-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SnrMJMXtsQbbbvnjW5ESkKMlHWB0HC4PmcX61Tnw4ugS9Ke7BR0fudak0XgoUNrt 47VfJCjdoguuHn+bQzCimg== 0000921530-02-000468.txt : 20020820 0000921530-02-000468.hdr.sgml : 20020820 20020820165911 ACCESSION NUMBER: 0000921530-02-000468 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020820 GROUP MEMBERS: GEORGE SOROS GROUP MEMBERS: QIH MANAGEMENT INVESTOR, L.P. GROUP MEMBERS: QIH MANAGEMENT, INC. GROUP MEMBERS: QUANTUM INDUSTRIAL PARTNERS LDC GROUP MEMBERS: SFM DOMESTIC INVESTMENTS LLC GROUP MEMBERS: SOROS FUND MANAGEMENT LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BLUEFLY INC CENTRAL INDEX KEY: 0001030896 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 133612110 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52401 FILM NUMBER: 02744037 BUSINESS ADDRESS: STREET 1: 42 WEST 39TH ST CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2129448000 MAIL ADDRESS: STREET 1: 42 WEST 39TH ST CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: PIVOT RULES INC DATE OF NAME CHANGE: 19970305 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SOROS FUND MANAGEMENT LLC CENTRAL INDEX KEY: 0001029160 IRS NUMBER: 133914976 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10106 BUSINESS PHONE: 2128721054 MAIL ADDRESS: STREET 1: C/O AKIN, GUMP, STRAUSS,HAUER,FELD, STREET 2: 399 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 bluefly_13d-080902.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 14)* BLUEFLY, INC. ----------------------------------------- (Name of Issuer) Common Stock, Par Value $0.01 Per Share ---------------------------------------- (Title of Class of Securities) 096227103 ---------------------------------------- (CUSIP Number) Stephen M. Vine, Esq. Akin, Gump, Strauss, Hauer & Feld, L.L.P. 590 Madison Avenue New York, New York 10022 (212) 872-1000 ----------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 9, 2002 -------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box . Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Continued on following pages Page 1 of 36 Pages Exhibit Index: Page 13 SCHEDULE 13D CUSIP No. 096227103 Page 2 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). QUANTUM INDUSTRIAL PARTNERS LDC 2 Check the Appropriate Box if a Member of a Group (See Instructions) a.[___] b.[ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) WC 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6 Citizenship or Place of Organization Cayman Islands 7 Sole Voting Power Number of 22,825,650 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 22,825,650 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 22,825,650** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ X ] 13 Percent of Class Represented By Amount in Row (11) 81.72%** 14 Type of Reporting Person (See Instructions) OO; IV - --------------- ** See Item 6 SCHEDULE 13D CUSIP No. 096227103 Page 3 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). QIH MANAGEMENT INVESTOR, L.P. 2 Check the Appropriate Box if a Member of a Group (See Instructions) a. [___] b. [ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) AF 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [___] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 22,825,650 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 22,825,650 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 22,825,650** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ X ] 13 Percent of Class Represented By Amount in Row (11) 81.72%** 14 Type of Reporting Person (See Instructions) PN; IA - --------------- ** See Item 6 SCHEDULE 13D CUSIP No. 096227103 Page 4 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). QIH MANAGEMENT, INC. 2 Check the Appropriate Box if a Member of a Group (See Instructions) a. [___] b. [ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) AF 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [__] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 22,825,650 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 22,825,650 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 22,825,650** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ X ] 13 Percent of Class Represented By Amount in Row (11) 81.72%** 14 Type of Reporting Person (See Instructions) CO - --------------- ** See Item 6 SCHEDULE 13D CUSIP No. 096227103 Page 5 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). SOROS FUND MANAGEMENT LLC 2 Check the Appropriate Box if a Member of a Group (See Instructions) a. [___] b. [ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) AF 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [___] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 22,825,650 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 22,825,650 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 22,825,650** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ X ] 13 Percent of Class Represented By Amount in Row (11) 81.72%** 14 Type of Reporting Person (See Instructions) OO; IA - --------------- ** See Item 6 SCHEDULE 13D CUSIP No. 096227103 Page 6 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). SFM DOMESTIC INVESTMENTS LLC 2 Check the Appropriate Box if a Member of a Group (See Instructions) a. [___] b. [ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) WC 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [___] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 746,885 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 746,885 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 746,885** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] 13 Percent of Class Represented By Amount in Row (11) 6.81%** 14 Type of Reporting Person (See Instructions) OO - --------------- ** See Item 6 SCHEDULE 13D CUSIP No. 096227103 Page 7 of 36 Pages 1 Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only). GEORGE SOROS (in the capacity described herein) 2 Check the Appropriate Box if a Member of a Group (See Instructions) a. [___] b. [ X ] 3 SEC Use Only 4 Source of Funds (See Instructions) AF 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [__] 6 Citizenship or Place of Organization United States 7 Sole Voting Power Number of 23,572,535 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 23,572,535 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 23,572,535** 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [___] 13 Percent of Class Represented By Amount in Row (11) 82.70%** 14 Type of Reporting Person (See Instructions) IA - --------------- ** See Item 6 Page 8 of 36 Pages This Amendment No. 14 to Schedule 13D relates to shares of Common Stock, $0.01 par value per share (the "Shares"), of Bluefly, Inc. (the "Issuer"). This Amendment No. 14 supplementally amends the initial statement on Schedule 13D, dated August 6, 1999, and all amendments thereto (collectively, the "Initial Statement"), filed by the Reporting Persons (as defined herein). This Amendment No. 14 is being filed by the Reporting Persons to report that QIP (as defined herein) and SFM Domestic Investments (as defined herein) have entered into an agreement with the Issuer as described herein, whereby QIP and SFM Domestic Investments each purchased from the Issuer shares of preferred stock as described herein. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Initial Statement. The Initial Statement is supplementally amended as follows. Item 2. Identity and Background This Statement is being filed on behalf of each of the following persons (collectively, the "Reporting Persons"): (i) Quantum Industrial Partners LDC ("QIP"); (ii) QIH Management Investor, L.P. ("QIHMI"); (iii) QIH Management, Inc. ("QIH Management"); (iv) Soros Fund Management LLC ("SFM LLC"); (v) SFM Domestic Investments LLC ("SFM Domestic Investments"); and (vi) Mr. George Soros ("Mr. Soros"). This Statement relates to the Shares held for the accounts of QIP and SFM Domestic Investments. Item 3. Source and Amount of Funds or Other Consideration The information set forth in Item 6 hereof is hereby incorporated by reference into this Item 3. QIP expended approximately $2,033,430 of its working capital to purchase the securities reported herein as being acquired since June 21, 2002 (60 days prior to the date hereof). SFM Domestic Investments expended approximately $66,570 of its working capital to purchase the securities reported herein as being acquired since June 21, 2002 (60 days prior to the date hereof). Item 4. Purpose of Transaction The information set forth in Item 6 hereof is hereby incorporated by reference into this Item 4. The Reporting Persons reserve the right to acquire, or cause to be acquired, additional securities of the Issuer, to dispose of, or cause to be disposed, such securities at any time or to formulate other purposes, plans or proposals regarding the Issuer or any of its securities, to the extent deemed advisable in light of general investment and trading policies of the Reporting Persons, market conditions or other factors. Page 9 of 36 Pages Item 5. Interest in Securities of the Issuer (a) (i) Each of QIP, QIHMI, QIH Management and SFM LLC may be deemed the beneficial owner of 22,825,650 Shares (approximately 81.72% of the total number of Shares outstanding assuming the exercise and conversion of all of the securities (excluding the Series 2002 