<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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
U.S.A. FLORAL PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
same
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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>
[U.S.A. FLORAL LETTERHEAD]
April ___, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of U.S.A. Floral Products, Inc. to be held on Wednesday, May 5, 1999, 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 5th.
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 300 East
Washington, D.C. 20007
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
----------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of U.S.A. Floral
Products, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, May 5, 1999, at 10:00 a.m., Eastern Daylight Savings Time, at The
Capital Hilton, 1001 16th Street, N.W., Washington, D.C., for the following
purposes:
1. To elect four Class II 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 PricewaterhouseCoopers LLP, independent
accountants, to audit the books and accounts of the Company for the year
ending December 31, 1999; and
3. To consider and act upon a proposal by the Board of Directors of the
Company (i) to approve and adopt an amendment to the Company's Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), to
change the name of the Company to [insert name here Corporation] and (ii)
to restate the Certificate of Incorporation to reflect the foregoing
amendment and previous amendments; and
4. To approve an amendment to the 1997 Long Term Incentive Plan to
increase the maximum number of shares of Common Stock that may be subject
to outstanding awards from 15% to 20% of the number of shares of Common
Stock outstanding from time to time; and
5. 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 of the Company has fixed the close of business on March
19, 1999 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, at the offices of the Company, 1025
Thomas Jefferson Street, N.W., Suite 300 East, 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
/s/ Jonathan J. Ledecky
Secretary
Washington, D.C.
April [1], 1999
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 PROMPTLY.
<PAGE>
U.S.A. FLORAL PRODUCTS, INC.
1025 Thomas Jefferson Street, N.W.
Suite 300 East
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 (the "Board") of U.S.A. Floral Products, Inc.,
a Delaware corporation (the "Company"), for use at the Company's 1999 Annual
Meeting of Stockholders (together with any and all adjournments and
postponements thereof, the "Annual Meeting") to be held on Wednesday, May 5, at
10:00 a.m., Eastern Daylight Savings 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 [1], 1999.
Record Date; Voting Securities; Voting and Proxies
The Board has fixed the close of business on March 19, 1999 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 15,939,538
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.
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
<PAGE>
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 Amended and Restated 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.
Under applicable Delaware law and the Company's Bylaws, amendment and
restatement of the Company's Certificate of Incorporation requires the
affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting. Because they will not be recorded as
votes in favor of such amendment and restatement, abstentions and broker non-
votes will have the effect of votes against amendment and restatement of the
Company's Certificate of Incorporation. If approved by the stockholders, the
amendment and restatement of the Certificate of Incorporation will become
effective upon filing with the Secretary of State of Delaware an Amended and
Restated Certificate of Incorporation, which filing will take place shortly
after the Annual Meeting.
The remaining proposals to be brought before the Annual Meeting require 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 these proposals. Because they will not be recorded as votes in favor
of such proposals, however, abstentions will have the effect of votes against
such proposals. Broker non-votes with respect to these proposals will be
treated as shares not capable of being voted on these proposals; accordingly,
broker non-votes will have no effect either on the minimum number of affirmative
votes necessary to approve such proposals or on the outcome of voting on such
proposals.
ELECTION OF DIRECTORS
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 11 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 II directors
expires at the Annual Meeting. The term of the Class I directors will expire at
the 2001 Annual Meeting of Stockholders, and the term of the Class III directors
will expire at the 2000 Annual Meeting of Stockholders. 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 II directors are nominees for election this year for
a three-year term expiring at the 2002 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 II nominees listed below unless otherwise instructed.
If a stockholder does not wish his or her shares to be voted for a particular
nominee, the stockholder 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.
Set forth below is certain information with regard to the four nominees for
election as Class II directors and each continuing Class I and Class III
director.
Nominees for Election as Class II Directors
2
<PAGE>
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
- --------------------- --------------------------------------------------------------
<S> <C>
Jeffrey Brothers Jeffrey Brothers has served as President of the Company's
Age 40 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.
John T. Dickinson John T. Dickinson has served as President of the Company's
Age 38 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.
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.
Theodore J. Leonsis Theodore J. Leonsis has been a member of the Board since
Age 43 December 1998 and is also a director of Preview Travel, Inc.
and Proxicom, Inc. Mr. Leonsis has been President of America
Online Studios, a division of America Online, Inc., since
November 1996. Prior to that, Mr. Leonsis was President of
America Online Services Company, also a division of America
Online, Inc. from 1994 to 1996. Mr. Leonsis was previously
Chief Executive Officer of Redgate Communications
Corporation, a media marketing company which was founded in
1987 and sold to America Online, Inc. in 1994.
Gustavo Moreno Gustavo Moreno has served as President of the Company's
Age 45 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.
</TABLE>
The Board unanimously recommends that stockholders vote for the election of
the four persons nominated to serve as Class II directors.
3
<PAGE>
Directors Continuing as Class I Directors - Term Expiring 2001
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
- --------------------- --------------------------------------------------------------------
<S> <C>
Aaron J. Gellman Aaron J. Gellman has been a member of the Board since
Age __ December 1998. Dr. Gellman is also a member of the board of
directors of ______. Since ___________, Dr. Gellman has been
the Director of the Transportation Center at Northwestern
University. Dr. Gellman is also a Professor of Management and
Strategy at Northwestern University's Graduate School of
Management and a Professor of Industrial Engineering at
Northwestern University's McCormick School of Engineering
and Applied Science.
Ann Torre Grant Ann Torre Grant has been a member of the Board since
Age 40 December 1998 and is also a director of Condor Technology
Solutions, Inc. ("Condor"), SLM Holding Co. and its subsidiary,
Sallie Mae, and Franklin Mutual Series Mutual Funds. Ms.
Grant has been a strategic and financial consultant to Condor
since December 1997. Ms. Grant was Executive Vice President
and Chief Financial Officer of NHP, Incorporated ("NHP"), a
national real estate services company, from February 1995 until
the sale of NHP in December 1997. From 1988 to February
1995, Ms. Grant held various corporate finance positions with
U.S. Airways, serving as Vice President and Treasurer from
1991 to 1995.
Peter Roy Peter Roy has been a member of the Board since December
Age __ 1998. Mr. Roy is also a director of Whole Foods Market, Inc.,
a publicly trade operator of specialty food stores and distribution
centers. From _____ to December 31, 1998, Mr. Roy served as
President of Whole Foods Market, Inc.
</TABLE>
4
<PAGE>
Directors Continuing as Class III Directors - Term Expiring 2000
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
- --------------------- --------------------------------------------------------------------
<S> <C>
Robert J. Poirier Robert J. Poirier co-founded the Company in April 1997 and
Age 47 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 23 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 1997
Age 41 and served as its Non-Executive Chairman of the Board until
September 1998. Mr. Ledecky founded U.S. Office Products
Company in October 1994 and served as its Chairman and
Chief Executive Officer from inception through November
1997 and thereafter as a director until May 1998. In February
1997, Mr. Ledecky founded, and currently serves as Chairman
of Building One Services Corporation (formerly Consolidated
Capital Corporation). Mr. Ledecky also currently serves as a
director of UniCapital Corporation, Building One Services
Corporation, Aztec Technology Partners, Inc., School Specialty,
Inc., Workflow Management, Inc., Microstrategy Incorporated and
Navigant International, Inc.
