecured basis
from Mr. Sanderman. The unsecured note was at a prime rate plus 3.0% with a
maturity date of October 1, 1998. These funds were used to pay property taxes
for 1996 and 1997 which became due on a building owned by the Company at 201
North Wells, Chicago, Illinois. This loan was repaid in full on June 30, 1998.
On March 17, 1998, in order to acquire the property located at 3228-3244
North Halsted, Chicago, Illinois, the Company borrowed $890,000 on an unsecured
basis from Mr. Sanderman. The unsecured note was at a rate of prime plus 3.0%
with an expiration date of October 1, 1998. This note was repaid in full on May
12, 1998.
On May 1, 1998, Erie Center Lofts, Inc., a wholly owned subsidiary of the
Company, entered into a $2.5 million Secured Subordinated Promissory Note with a
maturity date of June 30, 1999, and an interest rate of 20% with Mr. Sanderman.
The note is secured by a junior mortgage on the property commonly known as Erie
Tower located at 421 West Erie Street in Chicago, Illinois. Principal payments
under this note may only be paid out of net sales proceeds from the sale of
units within Erie Tower only after all advances made under the existing
revolving credit loan agreement related to the Erie Tower project have been
repaid.
On May 26, 1998 the Company borrowed $1,602,241 on an unsecured basis from
Mr. Sanderman. The unsecured note was at a rate of prime plus 3.0% with a
maturity date of October 1, 1998. These funds were used to pay property taxes
for 1990, 1991, and 1992, which became due through a court settlement on a
building owned by the Company at 201 N. Wells, Chicago, Illinois. This loan was
repaid in full on June 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.
14
<PAGE>
INDEPENDENT AUDITORS
The Company's Board of Directors, upon recommendation of the Audit
Committee, has selected PricewaterhouseCoopers LLP to audit the financial
statements of the Company for the fiscal year ended September 30, 1999. It is
expected that representatives of PricewaterhouseCoopers LLP 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 2000 Annual
Meeting of Shareholders must be received by the Corporate Secretary of the
Company not less than 120 days prior to March 3, 2000.
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, 150 West Center Court, Schaumburg, Illinois 60195.
Annual Report to Shareholders
The Company's Annual Report to Shareholders for the year ended September
30, 1998, containing financial and other information pertaining to the Company
is enclosed with this Proxy Statement which is being mailed to Shareholders on
or about February 2, 1999. 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, 1998 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
January 13, 1999. Requests for copies of such reports should be directed to
Sundance Homes, Inc., Attention: Investor Relations, 150 West Center Court,
Schaumburg, Illinois 60195.
15
<PAGE>
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,
/s/ David Apter
DAVID APTER
Corporate Secretary
16
<PAGE>
PROXY SUNDANCE HOMES, INC. This proxy is solicited
150 West Center Court, Schaumburg, Illinois 60195 on behalf of
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS Board of Directors
To Be Held On March 3, 1999
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 3, 1999, at 9:00 a.m. local time, at the offices of Katten Muchin & Zavis,
525 West Monroe, Suite 1600, Chicago, Illinois 60661, 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 II
[_] One vote for each share owned [_] WITHHOLD AUTHORITY to
FOR each nominee listed vote for all nominees listed
below (except as marked to below
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.)
Dennis Bookshester
Thomas Small
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. 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 PROPOSAL 1 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.