Preferred Stock) held for the account of QIP). This number consists of A) 5,287,082 Shares, B) 3,806,923 Shares issuable upon the conversion of 445,410 shares of Series A Preferred Stock, C) 12,829,524 Shares issuable upon the conversion of 8,607,843 shares of Series B Preferred Stock, D) 363,113 Shares issuable upon the exercise of warrants held for the account of QIP, E) 96,830 Shares issuable upon the exercise of Warrant No. 11 held for the account of QIP, F) 58,098 Shares issuable upon the exercise of Warrant No. 13 held for the account of QIP, G) 96,830 Shares issuable upon the exercise of Warrant No. 15 held for the account of QIP, and H) 287,250 Shares issuable upon the exercise of Warrant No. 17 held for the account of QIP. (ii) SFM Domestic Investments may be deemed the beneficial owner of 746,885 Shares (approximately 6.81% of the total number of Shares outstanding assuming the exercise and conversion of all the securities (excluding the Series 2002 Preferred Stock) held for its account). This number consists of A) 172,995 Shares, B) 124,701 Shares issuable upon the conversion of 14,590 shares of Series A Preferred Stock held for its account, C) 419,666 Shares issuable upon the conversion of 281,571 shares of Series B Preferred Stock held for its account, D) 11,887 Shares issuable upon the exercise of warrants held for its account, E) 3,170 Shares issuable upon the exercise of Warrant No. 12 held for its account, F) 1,902 Shares issuable upon the exercise of Warrant No. 14 held for its account, G) 3,170 Shares issuable upon the exercise of Warrant No. 16 held for its account, and H) 9,394 Shares issuable upon the exercise of Warrant No. 18 held for its account. (iii) Mr. Soros may be deemed the beneficial owner of 23,572,535 Shares (approximately 82.70% of the total number of Shares outstanding assuming the exercise and conversion of all of the securities (excluding the Series 2002 Preferred Stock) held for the accounts of QIP and SFM Domestic Investments). This number consists of A) 5,287,082 Shares held for the account of QIP, B) 3,806,923 Shares issuable upon the conversion of 445,410 shares of Series A Preferred Stock held for the account of QIP, C) 12,829,524 Shares issuable upon the conversion of 8,607,843 shares of Series B Preferred Stock held for the account of QIP, D) 363,113 Shares issuable upon the exercise of warrants held for the account of QIP, E) 96,830 Shares issuable upon the exercise of Warrant No. 11 held for the account of QIP, F) 58,098 Shares issuable upon the exercise of Warrant No. 13 held for the account of QIP, G) 96,830 Shares issuable upon the exercise of Warrant No. 15 held for the account of QIP, H) 287,250 Shares issuable upon the exercise of Warrant No. 17 held for the account of QIP, I) 172,995 Shares held for the account of SFM Domestic Investments, J) 124,701 Shares issuable upon the conversion of 14,590 shares of Series A Preferred Stock held for the account of SFM Domestic Investments, K) 419,666 Shares issuable upon the conversion of 281,571 shares of Series B Preferred Stock held for the account of SFM Domestic Investments, L) 11,887 Shares issuable upon the exercise of warrants held for the account of SFM Domestic Investments, M) 3,170 Shares issuable upon the exercise of the Warrant No. 12 held for the account of SFM Domestic Investments, N) 1,902 Shares issuable upon the exercise of Warrant No. 14 held for the account of SFM Domestic Investments, O) 3,170 Shares issuable upon the exercise of the Warrant No. 16 held for the account of SFM Domestic Investments, and P) 9,394 Shares issuable upon the exercise of Warrant No. 18 held for the account of SFM Domestic Investments. (b) (i) Each of QIP, QIHMI, QIH Management and SFM LLC (by virtue of the QIP contract) may be deemed to have the sole power to direct the voting and disposition of the 22,825,650 Shares held for the account of QIP (assuming the conversion of all the Series A Page 10 of 36 Pages Preferred Stock and the Series B Preferred Stock, and the exercise of the warrants and Warrant No. 11, Warrant No. 13, Warrant No. 15 and Warrant No. 17 held for the account of QIP). (ii) SFM Domestic Investments may be deemed to have the sole power to direct the voting and disposition of the 746,885 Shares held for its account (assuming the conversion of all the Series A Preferred Stock and the Series B Preferred Stock, and the exercise of the warrants and Warrant No. 12, Warrant No. 14, Warrant No. 16 and Warrant No. 18 held for its account). (iii) Mr. Soros (as a result of his position with SFM LLC and in his capacity as the sole managing member of SFM Domestic Investments) may be deemed to have the sole power to direct the voting and disposition of 23,572,535 Shares held for the accounts of QIP and SFM Domestic Investments. This number consists of A) 22,825,650 Shares held for the account of QIP (assuming the conversion of all the Series A Preferred Stock and the Series B Preferred Stock, and the exercise of the warrants and Warrant No. 11, Warrant No. 13, Warrant No. 15 and Warrant No. 17 held for the account of QIP) and B) 746,885 Shares held for the account of SFM Domestic Investments (assuming the conversion of all the Series A Preferred Stock and the Series B Preferred Stock, and the exercise of the warrants and Warrant No. 12, Warrant No. 14, Warrant No. 16 and Warrant No. 18 held for the account of SFM Domestic Investments). (c) Except for the transactions described in Item 6 below, which were effected in a privately negotiated transaction, there have been no transactions effected with respect to the Shares since June 21, 2002 (60 days prior to the date hereof) by any of the Reporting Persons. (d) (i) The shareholders of QIP, including Quantum Industrial Holdings, Ltd., a British Virgin Islands international business company, have the right to participate in the receipt of dividends from, or proceeds from the sales of, the securities held for the account of QIP in accordance with their ownership interests in QIP. (ii) Certain members of SFM Domestic Investments have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of SFM Domestic Investments. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. On August 9, 2002, the Issuer entered into a Series 2002 Preferred Stock Purchase Agreement (the "Purchase Agreement") with QIP and SFM Domestic Investments. Pursuant to the terms of the Purchase Agreement, QIP purchased 2,033.43 shares of the Series 2002 Convertible Preferred Stock, par value $.01 per share ("Series 2002 Preferred Stock") for an aggregate purchase price of $2,033,430, and SFM Domestic Investments purchased 66.57 shares of the Series 2002 Preferred Stock for an aggregate purchase price of $66,570. So long as any shares of the Series 2002 Preferred Stock are owned by QIP, SFM Domestic Investments or their respective affiliates, the Issuer has agreed not to take any action to approve or otherwise facilitate certain change of control transactions, including, but not limited to, a merger or consolidation of the Issuer resulting in a change of control or a sale of substantially all the assets of the Issuer, unless provision has been made for the holders of the Series 2002 Preferred Stock to receive in connection with such transaction an amount in cash equal to $1,000 per share of the Series 2002 Preferred Stock. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by the terms of the Purchase Agreement, which is attached in Exhibit EEE and is incorporated herein by reference in response to this Item 6. Page 11 of 36 Pages Pursuant to the terms of the Certificate of Powers, Designations, Preferences and Rights of the Series 2002 Convertible Preferred Stock (the "Series 2002 Preferred Certificate of Designations") and pursuant to the terms of the Certificate of Correction of Certificate of Powers, Designations, Preferences and Rights of Series 2002 Convertible Preferred Stock (the "Series 2002 Preferred Certificate of Correction"), filed by the Issuer with the Delaware Secretary of the State on August 9, 2002 and August 19, 2002, respectively, the shares of the Series 2002 Preferred Stock are convertible (to the extent stockholder approval is not required by the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time), at the option of the holders thereof, into any equity securities sold by the Issuer for cash in any subsequent round of financing at a conversion price based upon the lowest price per share paid by any investor in such subsequent round of financing. The holders of the Series 2002 Preferred Stock are entitled to a preference on a liquidation, dissolution or winding up of the Issuer equal to $1,000 per share of the Series 2002 Preferred Stock. So long as any shares of the Series 2002 Preferred Stock are outstanding, the approval of the holders of a majority of the shares of the Series 2002 Preferred Stock, voting separately as a class, must be obtained to designate or issue any shares of capital stock of the Issuer, or any rights, warrants or options exchangeable for or convertible into capital stock of the Issuer, ranking pari passu with or senior to the Series 2002 Preferred Stock in the event of a liquidation, dissolution or winding up of the Issuer. The foregoing descriptions of the Series 2002 Preferred Certificate of Designations and Series 2002 