UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of
1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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Preliminary
Proxy Statement.
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to
§240.14a-12
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Bluefly,
Inc.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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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):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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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.
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Previously Paid:
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Schedule or Registration Statement No.:
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Party:
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BLUEFLY,
INC.
42
West 39th
Street
New
York, NY 10018
Dear
Stockholder:
You are
cordially invited to attend the annual meeting of stockholders of Bluefly, Inc.
(the “Company”), which will be held on May 28, 2009 at 9:00 a.m., local time, at
the Company’s offices at 42 West 39th Street, 9th Floor,
New York, New York. The formal Notice of Annual Meeting and
Proxy Statement, fully describing the matters to be acted upon at the meeting,
appear on the following pages.
The
matters scheduled to be considered at the meeting are the election of directors
from among the nominees described in the Proxy Statement and to transact such
other business as may properly come before the meeting.
The Board
of Directors recommends a vote FOR the proposal being
presented at the meeting as being in the best interest of the Company and its
stockholders. We urge you to read the Proxy Statement and give it
your careful attention before completing the enclosed proxy card.
Your vote
is important regardless of the number of shares you own. Please be
sure you are represented at the meeting, whether or not you plan to attend in
person, by signing, dating and mailing the proxy card promptly. A
postage-paid return envelope is enclosed for your convenience.
If you
would like additional copies of the proxy material, or if you would like to ask
questions about the proposals, you should contact our Investor Relations
Department by telephone at (212) 944-8000.
| Sincerely, | |
 |
BLUEFLY,
INC.
42
West 39th Street
New
York, New York 10018
____________________________
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be
Held May 28, 2009
____________________________
NOTICE IS
HEREBY GIVEN that the annual meeting of stockholders of Bluefly, Inc. (the
“Company”) will be held at 9:00 a.m., local time, on May 28, 2009 at the
Company’s offices at 42 West 39th Street, 9th Floor,
New York, New York, for the following purposes:
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1.
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To
elect ten directors of the Company from among the nominees described in
the Proxy Statement to hold office until the next annual meeting of
stockholders.
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2.
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To
transact such other business as may properly come before the
meeting.
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Only
holders of record of the Company’s Common Stock at the close of business on
April 23, 2009 are entitled to notice of, and to vote at, the meeting and any
adjournment thereof. Such stockholders may vote in person or by
proxy.
WHETHER
OR NOT YOU PLAN TO ATTEND IN PERSON, PLEASE FILL IN, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE THAT YOUR
SHARES ARE REPRESENTED AT THE MEETING. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
| By Order of the Board of Directors, | |
|
April 28,
2009
BLUEFLY,
INC.
42
West 39th Street
New
York, New York 10018
____________________________
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
MEETING
____________________________
The
enclosed materials are also available at http://www.bluefly.com. The
following items are available at the specified link:
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1.
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The
Proxy Statement being issued in connection with the 2009 Annual Meeting of
Stockholders;
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2.
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The
Company’s Annual Report on Form 10-K for the year ended December 31, 2008;
and
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3.
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The
form of proxy card for use in connection with the 2009 Annual Meeting of
Stockholders.
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BLUEFLY,
INC.
42
West 39th Street
New
York, New York 10018
____________________________
PROXY
STATEMENT
This
Proxy Statement is furnished in connection with the solicitation by the board of
directors (the “Board of Directors”) of Bluefly, Inc., a Delaware corporation
(the “Company”), of proxies to be used at the annual meeting of stockholders of
the Company to be held at 9:00 a.m., local time, on May 28, 2009 at the
Company’s offices at 42 West 39th Street, 9th Floor,
New York, New York, and at any adjournment thereof. The purposes of
the meeting are:
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1.
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To
elect ten directors of the Company from among the nominees named in this
Proxy Statement to hold office until the next annual meeting of
stockholders.
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2.
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To
transact such other business as may properly come before the
meeting.
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If proxy cards in the accompanying form
are properly executed and returned, the shares of the Company’s Common Stock,
$.01 par value per share (the “Common Stock”) will be voted as instructed on the
proxy card. If no instructions are given, such shares will be voted
(i) for the election as directors of the nominees of the Board of Directors
named below; and (ii) in the discretion of the proxies named in the proxy card
on any other proposals to properly come before the meeting or any adjournment
thereof. Any proxy may be revoked by a stockholder of record prior to
its exercise upon written notice to the Secretary of the Company, or by the vote
of such stockholder cast in person at the meeting. The approximate
date of mailing of this Proxy Statement and accompanying form of proxy card is
April 28, 2009.
VOTING
Holders
of record of Common Stock as of the close of business on April 23, 2009 (the
“Record Date”) will be entitled to vote at the meeting or any adjournment
thereof. Each share of Common Stock entitles the holder thereof to
one vote on all matters to come before the stockholders at the
meeting. The Common Stock is not entitled to cumulative
voting.
Holders
of a majority of the votes entitled to be cast at the meeting will constitute a
quorum for the transaction of business. As of the Record Date, there
were 13,852,047 shares of Common Stock outstanding, each entitled to one vote.
The total number of votes entitled to be cast at the meeting is, therefore,
13,852,047. Abstentions and so-called “broker non-votes” (instances
in which brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned a proxy) are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.
The
favorable vote of a plurality of the votes cast by holders of shares of Common
Stock, present in person or represented by proxy at the meeting, voting together
as a class, is necessary to elect the nominees for the directors of the
Company. Abstentions and broker non-votes will not be counted as
votes cast with respect to, and therefore will have no effect on, any of the
matters.
1
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Ten
directors are to be elected at the meeting to serve until the next annual
meeting of stockholders. The Board of Directors has nominated the
persons named in the table below for election as directors. All such
persons are presently directors of the Company. Unless otherwise
specified in the accompanying proxy, the shares voted pursuant to it will be
voted for the persons named below as nominees for election as
directors. If, for any reason, at the time of the election, any of
the nominees should be unable or unwilling to accept election, such proxy will
be voted for the election, in such nominee’s place, of a substitute nominee
recommended by the Board of Directors to the extent that such substitute nominee
exists. However, the Board of Directors has no reason to believe that
any nominee will be unable or unwilling to serve as a director.
NOMINEES
FOR DIRECTOR; PREFERRED DESIGNEES
|
Name
of Director
|
Age
|
Director
of the Company Since
|
|
Riad
Abrahams
|
31
|
2007
to present
|
|
Mario
Ciampi
|
48
|
2008
to present
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Barry
Erdos
|
65
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2005
to present
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Michael
Helfand
|
49
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2009
to present
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Ann
Jackson
|
57
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2005
to present
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Martin
Miller
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79
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1991
to present
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Neal
Moszkowski
|
43
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1999
to present
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Melissa
Payner-Gregor
|
50
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2003
to present
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Anthony
Plesner
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50
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2008
to present
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David
Wassong
|
38
|
2001
to present
|
Riad
Abrahams has served as a director since August 2007. Mr.
Abrahams previously served as a director of the Company from August 2006 to
October 2006. He has served as a Managing Partner and co-founder of
BlackSwan Partners L.P., a private equity firm, since October
2006. Prior thereto, from 2001 to 2006, Mr. Abrahams was a Managing
Director at Maverick Capital, Ltd. (“Maverick”) working in the retail
sector. From 1999-2001, Mr. Abrahams worked in the Principal
Investment Area at The Blackstone Group. Mr. Abrahams is a graduate of Harvard
Business School and Harvard College. He also serves on the board of Ali Wing,
Inc. d/b/a giggle.
Mario
Ciampi was appointed to the Board of Directors in August 2008. Mr. Ciampi
has served as co-head of Private Special Capital Investments of Prentice Capital
Management, L.P. (“Prentice”), a private equity firm, since 2007. Mr.
Ciampi initially joined Prentice as a retail and consumer products consultant
working on business improvements, management oversight, and due diligence for
the firm’s special situation investments. Prior to joining Prentice,
he had a 10-year career with The Children’s Place organization; during that
period, he held various positions: Vice President – Store Development, Sr. Vice
President – Operations, and President of Disney Store – North
America. Previously, Mr. Ciampi was the Founder and Partner of DJM
Asset Management, a consulting company focused on retail real estate
repositioning, financial turn-arounds, and strategic growth
initiatives.
Barry
Erdos has
served as a director since February 2005. He has also served as the
Company’s President and Chief Operating Officer from January 2008 to December
2008 and is currently employed by the Company in a part-time, non-executive
capacity. In March 2009, Mr. Erdos was named as Chief Executive
Officer of FAO Schwartz, a specialty retailer of toys. From April
2004 to January 2007, Mr. Erdos was President and Chief Operating Officer of
Build a Bear Workshop, Inc., a specialty retailer of plush animals and related
products. Mr. Erdos was a director of Build a Bear Workshop, Inc. from July 2005
until January 2007. Mr. Erdos was the Chief Operating Officer and a
director of Ann Taylor Stores Corporation and Ann Taylor Inc., a women’s apparel
retailer, from November 2001 to April 2004. He was Executive Vice President,
Chief Financial Officer and Treasurer of Ann Taylor Stores
2
Corporation and Ann Taylor Inc. from 1999 to 2001. Prior to that,
he was Chief Operating Officer of J. Crew Group, Inc., a specialty retailer
of apparel, shoes and accessories, from 1998 to 1999.
