UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 15)*
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 LLP
590 Madison Avenue
New York, New York 10022
(212) 872-1000
----------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 27, 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 38 Pages
Exhibit Index: Page 16
SCHEDULE 13D
CUSIP NO. 096227103 Page 2 of 38 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 34,778,119
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 34,778,119
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
34,778,119**
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)
87.2%
14 Type of Reporting Person (See Instructions)
OO; IV
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
SCHEDULE 13D
CUSIP NO. 096227103 Page 3 of 38 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 34,778,119
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 34,778,119
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
34,778,119**
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)
87.2%
14 Type of Reporting Person (See Instructions)
PN; IA
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
SCHEDULE 13D
CUSIP NO. 096227103 Page 4 of 38 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 34,778,119
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 34,778,119
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
34,778,119**
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)
87.2%
14 Type of Reporting Person (See Instructions)
CO
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
SCHEDULE 13D
CUSIP NO. 096227103 Page 5 of 38 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 34,778,119
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 34,778,119
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
34,778,119**
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
87.2%
14 Type of Reporting Person (See Instructions)
OO; IA
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
SCHEDULE 13D
CUSIP NO. 096227103 Page 6 of 38 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 1,137,946
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,137,946
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,137,946**
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
10.0%
14 Type of Reporting Person (See Instructions)
OO
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
SCHEDULE 13D
CUSIP NO. 096227103 Page 7 of 38 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 35,916,065
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 35,916,065
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
35,916,065**
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
87.9%
14 Type of Reporting Person (See Instructions)
IA
----------
** See Item 6 of Amendment No. 14 to Schedule 13D.
Page 8 of 38 Pages
This Amendment No. 15 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. 15 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. 15 is being filed by the Reporting Persons to report that QIP
(as defined herein) and SFM Domestic Investments (as defined herein) have
entered into agreements with the Issuer as described herein, whereby QIP and SFM
Domestic Investments each: A) purchased from the Issuer shares of preferred
stock convertible into Shares; and B) received convertible demand promissory
notes (collectively, the "Notes") of the Issuer pursuant to which each of QIP
and SFM Domestic Investments acquired the right, at their option, to convert all
or any portion of the principal amount of such Notes, including any accrued and
unpaid interest thereon, into shares of preferred stock convertible into Shares,
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 $2,904,900 of its working capital to purchase the
securities reported herein as being acquired since August 20, 2002 (the date of
the last filing on Schedule 13D). This number consists of A) $968,300 to
purchase shares of the Issuer's Series C Convertible Preferred Stock, $.01 par
value per share ("Series C Preferred Stock") pursuant to the Series C Preferred
Stock and Note Purchase Agreement dated as of September 27, 2002 between the
Issuer, QIP and SFM Domestic Investments (the "Purchase Agreement"), and B)
$1,936,600 as the principal amount of the convertible demand promissory note
dated September 27, 2002, provided by the Issuer to QIP (the "QIP Note"). SFM
Domestic Investments expended $95,100 of its working capital to purchase the
securities reported herein as being acquired since August 20, 2002 (the date of
the last filing on Schedule 13D). This number consists of A) $31,700 to purchase
shares of the Series C Preferred Stock pursuant to the Purchase Agreement, and
B) $63,400 as the principal amount of the convertible demand promissory note
dated September 27, 2002 provided by the Issuer to SFM Domestic Investments (the
"SFM Domestic Note").
Page 9 of 38 Pages
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.
Item 5. Interest in Securities of the Issuer
The information set forth in Item 6 hereof is hereby incorporated by
reference into this Item 5.
(a) (i) Each of QIP, QIHMI, QIH Management and SFM LLC may be deemed the
beneficial owner of 34,778,119 Shares (approximately 87.2% 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) 21,658,444
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, H) 287,250 Shares
issuable upon the exercise of Warrant No. 17 held for the account of QIP, I)
1,041,183 Shares currently issuable upon the conversion of 968.3 shares of
Series C Preferred Stock, and J) 2,082,366 Shares issuable upon the conversion
of the shares of Series C Preferred Stock currently obtainable upon the
conversion of the QIP Note.
(ii) SFM Domestic Investments may be deemed the beneficial owner of
1,137,946 Shares (approximately 10.0% 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) 708,469 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, H) 9,394 Shares issuable upon the exercise of Warrant No.