Preferred Certificate of Correction do not purport to be complete and are qualified in their entirety by the terms of the Series 2002 Preferred Certificate of Designations and Series 2002 Preferred Certificate of Correction, which are attached in Exhibit FFF and Exhibit GGG, respectively, and are incorporated herein by reference in response to this Item 6. Pursuant to the terms of a letter (the "Letter"), dated August 19, 2002, from the Company to QIP and SFM Domestic Investments, the Company has agreed to put forth a proposal seeking stockholder approval of the conversion rights of the Series 2002 Preferred Stock at the Company's next annual or special meeting of stockholders to the extent that stockholder approval of such conversion rights is required by the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time. The foregoing description of the Letter does not purport to be complete and is qualified in its entirety by the terms of the Letter, which is attached in Exhibit HHH and is incorporated herein by reference in response to this Item 6. In connection with its purchase of $2,100,000 of shares of the Series 2002 Preferred Stock, QIP and SFM Domestic Investments reduced their standby commitment under the Standby Commitment (a copy of which was previously filed as Exhibit YY to Schedule 13D Amendment No. 11 and is incorporated herein by reference in response to this Item 6) to zero. In connection with the Standby Commitment, QIP and SFM Domestic Investments have agreed with the Issuer to waive the anti-dilution provisions contained in Section 5.8.6. of the Issuer's Certificate of Incorporation (a copy of which was previously filed as Exhibit RR to Schedule 13D Amendment No. 8 and is incorporated herein by reference in response to this Item 6) with respect to the issuance of any additional securities of the Issuer into which the shares of the Series 2002 Preferred Stock are converted, but only if there are no purchasers of securities in such financing other than QIP and SFM Domestic Investments or their respective affiliates and only if none of QIP, SFM Domestic Investments or their respective affiliates invest any additional funds in such financing. The foregoing descriptions of the Standby Commitment and the Certificate of Incorporation do not purport to be complete and are qualified in their entirety by the terms of the Standby Commitment and the Certificate of Incorporation, respectively. Except as set forth herein, the Reporting Persons do no have any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer. Item 7. Material to be Filed as Exhibits The Exhibit Index is incorporated herein by reference. Page 12 of 36 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Statement is true, complete and correct. Date: August 20, 2002 QUANTUM INDUSTRIAL PARTNERS LDC By: /s/ Richard D. Holahan, Jr. ----------------------------- Richard D. Holahan, Jr. Attorney-in-Fact QIH MANAGEMENT INVESTOR, L.P. By: QIH Management, Inc., its General Partner By: /s/ Richard D. Holahan, Jr. ----------------------------- Richard D. Holahan, Jr. Vice President QIH MANAGEMENT, INC. By: /s/ Richard D. Holahan, Jr. ----------------------------- Richard D. Holahan, Jr. Vice President SOROS FUND MANAGEMENT LLC By: /s/ Richard D. Holahan, Jr. ----------------------------- Richard D. Holahan, Jr. Assistant General Counsel SFM DOMESTIC INVESTMENTS LLC By: George Soros Its Managing Member By: /s/ Richard D. Holahan, Jr. ---------------------------- Richard D. Holahan, Jr. Attorney-in-Fact GEORGE SOROS By: /s/ Richard D. Holahan, Jr. ----------------------------- Richard D. Holahan, Jr. Attorney-in-Fact Page 13 of 36 Pages EXHIBIT INDEX EEE. Form of the Series 2002 Preferred Stock Purchase Agreement, 14 dated as of August 9, 2002, between Bluefly, Inc. and the investors listed on Schedule 1 thereto. FFF. Form of the Certificate of Powers, Designations, 29 Preferences and Rights of Series 2002 Convertible Preferred Stock of Bluefly, Inc. GGG. Form of the Certificate of Correction of the 35 Certificate of Powers, Designations, Preferences and Rights of the Series 2002 Convertible Preferred Stock of Bluefly, Inc. HHH. Form of letter, dated as of August 19, 2002, between 36 Bluefly, Inc. and Quantum Industrial Partners LDC. EX-99 3 bluefly13d_exheee.txt PREFERRED STOCK PURCHASE AGREEMENT Page 14 of 36 Pages EXHIBIT EEE SERIES 2002 PREFERRED STOCK PURCHASE AGREEMENT ---------------------------------------------- THIS SERIES 2002 PREFERRED STOCK PURCHASE AGREEMENT, dated as of August __, 2002 (this "Agreement"), is entered into by and between BLUEFLY, INC., a Delaware corporation (the "Company"), and the investors listed on Schedule 1 hereto (each, an "Investor" and, collectively, the "Investors"). RECITALS -------- WHEREAS, the Investors desire to purchase from the Company, and the Company desires to issue and sell to the Investors, Two Thousand One Hundred (2,100) shares (the "Shares") of Series 2002 Convertible Preferred Stock, par value $.01 per share (the "Series 2002 Preferred Stock"), of the Company on the terms, and subject to the conditions, contained herein. AGREEMENT --------- NOW, THEREFORE, in consideration for the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I PURCHASE AND SALE OF SERIES 2002 PREFERRED STOCK ------------------------------------------------ Subject to the terms and conditions hereof, the Company hereby issues and sells to the Investors, and each Investor hereby purchases from the Company, the number of Shares set for opposite such Investor's name in Schedule 1, for a purchase price of One Thousand Dollars ($1,000) per share, resulting in an aggregate purchase price for all Shares sold pursuant to the terms hereof of Two Million One Hundred Thousand Dollars ($2,100,000). ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to the Investors as follows: SECTION 2.1 Organization, etc. The Company and its Subsidiary (as defined in Section 2.4(b)) have each been duly formed, and are each validly existing as a corporation in good standing under the laws of their respective States of incorporation, and are each qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified could reasonably be expected to have a material adverse effect on the assets, liabilities, condition (financial or other), business or results of operations of the Company and its Subsidiary taken as Page 15 of 36 Pages a whole (a "Material Adverse Effect"). The Company and its Subsidiary each have have the requisite corporate power and authority to own, lease and operate their respective properties and to conduct their respective businesses as presently conducted. The Company has the requisite corporate power and authority to enter into, execute, deliver and perform all of its duties and obligations under this Agreement and to consummate the transactions contemplated hereby. SECTION 2.2 Authorization. The execution, delivery and performance of this Agreement and the issuance of the Shares have been duly authorized by all necessary corporate action on the part of the Company, including, without limitation, the due authorization by the affirmative votes of a majority of the disinterested directors of the Company's Board of Directors. SECTION 2.3 Validity; Enforceability. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by, or subject to, any bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity. SECTION 2.4 Capitalization. (a) As of the date hereof, the authorized capital stock of the Company consists of 40,000,000 shares of common stock, $0.01 par value per share (the "Common Stock"), and 25,000,000 shares of preferred stock, $0.01 par value per share, of which 500,000 shares have been designated Series A Convertible Preferred Stock, 9,000,000 shares have been designated Series B Convertible Preferred Stock and 2,000 shares have been designated Series 2002 Preferred Stock. Without giving effect to the transactions contemplated by this Agreement, the issued and outstanding capital stock of the Company consists of (i) 10,391,904 shares of Common Stock, (ii) 500,000 shares of Series A Convertible Preferred Stock and (iii) 8,910,782 shares of Series B Convertible Preferred Stock. All such shares of the Company have been duly authorized and are fully paid and non-assessable. Except as set forth on Schedule 2.4 hereto or as otherwise contemplated by this Agreement, there are no outstanding options, warrants or other equity securities that are convertible into, or exercisable for, shares of the Company's capital stock. (b) The only Subsidiary of the Company is Clothesline Corporation. The Company owns all of the issued and outstanding capital stock of its Subsidiary, free and clear of all liens and encumbrances. All of such shares of capital stock are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. There are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, the Company's Subsidiary, and there is no outstanding security of any kind convertible into or Page 16 of 36 Pages exchangeable for such shares or proprietary interest. "Subsidiary" means, with respect to the Company, a corporation or other entity of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by the Company. SECTION 2.5 Governmental Consents. The execution and delivery by the Company of this Agreement, and the performance by the Company