<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
USA FLORAL PRODUCTS, 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.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO USA FLORAL
April 13, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of U.S.A. Floral Products, Inc. to be held on Tuesday, May 12, 1998, at 10:00
a.m., at The Capital Hilton, 1001 16th Street, N.W., Washington, D.C.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters described in the accompanying Notice
of Annual Meeting and Proxy Statement.
Please read the accompanying Notice of Annual Meeting and Proxy Statement
carefully. Whether or not you plan to attend, you can ensure that your shares
are represented and voted at the Annual Meeting by promptly completing,
signing, dating and returning the enclosed proxy card in the envelope
provided.
We look forward to seeing you on May 12th.
Sincerely,
/s/ Robert J. Poirier
Robert J. Poirier
Chairman of the Board and Chief Executive Officer
<PAGE>
U.S.A. FLORAL PRODUCTS, INC.
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 600 WEST
WASHINGTON, D.C. 20007
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
---------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of U.S.A. Floral
Products, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 12, 1998, at 10:00 a.m. local time, at The Capital Hilton, 1001
16th Street, N.W., Washington, D.C., for the following purposes:
1. To elect four Class I directors to serve for a term of three years and
until their respective successors are duly elected and qualified; and
2. To ratify the selection of Price Waterhouse LLP, independent
accountants, to audit the books and accounts of the Company for the year
ending December 31, 1998; and
3. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on April 3, 1998 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting and any adjournment or postponement
thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Annual Meeting.
A complete list of the stockholders entitled to vote at the Annual Meeting
will be available during ordinary business hours for examination by any
stockholder, for any purpose germane to the Annual Meeting, for a period of at
least ten days prior to the Annual Meeting. This list may be inspected at the
offices of the Company, 1025 Thomas Jefferson Street, N.W., Suite 600 West,
Washington, D.C. 20007.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU ARE CORDIALLY INVITED TO
ATTEND THE ANNUAL MEETING IN PERSON. THE RETURN OF THE ENCLOSED PROXY CARD
WILL NOT AFFECT YOUR RIGHT TO REVOKE YOUR PROXY OR TO VOTE IN PERSON IF YOU DO
ATTEND THE ANNUAL MEETING.
By order of the Board of Directors,
Jonathan J. Ledecky
Secretary
Washington, D.C.
April 13, 1998
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE IT,
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY.
<PAGE>
U.S.A. FLORAL PRODUCTS, INC.
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 600 WEST
WASHINGTON, D.C. 20007
---------------------
PROXY STATEMENT
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors ("Board") of U.S.A. Floral Products, Inc., a
Delaware corporation (the "Company"), for use at the Company's 1998 Annual
Meeting of Stockholders (together with any and all adjournments and
postponements thereof, the "Annual Meeting") to be held on Tuesday, May 12, at
10:00 a.m. local time, at The Capital Hilton, 1001 16th Street, N.W.,
Washington, D.C., for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders (the "Notice"). This Proxy Statement, together
with the accompanying Notice and the enclosed proxy card, are first being sent
to stockholders on or about April 14, 1998.
RECORD DATE; VOTING SECURITIES; VOTING AND PROXIES
The Board has fixed the close of business on April 3, 1998 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting (the "Record Date"). On the Record Date, there were
13,989,610 shares of Common Stock of the Company, par value $.001 per share
("Common Stock"), outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote per share on each matter properly brought before the
Annual Meeting. Abstentions may be specified as to all proposals to be brought
before the Annual Meeting other than the election of directors.
Shares can be voted at the Annual Meeting only if the stockholder is present
in person or is represented by proxy. If the enclosed proxy card is properly
executed and returned prior to voting at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. In the absence of instructions, shares represented by executed
proxies will be voted as recommended by the Board. Brokers, banks and other
nominee holders will be requested to obtain voting instructions of beneficial
owners of stock registered in their names, and shares represented by a duly
completed proxy submitted by such a nominee holder on behalf of a beneficial
owner will be voted to the extent instructed by the nominee holder on the
proxy card. Rules applicable to nominee holders may preclude them from voting
shares held by them in nominee capacity on certain kinds of proposals unless
they receive voting instructions from the beneficial owners of the shares (the
failure to vote in such circumstances is referred to as a "broker non-vote").
The Board knows of no matters which are to be brought before the Annual
Meeting other than those set forth in the accompanying Notice. If any other
matters properly come before the Annual Meeting, the persons named in the
enclosed proxy card, or their duly appointed substitutes acting at the Annual
Meeting, will be authorized to vote or otherwise act thereon in accordance
with their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by attending the
Annual Meeting and voting in person, by notifying the Secretary of the Company
of such revocation in writing or by delivering a duly executed proxy bearing a
later date, provided that such notice or proxy is actually received by the
Company prior to the taking of any vote at the Annual Meeting.
The cost of solicitation of proxies for use at the Annual Meeting will be
borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees of the Company may solicit proxies personally
or by telephone.
<PAGE>
QUORUM; VOTES REQUIRED
The presence at the Annual Meeting, in person or by proxy, of shares of
Common Stock representing at least a majority of the total number of shares of
Common Stock entitled to vote on the Record Date will constitute a quorum for
purposes of the Annual Meeting. Shares represented by duly completed proxies
submitted by nominee holders on behalf of beneficial owners will be counted as
present for purposes of determining the existence of a quorum (even if some
such proxies reflect broker non-votes). In addition, abstentions will be
counted as present for purposes of determining the existence of a quorum.
Under applicable Delaware law and the Company's Bylaws ("Bylaws"), directors
are to be elected by a plurality of the votes of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting. Accordingly,
and in accordance with the Company's Bylaws, the four nominees for election as
directors who receive the highest number of votes actually cast will be
elected. Broker non-votes will be treated as shares that neither are capable
of being voted nor have been voted and, accordingly, will have no effect on
the outcome of the election of directors.
The remaining proposal to be brought before the Annual Meeting requires the
affirmative vote of a majority of the shares present and entitled to vote at
the Annual Meeting. Abstentions will be counted as shares present at the
Annual Meeting and will thus increase the minimum number of affirmative votes
necessary to approve this proposal. Because they will not be recorded as votes
in favor of such proposal, however, abstentions will have the effects of votes
against such proposal. Broker non-votes with respect to this proposal will be
treated as shares not capable of being voted on this proposal; accordingly,
broker non-votes will have no effect either on the minimum number of
affirmative votes necessary to approve such proposal or on the outcome of
voting on such proposal.