18 held for its account, I) 34,086 Shares currently issuable upon the conversion
of 31.7 shares of Series C Preferred Stock held for its account, and J) 68,172
Shares issuable upon the conversion of the shares of Series C Preferred Stock
currently obtainable upon the conversion of the SFM Domestic Note.
(iii) Mr. Soros may be deemed the beneficial owner of 35,916,065
Shares (approximately 87.9% 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) 34,778,119 Shares which may be deemed to be
beneficially owned by QIP as described above and B) 1,137,946 Shares which may
be deemed to be beneficially owned by SFM Dometic Investments as described
above.
Page 10 of 38 Pages
(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 34,778,119 Shares which may be deemed to be beneficially
owned by QIP as described above.
(ii) SFM Domestic Investments may be deemed to have the sole power to
direct the voting and disposition of the 1,137,946 Shares which may be deemed to
be beneficially owned by SFM Domestic Investments as described above.
(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 the 35,916,065
Shares which may be deemed to be beneficially owned by QIP and SFM Domestic
Investments as described above.
(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 August 20, 2002 (the date of the last
filing on Schedule 13D) 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.
Series C Preferred Stock and Note Purchase Agreement
----------------------------------------------------
On September 27, 2002, the Issuer entered into the Purchase Agreement (a
copy of which is incorporated by reference hereto as Exhibit III and is
incorporated herein by reference in response to this Item 6) with QIP and SFM
Domestic Investments. Pursuant to the terms of the Purchase Agreement, QIP
purchased 968.3 shares of Series C Preferred Stock for an aggregate purchase
price of $968,300 and SFM Domestic Investments purchased 31.7 shares of Series C
Preferred Stock for an aggregate purchase price of $31,700. The Issuer and QIP
also entered into the QIP Note (a copy of which is incorporated by reference
hereto as Exhibit JJJ and is incorporated herein by reference in response to
this Item 6) in the aggregate principal amount of $1,936,600 and the Issuer and
SFM Domestic Investments entered into the SFM Domestic Note (a copy of which is
incorporated by reference hereto as Exhibit KKK and is incorporated herein by
reference in response to this Item 6) in the aggregate principal amount of
$63,400.
Page 11 of 38 Pages
So long as any shares of Series C 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
Shares to receive in connection with such transaction an amount in cash equal to
the greater of (i) $1,000 per share of Series C Preferred Stock plus any accrued
and unpaid dividends and (ii) the amount that the holder of such Series C
Preferred Stock would receive if it were to convert their share or shares of
Series C Preferred Stock (without regard to any limitation on conversion and
without actually requiring to be so converted) into Shares (the "Series C
Liquidation Preference").
The Issuer, QIP and SFM Domestic Investments amended the definition of
"Registrable Securities" under the Investment Agreement (the "Investment
Agreement"), dated November 13, 2000 (a copy of which was previously filed as
Exhibit LL to Schedule 13D Amendment No. 7 and is incorporated herein by
reference in response to this Item 6) in order that certain securities related
to the Series C Preferred Stock and Series 2002 Preferred Stock were covered by
the registration rights set forth in the Investment Agreement. The amended
definition of "Registrable Securities" includes, along with any other securities
already included in such definition, the Shares issuable upon conversion of the
Series C Preferred Stock and the Series 2002 Preferred Stock (or upon the
exercise or conversion of any security issued upon conversion of the Series 2002
Preferred Stock). The foregoing description of the Investment Agreement does not
purport to be complete and is qualified in its entirety by the terms of the
Investment Agreement.
The Issuer has agreed to put forth proposals seeking stockholder approval
of (i) the conversion rights of the Series C Preferred Stock at the Company's
next annual or special meeting of stockholders and (ii) the increase in the
number of authorized Shares to 92,000,000. The Issuer has agreed to take all
reasonable action to convene a meeting of the Issuer's stockholders on or before
December 30, 2002.
The foregoing descriptions of the Purchase Agreement, the QIP Note and the
SFM Domestic Note do not purport to be complete and are qualified in their
entirety by the terms of each such document which are incorporated herein by
reference in response to this Item 6.