of the transactions contemplated hereby, do not and will not require the Company to effectuate or obtain any registration with, consent or approval of, or notice to any federal, state or other governmental authority or regulatory body, other than periodic and other filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The parties hereto agree and acknowledge that, in making the representations and warranties in the foregoing sentence of this Section 2.5, the Company is relying on the representations and warranties made by the Investors in Section 3.4. SECTION 2.6 No Violation. The execution and delivery of this Agreement and the performance by the Company of the transactions contemplated hereby will not (i) conflict with or result in a breach of any provision of the articles of incorporation or by-laws of the Company, (ii) result in a default or breach of, or, except for the approval of the holders of the Company's Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, require any consent, approval, authorization or permit of, or filing or notification to, any person, company or entity under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, loan, factoring arrangement, license, agreement, lease or other instrument or obligation to which the Company or its Subsidiary is a party or by which the Company or its Subsidiary or any of their respective assets may be bound or (iii) violate any law, judgment, order, writ, injunction, decree, statute, rule or regulation of any court, administrative agency, bureau, board, commission, office, authority, department or other governmental entity applicable to the Company or its Subsidiary, except, in the case of clause (ii) or (iii) above, any such event that could not reasonably be expected to have a Material Adverse Effect or materially impair the transactions contemplated hereby. SECTION 2.7 Issuances of Securities. The Shares have been validly issued, and, upon payment therefor, will be fully paid and non-assessable. The offering, issuance, sale and delivery of the Shares as contemplated by this Agreement are exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "Securities Act"), are being made in compliance with all applicable federal and (except for any violation or non-compliance that could not reasonably be expected to have a Material Adverse Effect) state laws and regulations concerning the offer, issuance and sale of securities, and are not being issued in violation of any preemptive or other rights of any stockholder of the Company. The parties hereto agree and acknowledge that, in making the representations and warranties in the foregoing sentence of this Section 2.7, the Company is relying on the representations and warranties made by the Investors in Section 3.4. SECTION 2.8 Absence of Certain Developments. Since December 31, 2001, there has not been any: (i) material adverse change in the condition, financial or otherwise, of the Page 17 of 36 Pages Company and its Subsidiary (taken as a whole) or in the assets, liabilities, properties or business of the Company and its Subsidiary (taken as a whole); (ii) declaration, setting aside or payment of any dividend or other distribution with respect to, or any direct or indirect redemption or acquisition of, any capital stock of the Company; (iii) waiver of any valuable right of the Company or its Subsidiary or cancellation of any material debt or claim held by the Company or its Subsidiary; (iv) material loss, destruction or damage to any property of the Company or its Subsidiary, whether or not insured; (v) acquisition or disposition of any material assets (or any contract or arrangement therefor) or any other material transaction by the Company or its Subsidiary otherwise than for fair value in the ordinary course of business consistent with past practice; or (vi) other agreement or understanding, whether in writing or otherwise, for the Company or its Subsidiary to take any action of the type, or any action that would result in an event of the type, specified in clauses (i) through (v). SECTION 2.9 Commission Filings. (a) The Company has filed all required forms, reports and other documents with the Securities and Exchange Commission (the "Commission") for periods from and after January 1, 2001 (collectively, the "Commission Filings"), each of which has complied in all material respects with all applicable requirements of the Securities Act and/or the Exchange Act (as applicable). The Company has heretofore made available to the Investors all of the Commission Filings, including the Company's Annual Report on Form 10-K for the year ended December 31, 2001 and the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. As of their respective dates, the Commission Filings did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim consolidated financial statements of the Company included or incorporated by reference in such Commission Filings have been prepared in accordance with generally accepted accounting principles, consistently applied ("GAAP") (except as may be indicated in the notes thereto or, in the case of the unaudited consolidated statements, as permitted by Form 10-Q), complied as of their respective dates in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, and fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiary as of the dates thereof and the results of operations for the periods then ended (subject, in the case of any unaudited consolidated interim financial statements, to the absence of footnotes required by GAAP and normal year-end adjustments). (b) The Company shall file as promptly as practicable with the Commission its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002 (the "June 2002 10-Q"), substantially in the form previously presented to the Investors. The June 2002 10-Q shall comply in all material respects with all applicable requirements of the Securities Act and/or the Exchange Act (as applicable). As of its date of filing, the June 2002 10-Q shall not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. Page 18 of 36 Pages The unaudited consolidated interim financial statements of the Company included or incorporated by reference in the June 2002 10-Q shall have been prepared in accordance with GAAP (except as may be indicated in the notes thereto or as permitted by Form 10-Q), shall comply as of their respective dates in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, and shall fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiary as of the dates thereof and the results of operations for the periods then ended (subject to the absence of footnotes required by GAAP and normal year-end adjustments). SECTION 2.10 Brokers. Neither the Company, nor any of its officers, directors or employees, has employed any broker or finder, or incurred any liability for any brokerage fees, commissions, finder's or other similar fees or expenses in connection with the transactions contemplated hereby. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE INVESTORS Each Investor represents and warrants to the Company, severally but not jointly, as follows: SECTION 3.1 Organization, etc. Such Investor has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of organization. Such Investor has the requisite organizational power and authority to enter into, execute, deliver and perform all of its duties and obligations under this Agreement and to consummate the transactions contemplated hereby. SECTION 3.2 Authority. The execution, delivery and performance of this Agreement have been duly authorized by all necessary organizational or other action on the part of such Investor. SECTION 3.3 Validity; Enforceability. This Agreement has been duly executed and delivered by such Investor, and constitutes the legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except as such enforceability may be limited by, or subject to, any bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity. SECTION 3.4 Investment Representations. (a) Such Investor acknowledges that the offer and sale of the Shares to such Investor have not been registered under the Securities Act, or the securities laws of any state or regulatory body, are being offered and sold in reliance upon exemptions from the registration requirements of the Securities Act and such laws and may not be transferred or resold without Page 19 of 36 Pages registration under such laws unless an exemption is available. The certificates representing the Shares will be imprinted with a legend in substantially the following form: "THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS UNLESS, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND STATE SECURITIES LAWS IS AVAILABLE." (b) Such Investor is acquiring the Shares for investment, and not with a view to the resale or distribution thereof, and is acquiring such securities for its own account. (c) Such Investor is an "accredited investor" (as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act), is sophisticated in financial matters and is familiar with the business of the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Such Investor has had the opportunity to investigate on its own the Company's business, management and financial affairs and has had the opportunity to review the Company's operations and facilities and to ask questions