ELECTION OF DIRECTORS
The Certificate of Incorporation and the Bylaws of the Company provide that
the number of directors (which is to be not less than two) is to be determined
from time to time by resolution of the Board. The Board is currently comprised
of 14 persons.
Pursuant to the Company's Certificate of Incorporation, the members of the
Board are divided into three classes, designated Class I, Class II and Class
III. Each class is to consist, as nearly as may be possible, of one-third of
the total number of members of the Board. The term of the Class I directors
expires at the Annual Meeting. The terms of the Class II and Class III
directors will expire at the 1999 and 2000 Annual Meetings of Stockholders,
respectively. At each Annual Meeting, the directors elected to succeed those
whose terms expire are of the same class as the directors they succeed and are
elected for a term to expire at the third Annual Meeting of Stockholders after
their election and until their successors are duly elected and qualified. A
director of any class who is elected to fill a vacancy resulting from an
increase in the number of directors holds office for the remaining term of the
class to which he is elected and a director who is elected to fill a vacancy
arising in any other manner holds office for the remaining term of his
predecessor.
The four incumbent Class I directors are nominees for election this year for
a three-year term expiring at the 2001 Annual Meeting of Stockholders. In the
election, the four persons who receive the highest number of votes actually
cast will be elected. The proxies named in the proxy card intend to vote for
the election of the four Class I nominees listed below unless otherwise
instructed. If a holder does not wish his or her shares to be voted for a
particular nominee, the holder must identify the exception in the appropriate
space provided on the proxy card, in which event the shares will be voted for
the other listed nominee. If any nominee becomes unable to serve, the proxies
may vote for another person designated by the Board or the Board may reduce
the number of directors. The Company has no reason to believe that any nominee
will be unable to serve.
2
<PAGE>
Set forth below is certain information with regard to the four nominees for
election as Class I directors and each continuing Class II and Class III
director.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<C> <S>
Raymond R. Ashmore............... Raymond R. Ashmore has served as President of the
Age 53 Company's United Wholesale operating unit since the
acquisition of United Wholesale Florists, Inc. and
United Wholesale Florists of America, Inc. ("United
Wholesale") in October 1997 and as a director of the
Company since appointment to the Board at its
meeting in November 1997. Prior to the acquisition
of United Wholesale by the Company, Mr. Ashmore
served as President of United Wholesale since 1983.
Dwight Haight.................... Dwight Haight has served as President of the
Age 50 Company's CFX operating unit since the acquisition
of CFX, Inc. ("CFX") in October 1997 and as a
director of the Company since appointment to the
Board at its meeting in November 1997. Prior to the
acquisition of CFX by the Company, Mr. Haight served
as President of CFX since 1974.
Roy O. Houff..................... Roy O. Houff has served as Chief Executive Officer
Age 56 of the Company's Houff operating unit since the
acquisition of The Roy Houff Company ("Houff") in
October 1997 and as a director of the Company since
appointment to the Board at its meeting in November
1997. Prior to the acquisition of Houff by the
Company, Mr. Houff served as Chief Executive Officer
of Houff since May 1997 and served as President of
Houff from 1977 until May 1997.
William W. Rudolph............... William W. Rudolph has served as President of the
Age 65 Company's Bay State operating unit since the
acquisition of Bay State Florist Supply, Inc. ("Bay
State") in October 1997 and as a director of the
Company since appointment to the Board at its
meeting in November 1997. Prior to the acquisition
of Bay State by the Company, Mr. Rudolph served in
an executive capacity with Bay State since 1962,
most recently as President of Bay State since 1990.
</TABLE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
THE FOUR PERSONS NOMINATED TO SERVE AS CLASS I DIRECTORS.
3
<PAGE>
DIRECTORS CONTINUING AS CLASS II DIRECTORS--TERM EXPIRING 1999
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
Jeffrey Brothers................. Jeffrey Brothers has served as President of the
Age 38 Company's Monterey Bay operating unit since the
acquisition of Monterey Bay Bouquet, Inc. and Bay
Area Bouquets, Inc. ("Monterey Bay") in October 1997
and as a director of the Company since appointment
to the Board at its meeting in November 1997. Prior
to the acquisition of Monterey Bay by the Company,
Mr. Brothers served as President of Monterey Bay
since February 1993. From 1985 until January 1993,
Mr. Brothers was President of Brothers, Inc., a
wholesale flower distributor.
John T. Dickinson................ John T. Dickinson has served as President of the
Age 36 Company's American Florist operating unit since the
acquisition of American Florist Supply, Inc.
("American Florist") in October 1997 and as a
director of the Company since appointment to the
Board at its meeting in November 1997. Prior to the
acquisition of American Florist by the Company, Mr.
Dickinson served as President of American Florist
since 1994. Mr. Dickinson has also served as a
director of the Wholesale Florists & Florist
Suppliers of America ("WF&FSA"), an industry trade
organization, since April 1997. Prior to 1994, Mr.
Dickinson served in a number of sales and marketing
positions for General Electric Company, most
recently as an area sales manager.
John Q. Graham................... John Q. Graham, Jr. has served as President of the
Age 49 Company's Alpine Gem operating unit since the
acquisition of Alpine Gem Flower Shippers, Inc.
("Alpine Gem") in October 1997 and as a director of
the Company since appointment to the Board at its
meeting in November 1997. Prior to the acquisition
of Alpine Gem by the Company, Mr. Graham served as
President of Alpine Gem since 1978.
Gustavo Moreno................... Gustavo Moreno has served as President of the
Age 44 Company's Flower Trading operating unit since the
acquisition of Flower Trading Corporation ("Flower
Trading") in October 1997 and as a director of the
Company since appointment to the Board at its
meeting in November 1997. Prior to the acquisition
of Flower Trading by the Company, Mr. Moreno served
as President of Flower Trading since 1977.
John Vaughan..................... John Vaughan has been a director of the Company
Age 63 since appointment to the Board in February 1998. He
is a co-founder of Continental Farms Limited
("Continental Farms") and Atlantic Bouquet Company
Limited ("Atlantic Bouquet") and served as the
Chairman of the Board of each entity until
Continental Farms' and Atlantic Bouquet's
acquisition by the Company in January 1998. Mr.
Vaughan is also a founder, past president and
director of ASOCOLFLORES, the largest association of
flower growers in Latin America.
</TABLE>
4
<PAGE>
DIRECTORS CONTINUING AS CLASS III DIRECTORS--TERM EXPIRING 2000
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<C> <S>
Robert J. Poirier................ Robert J. Poirier co-founded the Company in April
Age 46 1997 and has since served as its Chairman of the
Board, President and Chief Executive Officer. Mr.