Vincent W. Eades Vincent W. Eades has been a director of the Company since
Age 40 July 1997 and is also a director of UniCapital Corporation and
Building One Services Corporation. Since its inception in
March 1998, Mr. Eades has served as the Chairman, President
and Chief Executive Officer of PowerRide Motorsports, Inc.,
a company that will seek to become a leading retailer of
motorcycles and personal leisure vehicles through a
combination of consolidating, relocating and expanding
dealerships and opening new dealerships. From April 1995 to
March 1998, Mr. Eades 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 since
Age 56 July 1997 and is also a director of U.S. Office Products
Company, 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>
Board of Directors and Committees
The Board met seven times during the fiscal year ended December 31, 1998
("Fiscal 1998"), in addition to conducting its affairs on several occasions by
written consent. The Board has established an Executive Committee, an Audit
Committee, a Compensation Committee, and a Nominating Committee.
5
<PAGE>
The Executive Committee of the Board is authorized and empowered to take any
and all actions that the Board is permitted to take, other than (i) any action
that requires the consent of the lenders or their agent under the Company's
credit agreement or (ii) any action that involves the acquisition of the stock
or assets of, or merger or consolidation of the Company or any of its
subsidiaries with, any entity or group of entities in which the total
consideration to be paid by the Company equals or exceeds $15,000,000 in the
aggregate (whether in cash, stock, assumption of indebtedness or any combination
thereof). Directors Poirier, Ledecky, Mathias, Dickinson and Moreno are
currently members of the Executive Committee. The Executive Committee did not
meet during Fiscal 1998 but instead conducted business by written consent.
The Audit Committee selects and engages on behalf of the Board the independent
public accountants to conduct the annual audit of the Company's books and
records, reviews the proposed scope of such audit, approves the audit fees to be
paid and reviews the Company's accounting and financial controls with the
independent public accountants and the Company's financial and accounting staff.
The Audit Committee also reviews and approves transactions between the Company
and its directors, officers and affiliates. The Audit Committee currently
consists of Directors Eades and Grant. In addition to conducting business by
written consent on several occasions, the Audit Committee met twice during
Fiscal 1998.
The Compensation Committee (i) sets the levels and terms of compensation for
the Company's executive officers, (ii) approves, on behalf of the Company, entry
into employment agreements with executive officers and other employees, which
embody terms reviewed and approved by the Compensation Committee, (iii) sets
performance and other goals upon the attainment of which performance-based
incentive compensation may be paid, (iv) verifies the attainment of such goals
and determines the incentive compensation to be awarded in respect of such
attainment, and (v) reports to the Company's stockholders on executive
compensation as required by applicable rules and regulations of the Securities
and Exchange Commission. Directors Ledecky and Mathias are currently the members
of the Compensation Committee. In addition to conducting business by written
consent on several occasions, the Compensation Committee met two times during
Fiscal 1998.
The Nominating Committee proposes and reviews individuals to be nominated for
election to the Board. The Nominating Committee currently consists of Directors
Mathias and Roy. The Nominating Committee will consider nominees recommended by
stockholders. Stockholders may submit nominations to Chairman, Nominating
Committee, care of Secretary, U.S.A. Floral Products, Inc., 1025 Thomas
Jefferson Street, N.W., Suite 300 East, Washington, D.C. 20007. In addition to
conducting business by written consent on several occasions, the Nominating
Committee met one time during Fiscal 1998.
No director attended fewer than 75% of the total number of meetings of the
Board during Fiscal 1998.
6
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected PricewaterhouseCoopers LLP to serve as the Company's
principal accountants for the fiscal year ending December 31, 1999. A
representative of PricewaterhouseCoopers 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 PricewaterhouseCoopers 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
PricewaterhouseCoopers LLP as independent accountants.
AMENDMENT AND RESTATEMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY TO FLORAGISTICS INCORPORATED
On March [26], 1999 the Board unanimously approved, and recommended for
adoption by the stockholders at the Annual Meeting, an amendment to Article One
of the Company's Certificate of Incorporation, as amended, to change the
Company's name to [INSERT NAME HERE CORPORATION] and the restatement of the
Certificate of Incorporation to reflect the foregoing amendment and all previous
amendments. The Board believes that it would be in the best interests of the
Company and its stockholders to change its name because such a change will
reflect the Company's, present operations and business and its expanding
international character after the acquisition of the businesses of Florimex
Worldwide GmbH ("Florimex") on October 1, 1998. The name change will become
effective upon the filing of a Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware, which is anticipated to be as soon
as practicable following the date of the Annual Meeting.
The Board believes that changing the Company's name is an essential component
of the Company's goal to become the premier international floral products supply
company. After careful consideration, the Board believes that [INSERT NAME HERE
CORPORATION] more accurately communicates the Company's focus than the Company's
present name.
The proposed name change will not affect in any way the validity or
transferability of currently outstanding stock certificates or affect the
Company's capital or corporate structure. Stockholders will not be required to
surrender or exchange any stock certificates that they currently hold.
The full text of Article One of the Restated Certificate of Incorporation, as
proposed to be amended, is as follows:
"FIRST. The name of the corporation is [INSERT NAME HERE CORPORATION]
(hereinafter called the "Corporation")."
Vote Required For Approval
The affirmative vote of the holders of a majority of the Company's outstanding
shares of Common Stock is necessary for the approval of the amendment to and
related statement of the Certificate of Incorporation.
In accordance with Delaware law and notwithstanding approval of the amendment
and related restatement by the stockholders, at any time prior to the
effectiveness of the filing of the Restated Certificate of Incorporation with
the Secretary of State, the Board may abandon such proposed amendment without
further action by the stockholders.
The Board unanimously recommends that stockholders vote for the adoption of
the amendment to Article One and the Restatement of the Certificate of
Incorporation.
APPROVAL OF 1997 LONG-TERM INCENTIVE PLAN
On March 5, 1999, the Board adopted an amendment to the Company's 1997 Long-
Term Incentive Plan (the "Incentive Plan") and determined to submit the
Incentive Plan, as amended, to the stockholders for approval at the Annual
Meeting. The amendment to the Incentive Plan will increase the maximum number
of shares of Common Stock that may be subject to outstanding awards from 15% to
20% of the number of shares of Common Stock outstanding from time to time. The
applicable text of the Board's resolution is as follows:
RESOLVED, that the Board of Directors hereby amends Section 4(a) of the
U.S.A. Floral Products, Inc. 1997 Long Term Incentive Plan (the "Incentive
Plan") by deleting the first sentence of such Section 4(a) in its entirety,
and replacing it with the following: "The total amount of Stock that may
be subject to outstanding Awards, determined immediately after the grant of
any Award, shall not exceed 20% of the total number of shares of Stock
outstanding at the effective time of such grant."
The stockholders are being asked to approve the Incentive Plan, as amended, in
the form attached hereto as Appendix A.