and obtain whatever other information concerning the Company as such Investor has deemed relevant in making its investment decision. (d) Such Investor is in compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. Neither such Investor, nor any of its principal owners, partners, members, directors or officers is included on: (i) the Office of Foreign Assets Control list of foreign nations, organizations and individuals subject to economic and trade sanctions, based on U.S. foreign policy and national security goals; (ii) Executive Order 13224, which sets forth a list of individuals and groups with whom U.S. persons are prohibited from doing business because such persons have been identified as terrorists or persons who support terrorism or (iii) any other watch list issued by any governmental authority, including the Commission. (e) No representations or warranties have been made to such Investor by the Company or any director, officer, employee, agent or affiliate of the Company, other than the representations and warranties of the Company set forth herein, and the decision of such Investor to purchase the Shares is based on the information contained herein, the Commission Filings and such Investor's own independent investigation of the Company. Page 20 of 36 Pages SECTION 3.5 Governmental Consents. The execution and delivery by such Investor of this Agreement, and the performance by such Investor of the transactions contemplated hereby, do not and will not require such Investor to effectuate or obtain any registration with, consent or approval of, or notice to any federal state or other governmental authority or regulatory body, except for the filing with the Commission of an amendment to such Investor's Schedule 13D under the Exchange Act with respect to its acquisition of the Shares. SECTION 3.6 No Violation. The execution and delivery of this Agreement and the performance by such Investor of the transactions contemplated hereby, will not (i) conflict with or result in a breach of any provision of the articles of incorporation, by-laws or similar organizational documents of such Investor or (ii) violate any law, judgment, order, writ, injunction, decree, statute, rule or regulation of any court, administrative agency, bureau, board, commission, office, authority, department or other governmental entity applicable to such Investor, except, in the case of clause (ii) above, any such violation that could not reasonably be expected to materially impair the transactions contemplated hereby. SECTION 3.7 Brokers. Neither such Investor, nor any of its officers, directors or employees, has employed any broker or finder, or incurred any liability for any brokerage fees, commissions, finder's or other similar fees or expenses in connection with the transactions contemplated hereby. ARTICLE IV SURVIVAL; INDEMNIFICATION SECTION 4.1 Survival. The representations and warranties contained in Articles II and III hereof shall survive until the first anniversary of the date hereof. SECTION 4.2 Indemnification. Each party (including its officers, directors, employees, affiliates, agents, successors and assigns (each an "Indemnified Party")) shall be indemnified and held harmless by the other parties hereto (each an "Indemnifying Party") for any and all liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, without limitation, reasonable attorneys' fees and expenses) actually suffered or incurred by them (collectively, "Losses"), arising out of or resulting from the breach of any representation or warranty made by an Indemnifying Party contained in this Agreement. Notwithstanding the foregoing, the aggregate liability of any Investor under this Article IV shall in no event exceed fifty percent (50%) of the purchase price paid by such Investor for the Shares purchased by it and the aggregate liability of the Company under this Article IV shall in no event exceed fifty percent (50%) of the purchase price paid by the Investors for the Shares, except that the Company's liability for a violation of any of the representations and warranties contained in the first two sentences of Section 2.7 may exceed such limitation, but shall in no event exceed one hundred percent (100%) of the purchase price paid by the Investors for the Shares. SECTION 4.3 Indemnification Procedure. The obligations and liabilities of the Indemnifying Party under this Article IV with respect to Losses arising from claims of any third Page 21 of 36 Pages party that are subject to the indemnification provided for in this Article IV ("Third Party Claims") shall be governed by and contingent upon the following additional terms and conditions: if an Indemnified Party shall receive notice of any Third Party Claim, the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim promptly after the receipt by the Indemnified Party of such notice (which notice shall include the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises); provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article IV except to the extent the Indemnifying Party is materially prejudiced by such failure and shall not relieve the Indemnifying Party from any other obligation or liability that it may have to any Indemnified Party otherwise than under this Article IV. Upon written notice to the Indemnified Party within five (5) days of the receipt of such notice, the Indemnifying Party shall be entitled to assume and control the defense of such Third Party Claim at its or his expense and through counsel of its or his choice (which counsel shall be reasonably satisfactory to the Indemnified Party); provided, however, that, if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the reasonable judgment of counsel to the Indemnified Party for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party shall be entitled to retain its or his own counsel in each jurisdiction for which the Indemnified Party reasonably determines counsel is required, at the expense of the Indemnifying Party. In the event the Indemnifying Party exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Indemnified Party shall cooperate with the Indemnifying Party in such defense and make available to such Indemnifying Party, at the Indemnifying Party's expense, all witnesses, pertinent records, materials and information in the Indemnified Party's possession or under the Indemnified Party's control relating thereto as is reasonably required by the Indemnifying Party. Similarly, in the event the Indemnified Party is, directly or indirectly, conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party's expense, all such witnesses (including himself), records, materials and information in the Indemnifying Party's possession or under the Indemnifying Party's control relating thereto as is reasonably required by the Indemnified Party. No such Third Party Claim may be settled by the Indemnifying Party on behalf of the Indemnified Party without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld); provided, however, in the event that the Indemnified Party does not consent to any such settlement that would provide it with a full release from indemnified Loss and would not require it to take, or refrain from taking, any action, the Indemnifying Party's liability for indemnification shall not exceed the amount of such proposed settlement. The Indemnified Party will refrain from any act or omission that is inconsistent with the position taken by the Indemnifying Party in the defense of a Third Party Claim unless the Indemnified Party determines that such act or omission is reasonably necessary to protect its own interest. Page 22 of 36 Pages ARTICLE V MISCELLANEOUS SECTION 5.1 Change of Control Provision. For so long as any of the Shares are owned by the Investors or their affiliates, the Company will not agree to, or take any action to approve or otherwise facilitate any, merger or consolidation or Change of Control (including granting approvals required under applicable anti-takeover statutes), unless provision has been made for the holders of the Shares to receive from the acquiror or any other person or entity (other than the Company) as a result of and in connection with the transaction an amount in cash equal to the aggregate liquidation preference for the Shares held by them, as set forth in the Certificate of Powers, Designations, Preferences and Rights of the Series 2002 Preferred Stock. The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 5.1 were not performed in accordance with their terms and the Investors shall be entitled to specific performance of the terms of this Section 5.1 in addition to any other remedies at law or in equity. For purposes of this Section 5.1: a "Change of Control" shall mean any of the following (i) any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) becoming the beneficial owner, directly or indirectly, of outstanding shares of Capital Stock of the Company entitling such Person or Persons to exercise 50% or more of the total votes entitled to be cast at a regular or special meeting, or by action by written consent, of the shareholders of the Company in the election of directors (the term "beneficial owner" shall be determined in accordance with Rule 13d-3 of the Exchange Act), (ii) a majority of the Board of Directors of the Company shall