Poirier served as Vice President of 1-800-FLOWERS
from 1993 until March 1997, and was most recently
responsible for that company's florist network
operations, consisting of 2,500 independent retail
florists. From 1989 to 1993, Mr. Poirier served as
Group Director of FTD. Mr. Poirier has been employed
in the floral products industry for 22 years, and
has extensive experience at all levels of the floral
distribution channel.
Jonathan J. Ledecky.............. Jonathan J. Ledecky co-founded the Company in April
Age 40 1997 and has since served as its Non-Executive
Chairman of the Board. Mr. Ledecky founded U.S.
Office Products Company, a publicly-held supplier of
a broad range of office products and business
services, in October 1994 and has served since then
as its Chairman of the Board and, until November 5,
1997, as its Chief Executive Officer. Since its
inception, U.S. Office Products Company has acquired
and integrated over 190 companies. In February 1997,
Mr. Ledecky founded, and currently serves as
Chairman and Chief Executive Officer of,
Consolidation Capital Corporation, a company that
will seek to build consolidated enterprises with
national market reach through the acquisition and
integration of businesses in fragmented industries.
Mr. Ledecky also currently serves as Non-Executive
Chairman of the Board and a director of UniCapital
Corporation, a company formed to create a national
consolidator and operator of equipment leasing and
specialty finance businesses serving the commercial
market. Prior to founding U.S. Office Products
Company, Mr. Ledecky served from 1989 to 1991 as the
President of The Legacy Fund, Inc., and from 1991 to
September 1994 as President and Chief Executive
Officer of Legacy Dealer Capital Fund, Inc., a
wholly-owned subsidiary of Steelcase, Inc., the
nation's largest manufacturer of office furniture
products.
Vincent W. Eades................. Vincent W. Eades has been a director of the Company
Age 39 since July 1997 and is also a director of UniCapital
Corporation and Consolidation Capital Corporation.
From April 1995 to the present, Mr. Eades has served
as the Senior Vice President of Sales and Marketing
for Starbucks Coffee Co. Inc. For more than eleven
years prior to April 1995, Mr. Eades was associated
with Hallmark Cards Inc., most recently as a General
Manager.
Edward J. Mathias................ Edward J. Mathias has been a director of the Company
Age 56 since July 1997 and is also a director of U.S.
Office Products Company, The Fortress Group, Inc.,
Condor Technology Solutions, Inc. and Sirrom Capital
Corporation. Mr. Mathias has served as Managing
Director of the Carlyle Group, a Washington, D.C.
based merchant bank, since 1993. From 1971 to 1993,
Mr. Mathias was associated with T. Rowe Price
Associates, Inc., an investment management
organization, most recently as a Managing Director.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<C> <S>
John A. Quelch................... John A. Quelch has been a director of the Company
Age 46 since July 1997. Dr. Quelch is also a director of
U.S. Office Products Company, Pentland Group plc and
WPP Group plc, a marketing services company that
includes Ogilvy & Mather, J. Walter Thompson and
Hill & Knowlton. Dr. Quelch is the Sebastian S.
Kresge Professor of Marketing at the Harvard
Business School.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The Board met one time during the fiscal year ended December 31, 1997
("Fiscal 1997"). The Board has an Audit Committee and a Compensation
Committee. The Board does not have a standing Nominating Committee.
The responsibilities of the Audit Committee include recommending to the
Board the independent public accountants to be selected to conduct the annual
audit of the books and records of the Company, reviewing the proposed scope of
such audit and approving the audit fees to be paid, reviewing accounting and
financial controls of the Company with the independent public accountants and
the Company's financial and accounting staff and reviewing and approving
transactions between the Company and its directors, officers and affiliates.
Messrs. Eades and Quelch are the members of the Audit Committee. The Audit
Committee did not meet during Fiscal 1997.
The Compensation Committee provides a general review of the Company's
compensation plans and policies to ensure that they meet corporate objectives.
As described below, the Company's existing plans with respect to executive
compensation are largely based upon contractual commitments set forth in
employment agreements that are presently in effect. The responsibilities of
the Compensation Committee also include administering the 1997 Long-Term
Incentive Plan, including selecting the officers and salaried employees to
whom awards will be granted. Messrs. Ledecky and Mathias are the members of
the Compensation Committee. The Compensation Committee did not meet during
Fiscal 1997.
No director attended fewer than 75% of the total number of meetings of the
Board during Fiscal 1997.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected Price Waterhouse LLP to serve as the Company's
principal accountants for the fiscal year ending December 31, 1998. A
representative of Price Waterhouse LLP will be present at the Annual Meeting
and will have the opportunity to make a statement, if such person desires to
do so, and to respond to appropriate questions.
The proposal to ratify the selection of Price Waterhouse LLP will be
approved by the stockholders if it receives the affirmative vote of a majority
of the shares present and entitled to vote on the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS.
6
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth information regarding compensation of the
Company's Chief Executive Officer and other executive officers of the Company
whose compensation is required to be disclosed (the "Named Executive
Officers") for Fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
--------------------------- ---- ----------- ---------------------
<S> <C> <C> <C> <C>
Robert J. Poirier........................ 1997 $ 160,000 $ 0 110,000
Chairman of the Board, President
and Chief Executive Officer
Raymond C. Anderson...................... 1997 150,000 $ 0 50,000
Chief Financial Officer
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to the grant
of options to the Named Executive Officers during Fiscal 1997 and the value of
options held at December 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE
SECURITIES OPTION APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OR OPTION TERM (3)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- -------------- ----------- ---------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Poirier (1)... 110,000 13.8% $13.00 10/2007 899,319 2,279,051
Raymond C. Anderson (2). 50,000 6.2% $ 8.00 10/2007 658,751 1,285,932
</TABLE>
- --------
(1) Options to purchase 60,000 shares are immediately exercisable. All other
options will vest in 25% annual installments over four years commencing on
the first anniversary date of grant.
(2) All options vest in 25% annual installments over four years commencing on
the first anniversary of the date of grant.
(3) The potential realizable value is based on the assumed annual rates of
stock price appreciation being applied to the above exercise prices. Such
information is shown for informational purposes and does not represent an
estimate or prediction of the Company's future stock price.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE TABLE
The following table summarizes the value at December 31, 1997 of all shares
subject to options granted to the Named Executive Officers of the Company to
the extent not then exercised, and information concerning option exercises, if
any, during Fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (1)
ON VALUE ------------------------------- -------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- -------- -------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Poirier....... 0 $0 60,000 50,000 $165,000 $137,500
Raymond C. Anderson..... 0 $0 0 50,000 $ 0 $387,500
</TABLE>
- --------
(1) The value of the Common Stock at December 31, 1997 was $15.75 per share.