The Incentive Plan was originally adopted by the Board and approved by the
stockholders in August 1997. The Board believes that the approval of the
Incentive Plan, as amended, is necessary in order (i) to provide the Company
with a sufficient reserve of Common Stock for future awards needed to attract
and retain the services of key individuals essential to the Company's long-term
success and (ii) to continue to qualify options or stock appreciation rights
hereafter granted under the Incentive Plan, as amended, as "performance based"
compensation that is not subject to the $1 million limitation on deductible
compensation for certain executive officers in any fiscal year under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
7
<PAGE>
The following is a summary of the Incentive Plan, as amended. The summary,
however, does not purport to be a complete description of all provisions of the
Incentive Plan and is qualified in its entirety by reference to the full text of
the Incentive Plan, as amended, a copy of which is attached hereto as Appendix
A.
The Incentive Plan provides officers (including directors who also serve as
officers), key employees, consultants and other service providers with
additional incentives by enabling such persons to increase their ownership
interests in the Company. The maximum number of shares of common stock that may
be subject to outstanding awards may not be greater than that number of shares
equal to 20% of the number of shares of common stock outstanding from time to
time. Awards may be settled in cash, shares, other awards or other property, as
determined by the Compensation Committee of the Board. The number of shares
reserved or deliverable under the Incentive Plan and the annual per-participant
limit on the number of shares as to or with reference to which awards may be
granted are subject to adjustment in the event of stock splits, stock dividends
and certain other corporate events.
Individual awards under the Incentive Plan may take the form of one or more
of: (i) either incentive stock options ("ISOs") or non-qualified stock options
("NQSOs," and together with ISOs, "Options"); (ii) stock appreciation rights
("SARs"); (iii) restricted or deferred stock; (iv) dividend equivalents; (v)
bonus shares and awards in lieu of the Company's obligations to pay cash
compensation; and (vi) other awards the value of which is based in whole or in
part upon the value of the Company's Common Stock. Upon a change of control of
the Company (as defined in the Incentive Plan), certain conditions and
restrictions relating to an award with respect to the exercisability or
settlement of such award will lapse.
The Compensation Committee administers the 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).
The Incentive Plan also provides that no participant may be granted in any
calendar year awards which may be settled by delivery of more than 750,000
shares and limits payments under cash-settled awards in any calendar year to an
amount equal to the fair market value of that number of shares.
The Company generally is entitled to a tax deduction equal to the amount of
compensation realized by a participant through awards under the Incentive Plan,
except that (i) no deduction is permitted in connection with ISOs if the
participant holds the shares acquired upon exercise for the required holding
periods, and (ii) deductions for some awards could be limited under the $1.0
million deductibility cap of Section 162(m) of the Code.
The Incentive Plan will remain in effect until terminated by the Board. The
Incentive Plan may be amended by the Board without the consent of the
stockholders, except that any amendment, although effective when made, will be
subject to stockholder approval if required by any federal or state law or
regulation or by the rules of any stock exchange or automated quotation system
on which the Common Stock may then be listed or quoted.
The proposal to approve the Incentive Plan, as amended, 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 approval of the 1997 Long-Term
Incentive Plan, as amended.
EXECUTIVE COMPENSATION
Executive Compensation Summary
8
<PAGE>
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 1998.
Summary Compensation Table(1)
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Other Securities
Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options (#)
- ----------------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert J. Poirier 1998 $160,570 $60,000 $16,990 385,000
Chairman of the Board, President
and Chief Executive Officer 1997 $112,519 $ 0 $26,489 110,000
Raymond C. Anderson 1998 $167,935 $60,000 $ 6,000 20,000
Chief Information Officer and
Vice President 1997 $ 40,383 $ 0 $ 1,500 50,000
Christopher Wilson 1998 $ 78,440 $20,000 $37,500 50,000
Chief Operating Officer 1997 0 0 0 0
</TABLE>
- ----------------------------------
(1) Mr. Wilson joined the Company in the second half of 1998, as did
Messrs. Ferguson and Kipphut, the Company's Vice Chairman and Chief
Financial Officer, respectively, who are not mentioned in the table
above.
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to the grant
of Options to the Named Executive Officers during Fiscal 1998 and the value of
Options held at December 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities % of Total Price Appreciation for
Underlying Option Granted Exercise or Option Term (3)
Options to Employees Base Price Expiration -----------------------------
Name Granted (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- -------------- ---------------- ------------ ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Poirier 325,000(1) 20.7 18.875 1/2008 3,857,875 9,776,614
60,000(2) 3.8 6.000 10/2008 226,402 573,747
Raymond C. Anderson 20,000(1) 1.3 18.875 1/2008 237,408 601,638
Christopher Wilson 50,000(1) 3.2 12.125 8/2008 381,267 966,206
</TABLE>
- ----------------------------------
(1) All Options vest in 25% annual installments over four years commencing on
the first anniversary of the date of grant.
(2) Options to purchase 60,000 shares are immediately exercisable.
(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.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Value Table
The following table summarizes the value at December 31, 1998 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 1998.
9
<PAGE>
<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 0 132,500 362,500 330,000 0
Raymond C. Anderson 0 0 12,500 57,500 43,750 131,250
Christopher Wilson 0 0 0 50,000 0 50,000
</TABLE>
- ----------------------------------
(1) The value of the Common Stock at December 31, 1998 was $11.50 per share.
Arrangements Regarding Employment
Effective as of December 1, 1998, the Company entered into an employment
agreement (the "Agreement") with Robert J. Poirier, which superseded a prior
employment agreement, dated April 22, 1997 and amended on August 6, 1997 (the
"Prior Agreement") pursuant to which the Company agreed to employ Mr. Poirier as
Chairman of the Board, President and Chief Executive Officer for a term of three
years at an annual base salary of $500,000. Pursuant to the terms of the Prior
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) was granted an immediately
exercisable Option in October 1998 to purchase an additional 60,000 shares at an
exercise price equal to the then current market value per share. The Agreement
includes a one-year post-employment non-competition provision. Under the
Agreement, Mr. Poirier is eligible to receive an incentive cash bonus based upon
the Company's success in exceeding its earnings targets. If Mr. Poirier is
terminated without cause, he is entitled to receive his base salary, plus
benefits, for the period remaining in the term of the Agreement or a one-year
period following the termination, whichever is longer, and all unvested Options
will become fully vested and remain exercisable for the three-year period
following the termination. Notwithstanding the foregoing, should Mr. Poirier be
terminated without cause within a two-year period following a change in control
(as defined in the Incentive Plan) in lieu of the payment described in the
previous sentence, Mr. Poirier shall receive within five days of such
termination, a lump sum payment equal to three times his annual base salary at
the time of the termination or the change in control, whichever is greater, plus
coverage under the Company's insured welfare arrangements on the same basis as
such benefits were provided at the time of such termination for three years.