consist of Persons other than Continuing Directors, (iii) a recapitalization, reorganization, merger, consolidation or similar transaction, in each case with respect to which all or substantially all the Persons who are the respective beneficial owners, directly or indirectly, of the outstanding shares of Capital Stock of the Company immediately prior to such recapitalization, reorganization, merger, consolidation or similar transaction, will own less than 50% of the combined voting power of the then outstanding shares of Capital Stock of the Company resulting from such recapitalization, reorganization, merger, consolidation or similar transaction, (iv) the sale or other disposition of all or substantially all the assets of the Company in one transaction or in a series of related transactions, (v) any transaction occurs (other than one described in (iv) or (v))), the result of which is that the Common Stock is not required to be registered under Section 12 of the Exchange Act and in which the holders of Common Stock of the Company do not receive common stock of the Person surviving such transaction which is required to be registered under Section 12 of the Exchange Act, or (vi) immediately after any merger, consolidation, recapitalization or similar transaction, a "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than a group that includes the Investors and/or their affiliates, shall be the beneficial owners, directly or indirectly, of outstanding shares of Capital Stock of the Company (or any Person surviving such transaction) entitling them collectively to exercise 50% or more of the total voting power of shares of Capital Stock of the Company (or the surviving Person in such transaction) and in connection with or as a result of such transaction, the Company (or such surviving Person) shall have incurred or issued additional indebtedness such that the total indebtedness so incurred or issued equals at least 50% of the consideration payable in such transaction; "Capital Stock" shall mean, with Page 23 of 36 Pages respect to the Company, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, the Company's capital stock; and "Person" shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity; and "Continuing Directors" shall mean any member of the Board of Directors on the date hereof and any other member of the Board of Directors who shall be recommended or elected to succeed or become a Continuing Director by a majority of the Continuing Directors who are then members of the Board of Directors. SECTION 5.2 Publicity. Except as may be required by applicable law or the rules of any securities exchange or market on which securities of the Company are traded, no party hereto shall issue a press release or public announcement or otherwise make any disclosure concerning this Agreement and the transactions contemplated hereby, without prior approval of the others; provided, however, that nothing in this Agreement shall restrict the Company or any Investor from disclosing such information (a) that is already publicly available, (b) that may be required or appropriate in response to any summons or subpoena (provided that the disclosing party will use commercially reasonable efforts to notify the other parties in advance of such disclosure under this clause (b) so as to permit the non-disclosing parties to seek a protective order or otherwise contest such disclosure, and the disclosing party will use commercially reasonable efforts to cooperate, at the expense of the non-disclosing parties, in pursuing any such protective order) or (c) in connection with any litigation involving disputes as to the parties' respective rights and obligations hereunder. SECTION 5.3 Entire Agreement. This Agreement and any other agreement or instrument to be delivered expressly pursuant to the terms hereof constitute the entire Agreement between the parties hereto with respect to the subject matter hereof and supersede all previous negotiations, commitments and writings with respect to such subject matter. SECTION 5.4 Assignments; Parties in Interest. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing herein, express or implied, is intended to or shall confer upon any person not a party hereto any right, benefit or remedy of any nature whatsoever under or by reason hereof, except as otherwise provided herein. SECTION 5.5 Amendments. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, the parties against whom such amendment or modification is sought to be enforced. SECTION 5.6 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement. Page 24 of 36 Pages SECTION 5.7 Notices and Addresses. Any notice, demand, request, waiver, or other communication under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served or sent by facsimile; on the business day after notice is delivered to a courier or mailed by express mail, if sent by courier delivery service or express mail for next day delivery; and on the fifth business day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed as follows: To Company: Bluefly, Inc. 42 West 39th Street, 9th Floor New York, New York 10018 Fax: (212) 840-1903 Attn: Jonathan B. Morris With a copy to: Swidler Berlin Shereff Friedman, LLP 405 Lexington Avenue New York, New York 10174 Fax: (212) 891-9598 Attn: Richard A. Goldberg, Esq. To the Investors: To the address set forth on Schedule 1. SECTION 5.8 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. SECTION 5.9 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of law principles. The parties agree that the federal and state courts located in New York, New York shall have exclusive jurisdiction over any dispute involving this Agreement or the transactions contemplated hereby, and each party hereby irrevocably submits to the jurisdiction of, and waives any objection to the laying of venue in, such courts. SECTION 5.10 Counterparts; Facsimile Signatures. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and Page 25 of 36 Pages delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile, and a facsimile signature shall have the same force and effect as an original signature on this Agreement. SECTION 5.11 Expenses. The Company shall reimburse the Investors for their reasonable legal fees and expenses incurred in connection with the negotiation of this Agreement and the transactions contemplated hereby. Except as provided above, all costs and expenses, including, without limitation, fees and disbursements of counsel, incurred in connection with the negotiation, execution and delivery of this Agreement and its related documents shall be paid by the party incurring such costs and expenses, whether or not the closing shall have occurred. Page 26 of 36 Pages IN WITNESS WHEREOF, this Agreement has been duly executed on the date first set forth above. BLUEFLY, INC. By: ___________________________ Name: Title: QUANTUM INDUSTRIAL PARTNERS LDC By: ___________________________ Name: Title: SFM DOMESTIC INVESTMENTS LLC By: ___________________________ Name: Title: Page 27 of 36 Pages SCHEDULE 1 INVESTORS AND SHARE ALLOCATIONS - -------------------------------------------------------------------------------- Aggregate Purchase Name and Address of Investor Shares Purchased Price - ---------------------------- ---------------- ------ - -------------------------------------------------------------------------------- Quantum Industrial Partners LDC 2,033.43 $2,033,430 Kaya Flamboyan 9 Villemstad Curacao Netherlands-Antilles with a copy to: Soros Fund Management LLC 888 Fifth Avenue New York, New York 10106 Facsimile: (212) 664-0544 Attn: Richard Holahan, Esq. - -------------------------------------------------------------------------------- SFM Domestic Investments LLC 66.57 $ 66,570 c/o Soros Fund Management LLC 888 Fifth Avenue New York, New York 10106 Facsimile: (212) 664-0544 Attn: Richard Holahan, Esq. - -------------------------------------------------------------------------------- TOTAL 2,100 $2,100,000 - -------------------------------------------------------------------------------- Page 28 of 36 Pages SCHEDULE 2.4 CAPITALIZATION -------------- As of the date hereof, but without giving effect to the transactions contemplated by this Agreement, the following equity securities are outstanding and convertible into, or exercisable for shares of Common Stock: 1. 500,000 shares of Series A Convertible Preferred Stock (the "Series A Stock") are issued and outstanding. The Series A Stock is convertible into 4,273,504 shares of Common Stock. 2. 8,910,782 shares of Series B Convertible Preferred Stock (the "Series B Stock") are issued and outstanding. The Series B Stock is convertible into 13,281,038 shares of Common Stock. 3. Warrants to purchase an aggregate of 1,069,144 shares of Common Stock are issued and outstanding. 