ARRANGEMENTS REGARDING EMPLOYMENT
Effective as of April 22, 1997 and as amended August 6, 1997 the Company
entered into a two-year employment agreement with Robert J. Poirier, pursuant
to which the Company agreed to employ Mr. Poirier as Chairman of the Board,
President and Chief Executive Officer for a term of two years at an annual
base salary of $160,000. In addition, pursuant to the agreement, Mr. Poirier:
(i) was granted an option on October 9, 1997 to purchase 110,000 shares of
Common Stock at an exercise price equal to the initial public offering ("IPO")
price of $13.00 per share, which was fully vested and immediately exercisable
as to 60,000 shares, and which shall vest and become exercisable with respect
to 12,500 additional shares on each of the first four anniversaries of the
date of the grant; and (ii) will be granted an immediately exercisable option
in October 1998 to purchase an additional 60,000 shares at an exercise price
equal to then current market price per share. The agreement also includes a
two-year post-employment non-competition provision. The agreement provides
that Mr. Poirier will be eligible to participate in an incentive bonus
program, which is to be established by the Board. If Mr. Poirier is terminated
without cause, he is entitled to receive his base salary, plus benefits, for
the two year period following the termination, and all unvested options become
fully vested.
Upon consummation of the IPO, the Company entered into a two-year employment
agreement with Raymond C. Anderson, the Company's Chief Financial Officer,
providing for an annual base salary of $150,000 for a term of two years, plus
a bonus based upon the performance of the Company. The agreement also includes
a two-year post-employment non-competition provision. In addition, Mr.
Anderson was granted an option on October 9, 1997 to purchase 50,000 shares of
Common Stock with an exercise price equal to $8.00 per share, which option
vests over a four year period from the date of grant. If Mr. Anderson is
terminated without cause, he is entitled to receive accelerated vesting of
vested options to purchase shares of Common Stock then held by him, as well as
his base salary plus benefits for the greater of (i) the remainder of the term
or (ii) twelve months.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers,
employees or consultants of the Company are entitled to receive an annual
retainer fee of $25,000, plus reimbursement of expenses for each meeting of
the Board and each committee meeting that they attend in person. In addition,
non-employee directors receive an option to acquire 21,000 shares when elected
to the Board and an option to acquire 6,000 shares on the day after each
Annual Meeting of the Company's stockholders, under the provisions of the
Company's 1997 Non-Employee Directors' Stock Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Ledecky and Mathias.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is composed of two non-employee
directors. The Committee reports as follows:
General. The Committee is responsible for approving and reviewing with the
Board the compensation of the Company's executive officers and certain other
management personnel. This includes compensation awarded in the form of cash
bonuses and equity-based incentives. The Committee administers the Company's
stock benefit plans, including the 1997 Long-Term Incentive Plan.
The Committee believes that compensation must be competitive, as well as
directly and materially linked to the Company's performance. In administering
the Company's compensation program, the Committee's objectives include the
following: attracting and retaining executive talent; motivating executives to
maximize operating performance; measuring performance on both an individual
and a Company-wide basis; reflecting the Company's success in meeting growth
and profitability targets; and linking executive and stockholder interests
through the grant of stock options.
The key components of the Company's executive compensation program consist
of salary, annual incentive bonuses and stock options. The long-term
compensation of the Company's executive officers consists primarily of stock
options. Short-term compensation consists principally of base salary and a
cash bonus. The Committee's policy with respect to each of these elements,
including the basis of the compensation awarded to Mr. Poirier, the Company's
Chief Executive Officer ("CEO"), is discussed below.
Since the Company's inception, the Committee has striven to balance the cash
compensation needed to attract, motivate and retain executive talent with
long-term incentives through the grant of stock options with multi-year
vesting schedules. In the Committee's judgment, this approach tends to align
the interests of management most closely with those of the Company's
stockholders.
Base Salary. In setting base salaries for new executive officers, the
Committee takes into account the background and qualifications of the new
executives, the base salary levels of the Company's other executive officers
and the salaries that the Company's competitors (which are generally private
companies) are paying to executives employed in comparable positions.
Annual Incentive Bonus. At the end of the fiscal year, the Committee decides
whether to award incentive bonuses to executive officers, based on the
Company's success in achieving its growth and profitability targets and
recommendations made by the Company's CEO. Bonuses are determined by measuring
an officer's performance and the Company's overall performance against target
performance levels, typically based on: (i) the executive's overall
performance and contribution to the Company's growth and profitability; (ii)
the Company's overall profitability; (iii) the Company's internal revenue
growth; and (iv) the Company's revenue growth due to acquisitions.
1997 Long-Term Incentive Plan. Prior to the completion of the IPO in October
1997, the Company adopted the 1997 Long-Term Incentive Plan to provide
officers, key employees and consultants with additional incentives by
increasing their ownership interests in the Company and thereby focusing such
parties' efforts on the long-term goals of the Company and the maximization of
the total return to stockholders. In particular, the Company uses the Long-
Term Incentive Plan as a means to create incentive for its managers at the
operating unit level.
The Committee administers the 1997 Long-Term Incentive Plan and selects the
individuals who will receive awards. In addition, the Compensation Committee
determines the type and number of awards and the terms and conditions of those
awards (including exercise prices, vesting and forfeiture conditions,
performance conditions and periods during which awards will remain
outstanding).
9
<PAGE>
The Committee believes that aligning management's interests with those of
the Company's stockholders is an important element of the Company's approach
to executive compensation. Stock options align the interests of employees and
stockholders by providing value to the executive through stock price
appreciation. Generally, the stock options granted during Fiscal 1997 have
ten-year terms and are exercisable at the fair market value of the Company's
stock on the date of grant, beginning one year from the date of grant and
vesting thereafter in cumulative yearly amounts of 25% of the shares granted.
Certain of the options granted to executives during Fiscal 1997 varied from
this general practice. See, "Executive Compensation--Option Grants in Last
Fiscal Year." Of the 800,856 options granted to employees during Fiscal 1997,
options to purchase 160,000 shares of Common Stock, or approximately 20%, were
granted to executive officers during Fiscal 1997.