Effective August 4, 1998, the Company entered into a two-year employment
agreement with Christopher E. Wilson pursuant to which the Company agreed to
employ Mr. Wilson as Chief Operating Officer at an annual base salary of
$160,000 plus a bonus based upon the performance of the Company. Pursuant to
the Unanimous Written Consent of the Compensation Committee of the Board, dated
December 25, 1998, Mr. Wilson's annual base salary was increased to $200,000
effective January 1, 1999. Pursuant to the employment agreement, the Company
also granted Mr. Wilson an Option to purchase 50,000 shares of Common Stock at
an exercise price of $12.125 per share, and which shall vest at a rate of 25%
per year commencing one year from the date of grant. The agreement also includes
a two-year post-employment non-competition provision. If Mr. Wilson is
terminated without cause, he is entitled to receive accelerated vesting of
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 of
employment or (ii) 12 months.
Effective September 28, 1998, the Company entered into a two-year employment
agreement with W. Michael Kipphut pursuant to which the Company agreed to employ
Mr. Kipphut as Chief Financial Officer beginning on October 19, 1998 at an
annual salary base salary of $200,000 plus a bonus based upon the performance of
the Company. Pursuant to the employment agreement, the Company also granted Mr.
Kipphut an Option to purchase 50,000 shares of Common Stock at an exercise price
of $6.625 per share, and which shall vest at a rate of 25% per year commencing
one year from the date of grant. The agreement also includes a two-year post-
employment non-competition provision. If Mr. Kipphut is terminated
10
<PAGE>
without cause or in the event he terminates his employment for good reason, as
defined in the agreement, he is entitled to receive accelerated vesting of
Options to purchase shares of common stock then held by him, as well as his base
salary plus benefits for twelve months.
Effective October 1, 1998, the Company entered into a two-year employment
agreement with Dwight Ferguson pursuant to which the Company agreed to employ
Mr. Ferguson as Vice Chairman at an annual salary base salary of $220,000 plus a
bonus based upon the performance of the Company. Pursuant to the employment
agreement, the Company also granted Mr. Ferguson an Option to purchase 50,000
shares of Common stock at an exercise price of $5.00 per share, and which shall
vest at a rate of 25% per year commencing one year from the date of grant. The
agreement also includes a two-year post-employment non-competition provision.
If Mr. Ferguson is terminated without cause, he is entitled to receive
accelerated vesting of Options to purchase shares of Common Stock then held by
him, as well as his base salary plus benefits for twelve months.
Upon consummation of the IPO, the Company entered into a two-year employment
agreement with Raymond C. Anderson, who was then the Company's Chief Financial
Officer. Mr. Anderson was named Chief Information Officer and Vice President in
October 1998. The employment agreement provides for an annual base salary of
$150,000 (which was later increased to $170,000) 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is pleased to present its report
on compensation of the Company's executive officers.
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 also is responsible for
approving contractual arrangements between the Corporation and such executive
officers and management personnel, and for administering the Company's stock
benefit plans, including the 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 Options.
11
<PAGE>
The key components of the Company's executive compensation program consist of
salary and annual incentive bonuses (which represent the short-term compensation
components of the program) and Options (which represent the long-term
compensation components). The Committee's policy with respect to each of these
elements, including the basis of the compensation awarded to Mr. Poirier, the
Company's Chairman of the Board, President and Chief Executive Officer (the
"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 Options with multi-year vesting schedules.
In the Committee's judgment, this approach tends to align the interests if
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 often private companies,
or public companies in other distribution industries with which the Company
competes from time to time for executive talent) 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 growth and profitability targets and recommendations made
by the Company's CEO. Bonuses for 1998 were determined primarily 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. For 1999, the Company has
established a bonus structure with the senior executives, which correlates
annual cash bonuses to the Company's success in exceeding its earnings targets.
The Committee believes that earnings performance is an appropriate short- and
intermediate-term goal that can encompass the interests of both the Company's
business model and the Company's stockholders.
Incentive Plan. The Company's Incentive Plan is intended to provide officers,
key employees and consultants with additional incentives by increasing their
ownership interests in the Company and thereby focusing such individuals'
efforts on the long-term goals of the Company and the maximization of total
return to stockholders. In particular, the Company has used the Incentive Plan
as a means to create incentives for managers at the operating unit level,
principally through the award of Options to managers and other employees of each
operating subsidiary in conjunction with consummation of the acquisition of that
operating subsidiary.
In administering the Incentive Plan, the Committee selects, with the advice of
the CEO, the individuals who will receive awards, and 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).
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. Options align the interests of employees with those of
stockholders by providing value to the executive through stock price
appreciation. The Committee is cognizant of the possible adverse impact upon
the incentive provided by options that were granted at exercise prices in excess
of the prices at which the Company's common stock has traded from time to time
during 1998, and considers carefully the most appropriate ways in which to keep
employees generally, and executives particularly, well motivated to enhance the
Company's performance and stockholder value over the long term.
Generally, the Options granted during fiscal 1998 (which include Options under
the Incentive Plan and Options granted outside the Incentive Plan) have 10-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 1998 varied from this general practice, in
circumstances where the Committee believed such variances to be appropriate and
in the Company's interests. See "Executive Compensation --Option Grants in Last
Fiscal Year." Of the 1,202,435 Options granted to employees during
12
<PAGE>
1998, Options to purchase 570,000 shares of the Company's stock, or
approximately 47.4% of the Options granted during the year, were granted to
executive officers.
Options may be awarded periodically at the discretion of the Committee and
with the advice 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 will also take into account the
differential between the levels of cash compensation paid by the Company as
compared to those of its competitors, including competitors for management
talent.
The Committee intends, to the extent possible, that Options and other equity-
based awards granted to executive officers under the 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 Code.
Compensation of the CEO. As discussed above under "Arrangements Regarding
Employment," Mr. Poirier's base salary was originally determined in the arm's-
length negotiation of an employment agreement prior to the Company's IPO in
October 1997. In late 1998, following the consummation of the Company's
acquisition of the businesses of Florimex, the Committee began to reevaluate the
appropriateness of Mr. Poirier's base salary, as well as the other terms and
conditions of his employment, in light of (i) the dramatic growth in the breadth
of the Company's operations resulting from the extensive domestic acquisition
program carried on by the Company since its inception, (ii) the Company's rapid
international expansion and the accompanying veritable doubling in size of the
Company's annualized run-rate revenues resulting from the acquisition of the
Florimex businesses in the autumn of 1998, (iii) the compensation that the
Company was compelled to pay in 1998 in order to obtain qualified and
experienced senior management personnel who report directly to Mr. Poirier,
which compensation was generally higher than the compensation that Mr. Poirier
was contractually entitled to receive under the Prior Agreement, (iv) the
compensation levels paid to the chief executive officers of other publicly
traded companies in similar industries, and (v) Mr. Poirier's commitment and
dedication to the Company and his hard work on its behalf since its inception.
As a result of its reevaluation, the Committee determined to negotiate with Mr.
Poirier to revise and extend the 1997 employment agreement.
Effective December 1998, the Company entered into an employment agreement with
Mr. Poirier described above under "Arrangements Regarding Employment." The
Agreement provides for an increase in base compensation from $160,000 to
$500,000. The Committee considered the compensation of chief executive officers
of similarly situated companies of comparable size, and determined that Mr.