Michael
Helfand was appointed to the Board of Directors in February 2009. Since
2007, Mr. Helfand has served as the Interim Chief Financial Officer of
Rothschild North America, Inc., a global investment bank. From 2006
to 2007, Mr. Helfand was the Executive Vice President of Finance at WRC Media,
Inc., a publishing company. From 2003 to 2008, Mr. Helfand was a
consultant for Resources Connection, Inc., a project-based professional services
firm.
Ann Jackson
has served as a director since August 2005. From February 2007 to February 2008,
Ms. Jackson served as the EVP, Global Director of Business Development of
Sotheby’s. From 2005 to 2007, Ms. Jackson was the Chief Executive
Officer of WRC Media, Inc. From 2003 to 2005, Ms. Jackson was a partner at
Ripplewood Holdings, a private equity fund. From 1980 to 2003, Ms.
Jackson worked in various departments and publications at Time, Inc. From 2002
to 2003, she served as Group President of InStyle, Real Simple, Parenting and
Essence Magazines. She is the founding publisher of InStyle, which
launched in 1994. During her tenure at Time, Inc., Ms. Jackson also
held positions in corporate finance, direct mail for Time-Life Books Europe,
served as business manager for Money Magazine and general manager for Sports
Illustrated and People.
Martin
Miller has served as a director since July 1991. Since July 1999, Mr.
Miller has served as the President of The Terbell Group, Inc., a consulting
company. From October 1997 to April 2003, Mr. Miller was a partner in the
Belvedere Fund, L.P., a fund of hedge funds.
Neal
Moszkowski has served as a director since August 1999. Since April 2005,
Mr. Moszkowski has served as co-Chief Executive Officer of TowerBrook Capital
Partners L.P. (“TowerBrook”), a private equity investment
company. Prior to the formation of TowerBrook, Mr. Moszkowski was
Co-Head of Soros Private Equity, the private equity investment business of Soros
Fund Management LLC (“Soros”), where he served since August
1998. From August 1993 to August 1998, Mr. Moszkowski worked for
Goldman, Sachs & Co., where he served as a Vice President and Executive
Director in the Principal Investment Area. Mr. Moszkowski currently serves as a
director of WellCare Health Plans, Inc., Integra Life Sciences Holdings
Corporation and Spheris, Inc.
Melissa
Payner-Gregor was appointed as the Company’s President in September 2003
and became Chief Executive Officer in August 2004. From December 2000 to March
2003, Ms. Payner served as CEO and President of Spiegel Catalog. She
was also a board member of The Spiegel Group, Inc. (“Spiegel”) from December
2000 to March 2003. From 1997 to 2000, Ms. Payner was the
Senior Vice President of Merchandising and Advertising of Spiegel. From 1995 to
1997, Ms. Payner was President and a board member of Chico FAS, Inc. Ms. Payner
has also held senior executive positions with Guess?, Inc., Pastille (a Division
of Neiman Marcus) and Henri Bendel.
Anthony
Plesner was appointed to the Board of Directors in February 2008.
Mr. Plesner has served as Chief Financial Officer and Chief Administrative
Officer of Intralinks, Inc., a provider of online workspaces for secure document
exchange, since April 2005. From August 2004 to March 2005 he worked as an
independent consultant through Snap Solutions. From January 2003 to
July 2004 he served as Chief Financial Officer and Chief Operating Officer of
The NewsMarket, an online video archive and delivery platform. From
January 2000 to December 2002 he served as President and Chief Operating Officer
of 24/7 Real Media, Inc., a NASDAQ-listed provider of interactive marketing and
technology services. Prior to that, he served as Senior Vice President of
Finance and Business Development at Medscape, Inc. Mr. Plesner holds a
Bachelor of Arts in Economics from the University of Manchester in England, and
a Master of Business Administration from the University of
Pittsburgh.
David
Wassong has served as a director since February 2001 and became Interim
Chairman of the Board of Directors in February 2007. Mr. Wassong is currently a
Managing Drector at Soros and previously was a partner of Soros Private Equity
which he joined in June 1998. Prior to joining Soros Private Equity, from July
1997 to June 1998, Mr. Wassong was Vice President, and previously Associate, at
Lauder Gaspar Ventures, LLC, a media, entertainment and
telecommunications-focused venture capital fund.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO ELECT THE
TEN DIRECTORS THAT HAVE BEEN NOMINATED TO THE BOARD OF DIRECTORS.
3
CORPORATE
GOVERNANCE
The Board
of Directors reviewed the independence of each of the Company’s directors in
March 2009 on the basis of the standards adopted by Nasdaq. During
this review, the Board of Directors considered transactions and relationships
between the Company, on the one hand, and each director, members of his or her
immediate family, and other entities with which he or she is affiliated, on the
other hand. The purpose of this review was to determine which of such
transactions or relationships were inconsistent with a determination that the
director is independent under the Nasdaq rules. As a result of this
review, the Board of Directors affirmatively determined that each of the
Company’s directors other than Ms. Payner and Mr. Erdos are “independent
directors” within the meaning of the Nasdaq rules.
During
the fiscal year ended December 31, 2008, the Board of Directors met 8 times and
acted by unanimous written consent 3 times. Each of the
directors participated in 75% or more of the aggregate number of meetings and/or
written consents of the Board of Directors and committee(s) on which he or she
served during the 2008 fiscal year. The Company does not have a policy with
regard to the attendance by directors at the Company’s annual meeting of
stockholders. Ms. Payner and Mr. Wassong attended last year’s annual
meeting of stockholders.
The Board
of Directors has established an Audit Committee (“Audit Committee”) in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). The Audit Committee is comprised of
Anthony Plesner, Michael Helfand and Martin Miller. Mr. Plesner acts
as Chairman of the Audit Committee. The Audit Committee is
responsible for the appointment of the Company’s independent registered public
accountants, examining the results of audits, reviewing internal accounting
controls and reviewing related party transactions. The duties of the
Audit Committee are fully set forth in the charter adopted by that committee, a
copy of which is available on the Company’s website. The Board of Directors
has determined that Mr. Plesner is an “audit committee financial expert,” as
defined by Item 407(d) of Regulation S-K of the Exchange Act, and that each
member of the Audit Committee is “independent,” as required by the Exchange Act
and the Nasdaq Marketplace Rules (the “Nasdaq Rules”). During the
fiscal year ended December 31, 2008, the Audit Committee met 4 times and acted
by unanimous written consent 1 time.
The
Compensation Committee has three members, consisting of Neal Moszkowski, Riad
Abrahams and Mario Ciampi, and met 2 times and acted by unanimous written
consent 11 times in fiscal 2008. The Compensation Committee is comprised solely
of non-employee directors, all of whom the Board of Directors has determined are
independent in accordance with the Nasdaq Rules. The Compensation
Committee does not have a written charter.
The
Compensation Committee’s responsibilities include, among other duties, the
responsibility to:
• establish
the base salary, incentive compensation and any other compensation for the
officers of the Company;
• monitor
the Company’s management incentive and stock based compensation plans,
retirement and welfare plans and discharge the duties imposed on the
Compensation Committee by the terms of those plans; and
• perform
other functions or duties deemed appropriate by the Board of
Directors.
The
agenda for meetings of the Compensation Committee is determined by its
Chairman. The Compensation Committee reports directly to the Board of
Directors. The Compensation Committee has the authority to engage and
from time to time has engaged independent consultants to advise on particular
aspects of compensation. The Compensation Committee has authority to
retain, terminate and approve fees for advisors, consultants and agents as it
deems necessary to assist in the fulfillment of its responsibilities. The
Compensation Committee reviews the total fees paid to outside consultants by the
Company to ensure that the consultant maintains its objectivity and independence
when rendering advice to the Compensation Committee.
The Board
of Directors also established a Nominating and Governance Committee (“Nominating
Committee”), consisting of David Wassong and Anthony Plesner. The
purposes of the Nominating Committee are to assist the Board of Directors by
identifying individuals qualified to become directors, and setting criteria for,
and evaluating, candidates for director nominees, and to recommend to the Board
of Directors the director nominees for election at the annual meetings of
stockholders or for appointments to fill vacancies; recommend to the Board of
Directors nominees for each committee of the Board of Directors; advise the
Board of Directors about appropriate composition of the Board of Directors and
its committees; advise the Board of Directors about and recommend to the Board
of Directors appropriate corporate governance practices and to assist the Board
of Directors in implementing those practices; lead the Board of Directors in its
annual review of the performance of the Board of Directors and its committees;
and perform such other functions as the Board of Directors may assign to it from
time to time. The duties of the Nominating Committee are fully set
forth in the charter adopted by that committee, a copy of which is available on
the Company’s website. The Nominating Committee met 3 times during
2008 and acted by unanimous written consent 1 time.
4
The
Nominating Committee will consider many factors when evaluating candidates for
the nomination to the Board of Directors, with the goal of fostering a Board of
Directors comprised of directors with a variety of experience and
backgrounds. Important factors that will be considered as part of the
Nominating Committee’s evaluation include (without limitation) diversity, skill,
specialized expertise, experience, business acumen, understanding of strategy
and policy-setting. Depending upon the Company’s then-current needs,
certain factors may be weighed more or less heavily. In considering
candidates for the Board of Directors, the Nominating Committee will consider
the entirety of each candidate’s credentials and does not have any specific
minimum qualifications that must be met. However, the Nominating
Committee does believe that all members of the Board of Directors should have
the highest character and integrity and sufficient time to devote to Company
matters.