Stock options have been, and will continue to be, awarded periodically at
the discretion of the Compensation Committee, based upon recommendations of
the Company's CEO. The size of such grants, in general, will be evaluated by
regularly assessing competitive market practices, the recipient's position and
level of responsibility within the Company and the Company's overall
performance. Grants also will take into account the differential between the
levels of cash compensation paid by the Company as compared to those of its
competitors.
The Committee intends, to the extent possible, that options and other
equity-based awards granted to executive officers under the 1997 Long-Term
Incentive Plan be deductible for federal tax purposes. Stock option awards
granted under the Incentive Plan are deductible in accordance with Section
162(m) of the Internal Revenue Code.
Compensation of the Chief Executive Officer. As discussed above under
"Arrangements Regarding Employment," Mr. Poirier's base salary was determined
prior to the IPO based on arms-length discussions between the Company and Mr.
Poirier. In addition, Mr. Poirier was granted options to purchase 110,000
shares of Common Stock as a part of this arrangement, of which options to
purchase 60,000 shares became immediately exercisable upon consummation of the
IPO. In general, the Committee believes that tying Mr. Poirier's financial
reward to the market price of the Common Stock best aligns Mr. Poirier's
interests with the interests of the Company's stockholders, and further
ensures his continued service to the Company.
Jonathan J. Ledecky Edward J. Mathias
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 18, 1998 held by each
person who is known by the Company to have been the beneficial owner of more
than five percent of the Company's Common Stock on such date, by each director
and Named Executive Officer of the Company and by all directors and Executive
Officers of the Company as a group (based on 12,924,193 shares of Common Stock
outstanding as of such date).
<TABLE>
<CAPTION>
SHARES OWNED
-----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ --------- -------
<S> <C> <C>
Jonathan J. Ledecky (1)..................................... 1,310,000 10.1
c/o U.S.A. Floral Products, Inc.
1025 Thomas Jefferson Street, N.W.
Suite 600 West
Washington, D.C. 20007
Robert J. Poirier (2)....................................... 1,060,000 8.2
c/o U.S.A. Floral Products, Inc.
1025 Thomas Jefferson Street, N.W.
Suite 600 West
Washington, D.C. 20007
Pilgrim Baxter & Associates, Ltd. (3)....................... 866,000 6.7
225 Duportail Road
Wayne, PA 19087
Raymond C. Anderson......................................... -0- *
Vincent W. Eades (4)........................................ 15,500 *
Edward J. Mathias (5)....................................... 110,500 *
John A. Quelch (6).......................................... 35,500 *
Raymond R. Ashmore.......................................... 100,125 *
Jeffrey Brothers............................................ 74,875 *
John T. Dickinson........................................... 141,750 1.1
John Q. Graham, Jr.......................................... 80,000 *
Dwight Haight............................................... 118,750 *
Roy O. Houff................................................ -0- *
Gustavo Moreno.............................................. 22,400 *
William W. Rudolph (7)...................................... 42,955 *
John Vaughan................................................ -0- *
All directors and executive officers, as a group (8)........ 3,112,355 23.7
</TABLE>
- --------
* Less than 1%
(1) Includes 100,000 shares which may be acquired within 60 days of March 18,
1998 pursuant to the exercise of options.
(2) Includes 60,000 shares which may be acquired within 60 days of March 18,
1998 pursuant to the exercise of options. Also includes 200,000 shares
held by trusts for the benefit of Mr. Poirier's spouse and children; Mr.
Poirier disclaims beneficial ownership of all such trusts' shares.
11
<PAGE>
(3) Based on information contained in a Report on Schedule 13G filed by such
stockholder with the Securities and Exchange Commission on February 17,
1998.
(4) Includes 10,500 shares which may be acquired within 60 days of March 18,
1998 pursuant to the exercise of options.
(5) Includes 10,500 shares which may be acquired within 60 days of March 18,
1998 pursuant to the exercise of options. Also includes 50,000 shares
owned by Mr. Mathias' daughter; Mr. Mathias disclaims beneficial ownership
of such shares.
(6) Includes 10,500 shares which may be acquired within 60 days of March 18,
1998 pursuant to the exercise of options.
(7) Mr. Rudolph's shares are owned jointly with his wife.
(8) Includes an aggregate of 191,500 shares which may be acquired within 60
days of March 18, 1998 pursuant to the exercise of options.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Set forth below is a description of certain transactions and relationships
between the Company and certain persons who are officers, directors and
principal stockholders of the Company. Except as otherwise indicated, the
negotiation of all the transactions described below preceded the IPO in
October 1997.
Mr. Poirier
On April 22, 1997 the Company sold 1,000,000 shares of its common stock to
Mr. Poirier in an organizational subscription for aggregate cash consideration
of $1,000. For other matters concerning Mr. Poirier, see "Executive
Compensation -- Arrangements Regarding Employment."
Mr. Ledecky
On April 22 and April 23, 1997 the Company sold an aggregate of 1,100,000
shares of its common stock to Mr. Ledecky in an organizational subscription
for aggregate cash consideration of $2,000. In addition, on August 6, 1997,
the Company granted Mr. Ledecky an option to purchase 210,000 shares of Common
Stock (which became immediately exercisable upon consummation of the IPO) at
an exercise price equal to the IPO price ($13.00 per share). On October 9,
1997 the Company sold 110,000 shares of its Common Stock to Jonathan J.
Ledecky for aggregate cash consideration of 1,430,000, upon exercise of the
above-described option.
Mr. Mathias
On April 23, 1997, the Company sold 100,000 shares of its common stock to
Edward J. Mathias in an organizational subscription for aggregate cash
consideration of $100,000. Mr. Mathias was not a director of the Company at
the time of the stock purchase.
Mr. Quelch
On May 10, 1997, the Company sold 25,000 shares of its common stock to John
A. Quelch in an organizational subscription for aggregate cash consideration
of $25,000. Mr. Quelch was not a director of the Company at the time of the
stock purchase.
Mr. Houff
The Company acquired all of the outstanding stock of Houff for $11.0 million
in cash, all of which was paid to Mr. Houff. Mr. Houff entered into a two-year
covenant not to compete with the Company and its
12
<PAGE>
subsidiaries and a two-year employment agreement with the Company's Houff
operating unit. Mr. Houff was not a director at the time of the negotiation of
the Houff merger agreement.