Poirier's new compensation level was near the midpoint of the compensation for
chief executive officers of companies having comparable annualized revenues to
those of the Company (including the Florimex businesses). By raising Mr.
Poirier's base compensation significantly, the Committee believed that it was
recognizing Mr. Poirier for his efforts and success in building the Company from
inception, while preserving considerable flexibility for the Committee to
consider additional increases in the future if Mr. Poirier provides sustained
and consistent excellence in leadership.
Under the Agreement, Mr. Poirier is eligible to receive a cash bonus based
upon the Company's success in exceeding its earnings targets. This bonus
structure is now consistent with the bonus arrangements that were negotiated
between the Company and the executive officers who were hired in the second half
of 1998 as the Company focused on building its senior management team. The
Committee believes that consistency among the bonus structures applicable to
senior executives can lead to team-building among those executives and to the
coordination of their efforts and goals in seeking to achieve the short- and
intermediate-term objectives of the Company.
The Agreement also extends the term of employment from an expiration date of
April 22, 1999 to an expiration date of December 1, 2001. Moreover, under the
Agreement, Mr. Poirier is bound by non-competition and non-solicitation
provisions that were not present in the original 1997 employment agreement. In
light of Mr. Poirier's key role within the Company, the Committee believed that
it was important to secure the benefits of Mr. Poirier's services and
professional efforts for a longer period of time than had originally been agreed
upon, and to seek to limit the ability of a competitor to benefit from Mr.
Poirier's knowledge and expertise following any cessation of employment.
13
<PAGE>
Finally, on January 27, 1998, the Committee granted Mr. Poirier Options to
purchase 325,000 shares of the Company's Common Stock at an exercise price of
$18.875 per share, and on October 16, 1998, the Committee granted Mr. Poirier
Options to purchase 60,000 shares of the Company's Common Stock at an exercise
price of $6.00 per share. The 60,000 share option grant had been agreed upon as
part of the original 1997 employment agreement; the 325,000 share option grant
reflected the Committee's consistent belief that the interests of senior
management generally, and the CEO particularly, should be closely aligned with
the interests of the Company's stockholders. In making this grant, the
Committee was cognizant of Mr. Poirier's significant shareholdings, as well as
the level of his cash compensation, and considered the appropriate level of
stock ownership and option holdings relative to Mr. Poirier's total compensation
and incentive package.
The Compensation Committee
Edward J. Mathias Jonathan J. Ledecky
14
<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 15, 1999 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 15,939,538 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) 1,485,000 9.3
c/o U.S.A. Floral Products, Inc.
1025 Thomas Jefferson Street, N.W.
Suite 300 East
Washington, D.C. 20007
Robert J. Poirier (2) 1,226,756 7.7
c/o U.S.A. Floral Products, Inc.
1025 Thomas Jefferson Street, N.W.
Suite 300 East
Washington, D.C. 20007
Christopher Wilson 868 *
Raymond C. Anderson (3) 12,500 *
Vincent W. Eades (4) 27,000 *
Theodore J. Leonsis -0- *
Aaron J. Gellman -0- *
Ann Torre Grant (5) 5,000 *
Edward J. Mathias (6) 142,000 *
Peter Roy 4,000 *
Jeffrey Brothers (7) 83,375 *
John T. Dickinson (8) 155,231 *
Gustavo Moreno (9) 34,900 *
All directors and executive officers,
16 persons as a group (10) 3,183,234 20.0
</TABLE>
*Less than 1%
(1) Includes 125,000 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options.
(2) Includes 213,750 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options. Also includes 200,000 shares held
by trusts for the benefit of Mr. Poirier's spouse and children, 506 shares
held by Mr. Poirier's spouse and 17,500 shares which may be acquired by Mr.
Poirier's spouse within 60 days of March 15, 1999. Mr. Poirier disclaims
beneficial ownership of all such trusts' shares and his spouse's shares.
(3) All shares may be acquired within 60 days of March 15, 1999 pursuant to the
exercise of Options.
(4) Includes 27,000 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options.
(5) All such shares are held in the IRA account of Ms. Grant's spouse. Ms. Grant
disclaims beneficial ownership of such shares.
(6) Includes 27,000 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options. Also includes 50,000 shares owned
by Mr. Mathias' daughter. Mr. Mathias disclaims beneficial ownership of such
shares.
15
<PAGE>
(7) Includes 12,500 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options.
(8) Includes 12,500 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options.
(9) Includes 12,500 shares which may be acquired within 60 days of March 15,
1999 pursuant to the exercise of Options.
(10) Includes an aggregate of 460,250 shares which may be acquired within 60
days of March 15, 1999 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.
Mr. Dickinson
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
Fiscal 1998, purchases from Meadow Flowers totaled approximately $205,000.
The Company continues to purchase roses from Meadow Flowers and
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
Mr. Brothers has a 40% interest in the entity that owns the property which
Monterey Bay leases. The lease, which terminates December 31, 1999 provides for
monthly rental payments of $12,000. Mr. Brothers has a 50% interest in Brothers
Floral Associates, a vendor to Monterey Bay.
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. 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 initial public offering price of $13.00 per
share. 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.
For Fiscal 1998, Directors Dickinson and Moreno each were paid bonuses of
$20,000.
16
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE OCTOBER 10, 1997
The following graph shows the cumulative total stockholder return on the
Common Stock from the Company's IPO price on October 10, 1997 through February
26, 1999, 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 on October 10, 1997 and in the Nasdaq National Market Composite
Index and the Nasdaq 100 Index and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
October 10, 1997 December 31, 1997 December 31, 1998 February 26, 1999
<S> <C> <C> <C> <C>
U.S.A. Floral Products, Inc. 100 121 88 108
Nasdaq National Market 100 90 127 132
Composite Index
Nasdaq 100 Index 100 87 161 169
</TABLE>
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. In
order to be so included for the 2000 Annual Meeting of Stockholders, stockholder
proposals must be received by the Secretary of the Company at is principal
executive offices no later than December 2, 1999 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 1998, all such persons complied with all applicable filing requirements.
The Company's Annual Report to Stockholders for the Fiscal 1998, 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.
17
<PAGE>
APPENDIX A
U.S.A. FLORAL PRODUCTS, INC.
1997 LONG-TERM INCENTIVE PLAN, AS AMENDED
1. Purpose. The purpose of this 1997 Long-Term Incentive Plan (the
-------
"Plan") of U.S.A. Floral Products, Inc., a Delaware corporation (the "Company"),
is to advance the interests of the Company and its stockholders by providing a
means to attract, retain and reward directors, officers and other key employees
and consultants of and service providers to the Company and its subsidiaries and
to enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.