The
Nominating Committee will consider persons recommended by stockholders as
candidates for nomination as a director. In evaluating such
nominations, the Nominating Committee will use the same selection criteria the
Nominating Committee uses to evaluate other potential
nominees. Recommendations should be submitted to the Secretary of the
Company. Each recommendation should include a personal biography of
the suggested candidate, an indication of the background or experience that
qualifies such person for consideration, and a statement that such person has
agreed to serve if nominated and elected. Stockholders who wish to
nominate a person for election to the Board of Directors themselves, rather than
recommending a candidate to the Nominating Committee for potential nomination by
the Board of Directors, must comply with applicable law.
Communication
by stockholders may be made to any or all of the members of the Board of
Directors by writing directly to them c/o Bluefly, Inc., 42 West 39th Street,
New York, New York 10018. All such communications will be relayed to
the appropriate members of the Board of Directors.
The
Company has adopted a Code of Ethics applicable to all directors, officers and
employees, which meets the requirements of a “code of ethics” as defined in Item
406 of Regulation S-K, and maintains procedures for the confidential, anonymous
submission by employees of complaints regarding the Company’s accounting,
internal accounting controls, auditing matters and other issues. A
copy of the Company’s code of ethics is available on the Company’s Web site at
www.bluefly.com. Any amendment to or waiver of a provision of the
code of ethics that applies to the Company’s principal executive officer,
principal financial officer, principal accounting officer, controller or persons
performing similar functions and relates to elements of the code specified in
the rules of the Securities and Exchange Commission (the “SEC”) will be posted
on the Web site.
5
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit
Committee met and held discussions with management and PricewaterhouseCoopers
LLP (“PwC”). The Audit Committee reviewed and discussed the audited
financial statements for fiscal 2008 with management and has discussed with the
independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communication with Audit
Committees.”
The
Company’s independent registered public accounting firm also provided to the
Audit Committee certain written communications and the letter required by PCAOB
Rule 3526, “Communications with Audit Committees Concerning
Independence.” The Audit Committee also discussed with the
independent registered public accounting firm their independence from the
Company.
Based on
the Audit Committee’s review and discussions described above, the Audit
Committee recommended to the Board of Directors that the Company’s audited
financial statements for fiscal 2008 be included in the Company’s Annual Report
on Form 10-K for fiscal 2008 filed with the SEC.
AUDIT
COMMITTEE
ANTHONY
PLESNER
MICHAEL
HELFAND
MARTIN
MILLER
6
SHARE
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following table sets forth certain information with respect to the beneficial
ownership of the Common Stock of the Company as of the Record Date for (i) each
person who is known by the Company to own beneficially more than 5% of the
Common Stock, (ii) each of the Company's directors, (iii) each of the Named
Executive Officers, (as defined under the caption “Executive Compensation”
below) and (iv) all directors and Named Executive Officers as a
group.
|
Name(1)
|
Number
of Shares
Beneficially
Owned
|
Percentage(2)
|
|||
|
Riad
Abrahams
|
2,625
|
(3)
|
*
|
||
|
Mario
Ciampi
|
750
|
(29)
|
*
|
||
|
Barry
Erdos
|
5,437
|
(4)
|
*
|
||
|
Michael
Helfand
|
1,875
|
(30)
|
*
|
||
|
Ann
Jackson
|
4,250
|
(5)
|
*
|
||
|
Kara
B. Jenny
|
52,537
|
(11)
|
*
|
||
|
Bradford
Matson
|
28,452
|
(6)
|
*
|
||
|
Martin
Miller
|
6,317
|
(7)(8)
|
*
|
||
|
Neal
Moszkowski(9)
|
5,875
|
(10)
|
*
|
||
|
Melissa
Payner-Gregor
|
277,208
|
(12)
|
2.0
|
%
|
|
|
Anthony
Plesner
|
2,437
|
(13)
|
*
|
||
|
David
Wassong(14)
|
8,000
|
(15)
|
*
|
||
|
SFM
Domestic Investments LLC
|
176,731
|
(16)
|
1.3
|
%
|
|
|
Quantum
Industrial Partners LDC
|
5,399,631
|
(17)(18)
|
37.5
|
%
|
|
|
George
Soros
|
5,576,362
|
(19)
|
38.8
|
%
|
|
|
Prentice
Capital Offshore, Ltd.(21)
|
905,147
|
(23)
|
6.5
|
%
|
|
|
S.A.C.
Capital Associates, LLC(20)
|
1,143,861
|
(22)
|
8.3
|
%
|
|
|
Prentice
Capital Management, LP(21)
|
3,038,627
|
(23)
|
21.9
|
%
|
|
|
Michael
Zimmerman(21)
|
3,038,627
|
(23)
|
21.9
|
%
|
|
|
Maverick
Fund, L.D.C.(24)
|
1,455,996
|
(26)
|
10.4
|
%
|
|
|
Maverick
Fund II, Ltd.(24)
|
1,270,536
|
(27)
|
9.1
|
%
|
|
|
Maverick
Fund USA, Ltd.(24)
|
641,840
|
(28)
|
4.6
|
%
|
|
|
All
directors and Named Executive Officers as a group (12
persons)
|
395,763
|
(25)
|
2.8
|
%
|
|
______________
*Less than 1%.
|
|
(1)
|
Except
as otherwise indicated, the address of each of the individuals listed is
c/o Bluefly, Inc., 42 West 39th Street, New York, New York
10018.
|
|
|
(2)
|
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities.
Shares of Common Stock issuable upon the exercise of options or warrants
currently exercisable or exercisable within 60 days of April 23, 2009 are
deemed outstanding for computing the percentage ownership of the person
holding such options or warrants but are not deemed outstanding for
computing the percentage ownership of any other
person.
|
|
|
(3)
|
Includes
750 shares of Restricted Stock granted under the Company’s 1997 Stock
Plan, 2000 Stock Plan and 2005 Stock Incentive Plan (collectively the
“Plans”).
|
|
|
(4)
|
Includes
4,500 shares of Common Stock issuable upon exercise of options. Excludes
62,500 shares underlying deferred stock units, which are vested or will
vest within 60 days of the Record Date, but are not deliverable within
such time.
|
|
|
(5)
|
Includes
1,000 shares of Common Stock issuable upon exercise of options and 750
shares of Restricted Stock granted under the
Plans.
|
|
|
(6)
|
Excludes
21,727 shares underlying deferred stock units, which are vested or will
vest within 60 days of the Record Date, but are not deliverable within
such time.
|
|
|
(7)
|
Includes
300 shares of Common Stock held by Madge Miller, the wife of Martin
Miller, as to which Mr. Miller disclaims beneficial
ownership.
|
7
|
|
(8)
|
Includes
3,125 shares of Common Stock issuable upon exercise of options and 750
shares of Restricted Stock granted under the
Plans.
|
|
|
(9)
|
Mr.
Moszkowski’s address is c/o, TowerBrook Capital Partners, L.P., 430 Park
Avenue New York, New York, 10022.
|
|
|
(10)
|
Includes
3,125 shares of Common Stock issuable upon exercise of options and 750
shares of Restricted Stock granted under the Plans. Certain of the options
are held for the benefit of QIP (as defined in note (17)
below).
|
|
|
(11)
|
Includes
34,288 shares of Common Stock issuable upon exercise of options. Excludes
8,851 shares underying deferred stock units, which are vested or will vest
within 60 days of the Record Date, but are not deliverable within such
time.
|
|
|
(12)
|
Includes
45,000 shares of Common Stock issuable upon exercise of options granted
under the Plans. Excludes 116,720 shares underlying deferred stock units,
which are vested or will vest within 60 days of the Record Date, but are
not deliverable within such time.
|
|
|
(13)
|
Includes
937 shares of Restricted Stock granted under the
Plans.
|
|
|
(14)
|
Mr.
Wassong’s address is c/o Soros Fund Management LLC, 888 Seventh Avenue,
33rd floor, New York, New York 10106. Mr. Wassong disclaims beneficial
ownership of the shares of Common Stock beneficially owned by George
Soros, SFMDI and QIP (as defined in notes (16) and (17) below) and none of
such shares are included in the table above as being beneficially owned by
him.
|
|
|
(15)
|
Includes
3,500 shares of Common Stock issuable upon exercise of options and 1,500
shares of Restricted Stock granted under the Plans. Certain of the options
are held for the benefit of QIP (as defined in note (17)
below).
|
|
|
(16)
|
Represents
159,074 shares of Common Stock and 1,432 shares of Common Stock issuable
upon the exercise of warrants and 16,225 shares of Common Stock
contingently issuable upon the exercise of convertible notes
(collectively, the “SFMDI Shares”) held in the name of SFM Domestic
Investments LLC (“SFMDI”). SFMDI is a Delaware limited
liability company. George Soros (“Mr. Soros”) may also be deemed the
beneficial owner of the SFMDI Shares. The principal address of
SFMDI is at 888 Seventh Avenue, 33rd Floor, New York, New York
10106. The foregoing information was derived, in part, from
certain publicly available reports, statements and schedules filed with
the SEC.
|
|
|
(17)
|
Represents
4,860,115 shares of Common Stock and 43,768 shares of Common Stock
issuable upon the exercise of warrants and 495,748 shares of Common Stock
contingently issuable upon the exercise of convertible notes
(collectively, the “QIP Shares”) held in the name of Quantum Industrial
Partners LDC (“QIP”). The number of shares beneficially owned by QIP does
not include the options held by Messrs. Moszkowski and Wassong held for
the benefit of QIP. See notes (10) and
(15).
|
|
|
(18)
|
QIP
is an exempted limited duration company formed under the laws of the
Cayman Islands with its principal address at Kaya Flamboyan 9, Willemstad,
Curacao, Netherlands Antilles. QIH Management Investor, L.P.