Mr. Houff is the sole stockholder of RHI Industries, Inc. ("RHI
Industries"). Houff paid management fees, vehicle lease payments and health
insurance premiums to RHI Industries, which payments totaled $0.9 million for
the period January 1, 1997 through October 15, 1997. All payments to RHI
Industries terminated upon consummation of the acquisition of Houff. Houff
leased six of its seven facilities from Mr. Houff. Lease payments totaled $0.4
million for the period January 1, 1997 through October 15, 1997. The
properties owned by Mr. Houff were acquired by Houff prior to the Houff Merger
and the lease arrangement was thereupon terminated.
Mr. Haight
The Company acquired all of the outstanding stock of CFX for $9.8 million in
cash (of which a portion represents the amount of CFX's accumulated
adjustments account, which was distributed to the stockholders of CFX
immediately prior to the consummation of the CFX Merger) and 250,000 shares of
Common Stock. Mr. Haight received approximately $2.8 million in cash and
118,750 shares of Common Stock for his shares of capital stock of CFX. Mr.
Haight also received options to purchase 25,000 shares of Common Stock at an
exercise price of $13.00 per share. Mr. Haight entered into a two-year
covenant not to compete with the Company and its affiliates (subject to
certain exceptions) and a two-year employment agreement with the Company's CFX
operating unit. Mr. Haight was not a director at the time of the negotiation
of the CFX merger agreement.
Mr. Haight owns 25% of two farms, Miramonte and Mocari, both of which are
located in Colombia. CFX purchases flowers from these farms on a consignment
basis, which purchases totaled $12.0 million in the year ended December 31,
1996 and $13.3 million for the period January 1, 1997 through October 15,
1997. Mr. Haight also owned 50% of H&H Flowers which was acquired by the
Company in 1998, a bouquet manufacturer with which CFX conducts business.
Sales to and purchases from H&H Flowers for the period January 1, 1997 to
October 15, 1997 totaled $2.67 million. CFX provides management services to
H&H Flowers, for which services H&H Flowers paid fees totaling $0.4 million
for the period January 1, 1997 to October 15, 1997. All arrangements with
related parties are on terms substantially similar to those the Company would
realize in agreements with unaffiliated third parties in arm's-length
transactions. Mr. Haight owns 50% of Floraltech, Inc., an entity that manages
CFX's Colombian business activities. CFX paid $0.2 million to Floraltech, Inc.
for the period January 1, 1997 to October 15, 1997. The CFX Merger Agreement
provides that, upon consummation of the Merger, CFX will acquire the stock of
Floraltech, Inc. for a nominal consideration. Mr. Haight owns 50% of Flying
High Venture, from which entity CFX leases its facility in Miami, Florida.
Lease payments to Flying High Venture totaled $0.2 million for the period
January 1, 1997 to October 15, 1997. In connection with Flying High Venture's
financing of the acquisition of the real property, CFX guaranteed an
industrial revenue bond and a term loan to Flying High Venture. CFX's guaranty
obligation under the industrial revenue bond is secured by a pledge of all of
the assets of CFX. As of October 15, 1997, the outstanding principal balance
of the industrial revenue bond and the term loan in the aggregate was $3.5
million. Interest on the industrial revenue bond and the term loan accrues at
an effective annual rate of 7.48% and 9.44%, respectively. From time to time
prior to the CFX Merger, CFX advanced funds to Mr. Haight. All amounts due to
CFX from Mr. Haight were repaid to CFX upon consummation of the acquisition of
CFX.
Mr. Rudolph
The Company acquired all of the outstanding stock of Bay State for $6.0
million in cash and 495,550 shares of Common Stock. Mr. Rudolph received
approximately $0.5 million in cash and 43,000 shares of Common Stock for his
shares of capital stock of Bay State. In addition, Mr. Rudolph entered into a
two-year covenant not to compete with the Company and its affiliates (subject
to certain exceptions) and a two-year employment agreement with the Company's
Bay State operating unit. Mr. Rudolph was not a director at the time of the
negotiation of the Bay State merger agreement.
13
<PAGE>
Mr. Rudolph owns 8.7% of Cromwell Floral Properties LLC ("Cromwell"), which
is the owner of a building in Cromwell, Connecticut from which Bay State
operates a wholesale distribution facility. Bay State made rental payments to
Cromwell in the amount of $0.1 million for the period January 1, 1997 to
October 15, 1997. Mr. Rudolph also owns 8.7% of Massachusetts Floral
Properties LLC ("MFP"), which is the owner of a building in Waltham,
Massachusetts from which Bay State operates its headquarters and wholesale
facility. Bay State has leased the Waltham, Massachusetts property from MFP
for an annual rental fee of $0.2 million since October 16, 1997. Bay State
also leases a building in Springfield, Massachusetts from MFP which it
operates as a wholesale distribution facility for an annual rental fee of
$0.03 million. The Company believes that the terms of each of these leases are
no less favorable than those that the Company could obtain from an
unaffiliated third party.
Pursuant to a deferred compensation arrangement entered into between Bay
State and Mr. Rudolph in July 1976 and amended in August 1984 and March 1997,
Mr. Rudolph is to receive deferred compensation of $35,000 per year for the 10
years following the termination of his employment with Bay State.
Mr. Moreno
The Company acquired all of the outstanding stock of Flower Trading in a
reverse subsidiary merger for $5.9 million in cash and 160,000 shares of
Common Stock. In addition, the Company assumed an estimated tax liability of
Flower Trading of approximately $0.5 million. Mr. Moreno received
approximately $0.8 million in cash and 22,400 shares of Common Stock for his
shares of capital stock of Flower Trading. In addition, Mr. Moreno entered
into a two-year covenant not to compete with the Company and its affiliates
(subject to certain exceptions) and a two-year employment agreement with the
Company's Flower Trading operating unit. Mr. Moreno was not a director at the
time of the negotiation of the Flower Trading merger agreement.
Flower Trading previously owned a 75% interest in UltraFlora, which was
transferred to Seacross Trading Inc. prior to the acquisition of Flower
Trading and which was acquired by the Company in January 1998 for $2.8 million
in cash and 163,281 shares of Common Stock. Mr. Moreno entered into a
consulting agreement with the Company as part of the UltraFlora transaction,
for which he was granted options to purchase 50,000 shares of the Company's
Common Stock. Flower Trading provides handling services to UltraFlora. For the
period from January 1, 1997 to October 15, 1997, UltraFlora paid Flower
Trading $0.3 million for such services.
Mr. Ashmore
The Company acquired all of the outstanding stock of United Wholesale for
$4.8 million in cash and 268,500 shares of Common Stock. Mr. Ashmore received
approximately $1.0 million in cash and 98,625 shares of Common Stock for his
shares of capital stock of United Wholesale. Mr. Ashmore entered into a two-
year covenant not to compete with the Company and its affiliates and a two-
year employment agreement with the Company's United Wholesale operating unit.