2. Definitions. The definitions of awards under the Plan, including
-----------
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents and Other
Stock-Based Awards are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." For purposes of the Plan, the following additional
terms shall be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice or
other instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) A "Change in Control" shall be deemed to have occurred if:
(i) the date of the acquisition by any "person" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the Company or
any of its subsidiaries or affiliates or any employee benefit plan
sponsored by any of the foregoing, of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of either (x)
the then outstanding shares of common stock of the Company or (y) the then
outstanding voting securities entitled to vote generally in the election of
directors; or
(ii) the date the individuals who constitute the Board as of the date
of the Initial Public Offering (the "Incumbent Board") cease for any reason
to constitute at least a majority of the members of the Board, provided
that any individual becoming a director subsequent to the effective date of
this Agreement whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than any individual
whose nomination for election to Board membership was not endorsed by the
Company's management prior to, or at the time of, such individual's initial
nomination for election) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iii) the consummation of a merger, consolidation, recapitalization,
reorganization, sale or disposition of all or a substantial portion of the
Company's assets, a reverse stock split of outstanding voting securities,
the issuance of shares of stock of the Company in connection with the
acquisition of the stock or assets of another entity, provided, however,
that a Change in Control shall not occur under this clause (iii) if
consummation of the transaction would result in at least 70% of the total
voting power represented by the voting securities of the Company (or,
<PAGE>
if not the Company, the entity that succeeds to all or substantially all
of the Company's business) outstanding immediately after such transaction
being beneficially owned (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder relative
to other such continuing holders not substantially altered in the
transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "Committee" means the committee appointed by the Board to administer
the Plan, or if no committee is appointed, the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
(h) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that (i) if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was trading or
quotation) as provided by one of such organizations, (ii) the "fair market
value" of Stock on the date on which shares of Stock are first issued and sold
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission shall be the Initial Public Offering price of
the shares so issued and sold, as set forth in the first final prospectus used
in such offering and (iii) the "fair market value" of Stock prior to the date of
the Initial Public Offering shall be as determined by the Board.
(i) "Initial Public Offering" shall mean an initial public offering of
shares of Stock in a firm commitment underwriting registered with the Securities
and Exchange Commission in compliance with the provisions of the 1933 Act.
(j) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(l) "Participant" means a person who, at a time when eligible under Section
5 hereof, has been granted an Award under the Plan.
(m) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(n) "Stock" means the Common Stock, par value $.01, of the Company and such
other securities as may be substituted for Stock or such other securities
pursuant to Section 4.
3. Administration.
--------------
(a) Authority of the Committee. The Plan shall be administered by the
--------------------------
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
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(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each such
person;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award will relate, the terms and conditions of any
Award granted under the Plan (including, but not limited to, any exercise price,
grant price or purchase price, any restriction or condition, any schedule for
lapse of restrictions or conditions relating to transferability or forfeiture,
exercisability or settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance conditions
relating to Awards not intended to be governed by Section 7(f) and waivers and
modifications thereof), based in each case on such considerations as the
Committee shall determine), and all other matters to be determined in connection
with an Award;
(iv) to determine whether, to what extent and under what circumstances an
Award may be settled, or the exercise price of an Award may be paid, in cash,
Stock, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;
(v) to determine whether, to what extent and under what circumstances
cash, Stock, other Awards or other property payable with respect to an Award
will be deferred either automatically, at the election of the Committee or at
the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Award,
rules and regulations, Award Agreement or other instrument hereunder; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or advisable
for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Participants who are then subject
to Section 16 of the Exchange Act in respect of the Company are exempt under
Rule 16b-3. In any case in which the Board is performing a function of the
Committee under the Plan, each reference to the Committee herein shall be deemed
to refer to the Board.
(b) Manner of Exercise of Committee Authority. Any action of the Committee
-----------------------------------------
with respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, subsidiaries of the Company, Participants, any person
claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
by modified by the Committee (subject to Section 8(e)). The express grant of
any specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. Except as provided under Section 7(f), the Committee may delegate to
officers or managers of the Company or any subsidiary of the Company the
authority, subject to such terms as the Committee shall determine, to perform
such functions as the Committee may determine, to the extent permitted under
applicable law.
3
<PAGE>
(c) Limitation of Liability. Each member of the Committee shall be
-----------------------
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
---------------------
(a) Amount of Stock Reserved. The total amount of Stock that may be
------------------------
subject to outstanding awards, determined immediately after the grant of any
Award, shall not exceed 20% of the total number of shares of Stock outstanding
at the effective time of such grant. Notwithstanding the foregoing, the number
of shares that may be delivered upon the exercise of ISOs shall not exceed 15%
of the total number of shares of Stock outstanding immediately after the
consummation of the Initial Public Offering (subject to adjustment as provided
in Section 4(c)), provided, however, that shares subject to ISOs shall not be
-----------------
deemed delivered if such ISOs are forfeited, expire or otherwise terminate
without delivery of shares to the Participant. If an Award valued by reference
to Stock may only be settled in cash, the number of shares to which such Award
relates shall be deemed to be Stock subject to such Award for purposes of this
Section 4(a). Any shares of Stock delivered pursuant to an Award may consist,
in whole or in part, of authorized and unissued shares, treasury shares or
shares acquired in the market for a Participant's Account.
(b) Annual Per-Participant Limitations. During any calendar year, no
----------------------------------
Participant may be granted Awards that may be settled by delivery of more than
750,000 shares of Stock, subject to adjustment as provided in Section 4(c). In
addition, with respect to Awards that may be settled in cash (in whole or in
part), no Participant may be paid during any calendar year cash amounts relating
to such Awards that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the preceding sentence at the date of grant or the
date of settlement of Award. This provision sets forth two separate
limitations, so that Awards that may be settled solely by delivery of Stock will
not operate to reduce the amount of cash-only Awards, and vice versa;
nevertheless, Awards that may be settled in Stock or cash must not exceed either
limitation.
(c) Adjustments. In the event that the Committee shall determine that any
-----------
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, (ii) the number and kind
of shares of Stock specified in the Annual Per-Participant Limitations under
Section 4(b), (iii) the number and kind of shares of outstanding Restricted
Stock or other outstanding Award in connection with which shares have been
issued, (iv) the number and kind of shares that may be issued in respect of
other outstanding Awards and (v) the exercise price, grant price or purchase
price relating to any Award. (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award). In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including, without
limitation, cancellation of unexercised or outstanding Awards, or substitution
of Awards using stock of a successor or other entity) in recognition of unusual
or nonrecurring events (including, without limitation, events described in the
preceding sentence and events constituting a Change in Control) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
4
<PAGE>
5. Eligibility. Executive officers and other key employees of the
-----------
Company and its subsidiaries, including any officer or member of the Board who
is also such an employee, and persons who provide consulting or other services
to the Company deemed by the Committee to be of substantial value to the
Company, are eligible to be granted Awards under the Plan. In addition, persons
who have been offered employment by the Company or its subsidiaries, and persons
employed by an entity that the Committee reasonably expects to become a
subsidiary of the Company, are eligible to be granted an Award under the Plan;
provided, however, that such Award shall be canceled if such person fails to
- -----------------
commence such employment, or such entity fails to become a subsidiary, and no
payment of value may be made in connection with such Award until such person has
commenced such employment or until such entity becomes a subsidiary.
6. Specific Terms of Awards.
------------------------
(a) General. Awards may be granted on the terms and conditions set forth
-------
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant. Except as provided in Section 6(f), 6(h), or 7(a),
or to the extent required to comply with requirements of applicable law, only
services may be required as consideration for the grant (but not the exercise)
of any Award.