4. Options issued to purchase 3,935,912 shares of Common Stock are issued and outstanding under the Company's 1997 Stock Option Plan, as amended, and 2000 Stock Option Plan, as amended. EX-99 4 bluefly13d_exhfff.txt CERTIFICATE OF DESIGNATION Page 29 of 36 Pages EXHIBIT FFF CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES 2002 CONVERTIBLE PREFERRED STOCK OF BLUEFLY, INC. BLUEFLY, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Company"), DOES HEREBY CERTIFY THAT: Pursuant to authority conferred upon the Board of Directors of the Company (the "Board") by the Certificate of Incorporation of the Company (the "Certificate of Incorporation"), and pursuant to the provisions of ss. 151 of the Delaware General Corporation Law (the "DGCL"), the Board, at a meeting held on August __, 2002, duly adopted the following resolution providing for the voting powers, designations, preferences and rights, and the qualifications, limitations and restrictions, of the Series 2002 Convertible Preferred Stock. WHEREAS, the Certificate of Incorporation provides for two classes of shares known as common stock, $0.01 par value per share (the "Common Stock"), and preferred stock, $0.01 par value per share (the "Preferred Stock"); and WHEREAS, the Board is authorized by the Certificate of Incorporation to provide for the issuance of the shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the DGCL, to establish from time to time the number of shares to be included in any such series and to fix the voting powers, designations, preferences and rights of the shares of any such series, and the qualifications, limitations and restrictions thereof. NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to, and hereby does, designate a Series 2002 Convertible Preferred Stock and fixes and determines the voting powers, designations, preferences and rights, and the qualifications, limitations and restrictions relating to the Series 2002 Convertible Preferred Stock as follows: 1. Designation. There shall hereby be created and established a series of Preferred Stock, and the shares of such series of Preferred Stock shall be designated "Series 2002 Convertible Preferred Stock" (referred to herein as the "Series 2002 Stock"). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 11 below. 2. Authorized Number. The number of shares constituting the Series 2002 Stock shall be 2,100. Page 30 of 36 Pages 3. Ranking. The Series 2002 Stock shall rank, as to rights upon a liquidation, dissolution or winding up of the Company, on parity with the Company's currently outstanding Series A Convertible Preferred Stock, $0.01 par value per share (the "Series A Stock"), and the Company's currently outstanding Series B Convertible Preferred Stock, $0.01 par value per share (the "Series B Stock"), and senior and prior to the Common Stock and to all other classes or series of stock issued by the Company, currently and in the future, except as otherwise approved by the affirmative vote or consent of the holders of a majority of the then-outstanding shares of Series 2002 Stock pursuant to Section 7 hereof. All equity securities of the Company to which the Series 2002 Stock ranks prior, whether upon liquidation, dissolution, winding up or otherwise, including the Common Stock, are collectively referred to herein as "Junior Securities." 4. Dividends. Dividends shall be payable with respect to shares of Series 2002 Stock only if, and to the extent, declared by the Board. The holders of shares of Series 2002 Stock shall not be entitled to receive any dividends with respect to such shares except in accordance with this Section 4. 5. Conversion. Subject to the terms and conditions of this Section 5, the holder of any share or shares of Series 2002 Stock shall have the right, at its option, at any time and from time to time, upon the consummation of any Subsequent Round of Financing to convert each such share (or fraction thereof) of Series 2002 Stock into a number of fully paid and nonassessable Subsequent Round Securities (with the most favorable terms received by any investor in such Subsequent Round of Financing) equal to the quotient obtained by dividing the Series 2002 Liquidation Preference by the lowest price per Subsequent Round Security paid by any investor in such Subsequent Round of Financing. Written notice of a Subsequent Round of Financing stating the date on which such Subsequent Round of Financing is expected to become effective and describing the terms and conditions of such Subsequent Round of Financing shall be delivered by the Company to, and received by, the holders of shares of Series 2002 Stock not less than 10 days prior to the consummation of such Subsequent Round of Financing. The rights of conversion pursuant to this Section 5 shall be exercised by the holder of shares of Series 2002 Stock by giving written notice, which shall be received by the Company not less than five (5) days prior to the consummation of such Subsequent Round of Financing that the holder elects to convert a stated number of shares of Series 2002 Stock into Subsequent Round Securities and by the surrender of a certificate or certificates for the shares to be so converted to the Company at its principal office (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Series 2002 Stock) at any time during its usual business hours, together with a statement of the name or names (with address) in which the certificate or certificates for Subsequent Round Securities shall be issued. Promptly after the surrender of the certificate or certificates for shares of Series 2002 Stock to be converted as set forth above, and upon consummation of the Subsequent Round of Financing pursuant to which such shares of Series 2002 Stock are to be converted, the Company shall issue and deliver, or cause to be issued or delivered, to the holders, registered in such name or names as such holders may direct, a certificate or certificates for the number and type of Subsequent Round Securities issuable upon Page 31 of 36 Pages conversion of such shares of Series 2002 Stock. To the extent that, following surrender of any certificate or certificates for shares of Series 2002 Stock to be converted as set forth above, the Company determines not to proceed with the Subsequent Round of Financing pursuant to which such shares of Series 2002 Stock are to be converted, such certificates shall be returned immediately following such determination to the holders thereof and the shares of Series 2002 Stock represented by such certificates shall remain outstanding. No fractional Subsequent Round Securities shall be issued upon conversion of the shares of Series 2002 Stock. If any fractional Subsequent Round Security would, except for the provisions of the immediately preceding sentence, be delivered upon such conversion, the Company, in lieu of delivering such fractional Subsequent Round Securities, shall pay to the holder surrendering the shares of Series 2002 Stock for conversion an amount in cash equal to the current market price of such fractional Subsequent Round Security as determined in good faith by the Board. The issuance of certificates for Subsequent Round Securities upon conversion of the shares of Series 2002 Stock shall be made without charge to the holders thereof for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of the shares of Series 2002 Stock which is being converted. 6. Liquidation Rights. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company resulting in a distribution of assets to the holders of any class or series of the Company's capital stock (each such event, a "Series 2002 Liquidation"), each holder of shares of Series 2002 Stock will be entitled to payment out of the assets of the Company available for distribution of an amount per share in cash equal to the Series 2002 Liquidation Preference, such amount to be paid on a pari passu basis and pro rata according to their respective liquidation preferences with the amount distributable as liquidation preferences to the holders of the Series A Stock and Series B Stock and before any distribution is made on any Junior Securities, including, without limitation, Common Stock of the Company. If, upon any Series 2002 Liquidation, the assets to be distributed among the holders of shares of Series 2002 Stock shall be insufficient to permit payment to the holders of shares of Series 2002 Stock of the full Series 2002 Liquidation Preference for each such share, then all of the assets of the Company to be so distributed as liquidation preferences to the holders of shares of Series A Stock, Series B Stock and Series 2002 Stock shall be distributed among the holders of shares of Series A Stock, Series B Stock and Series 2002 Stock ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. 7. Voting Rights; Amendment and Waiver. Except as otherwise expressly provided herein or as required under the DGCL, the Series 2002 Stock shall be non-voting. For so long as any shares of Series 2002 Stock are outstanding, the Company shall not, without the prior approval of the holders of at least a majority of the then-outstanding shares of Series 2002 Stock, given in writing or at a meeting, consenting or voting (as the case may be) separately as a series, (i) effect any transaction or other action that would adversely affect the rights, preferences, powers and privileges of the Series 2002 Stock or (ii) designate or issue any shares of capital stock of the Company, or any rights, warrants or options exchangeable for or convertible into Page 32 of 36 Pages capital stock of the Company, ranking pari passu with or senior to the Series 2002 Stock in the event of a liquidation, dissolution or winding up of the Company. Notwithstanding any other provision hereof, the holders of at least a majority of the then-outstanding shares of Series 2002 Stock shall have the right and authority to waive any power, preference or right of the Series 2002 Stock by delivering to the Company a written waiver executed by such holders. 