Mr. Ashmore was not a director at the time of the negotiation of the United
Wholesale merger agreement.
Mr. Ashmore owns 33% of United Properties, an entity from which United
Wholesale leases eight of its facilities. Lease payments made by United
Wholesale to United Properties in the year ended June 30, 1997 totaled $0.2
million. United Wholesale leases its corporate headquarters from a partnership
in which United Properties has a 50% interest. Lease payments to the United
Properties affiliate totaled $0.1 million for the year ended June 30, 1997.
The Company was granted a five-year option to purchase the property leased
from the affiliated entity. The Company believes that all properties are
leased on terms no less favorable than those that the Company could obtain
from an unaffiliated third party.
United Wholesale made advances to Mr. Ashmore totaling $34,000 in the year
ended June 30, 1997 and to United Properties totaling $1.1 million as of June
30, 1997. Upon consummation of the United Wholesale Merger, Mr. Ashmore and
United Properties repaid the balance of these advances.
14
<PAGE>
Mr. Dickinson
The Company acquired all of the outstanding stock of American Florist for
$4.8 million in cash, all of which was paid to Mr. Dickinson. Mr. Dickinson
entered into a two-year covenant not to compete with the Company and its
affiliates and a two-year employment agreement with the Company's American
Florist operating unit. Mr. Dickinson also received options to purchase 50,000
shares of Common Stock at an exercise price per share of $13.00. In addition,
Mr. Dickinson received a contingent payment of $2.4 million as part of an
earn-out arrangement with the Company. The contingent payment was (payable by
the issuance of 141,750 shares of Common Stock). Mr. Dickinson was not a
director at the time of the negotiation of the American Florist merger
agreement.
Mr. Dickinson has an ownership interest in a rose farm in Ecuador ("Meadow
Flowers"). Mr. Dickinson's spouse is the sole stockholder of Farm Direct
Flowers, Inc., which has a 13.5% interest in Meadow Flowers. American Florist
purchases roses, as well as other types of flowers, from Meadow Flowers. For
the period January 1, 1997 through October 15, 1997 purchases from Meadow
Flowers totaled approximately $0.2 million. The Company continues to purchase
roses from Meadow Flowers and believes that the terms of the purchases made
from Meadow Flowers are no less favorable than those the Company could obtain
from an unaffiliated third party.
Mr. Brothers
The Company acquired all of the outstanding stock of Monterey Bay for $2.5
million in cash. Mr. Brothers received $1.0 million in cash for his shares of
capital stock of Monterey Bay. Mr. Brothers entered into a two-year covenant
not to compete with the Company and its affiliates and a two-year employment
agreement with the Company's Monterey Bay operating unit. Mr. Brothers
received options to purchase 50,000 shares of Common Stock at an exercise
price per share of $13.00. The stockholders of Monterey Bay, including Mr.
Brothers, received a contingent payment of $3.5 million as part of an earn-out
arrangement with the Company. Of the contingent payment, Mr. Brothers received
$0.2 million in cash and 74,875 shares of Common Stock. Mr. Brothers was not a
director at the time of the negotiation of the Monterey Bay merger agreement.
Mr. Brothers has a 40% interest in the entity that owns the property which
Monterey Bay leases. Monterey Bay's lease payments totaled $0.1 million for
the period January 1, 1997 to October 15, 1997. The lease, which terminates
December 31, 1999 provides for monthly rental payments of $12,000.
Mr. Graham
The Company acquired all of the outstanding stock of Alpine Gem for (i) $1.6
million in cash; (ii) S Corporation distributions of approximately $42,000;
and (iii) 160,000 shares of Common Stock. In connection with the Alpine Gem
Merger, Mr. Graham received $0.8 million in cash and 80,000 shares of Common
Stock. Mr. Graham entered into a two-year covenant not to compete with the
Company and its affiliates and a two-year employment agreement with the
Company's Alpine Gem operating unit. Mr. Graham also received options to
purchase 50,000 shares of Common Stock at an exercise price per share equal to
the initial public offering price of $13.00 per share. Mr. Graham was not a
director at the time of the negotiation of the Alpine Gem merger agreement.
Mr. Vaughan
The Company acquired all of the partnership interests of Continental Farms
and Atlantic Bouquet on January 28, 1998 for $27.5 million in cash and
1,642,672 in shares of Common Stock. Mr. Vaughan was the grantor under one of
the three trusts which held the partnership interests in Continental Farms and
Atlantic Bouquet. Certain farms, which are owned by the Vaughan family, are
significant supply sources for floral products. Upon the consummation of the
acquisition, the Company entered into a flower supply agreement with Lewis
Marketing Ltd. ("Lewis Marketing"), an exclusive sales distributor of the
Vaughan-owned farms, to
15
<PAGE>
continue Lewis Marketing's commercial relationship with the Company. The
Company believes that the terms of the agreement with Lewis Marketing are no
less favorable than those the Company could obtain from an unaffiliated third
party. The total consideration paid by Continental Farms and Atlantic Bouquet
to Lewis Marketing in 1997 was $12.1 million. The Company established, along
with certain sellers in the Continental Farms and Atlantic Bouquet
acquisition, a $7.0 million escrow account (to which the Company contributed
$3.5 million) to provide security against potential claims that may be
asserted under the Continental Farms and Atlantic Bouquet Merger Agreement,
which contribution will be returned to the Company the extent (if any) that
indemnifiable claims under the escrow are not made prior to its expiration.
Mr. Vaughan was not a director at the time of the negotiation of the
Continental Farms and Atlantic Bouquet merger agreements.
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVES OF OPERATING UNITS WHO ARE ALSO
DIRECTORS
The Company, through its wholly-owned subsidiaries, has entered into
employment agreements with certain of the individuals principally responsible
for management of the operating units. Described below are those employment
agreements of individuals who are directors of the Company. Each of the
agreements described below provides that the employee (i) will receive a
specified base salary, (ii) will be employed for a two-year period, (iii)
agrees to not compete with the Company for two years following termination of
employment and (iv) is eligible for an annual bonus of up to 100% of base
salary based in part on the performance of the applicable operating unit and
in part upon the performance of the Company. Roy O. Houff's employment
agreement with the Company's Houff operating unit provides that Mr. Houff will
be employed for a two-year period with a base salary of $150,000. Dwight
Haight's employment agreement with the Company's CFX operating unit provides
that Mr. Haight will be employed for a two-year period with a base salary of
$216,000. William W. Rudolph's employment agreement with the Company's Bay
State operating unit provides that Mr. Rudolph will be employed for a two-year
period with a base salary which was equal to his current salary through
December 31, 1997 and a base salary of $150,000 beginning January 1, 1998.