(“QIHMI”), an investment advisory firm organized as a Delaware limited
partnership, is a minority shareholder of, and is vested with investment
discretion with respect to portfolio assets held for the account of
QIP. The sole general partner of QIHMI is QIH Management LLC, a
Delaware limited liability company (“QIH Management”). Soros Fund
Management LLC, a Delaware limited liability company, is the sole managing
member of QIH Management Mr. Soros may be deemed to have shared voting
power and sole investment power with respect to the QIP
Shares. Accordingly, each of QIP, QIHMI, QIH Management, Soros
Fund Management LLC and Mr. Soros may be deemed to be the beneficial
owners of the QIP Shares. Each has their principal office at
888 Seventh Avenue, 33rd Floor, New York, New York 10106. The
foregoing information was derived, in part, from certain publicly
available reports, statements and schedules filed with the
SEC.
|
|
|
(19)
|
See
notes (16), (17) and (18) above. The number of shares beneficially owned
by Mr. Soros does not include the options held by Messrs. Moszkowski and
Wassong held for the benefit of QIP. See notes (10) and
(15).
|
|
|
(20)
|
The
address of S.A.C. Capital Associates, LLC, is 72 Cummings Point Road,
Stamford, CT 06902. The address of each of Prentice Capital Offshore,
Ltd., Prentice Capital Management, LP and Michael Zimmerman is 623 Fifth
Avenue, 32nd
Floor, New York, New York 10022.
|
|
|
(21)
|
Prentice
Capital Management, LP has investment and voting power with respect to the
securities held by Prentice Capital Offshore, Ltd. Mr. Michael
Zimmerman is the managing member of the general partner of Prentice
Capital Management, LP. Each of Prentice Capital Management, LP
and Mr. Zimmerman disclaim beneficial ownership of any of these
securities.
|
|
|
(22)
|
Pursuant
to an investment management agreement among S.A.C. Capital Advisors, LLC,
Prentice Capital Management, LP and Mr. Zimmerman, Prentice Capital
Management, LP manages an investment account that contains certain
securities, including those referenced herein, held by S.A.C. Capital
Associates, LLC (the “Managed Account”). The securities in the
Managed Account are held in the name of S.A.C. Capital Associates,
LLC. Prentice Capital Management, LP has, except in limited
circumstances, the power to vote or to direct the vote and to dispose or
to direct the disposition of the securities in the Managed Account,
including the securities referenced herein. Each of S.A.C. Capital
Advisors, LLC, S.A.C. Capital Management, LLC (investment managers to
S.A.C. Capital Associates, LLC), S.A.C Capital Associates, LLC and Mr.
Steven A. Cohen, who controls each of S.A.C. Capital Advisors, LLC and
S.A.C. Capital Management, LLC, disclaim beneficial ownership of any of
the securities held in the Managed Account, and each disclaims group
ownership with Prentice Capital Management, LP as to the securities held
in the Managed Account and as to any other securities that are
beneficially owned by Prentice Capital Management, LP or its
affiliates. Each of Prentice Capital Management, LP and Mr.
Zimmerman disclaim beneficial ownership of any securities held in the
Managed Account except to the extent of their pecuniary
interest.
|
8
|
|
(23)
|
Consists
of: (a) 81,678 shares held by Prentice Capital Partners, LP;
(b) 403,773 shares held by Prentice Capital Partners QP, LP; (c) 905,147
shares held by Prentice Capital Offshore, Ltd. (see note (21) above); (d)
1,143,861 shares held by S.A.C. Capital Associates, LLC (see note (22)
above); (e) 200,306 shares held by GPC XLIII, LLC; and (f) 303,862 shares
held by PEC I, LLC. Prentice Capital Management, LP and Mr. Zimmerman
control the investing and trading in securities held by each of these
entities. Each of Prentice Capital Management, LP and Mr.
Zimmerman disclaim beneficial ownership of any of these
securities.
|
|
|
(24)
|
Maverick
Capital, Ltd. is an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940 and, as such, has beneficial ownership of
the shares held by Maverick Fund USA, Ltd., Maverick Fund, L.D.C. and
Maverick Fund II, Ltd. through the investment discretion it exercises over
these accounts. Maverick Capital Management, LLC is the General Partner of
Maverick Capital, Ltd. Lee S. Ainslie III is the manager of Maverick
Capital Management, LLC who possesses sole investment discretion pursuant
to Maverick Capital Management, LLC's regulations. The address of Maverick
Capital, Ltd. and Maverick Capital Management, LLC is 300 Crescent Court,
18th Floor, Dallas, TX 75201; and the address of each of Lee S. Ainslie
III, Maverick Fund, L.D.C., Maverick Fund II, Ltd. and Maverick Fund USA,
Ltd. is c/o Maverick Capital, Ltd., 300 Crescent Court, 18th Floor,
Dallas, TX 75201.
|
|
|
(25)
|
Includes
94,538 shares of Common Stock issuable upon exercise of options and 8,062
shares of Restricted Stock granted under the Plans. Excludes 209,798
shares underlying deferred stock units, which are vested or will vest
within 60 days of the Record Date, but are not deliverable within such
time.
|
|
|
(26)
|
Represents
1,313,466 shares of Common Stock, 8,557 shares of Common Stock issuable
upon the exercise of warrants and 133,973 shares of Common Stock
contingently issuable upon the exercise of convertible notes held by
Maverick Fund, L.D.C.
|
|
|
(27)
|
Represents
1,146,158 shares of Common Stock, 7,467 shares of Common Stock issuable
upon the exercise of warrants and 116,910 shares of Common Stock
contingently issuable upon the exercise of convertible notes held by
Maverick Fund II, Ltd.
|
|
|
(28)
|
Represents
579,004 shares of Common Stock and 3,772 shares of Common Stock issuable
upon the exercise of warrants and 59,063 shares of Common Stock
contingently issuable upon the exercise of convertible notes held by
Maverick Fund USA, Ltd.
|
|
|
(29)
|
Includes
750 shares of Restricted Stock granted under the
Plans.
|
|
|
(30)
|
Includes
1,875 shares of Restricted Stock granted under the
Plans.
|
9
EXECUTIVE
OFFICERS OF THE COMPANY
The
following table sets forth the names, ages and all positions and offices with
the Company held by the Company’s present executive officers.
|
Name
|
Age
|
Positions
and Offices Presently Held
|
|
Melissa
Payner-Gregor
|
50
|
Chief
Executive Officer
|
|
Kara
B. Jenny
|
39
|
Chief
Financial Officer
|
|
Martin
Keane
|
44
|
Sr.
VP of
eCommerce
|
________________
Following
is information with respect to the Company’s executive officers who are not also
directors of the Company:
Kara B.
Jenny has served as the Company’s Chief Financial Officer since March
2008. Ms. Jenny was Vice President of Finance from May 1999 to March
2008. Prior to that, she was an Audit Manager at Arthur Andersen LLP. She is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants.
Martin
Keane served as the Company’s Vice President of Product Development
and E-Commerce from January 1999 through September 2004 when he
assumed the role of Senior Vice President of E-Commerce. From 1997
to 1999, Mr. Keane was the Design Director for Music Boulevard, an
E-Commerce site owned by N2K, Inc. From 1990 to 1997, Mr. Keane
served as Regional Manager for APCO Graphics, an architectural graphics
company.
10
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information for the fiscal years ended December 31,
2008 and 2007 concerning compensation of (1) all individuals serving as our
principal executive officer during the fiscal year ended December 31, 2008, (2)
the two other most highly compensated executive officers of the Company who were
serving as executive officers as of December 31, 2008, and (3) one additional
individual who would have been among the two most highly compensated executive
officers of the Company had he still been serving as an executive officer as of
December 31, 2008 (collectively, the “Named Executive Officers”):
|
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Stock
Options
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||
|
(1)
|
(1)
|
|||||||||||||||||||||||||
|
Melissa
Payner – Gregor
Chief Executive
Officer
|
2008
|
$
|
500,000
|
$
|
223,421
|
(2)
|
$
|
--
|
$
|
--
|
$
|
67,625
|
(3)
|
$
|
791,046
|
|||||||||||
|
2007
|
$
|
500,000
|
$
|
166,804
|
(4)
|
$
|
--
|
$
|
--
|
$
|
62,471
|
(3)
|
$
|
729,275
|
||||||||||||
|
Barry
Erdos(7)
President / Chief
Operating
Officer
|
2008
|
$
|
378,000
|
$
|
49,381
|
(5)
|
$
|
312,500
|
(6)
|
$
|
--
|
$
|
20,000
|
(9)
|
$
|
759,881
|
||||||||||
|
2007
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||||||||
|
Kara
B. Jenny
Chief Financial
Officer
|
2008
|
$
|
239,000
|
$
|
--
|
$
|
--
|
$
|
59,900
|
(8)
|
$
|
7,236
|
(9)
|
$
|
306,136
|
|||||||||||
|
2007
|
$
|
186,000
|
$
|
50,000
|
(14)
|
$
|
70,129
|
(15)
|
$
|
--
|
$
|
3,972
|
(9)
|
$
|
310,101
|
|||||||||||
|
Bradford
Matson(13)
Chief Marketing
Officer
|
2008
|
$
|
350,000
|
$
|
227,038
|
(10)
|
$
|
--
|
$
|
--
|
$
|
8,231
|
(9)
|
$
|
585,269
|
|||||||||||
|
2007
|
$
|
350,000
|
$
|
120,000
|
(11)
|
$
|
208,478
|
(12)
|
$
|
--
|
$
|
12,129
|
(9)
|
$
|
690,607
|
|||||||||||
______________
|
|
(1)
|
For
a discussion of the assumptions made in the valuation of the Stock and
Option Awards, see Note 11 of the Notes to Financial Statements, included
in our annual report on Form 10-K for the fiscal year ended December 31,
2008.