8. Reservation of Subsequent Round Securities. The Company shall reserve and keep available solely for issuance upon the conversion of shares of Series 2002 Stock, such number and type of Subsequent Round Securities as will from time to time be sufficient to permit the conversion of all outstanding shares of Series 2002 Stock for which a holder has elected to exercise its right pursuant to Section 5 to convert such shares into such Subsequent Round Securities, and, if applicable, shall take all action to increase the authorized number of Subsequent Round Securities if at any time there shall be insufficient authorized but unissued Subsequent Round Securities to permit such reservation or to permit the conversion of all outstanding shares of Series 2002 Stock for which a holder has elected to exercise its rights pursuant to Section 5 to convert such shares into such Subsequent Round Securities. The Company covenants that all Subsequent Round Securities which shall be so issued shall be duly authorized, validly issued, fully paid and non-assessable by the Company and free from any taxes, liens and charges with respect to the issue thereof. The Company will take all such action as may be necessary to ensure that all such Subsequent Round Securities may be so issued without violation of any applicable law or regulation, or of any requirement of any national securities exchange or quotation system upon which the Common Stock may be listed. 9. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 10. Severability of Provisions. If any voting powers, preferences and rights of the Series 2002 Stock and qualifications, limitations and restrictions thereof set forth herein (as this Certificate of Designations may be amended from time to time) are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and rights of Series 2002 Stock and qualifications, limitations and restrictions thereof set forth herein (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and rights of Series 2002 Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and rights of Series 2002 Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and rights of Series 2002 Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 11. Certain Definitions. The following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires: Page 33 of 36 Pages "Series 2002 Liquidation Preference" means an amount per share equal to $1,000, as adjusted to reflect stock splits, stock dividends, combinations and other similar occurrences. "Subsequent Round of Financing" means the offer and sale for cash by the Company of its equity securities. "Subsequent Round Securities" means the equity securities sold in the Subsequent Round of Financing; provided that, to the extent that two or more types or classes of equity securities are sold as a unit in the Subsequent Round of Financing, "Subsequent Round Securities" shall mean a unit consisting of the same types or classes of equity securities, in the same proportion, as the units sold in the Subsequent Round of Financing. 12. Exclusion of Other Rights. Except as may otherwise be required by law, shares of Series 2002 Stock shall not have any voting powers, designations, preferences and rights, other than those specifically set forth herein (as may be amended from time to time) and in the Certificate of Incorporation. 13. Registered Holders. A holder of Series 2002 Stock registered on the Company's stock transfer books as the owner of shares of Series 2002 Stock shall be treated as the owner of such shares for all purposes. All notices and all payments required to be mailed to a holder of shares of Series 2002 Stock shall be mailed to such holder's registered address on the Company's stock transfer books, and all dividend and redemption payments to a holder of shares of Series 2002 Stock made hereunder shall be deemed to be paid in compliance hereof on the date such payments are deposited into the mail addressed to such holder at his registered address on the Company's stock transfer books. [Remainder of page intentionally left blank] Page 34 of 36 Pages IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designations this ___ day of August, 2002. BLUEFLY, INC. By:_____________________________ Name: Title: EX-99 5 bluefly13d_exhggg.txt CERTIFICATE OF CORRECTION Page 35 of 36 Exhibit GGG CERTIFICATE OF CORRECTION OF CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES 2002 CONVERTIBLE PREFERRED STOCK OF BLUEFLY, INC. It is hereby certified that: 1. The name of the corporation is Bluefly, Inc. (the "Company"). 2. In Section 5 of the Certificate of Powers, Designations, Preferences and Rights of Series 2002 Convertible Preferred Stock of Bluefly, Inc. (the "Certificate of Designations"), which was filed with the Secretary of State of the State of Delaware (the "Secretary of State") on August 9, 2002, the phrase "and to stockholder approval (to the extent, and only to the extent, required by the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time (for the avoidance of doubt, it being understood that, prior to conversion of shares of the Series 2002 Preferred Stock, such approval need only be obtained as to the portion or portions, if any, of Subsequent Round Securities that the holder would acquire upon conversion that exceeds the amount that could be acquired without such approval under the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time))" was inadvertently omitted. The phrase was intended to be included after the phrase "[s]ubject to the terms and conditions of this Section 5." 3. This Certificate of Correction is hereby filed pursuant to Section 103(f) of the General Corporation Law of the State of Delaware to correct the first sentence of Section 5 of the Certificate of Designations to read as follows (with the remaining provisions of Section 5 of the Certificate of Designation continuing to read as set forth in the Certificate of Designations filed with the Secretary of State on August 9, 2002): "Subject to the terms and conditions of this Section 5 and to stockholder approval (to the extent, and only to the extent, required by the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time (for the avoidance of doubt, it being understood that, prior to conversion of shares of the Series 2002 Preferred Stock, such approval need only be obtained as to the portion or portions, if any, of Subsequent Round Securities that the holder would acquire upon conversion that exceeds the amount that could be acquired without such approval under the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time)), the holder of any share or shares of Series 2002 Stock shall have the right, at its option, at any time and from time to time, upon the consummation of any Subsequent Round of Financing to convert each such share (or fraction thereof) of Series 2002 Stock into a number of fully paid and nonassessable Subsequent Round Securities (with the most favorable terms received by any investor in such Subsequent Round of Financing) equal to the quotient obtained by dividing the Series 2002 Liquidation Preference by the lowest price per Subsequent Round Security paid by any investor in such Subsequent Round of Financing." IN WITNESS WHEREOF, the undersigned has executed this Certificate of Correction this 19th day of August, 2002. BLUEFLY, INC. By: __________________________ Name: Title: EX-99 6 bluefly13d_exhhh.txt SIDE LETTER Page 36 of 36 Exhibit HHH BLUEFLY, INC. 42 West 39th Street New York, New York 10018 August 19, 2002 Quantum Industrial Partners LDC Kaya Flamboyan 9 Willemstad Curacao Netherlands-Antilles SFM Domestic Investments LLC c/o Soros Fund Management LLC 888 Seventh Avenue New York, New York 10106 Gentlemen: Reference is hereby made to the Certificate of Powers, Designations, Preferences and Rights of Series 2002 Convertible Preferred Stock (the "Certificate of Designations") of Bluefly, Inc. (the "Company"). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Certificate of Designations. Pursuant to Section 8 of the Certificate of Designations, the Company is required, with respect to any Subsequent Round Securities to be issued upon the conversion of any shares of the Series 2002 Stock, to "take all such action as may be necessary to ensure that all such Subsequent Round Securities may be so issued without violation of any applicable law or regulation, or of any requirement of any national securities exchange or quotation system upon which the Common Stock may be listed." The Company hereby confirms that, in accordance with the provisions of Section 8, it shall put forth a proposal seeking stockholder approval of the conversion rights contained in Section 5 of the Certificate of Designations at the Company's next annual or special meeting of stockholders to the extent that such stockholder approval of the conversion rights contained in Section 5 of the Certificate of Designations is required by the rules of the Nasdaq SmallCap Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time. Very truly yours, BLUEFLY, INC. By: _________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----