(b) Options. The Committee is authorized to grant Options (including
-------
"reload" options automatically granted to offset specified exercises of Options)
on the following terms and conditions ("Options"):
(i) Exercise Price. The exercise price per share of Stock purchasable
--------------
under an Option shall be determined by the Committee.
(ii) Time and Method of Exercise. The Committee shall determine the time
---------------------------
or times at which an Option may be exercised in whole or in part, the methods by
which such exercise price may be paid or deemed to be paid, the form of such
payment, including, without limitation, cash, Stock, other Awards or awards
granted under other Company plans or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis,
such as through "cashless exercise" arrangements, to the extent permitted by
applicable law), and the methods by which Stock will be delivered or deemed to
be delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply in
----
all respects with the provisions of Section 422 of the Code, including but not
limited to the requirement that no ISO shall be granted with an exercise price
less than 100% (110% for an individual described in Section 422(b)(6) of the
Code) of the Fair Market Value of a share of Stock on the date of grant and
granted no more than ten years after the effective date of the Plan. Anything
in the Plan to the contrary notwithstanding, no term of the Plan relating to
ISOs shall be interpreted, amended, or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless requested by the affected
Participant.
(iv) Termination of Employment. Unless otherwise determined by the
-------------------------
Committee, upon termination of a Participant's employment with the Company and
its subsidiaries, such Participant may exercise any Options during the three-
month period following such termination of employment, but only to the extent
such Option was exercisable immediately prior to such termination of employment.
Notwithstanding the foregoing, if the Committee determines that such termination
is for cause, all Options held by the Participant shall terminate as of the
termination of employment.
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs
-------------------------
on the following terms and conditions ("SARs"):
5
<PAGE>
(i) Right to Payment. An SAR shall confer on the Participant to whom it is
----------------
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise (or, if the Committee
shall so determine in the case of any such right other than one related to an
ISO, the Fair Market Value of one share at any time during a specified period
before or after the date of exercise), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the Fair Market Value of one
share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or times at which
-----------
an SAR may be exercised in whole or in part, the method of exercise, method of
settlement, form of consideration payable in settlement, method by which Stock
will be delivered or deemed to be delivered to Participants, whether or not an
SAR shall be in tandem with any other Award, and any other terms and conditions
of any SAR. Limited SARs that may only be exercised upon the occurrence of a
Change in Control may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee may determine. Limited SARs may be either
freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
----------------
Stock on the following terms and conditions ("Restricted Stock"):
(i) Grant and Restrictions. Restricted Stock shall be subject to such
----------------------
restrictions on transferability and other restrictions, if any, as the Committee
may impose, which restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, or otherwise, as the
Committee may determine. Except to the extent restricted under the terms of the
Plan and any Award Agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or the right
to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
----------
termination of employment or service (as determined under criteria established
by the Committee) during the applicable restriction period, Restricted Stock
that is at that time subject to restrictions shall be forfeited and reacquired
by the Company; provided, however, that the Committee may provide, by rule or
-----------------
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of termination resulting from specified
causes.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may
----------------------
be evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant,
such certificates may bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, the Company
may retain physical possession of the certificate, and the Participant shall
have delivered a stock power to the Company, endorsed in blank, relating to the
Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either paid at
---------
the dividend payment date in cash or in shares of unrestricted Stock having a
Fair Market Value equal to the amount of such dividends, or the payment of such
dividends shall be deferred and/or the amount or value thereof automatically
reinvested in additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant to elect.
Stock distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed, unless otherwise determined
by the Committee.
6
<PAGE>
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock
--------------
subject to the following terms and conditions ("Deferred Stock"):
(i) Award and Restrictions. Delivery of Stock will occur upon expiration
----------------------
of the deferral period specified for an Award of Deferred Stock by the Committee
(or, if permitted by the Committee, as elected by the Participant). In
addition, Deferred Stock shall be subject to such restrictions as the Committee
may impose, if any, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times, separately or in combination, in
installments or otherwise, as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
----------
termination of employment or service (as determined under criteria established
by the Committee) during the applicable deferral period or portion thereof to
which forfeiture conditions apply (as provided in the Award Agreement evidencing
the Deferred Stock), all Deferred Stock that is at that time subject to such
forfeiture conditions shall be forfeited; provided, however, that the Committee
-----------------
may provide, by rule or regulation or in any Award Agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating to
Deferred Stock will be waived in whole or in part in the event of termination
resulting from specified causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
--------------------------------------------------
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
--------------------
Equivalents entitling the Participant to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock ("Dividend Equivalents"). Dividend Equivalents may be
awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
------------------------
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may be granted
pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
---------------------------------------
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
------------------------------------------------------
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with or in substitution for any other Award granted
under the Plan or any award granted under any other plan of the Company, any
subsidiary or any business entity to be acquired by the Company or a subsidiary,
or any other right of a Participant to receive payment from the Company or any
subsidiary. Awards granted in addition to or in tandem with other Awards or
7
<PAGE>
awards may be granted either as of the same time as or a different time from the
grant of such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period as may
--------------
be determined by the Committee; provided, however, that in no event shall the
-----------------
term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
----------------------------
applicable Award Agreement, payments to be made by the Company or a subsidiary
upon the grant, exercise or settlement of an Award may be made in such forms as
the Committee shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or transfer, in
installments or on a deferred basis. Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in Stock.
(d) Rule 16b-3 Compliance.
---------------------
(i) Six-Month Holding Period. Unless a Participant could otherwise
------------------------
dispose of equity securities, including derivative securities,
acquired under the Plan without incurring liability under Section
16(b) of the Exchange Act, equity securities acquired under the Plan
must be held for a period of six months following the date of such
acquisition, provided that this condition shall be satisfied with
respect to a derivative security if at least six months elapse from
the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
(ii) Other Compliance Provisions. With respect to a Participant who
---------------------------
is then subject to Section 16 of the Exchange Act in respect of the
Company, the Committee shall implement transactions under the Plan and
administer the Plan in a manner that will ensure that each transaction
by such a Participant is exempt from liability under Rule 16b-3,
except that such a Participant may be permitted to engage in a non-
exempt transaction under the Plan if written notice has been given to
the Participant regarding the non-exempt nature of such transaction.
The Committee may authorize the Company to repurchase any Award or
shares of Stock resulting from any Award in order to prevent a
Participant who is subject to Section 16 of the Exchange Act from
incurring liability under Section 16(b). Unless otherwise specified
by the Participant, equity securities, including derivative
securities, acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired by
the Participant.
(e) Loan Provisions. With the consent of the Committee, and subject at all
---------------
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection with any Award, including the payment by a Participant of
any or all federal, state or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have full authority
to decide whether to make a loan or loans hereunder and to determine the amount,
terms and provisions of any such loan or loans, including the interest rate to
be charged in respect of any such loan or loans, whether the loan or loans are
to be with or without recourse against the borrower, the terms on which the loan
is to be repaid and conditions, if any, under which the loan or loans may be
forgiven.