|
|
|
(2)
|
Represents
(a) a bonus of $200,000 for the fiscal year ended December 31, 2008 and
(b) a bonus of $23,421 in order to cover taxes incurred in connection with
the vesting of deferred stock
units.
|
|
|
(3)
|
Includes
$48,000 paid in 2008 and 2007 in connection with a housing allowance and
$19,625 and $14,471 paid in 2008 and 2007, respectively, in connection
with life insurance premiums.
|
|
|
(4)
|
Represents
(a) a bonus of $66,804 in order to cover taxes incurred in connection with
the vesting of deferred stock units and (b) a bonus of $100,000 awarded in
March 2008 for the fiscal year ended December 31,
2007.
|
|
|
(5)
|
Represents
(a) a bonus of $5,381 in order to cover taxes incurred in connection with
the vesting of deferred stock units and (b) a signing bonus of $44,000 to
join the Company as President and Chief Operating
Officer.
|
|
|
(6)
|
Represents
the value of vested deferred stock units granted in January
2008.
|
|
|
(7)
|
Mr.
Erdos resigned as President and Chief Operating Officer in December
2008. Mr. Erdos continues to serve as a director and a
non-executive, part-time employee of the
Company.
|
|
|
(8)
|
Represents
the value of Stock Option Awards granted to Ms. Jenny in March
2008.
|
|
|
(9)
|
Represents
amounts paid in connection with life insurance
premiums.
|
|
|
(10)
|
Represents
(a) a bonus of $115,000 paid in March 2009 for the fiscal year ended
December 31, 2008 in connection with Mr. Matson’s termination agreement
and (b) $112,038 in connection with a housing
allowance.
|
|
|
(11)
|
Represents
(a) a bonus of $70,000 paid in March 2008 for the fiscal year ended
December 31, 2007 and (b) a relocation bonus of
$50,000.
|
|
|
(12)
|
Represents
the value of the following awards granted during the year ended December
31, 2007: (a) 5,186 shares of Restricted Stock granted to Mr. Matson in
February 2007 pursuant to the Company’s Offer to Exchange, in exchange for
Mr. Matson forfeiting his rights to certain fully vested stock options
that would have been exercisable to purchase an aggregate of 12,240 shares
of Common Stock; and (b) 18,506 Deferred Stock units granted in February
2007 pursuant to the Company’s Offer to Exchange, in exchange for Mr.
Matson forfeiting his rights to certain unvested options that would have
been exercisable to purchase an aggregate of 27,760 shares of Common
Stock.
|
|
|
(13)
|
Mr.
Matson resigned as Chief Marketing Officer in January
2009.
|
|
|
(14)
|
Represents
(a) a bonus of $50,000 paid in March 2008 for the fiscal year ended
December 31, 2007.
|
11
|
|
(15)
|
Represents
the value of the following awards granted during the year ended December
31, 2007: (a) 4,494 shares of Restricted Stock granted to Ms. Jenny in
February 2007 pursuant to the Company’s Offer to Exchange, in exchange for
Ms. Jenny forfeiting her rights to certain fully vested stock options that
would have been exercisable to purchase an aggregate of 15,458 shares of
Common Stock; and (b) 1,028 Deferred Stock Units granted in February 2007
pursuant to the Company’s Offer to Exchange, in exchange for Ms. Jenny
forfeiting her rights to certain unvested stock options that would have
been exercisable to purchase an aggregate of 1,542 shares of Common
Stock.
|
Based on
the fair value of equity awards granted to named executive officers in 2008 and
2007, and the base salary of the named executive officers:
(a) “Salary” accounted for approximately 60% and 63% of the total
compensation of the named executive officers in 2008 and 2007, respectively; (b)
incentive compensation accounted for approximately 36% and 32% of the total
compensation of the named executive officers in 2008 and 2007, respectively; and
(c) other benefits accounted for approximately 4% and 5% of the total
compensation of named executive officers in 2008 and 2007,
respectively. Because the value of certain equity awards included
below is based on the provisions of Statement of Financial Accounting Standards
No. 123 (revised 2004), Share-based Payment, rather
than the fair value, these percentages cannot be derived using the amounts
reflected in the applicable table above.
Employment
Agreements
Melissa Payner
On
November 14, 2006, the Company entered into a thirty-six (36) month employment
agreement (the "Payner Agreement") with Melissa Payner providing for her
continued service as its Chief Executive Officer and a member of our Board of
Directors. The Payner Agreement was effective as of July 1, 2006 and replaced
Ms. Payner's prior employment agreement, which would have expired on March 1,
2007. If the Company does not provide Ms. Payner with written notice of its
desire to renew the Payner Agreement at least 90 days prior to the then-current
term (including any one year renewal term), the Payner Agreement shall
automatically extend from one year from the end of the then-current term. The
Company did not provide such notice to Ms. Payner at least 90 days prior to July
1, 2009 and, therefore, the Payner Agreement shall automatically extend for a
one year period following July 1, 2009. Under the Payner Agreement,
Ms. Payner is entitled to an annual base salary of $500,000, subject to
increases in the sole discretion of the Compensation Committee. She is also
eligible to receive an annual performance bonus based upon the achievement of
certain targets to be set for each fiscal year by the Compensation Committee in
its sole discretion.
In the
event of a change of control (as defined in the Payner Agreement), any unvested
stock options, restricted stock awards and one-half of any deferred stock unit
awards granted to Ms. Payner which are outstanding as of the date of the change
of control and have not yet vested (the "Payner COC Unvested DSUs") shall be
deemed fully vested as of the date of the change of control. The remaining
one-half of the Payner COC Unvested DSUs shall vest on the earliest to occur of:
(a) the scheduled vesting date and (b) twelve (12) months from the date of the
change of control. In the event that Ms. Payner would be subject to tax under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
payments to her under the Payner Agreement will be reduced to the maximum amount
that she could receive without being subject to such tax.
The
Payner Agreement provides Ms. Payner with a monthly housing allowance of $4,000
and an annual allowance of approximately $27,500 for life insurance and
supplemental disability insurance. Ms. Payner is subject to certain covenants
under the Payner Agreement, including a non-competition covenant covering the
term of her employment and an additional period of eighteen (18) months
thereafter.
Kara
B. Jenny
On March
19, 2008, the Company entered into an amended and restated employment agreement
(the "Jenny Agreement") with Kara Jenny providing for her service as Chief
Financial Officer of the Company. The Jenny Agreement amends and restates the
earlier employment agreement between the Company and Ms. Jenny, which covered
her service as Vice President of Finance of the Company and was set to expire in
June 2008. The Jenny Agreement has a term ending on March 31, 2011.
12
Pursuant
to the Jenny Agreement, Ms. Jenny is entitled to an annual base salary of
$250,000, subject to increases in the sole discretion of the Compensation
Committee. Ms. Jenny is eligible to receive an annual performance bonus in an
amount determined by the Compensation Committee in its sole
discretion. During the term of the Jenny Agreement, Ms. Jenny shall
be eligible to participate in all medical and other employee benefit plans of
the Company on the same terms and conditions as those offered to other senior
executive officers of the Company; additionally, the Company shall provide Ms.
Jenny with an annual allowance of $10,000 for the purchase of life insurance and
disability insurance. The Jenny Agreement provided for a one-time grant to Ms.
Jenny of incentive stock options under the Company's 2005 Stock Incentive Plan
to purchase 20,000 shares of Common Stock at an exercise price equal to the fair
market value on the date of grant. Such options vest in thirty-six equal monthly
installments, subject to accelerated vesting in the event that her employment is
terminated following a Change of Control (as defined in the Jenny
Agreement).
Pursuant
to the Jenny Agreement, if Ms. Jenny's employment is terminated without Cause
(as defined in the Jenny Agreement) or as a result of a Constructive Termination
(as defined in the Jenny Agreement), she would be entitled to receive her base
salary through the date of termination, plus unreimbursed business expenses and
bonuses that have been earned and awarded but not yet paid, as well as her
then-current base salary for 180 days from the date of termination (the
"Severance Period"). In addition, if Ms. Jenny's employment is terminated
without Cause or as a result of a Constructive Termination, the Company shall
maintain in effect the medical and dental insurance and hospitalization plans of
the Company as well as any Company sponsored life insurance policy in which Ms.
Jenny participates as of the date of such termination for one year from the date
of termination.