Jeffrey Brothers' employment agreement with the Company's Monterey Bay
operating unit provides that Mr. Brothers will be employed for a two-year
period with a base salary of $170,000. In addition, Mr. Brothers was granted
options to purchase 50,000 shares of Common Stock with an exercise price equal
to the IPO price of $13.00 per share. John Q. Graham, Jr.'s employment
agreement with the Company's Alpine Gem operating unit provides that Mr.
Graham will be employed for a two-year period with a base salary of $80,000.
In addition, Mr. Graham was granted options to purchase 50,000 shares of
Common Stock with an exercise price equal to the initial public offering price
of $13.00 per share. Raymond R. Ashmore's employment agreement with the
Company's United Wholesale operating unit provides that Mr. Ashmore will be
employed for a two-year period with a base salary of $150,000. John T.
Dickinson's employment agreement with the Company's American Florist operating
unit provides that Mr. Dickinson will be employed for a two-year period with a
base salary of $150,000. In addition, Mr. Dickinson was granted options to
purchase 50,000 shares of Common Stock, with an exercise price equal to the
IPO price of $13.00 per share. Gustavo Moreno's employment agreement with the
Company's Flower Trading operating unit provides that Mr. Moreno will be
employed for a two-year period with a base salary of $270,000.
16
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE OCTOBER 10, 1997
The following graph show the cumulative total stockholder return on the
Common Stock from the Company's initial public offering price on October 10,
1997 through February 27, 1998, as compared to the returns of the Nasdaq
National Market Composite Index and the Nasdaq 100 Index. The graph assumes
that $100 was invested in the Common Stock, the Nasdaq National Market
Composite Index and the Nasdaq 100 Index on October 10, 1997 and assumes
reinvestment of dividends.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG USA FLORAL PRODUCTS, INC., NASDAQ NATIONAL MARKET
COMPOSITE INDEX AND NASDAQ 100
<CAPTION>
Measurement period USA FLORAL NASDAQ NATIONAL NASDAQ 100
(Fiscal year Covered) PROUCTS, INC. MARKET COMPOSITE INDEX INDEX
- --------------------- ------------- ---------------------- -- -------
<S> <C> <C> <C>
Measurement PT -
10/10/97 $100 $100 $100
FYE 12/31/97 $121 $ 90 $ 91
FYE 02/27/98 $184 $102 $104
</TABLE>
- --------
/1/The original comparison date for the Nasdaq 100 Index was September 30,
1997 due to the unavailability of data for October 10, 1997.
17
<PAGE>
OTHER MATTERS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the "Act"), stockholders may present proper proposals for inclusion in the
Company's proxy statement and for consideration at the next Annual Meeting of
Stockholders by submitting such proposals to the Company in a timely manner.
Pursuant to the Company's Bylaws, in order to be so included for the 1999 Annual
Meeting of Stockholders, stockholder proposals must be received by the Secretary
of the Company at is principal executive offices no later than December 15, 1998
and must otherwise comply with the requirements of Rule 14a-8.
Under Section 16(a) of the Act, the Company's directors, officers, and
persons who are directly or indirectly the beneficial owners of more than 10% of
the Common Stock of the Company are required to file with the Securities and
Exchange Commission (the "Commission"), within specified monthly and annual due
dates, a statement of their initial beneficial ownership and all subsequent
changes in ownership of Common Stock. Rules of the Commission require such
persons to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of such forms, the Company believes that, during
Fiscal 1997, all such persons complied with all applicable filing requirements.
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL 1997, INCLUDING
CONSOLIDATED FINANCIAL STATEMENTS, IS BEING MAILED TO ALL STOCKHOLDERS ENTITLED
TO VOTE AT THE ANNUAL MEETING TOGETHER WITH THIS PROXY STATEMENT. THE ANNUAL
REPORT DOES NOT CONSTITUTE A PART OF THIS PROXY STATEMENT.
18
<PAGE>
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
U.S.A. FLORAL PRODUCTS, INC.
The undersigned hereby appoints Robert J. Poirier and Raymond C. Anderson, and
each of them acting singly, proxies of the undersigned stockholder with full
power of substitution to each of them, to vote all shares of Common Stock of
U.S.A. Floral Products, Inc. (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held on Tuesday, May 12, 1998, at 10:00 a.m. local time, at
The Capital Hilton, 1001 16th Street, N.W., Washington, D.C., and at any
adjournments or postponements thereof.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder and in the discretion of the holders of this Proxy
upon such other matters as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN AND DATE THIS PROXY ON
THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
U.S.A. FLORAL PRODUCTS, INC.
Tuesday, May 12, 1998
The Capital Hilton
1001 16th Street, N.W.
Washington, D.C.
\|/ Please Detach and Mail in the Envelope Provided \|/
Please mark your
[ X ] votes as in this
example.
The Board of Directors unanimously recommends a vote "FOR ALL NOMINEES"
FOR ALL AUTHORITY WITHHELD
NOMINEES FOR ALL NOMINEES
Proposal 1: Nominees:
Election [ ] [ ] Raymond R. Ashmore
Nominees Dwight Haight
listed at right as Directors Roy O. Houff
William W. Rudolph
Authority withheld for the following only (write the name(s) of
the nominee(s) on the line below)
- ---------------------------------------------------------------
FOR AGAINST ABSTAIN
Proposal 2: Ratification of Price Waterhouse
LLP as the Company's Independent [ ] [ ] [ ]
Accountants for the Fiscal Year Ending
December 31, 1998.
The Board of Directors unanimously recommends a vote "FOR" ratification of the
selection of Price Waterhouse LLP as independent accountants.
In their discretion, the Proxy holders are authorized to vote upon such other
matters as may properly come before the meeting. Unless otherwise specified, the
shares of Common Stock represented hereby will be voted "FOR" the election of
all nominees listed as directors and "FOR" the approval of Proposal 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
Signature Signature Date: 1998
---------------------- -------------------- -------
Note: (Please mark your vote, date and sign as your name appears above and
return this Proxy in the enclosed postpaid envelope. If acting as executor,
administrator, trustee, guardian, etc., you should so indicate when signing. If
the signer is a corporation, please sign the full corporate name, and indicate
title as duly authorized officer.)