8
<PAGE>
(f) Performance-Based Awards. The Committee may, in its discretion,
------------------------
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified performance-
based compensation" within the meaning of Code Section 162(m) and regulations
thereunder. The performance objectives for an Award subject to this Section
7(f) shall consist of one or more business criteria and a targeted level or
levels of performance with respect to such criteria, as specified by the
Committee but subject to this Section 7(f). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code. Business criteria used by the Committee in establishing performance
objectives for Awards subject to this Section 7(f) shall be selected from among
the following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash flow provided by operations;
(4) Changes in annual revenues; and/or
(5) Strategic business criteria, consisting of one or more objectives
based on meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals
relating to acquisitions or divestitures.
The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Achievement of performance objectives
with respect to such Awards shall be measured over a period of not less than one
year nor more than five years, as the Committee may specify. Performance
objectives may differ for such Awards to different Participants. The Committee
shall specify the weighting to be given to each performance objective for
purposes of determining the final amount payable with respect to any such Award.
The Committee may, in its discretion, reduce the amount of a payout otherwise to
be made in connection with an Award subject to this Section 7(f), but may not
exercise discretion to increase such amount, and the Committee may consider
other performance criteria in exercising such discretion. All determinations by
the Committee as to the achievement of performance objectives shall be in
writing. The Committee may not delegate any responsibility with respect to an
Award subject to this Section 7(f).
(g) Acceleration upon a Change of Control. Notwithstanding anything
-------------------------------------
contained herein to the contrary, all conditions and/or restrictions relating
to the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall immediately lapse upon a Change in Control, provided, however, that such
lapse shall not occur if (i) it is intended that the transaction constituting
such Change in Control be accounted for as a pooling of interests under
Accounting Principles Board Option No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c) thereof,
or (ii) the Committee, in its discretion, determines that such lapse shall not
occur, provided, further, that the Committee shall not have the discretion
granted in clause (ii) if it is intended that the transaction constituting such
Change in Control be accounted for as a pooling of interests under Accounting
Principles Board Option No. 16 (or any successor thereto), and such discretion
would otherwise violate Paragraph 47(c) thereof.
8. General Provisions.
------------------
(a) Compliance With Laws and Obligations. The Company shall not be
------------------------------------
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders and
other
9
<PAGE>
restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the Plan
------------------------------
will not be transferable by a Participant except by will or the laws of descent
and distribution or to a Beneficiary in the event of the Participant's death,
shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise subject to the claims of creditors, and, in the case of ISOs and SARs
in tandem therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative; provided,
---------
however, that such Awards and other rights (other than ISOs and SARs in tandem
- -------
therewith) may be transferred to one or more transferees during the lifetime of
the Participant to the extent and on such terms as then may be permitted by the
Committee.
(c) No Right to Continued Employment or Service. Neither the Plan nor any
-------------------------------------------
action taken hereunder shall be construed as giving any employee or other person
the right to be retained in the employ or service of the Company or any of its
subsidiaries, nor shall it interfere in any way with the right of the Company or
any of its subsidiaries to terminate any employee's employment or other person's
service at any time.
(d) Taxes. The Company and any subsidiary is authorized to withhold from
-----
any Award granted or to be settled, any delivery of Stock in connection with an
Award, any other payment relating to an Award or any payroll or other payment to
a Participant amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
------------------------------
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided, however, that,
-----------------
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, without the consent of an affected
-----------------
Participant, no such action may materially impair the rights of such Participant
under such Award (as such rights are set forth in the Plan and the Award
Agreement).
(f) No Rights to Awards; No Stockholder Rights. No Participant or employee
------------------------------------------
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants and employees. No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Stock is duly issued or transferred and delivered to
the Participant in accordance with the terms of the Award or, in the case of an
Option, the Option is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
---------------------------------------------
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
- -----------------
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
10
<PAGE>
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
--------------------------
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued or
--------------------
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the Company
-----------------------------------
that employee Options, SARs and other Awards designated as Awards subject to
Section 7(f) shall constitute "qualified performance-based compensation" within
the meaning of Code Section 162(m). Accordingly, if any provision of the Plan
or any Award Agreement relating to such an Award does not comply or is
inconsistent with the requirements of Code Section 162(m), such provision shall
be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the performance
objectives.
(k) Governing Law. The validity, construction and effect of the Plan, any
-------------
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
(l) Effective Date; Plan Termination. The Plan shall become effective as
--------------------------------
of the date of its adoption by the Board and approval of the Company's
stockholders, and shall continue in effect until terminated by the Board.
11
<PAGE>
PROXY
U.S.A. FLORAL PRODUCTS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999
The undersigned stockholder of U.S.A. Floral Products, Inc. (the "Company")
hereby appoints Robert J. Poirier and W. Michael Kipphut, and each of them, as
the attorneys and proxies of the undersigned, with full power of substitution,
to vote all shares of Common Stock, par value $.001 per share, of 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 at The Capital Hilton,
1001 16th Street, N.W., Washington, D.C., on Wednesday, May 5, 1999, commencing
at 10:00 a.m., Eastern Daylight Savings Time, and at any adjournment or
postponement thereof, as follows:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
U.S.A. FLORAL PRODUCTS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Class II Directors: FOR all nominees WITHHOLD To withhold
Nominees: Jeffrey Brothers, John T. listed (except AUTHORITY authority to vote for
Dickinson, Theodore J. Leonsis, and those for whom TO VOTE FOR any nominee, write
Gustavo Moreno. authority is being ALL the name of the
withheld) NOMINEES nominee below:
/ / / /
------------------
2. Proposal to ratify the appointment For Against Abstain
of PricewaterhouseCoopers LLP,
independent certified accounts, to
audit the books and accounts of the
Company for the year ending
December 31, 1999.
/ / / / / /
------------------
3. Proposal to amend the Certificate For Against Abstain
of Incorporation to change the
Company's name to [insert name here
corporation] and to restate the
Certificate of Incorporation to / / / / / /
reflect such amendment and previous
amendments. ------------------
4. Proposal to approve the 1997 Long For Against Abstain
Term Incentive Plan, as amended,
including an increase in the maximum
number of shares of Common Stock that
may be subject to outstanding awards
from 15% to 20% of the number of
shares of Common Stock outstanding
from time to time.
/ / / / / /
</TABLE>
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 AS CLASS II DIRECTORS OF ALL THE NOMINEES LISTED AND
"FOR" PROPOSALS 2, 3 and 4.
Dated:____________________, 1999
__________________________________
Signature of Stockholder
__________________________________
Signature of Stockholder
NOTE: Please sign this proxy exactly as name(s) appear on your stock
certificate. When signing as attorney-in-fact, executor, administrator, trustee
or guardian, please add your title as such, and if signer is a corporation,
please sign with full corporate name by a duly authorized officer or officers
and affix the corporate seal. Where stock is issued in the name of two (2) or
more persons, all such persons should sign.
IMPORTANT: PLEASE SIGN, DATE AND RETURN PROMPTLY.