In the
event that Ms. Jenny would be subject to tax under Section 4999 of the Code, the
payments to her under the Jenny Agreement will be reduced to the maximum amount
that she could receive without being subject to such tax. Ms. Jenny is subject
to certain covenants under the Jenny Agreement, including a non-competition and
non-solicitation covenant covering the term of her employment and an additional
period of two (2) years thereafter.
13
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information concerning exercisable and unexercised
stock options and unvested stock awards as of December 31, 2008 for each of the
Named Executive Officers:
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END — DECEMBER 31, 2008
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units of
Stock
that
have not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock that
have not
Vested
($)
|
||||||||||||||||||||
|
Name
|
|||||||||||||||||||||||||
|
Melissa
Payner-Gregor
|
20,000
|
--
|
$
|
12.60
|
3/23/2015
|
||||||||||||||||||||
|
25,000
|
--
|
$
|
12.00
|
12/27/2015
|
|||||||||||||||||||||
|
46,685
|
(1)
|
$
|
33,613
|
(1)
|
|||||||||||||||||||||
|
Barry Erdos
|
3,250
|
(2)
|
--
|
$
|
13.40
|
2/18/2015
|
|||||||||||||||||||
|
1,250
|
(2)
|
--
|
$
|
11.40
|
2/17/2016
|
||||||||||||||||||||
|
Kara B.
Jenny
|
24,000
|
--
|
$
|
9.10
|
12/26/2012
|
||||||||||||||||||||
|
2,500
|
--
|
$
|
12.60
|
3/23/2015
|
|||||||||||||||||||||
|
5,008
|
14,992
|
(3)
|
$
|
4.60
|
3/31/2018
|
||||||||||||||||||||
|
3,666
|
$
|
2,640
|
(4)
|
||||||||||||||||||||||
|
Bradford
Matson
|
10,000
|
(5)
|
--
|
$
|
12.00
|
12/27/2015
|
|||||||||||||||||||
______________
|
|
(1)
|
Represents
46,685 shares underlying unvested deferred stock units valued using the
closing price ($0.72) of the Company’s Common Stock as of December 31,
2008.
|
|
|
(2)
|
All
outstanding unexercised option awards were forfeited in January
2009.
|
|
|
(3)
|
The
option vests at a rate of 2.778% per month for 36 months beginning March
31, 2008 after six months.
|
|
|
(4)
|
Represents
3,666 shares underlying unvested deferred stock units valued using the
closing price ($0.72) of the Company’s Common Stock as of December 31,
2008.
|
|
|
(5)
|
All
outstanding unexercised option awards were forfeited in February 2009 and
all unvested stock awards were forfeited in January
2009.
|
14
Potential
Payments Upon Termination or Change-in-Control
We
have entered into agreements that will require us to provide compensation to
certain of the Named Executive Officers in the event of a termination of
employment or a change in control of the Company. See “Employment Agreements”
for a description of such agreements. The amount of compensation payable to each
Named Executive Officer in each situation is listed in the tables below, if
their employment were to have been terminated as of December 31,
2008.
The
following table describes and quantifies the estimated payments and benefits
that would have been provided upon termination or a change in control of the
Company as of December 31, 2008 for Melissa Payner, our Chief Executive
Officer:
|
Termination
|
||||||||||||||||
|
Benefits
and Payments
|
Employment
Agreement
Severance
(1)
|
Death
|
Disability
|
Change
in Control (2)
|
||||||||||||
|
Base
Salary
|
$
|
500,000
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||
|
Stock
Options (Accelerated Vesting)(3)
|
--
|
--
|
--
|
--
|
||||||||||||
|
Deferred
Stock Units (Accelerated Vesting)(3)
|
--
|
--
|
--
|
11,671
|
||||||||||||
|
Insurance
Proceeds(4)
|
--
|
3,000,000
|
90,000
|
--
|
||||||||||||
|
Insurance
Premiums (Life, Health and Disability)(5)
|
27,500
|
--
|
--
|
--
|
||||||||||||
|
Total
|
$
|
527,500
|
$
|
3,000,000
|
$
|
90,000
|
$
|
11,671
|
||||||||
______________
|
|
(1)
|
Ms.
Payner’s employment agreement provides her with the severance payments
upon (1) termination of employment by the Company without “Cause” and (2)
termination of employment by Ms. Payner as a result of a “Constructive
Termination.”
|
|
|
Under
the Payner Agreement: (a) “Cause” shall be deemed to occur if
Ms. Payner (i) has been convicted of a felony or any serious crime
involving moral turpitude, or engaged in materially fraudulent or
materially dishonest actions in connection with the performance of her
duties under the Payner Agreement, (ii) has willfully and materially
failed to perform her reasonably assigned duties under the Payner
Agreement, (iii) has breached the terms and provisions of the Payner
Agreement in any material respect or (iv) has failed to comply in any
material respect with the Company’s written policies of conduct of which
she had actual notice, including with respect to trading in securities
(subject to a 20-day notice period and opportunity to cure in the case of
an event of the type described in clauses (ii)-(iv)); and (b) a
“Constructive Termination” shall be deemed to have occurred upon (i) the
removal of Ms. Payner from her position as Chief Executive Officer of the
Company, (ii) the material breach by the Company of the Payner Agreement,
including any material diminution in the nature or scope of the
authorities, powers, functions duties or responsibilities of Ms. Payner as
Chief Executive Officer and a senior executive officer of the Company (or
to the extent that the Company becomes a division or subsidiary of another
entity, the authorities, powers, functions, duties or responsibilities of
the Chief Executive Officer or senior executive officer of such division
or subsidiary (subject to a 30-day notice period and opportunity to
cure).
|
|
|
Receipt
of severance benefits is subject to Ms. Payner’s execution of a mutual
release reasonably acceptable to the Company and Ms.
Payner.
|
|
|
(2)
|
Under
the Payner Agreement, a “Change in Control” shall be deemed to occur
upon:
|
|
|
(1)
|
the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more (on a fully diluted basis) of either (A) the then
outstanding shares of common stock of the Company, taking into account as
outstanding for this purpose such common stock issuable upon the exercise
of options or warrants, the conversion of convertible stock or debt, and
the exercise of any similar right to acquire such common stock (the
“Outstanding Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”), provided, however, that for purposes of the
Payner Agreement, the following acquisitions shall not constitute a Change
of Control: (I) any acquisition by the Company or any
affiliate, (II) any acquisition by any employee benefit plan
|
15
| sponsored or maintained by the Company or any affiliate, (III) any acquisition by Soros or (IV) any acquisition which complies with clauses (A), (B) and (C) of clause (5) below; | ||
|
|
(2)
|
individuals
who, on the date of the Payner Agreement, constitute the Board of
Directors (the “Incumbent Directors”) cease for any reason to constitute
at least a majority of the Board of Directors, provided that any person
becoming a director subsequent to such date, whose election or nomination
for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board of Directors (either by a specific
vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director, provided, however, that
no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board of
Directors shall be deemed to be an Incumbent
Director;
|
|
|
(3)
|
the
dissolution or liquidation of the
Company;
|
|
|
(4)
|
the
sale of all or substantially all of the business or assets of the Company;
or
|
|
|
(5)
|
the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company that requires
the approval of the Company’s stockholders, whether for such transaction
or the issuance of scurrilities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A)
more than fifty percent (50%) of the total voting power of (x) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of sufficient voting
securities eligible to select a majority of the directors of all the
Surviving Corporation (the “Parent Corporation”), is represented by the
Outstanding Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by
shares into which the Outstanding Company voting Securities were converted
pursuant to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the voting
power of the Company’s Voting securities among the holders thereof
immediately prior to the Business Combination, (B) no person or entity
(other than Soros or any employee benefit plan sponsored or maintained by
the Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of thirty percent (30%) or more
of the total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Board members at the time of the Board’s
approval of the execution of the initial agreement providing for such
Business Combination.
|
|
|
(3)
|
Pursuant
to the Payner Agreement: (a) all unvested stock
options, deferred stock units and shares of restricted stock
granted to Ms. Payner vest upon a termination without “Cause” or a
“Constructive Termination; and (b) all stock options, restricted stock and
one half of any deferred stock units and granted to Payner
which are outstanding as of the date of a Change of Control and have not
yet vested (“COC Unvested Awards”) shall be deemed to be fully vested as
of that date, and (subject to certain tax limitations) the remaining one
half of the COC Unvested Awards shall vest on the earliest to occur of (x)
the scheduled vesting date and (y) twelve (12) months from the date of
such Change of Control, subject, in each case, to Ms. Payner’s continued
employment with the Company on such dates and (z) Ms. Payner’s
Constructive Termination or termination without Cause following such
Change of Control.
|
|
|
The
dollar values in the table assume that the benefit of acceleration of the
deferred stock units equals the closing sale price of the Common Stock on
December 31, 2008 ($0.72) multiplied by the number of shares of Common
Stock subject to unvested deferred stock units held by Ms. Payner at
December 31, 2008. Options were excluded as they were out of the money,
and as of December 31, 2008, all Restricted Stock awards had previously
vested.
|
|
|
(4)
|
The
life insurance proceeds represent the aggregate face value of life
insurance policies for which we pay the premiums and Ms. Payner is
designated as the beneficiary. The payments are actually paid by the life
insurance company in a lump sum.
|
|
|
The
disability insurance proceeds represent the annual payout of disability
policies for which we pay the
premiums.
|
|
|
(5)
|
These
premiums are paid by us when due for one year after termination. The
numbers in the table are based on the premiums paid in fiscal
2008.
|
16
The
following table describes and quantifies the estimated payments and benefits
that would have been provided upon termination or a change in control of the
Company as of December 31, 2008 for Kara B. Jenny, our Chief Financial
Officer:
|
Termination
|
||||||||||||||||
|
Benefits
and Payments
|
Employment
Agreement
Severance
(1)
|
Death
|
Disability
|
Change
in Control (2)
|
||||||||||||
|
Base
Salary
|
$
|
125,000
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||
|
Stock
Options (Accelerated Vesting)(3)
|
--
|
--
|
--
|
--
|
||||||||||||
|
Deferred
Stock Units (Accelerated Vesting)(3)
|
--
|
--
|
--
|
1,320
|
||||||||||||
|
Insurance
Proceeds(4)
|
--
|
2,500,000
|
--
|
--
|
||||||||||||
|
Insurance
Premiums (Life, Health and Disability)(5)
|
10,000
|
--
|
--
|
--
|
||||||||||||
|
Total
|
$
|
135,000
|
$
|
2,500,000
|
$
|
--
|
$
|
1,320
|
||||||||
______________
|
|
(1)
|
Ms.
Jenny’s employment agreement provides her with the severance payments upon
(1) termination of employment by the Company without “Cause” and (2)
termination of employment by Ms. Jenny as a result of a “Constructive
Termination.”
|
|
|
Under
the Jenny Agreement: (a) “Cause” shall be deemed to occur if
Ms. Jenny (i) has been convicted of a felony or any serious crime
involving moral turpitude, or engaged in materially fraudulent or
materially dishonest actions in connection with the performance of her
duties under the Jenny Agreement, (ii) has willfully and materially failed
to perform her reasonably assigned duties under the Jenny Agreement, (iii)
has breached the terms and provisions of the Jenny Agreement in any
material respect or (iv) has failed to comply in any material respect with
the Company’s written policies of conduct of which she had actual notice,
including with respect to trading in securities (subject to a 20-day
notice period and opportunity to cure in the case of an event of the type
described in clauses (ii)-(iv)); and (b) a “Constructive Termination”
shall be deemed to have occurred upon (i) the removal of Ms. Jenny from
her position as Chief Financial Officer of the Company, (ii) the material
breach by the Company of the Jenny Agreement, including any material
diminution in the nature or scope of the authorities, powers, functions
duties or responsibilities of Ms. Jenny as Chief Executive Officer and a
senior executive officer of the Company (or to the extent that the Company
becomes a division or subsidiary of another entity, the authorities,
powers, functions, duties or responsibilities of the Chief Financial
Officer or senior executive officer of such division or subsidiary
(subject to a 30-day notice period and opportunity to
cure).
|
|
|
Receipt
of severance benefits is subject to Ms. Jenny’s execution of a mutual
release reasonably acceptable to the Company and Ms.
Jenny.
|
|
|
Pursuant
to the Jenny Agreement, Ms. Jenny is provided a severance payment of her
then-current salary for 180 days.
|
|
|
(2)
|
Under
the Jenny Agreement, a “Change in Control” shall be deemed to occur
upon:
|
|
|
(1)
|
the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more (on a fully diluted basis) of either (A) the then
outstanding shares of common stock of the Company, taking into account as
outstanding for this purpose such common stock issuable upon the exercise
of options or warrants, the conversion of convertible stock or debt, and
the exercise of any similar right to acquire such common stock (the
“Outstanding Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”), provided, however, that for purposes of the Jenny
Agreement, the following acquisitions shall not constitute a Change of
Control: (I) any acquisition by the Company or any affiliate,
(II) any acquisition by any employee benefit plan sponsored or maintained
by the Company or any affiliate, (III) any acquisition by Soros or (IV)
any acquisition which complies with clauses (A), (B) and (C) of clause (5)
below;
|
17
|
|
(2)
|
individuals
who, on the date of the Jenny Agreement, constitute the Incumbent
Directors cease for any reason to constitute at least a majority of the
Board of Directors, provided that any person becoming a director
subsequent to such date, whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then
on the Board of Directors (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall be an
Incumbent Director, provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an actual
or threatened election contest with respect to directors or as a result of
any other actual or threatened solicitation of proxies or consents by or
on behalf of any person other than the Board of Directors shall be deemed
to be an Incumbent Director;
|
|
|
(3)
|
the
dissolution or liquidation of the
Company;
|
|
|
(4)
|
the
sale of all or substantially all of the business or assets of the Company;
or
|
|
|
(5)
|
the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company that requires
the approval of the Company’s stockholders, whether for such transaction
or the issuance of scurrilities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A)
more than fifty percent (50%) of the total voting power of (x) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of sufficient voting
securities eligible to select a majority of the directors of all the
Surviving Corporation (the “Parent Corporation”), is represented by the
Outstanding Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by
shares into which the Outstanding Company voting Securities were converted
pursuant to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the voting
power of the Company’s Voting securities among the holders thereof
immediately prior to the Business Combination, (B) no person or entity
(other than Soros or any employee benefit plan sponsored or maintained by
the Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of thirty percent (30%) or more
of the total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Board members at the time of the Board’s
approval of the execution of the initial agreement providing for such
Business Combination.
|
|
|
(3)
|
Pursuant
to the Jenny Agreement: (a) all unvested stock
options, deferred stock units and shares of restricted stock
granted to Ms. Jenny vest upon a termination without “Cause” or a
“Constructive Termination; and (b) all stock options, restricted stock and
one half of any deferred stock units and granted to Jenny which
are outstanding as of the date of a Change of Control and have not yet
vested (“COC Unvested Awards”) shall be deemed to be fully vested as of
that date, and (subject to certain tax limitations) the remaining one half
of the COC Unvested Awards shall vest on the earliest to occur of (x) the
scheduled vesting date and (y) twelve (12) months from the date of such
Change of Control, subject, in each case, to Ms. Jenny’s continued
employment with the Company on such dates and (z) Ms. Jenny’s Constructive
Termination or termination without Cause following such Change of
Control.
|
|
|
The
dollar values in the table assume that the benefit of acceleration of the
deferred stock units equals the closing sale price of the Common Stock on
December 31, 2008 ($0.72) multiplied by the number of shares of Common
Stock subject to unvested deferred stock units held by Ms. Jenny at
December 31, 2008. Options were excluded as they were out of the money,
and as of December 31, 2008, all Restricted Stock awards had previously
vested.
|
|
|
(4)
|
The
life insurance proceeds represent the aggregate face value of life
insurance policies for which we pay the premiums and Ms. Jenny is
designated as the beneficiary. The payments are actually paid by the life
insurance company in a lump sum.
|
|
|
The
disability insurance proceeds represent the annual payout of disability
policies for which we pay the
premiums.
|
|
|
(5)
|
These
premiums are paid by us when due for one year after termination. The
numbers in the table are based on the premiums paid in fiscal
2008.
|
18
Compensation
of Directors
The
following table sets forth information concerning the compensation of our
directors for the fiscal year ended December 31, 2008:
DIRECTOR
COMPENSATION — YEAR ENDED DECEMBER 31, 2008
|
Name
(1)
|
Fees
Earned
or
Paid
in
Cash
($)
|
Restricted
Stock
Awards
($)
(2)
|
Total
($)
|
||||||||||
|
Riad
Abrahams
|
$ | -- | $ | 3,375 | $ | 3,375 | |||||||
|
Mario
Ciampi(3)
|
-- | 2,408 | 2,408 | ||||||||||
|
Ann
Jackson
|
16,000 | 3,375 | 19,375 | ||||||||||
|
Christopher
McCann(4)
|
14,500 | 3,375 | 17,875 | ||||||||||
|
Martin
Miller
|
16,000 | 3,375 | 19,375 | ||||||||||
|
Neal
Moszkowski
|
-- | 3,375 | 3,375 | ||||||||||
|
Anthony
Plesner
|
18,000 | 6,450 | 24,450 | ||||||||||
|
David
Wassong
|
-- | 6,750 | 6,750 | ||||||||||
______________
|
|
(1)
|
Ms.
Payner and Mr. Erdos are not included in the table as they are also Named
Executive Officers in the Summary Compensation Table. They receive no
additional compensation for their service as a Director of the
Company. Furthermore, Mr. Helfand is also not included in the
table as he was appointed to the Board of Directors in
2009.
|
|
|
(2)
|
Represents
the grant date fair value of the following Restricted Stock Awards all of
which were issued pursuant to the terms of the 2005 Stock Incentive Plan:
750 shares of Restricted Stock issued to Mr. Abrahams; 750 shares of
Restricted Stock issued to Ms. Jackson; 750 shares of Restricted Stock
issued to Mr. McCann; 750 shares of Restricted Stock issued to Mr. Miller;
750 shares of Restricted Stock issued to Mr. Moszkowski; 1,500 shares of
Restricted Stock issued to Mr. Plesner; and 1,500 shares of Restricted
Stock issued to Mr. Wassong.
|
|
|
(3)
|
Mr.
Ciampi was appointed to the Board of Directors in August 2008 and was
granted 1,125 shares of Restricted Stock pursuant to the terms of the 2005
Stock Incentive Plan.
|
|
|
(4)
|
Mr.
McCann resigned as Director of the Company in February
2009.
|
The Company's independent, outside
non-employee directors (other than Messrs. Abrahams, Ciampi and Wassong who are
designated under the Company’s Voting Agreement with Soros, Maverick and
Prentice) are paid a cash stipend of $1,500 for each board or committee meeting
attended in person (and, in the case of the Audit Committee Chairman, $2,000 per
audit committee meeting) and are reimbursed for expenses incurred on behalf of
the Company. In addition, each such director is paid an annual retainer of
$10,000 at the first regularly scheduled Board of Directors meeting of each
fiscal year. The maximum aggregate stipend and retainer paid to any such
director in a year is $16,000 (or, in the case of the Audit Committee Chairman,
$18,000). In March 2009, in order to assist the Company’s efforts to
maintain the best liquidity position possible, the Board of Directors
unanimously agreed that annual retainers would be suspended (other than the
retainer paid to Mr. Helfand for 2009) until such time as the Board of Directors
deems appropriate.
Under
the terms of the 2005 Stock Incentive Plan, each non-employee director
(including Messrs. Abrahams, Ciampi and Wassong) receives a one-time grant of
1,125 shares of Restricted Stock (1,875 shares in the case of the Chairman of
the Board of Directors and 1,500 shares in the case of the Chairman of the Audit
Committee) at the time of the first regularly scheduled Board meeting after such
director is appointed to the Board of Directors and an annual restricted stock
grant of 750 shares of Common Stock (1,500 shares in the case of the Chairman of
the Board of Directors and 937 shares in the case of the Chairman of the Audit
Committee) at the first regularly scheduled Board meeting of each fiscal year
(even if such director is receiving a restricted stock grant in connection with
his or her appointment at such meeting). All such restricted stock
grants vest on the one year anniversary of the date of grant.
19
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our officers and directors, and persons who own
more than ten percent of a registered class of our equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) reports they file.
Based solely on a review of the copies of such reports furnished to us during or
with respect to fiscal 2008, or written representations that no Forms 5 were
required, we believe that during the fiscal year ended December 31, 2008 all
Section 16(a) filing requirements applicable to our officers, directors and
greater than ten-percent beneficial owners were complied with.
Certain
Relationships and Related Transactions
Review
and Approval of Related Person Transactions
Our
Code of Ethics and Standards of Business Conduct applies to all directors and
employees (including our named executive officers). Under the Code of
Ethics and Standards of Business Conduct, all employees are required to take all
reasonable efforts to identify actual or potential conflicts of interest between
Company interests and their personal or professional relationships and to bring
such conflicts to the attention of the Company’s counsel. Members of
the Board of Directors who have any personal interest in a transaction upon
which the Board of Directors passes are required to disclose such interest to
the other directors and to recuse themselves from participation in any decision
in which there is a conflict between their personal interests and our
interests.
Our
Audit Committee reviews any related party transaction and transactions involving
conflicts of interest with officers and directors whenever possible in advance
of the creation of such transaction or conflict, unless either the Compensation
Committee or a another committee of the Board of Directors, consisting of
independent directors has previously reviewed such transaction.
Related Person
Transactions
Except as set forth below, we are not
aware of any transactions since the beginning of our last fiscal year in which
the Company was or is a party, in which the amount involved exceeded $120,000,
and in which a director, director nominee, executive officer, holder of more
than 5% of our Common Stock or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material
interest.
Subordinated Debt Financing
Commitment
In March
2008, we entered into an agreement (the “Commitment”) with affiliates of Soros
and private funds associated with Maverick pursuant to which they agreed to
provide up to $3 million of debt financing to us, on a standby basis, during
fiscal 2008, provided that the commitment amount will be reduced by the gross
proceeds of any equity financing consummated during the year. As of the
Record Date, Soros and Maverick owned 38% and 22%, respectively, of our issued
and outstanding shares of Common Stock. We drew down the Commitment
in July 2008, which was evidenced by the issuance of subordinated convertible
notes (the “Subordinated Notes”) that have a term expiring three years from the
date of issuance of the Subordinated Notes and bear interest at the rate of 8%
per annum, compounded annually. Interest is payable upon maturity or
conversion. The Subordinated Notes are convertible at the holder’s option
(a) into equity securities that the Company might issue in any subsequent round
of financing at a price equal to the lowest price per share to be paid by any
investor in such subsequent round of financing or (b) into Common Stock at a
price per share equal to the trailing 20-day average stock price on the date of
issuance of the Subordinated Notes. In connection with the Commitment, we
issued warrants to Soros and Maverick to purchase an aggregate of 52,497 shares
of Common Stock at an exercise price equal to $5.10.
20
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
The Audit
Committee of the Board of Directors has selected PricewaterhouseCoopers LLP
(“PwC”) as the independent registered public accounting firm for the fiscal year
ending December 31, 2009. The Company’s financial statements for the
2008 fiscal year were audited by PwC.
A
representative of PwC will be present at the meeting, will be provided the
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions from stockholders.
Audit
Fees
The
aggregate fees billed for professional services rendered by PwC for the audit of
the Company’s financial statements, including the reviews of the Company’s
condensed financial statements included in its quarterly reports on Form 10-Q,
for fiscal 2008 and 2007 were approximately $294,000 and $264,000,
respectively.
Audit
Related Fees
Other
than the fees described under the caption “Audit Fees” above, PwC did not bill
any fees for services rendered to the Company during fiscal 2008 and 2007 for
assurance and related services in connection with the audit or review of the
Company financial statements.
Tax
Fees
PwC did not bill the Company for any
professional services rendered to the Company during fiscal 2008 and 2007 for
tax compliance, tax advice or tax planning.
Other
Fees
PwC did
not bill the Company for any other professional services rendered during fiscal
2008 and 2007 other than those described under the caption “Audit
Fees.”
Audit
Committee Pre-Approval Policies
The Company’s policy is that, before
PwC is engaged by the Company to render audit or non-audit services, the
engagement is approved by the Audit Committee.
21
OTHER
BUSINESS
The Board
of Directors currently knows of no other matters to be presented at the
meeting. However, if any other matters properly come before the
meeting, or any adjournment thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment of the persons
named therein.
STOCKHOLDER
PROPOSALS
Stockholders
who, in accordance with SEC Rule 14a-8, wish to present proposals for the
inclusion in the proxy materials to be distributed in connection with next
year’s annual meeting must submit their proposals so that they are received at
our principal executive offices not later than the close of business on December
29, 2009 and must otherwise comply with the rules of the SEC for inclusion in
the proxy materials.
The
Company’s bylaws provide that a stockholder who wishes to present a proposal for
stockholder vote at the Company’s next annual meeting (other than a matter
brought pursuant to SEC Rule 14a-8) must give written notice to the Secretary of
the Company not less than 90 days nor more than 120 days prior to the date that
is one year from the date of this annual meeting. Accordingly, any
such proposal must be received by the Secretary of the Company not later than
February 28, 2010 and no earlier than January 28, 2010. The notice must contain
specified information about the proposed business and the stockholder making the
proposal. If a stockholder gives notice of a proposal after the
deadline, the Company’s proxy holders will have discretionary authority to vote
on this proposal when and if raised at the next annual meeting.
COST
OF SOLICITATION
The cost
of soliciting proxies in the accompanying form has been or will be borne by the
Company. Directors, officers and employees of the Company may solicit
proxies personally or by telephone or other means of
communications. Although there is no formal agreement to do so,
arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to their principals, and the
Company may reimburse them for any attendant expenses.
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE AS PROMPTLY AS
POSSIBLE.
| By Order of the Board of Directors, | |
|
Dated:
April 28, 2009
22
[FRONT]
BLUEFLY,
INC.
PROXY
Annual Meeting, May 28,
2009
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints MELISSA PAYNER-GREGOR and KARA B. JENNY as Proxy,
with full power to appoint their substitute, and hereby authorizes them to
appear and vote as designated on the reverse side, all shares of Common Stock of
Bluefly, Inc. held on record by the undersigned on April 23, 2009 at the Annual
Meeting of Stockholders to be held on May 28, 2009, and any adjournments
thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
(Continued
and to be signed on the reverse side.)
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|
x Please
mark your
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votes
as in this
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example.
|
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VOTE
FOR
ALL
NOMINEES
|
VOTE
FOR
ALL
NOMINEES,
except
as
marked to the
contrary
below
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VOTE
WITHHELD
AUTHORITY
FROM
ALL NOMINEES
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1.ELECTION
OF DIRECTORS
Nominees:
Riad
Abrahams
Mario
Ciampi
Barry
Erdos
Michael
Helfand
Ann
Jackson
Martin
Miller
Neal
Moszkowski
Melissa
Payner-
Gregor
Anthony
Plesner
David
Wassong
|
o
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o
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
|
o
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||||
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The
undersigned acknowledges receipt of the accompanying Proxy Statement dated
April 28, 2009.
SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE ANNUAL MEETING IN
ACCORDANCE WITH THE STOCKHOLDER’S SPECIFICATIONS ABOVE. THE PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT
THE TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF
STOCKHOLDERS TO THE UNDERSIGNED.
|
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___________________________________
SIGNATURE
OF STOCKHOLDER
|
___________________________________
DATE________________
SIGNATURE
IF HELD JOINTLY
|
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NOTE: Please
mark, date, sign and return this Proxy promptly using the enclosed
envelope. When shares are held by joint tenants, both should
sign. If signing as an attorney, executor, administrator,
trustee or guardian, please give full title. If a corporation
or partnership, please sign in corporate or partnership name by an
authorized person.
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