Certificate of Powers, Designations, Preferences and Rights of
--------------------------------------------------------------
Series C Preferred Stock
------------------------
Pursuant to the terms of the Certificate of Powers, Designations,
Preferences and Rights of Series C Convertible Preferred Stock (the "Series C
Preferred Certificate of Designations") (a copy of which is incorporated by
reference hereto as Exhibit LLL and is incorporated herein by reference in
response to this Item 6) filed by the Issuer with the Delaware Secretary of the
State on September 27, 2002, the shares of Series C Preferred Stock are entitled
to cumulative dividends at a rate of 8% per annum, compounding annually. The
dividends are payable only upon a conversion of the Series C Preferred Stock
into Shares, a liquidation, dissolution or winding up of the Issuer or a
redemption of the Series C Preferred Stock. Series C Preferred Stockholders are
entitled to a preference on a liquidation, dissolution or winding up of the
Issuer in an amount per share equal to the Series C Liquidation Preference.
Page 12 of 38 Pages
Holders of Series C Preferred Stock are entitled to vote on all matters
submitted to a vote of the Issuer's stockholders, voting as a single class with
the holders of Shares, on an as-converted basis. Notwithstanding the foregoing,
(i) holders of Series C Preferred Stock are not entitled to vote with respect to
the approval of the conversion rights of the Series C Preferred Stock or the
Series 2002 Preferred Stock and (ii) until the Issuer's stockholders approve the
conversion rights of the Series C Preferred Stock (to the extent such approval
is required by the rules of the Nasdaq SmallCap Market or any other national
securities exchange or quotation system upon which the Shares may be listed from
time to time), the total number of votes cast with respect to the then
outstanding shares of Series C Preferred Stock may not exceed 2,077,341 (subject
to adjustment to reflect any stock split, stock dividend, reclassification or
similar transaction). So long as at least 40% of the shares of Series C
Preferred Stock remain outstanding, the Issuer may take the actions enumerated
in Section 5.1 of the Series C Preferred Certificate of Designations only with
the approval of a majority of the shares of Series C Preferred Stock, voting
separately as a class. In addition, so long as any shares of Series C Preferred
Stock are outstanding, the approval of the holders of at least 66-2/3% of such
shares, voting separately as a class, must be obtained (i) to effect any
transaction that would adversely affect the rights, preferences, powers and
privileges of the shares of Series C Preferred Stock or (ii) to merge or
consolidate with another entity, sell all or substantially all of the Issuer's
assets or enter into a transaction resulting in, or facilitating, a change of
control.
Each share of Series C Preferred Stock is convertible, at the option of the
holder thereof, into a number of fully paid and nonassessable Shares obtained by
dividing (i) $1,000 by (ii) $0.93 (as adjusted, the "Series C Conversion
Price"). The Series C Conversion Price may be adjusted upon the occurrence of
certain events described in the Series C Preferred Certificate of Designations,
including, but not limited to, the issuance by the Issuer of securities at a
price per share (the "New Issue Price") less than the Series C Conversion Price
in which case the Series C Conversion Price will be adjusted to equal the New
Issue Price. Upon conversion, the accrued and unpaid dividends on each share of
Series C Preferred Stock are paid, at the option of the Issuer, in cash or in
Shares. Notwithstanding the foregoing, (i) until the Issuer's stockholders
approve the conversion rights of the Series C Preferred Stock (to the extent
such approval is required by the rules of the Nasdaq SmallCap Market or any
other national securities exchange or quotation system upon which the Shares may
be listed from time to time), no share of Series C Preferred Stock may be
converted into Shares to the extent that, after giving effect to such
conversion, the total number of Shares issued from and after September 27, 2002
as a result of the conversion of shares of Series C Preferred Stock would exceed
2,077,341 (subject to adjustment to reflect any stock split, stock dividend,
reclassification or similar transaction) and (ii) no shares of Series C
Preferred Stock are convertible into Shares until the Issuer's stockholders
approve the increase in the number of authorized Shares to 92,000,000.
Holders of Series C Preferred Stock are entitled to certain preemptive
rights in instances where the Issuer issues any Shares or securities convertible
or exchangeable into Shares, subject to certain excluded issuances.
Subject to the fulfillment of certain requirements, the Issuer may redeem
for cash all the shares of Series C Preferred Stock at redemption prices equal
to multiples of the Series C Conversion Price, as set forth in Section 7 of the
Series C Preferred Certificate of Designations.
The foregoing description of the Series C Preferred Certificate of
Designations does not purport to be complete and is qualified in its entirety by
the terms of the Series C Preferred Certificate of Designations, which is
incorporated herein by reference in response to this Item 6.
Page 13 of 38 Pages
Convertible Demand Promissory Notes
-----------------------------------
Each Note bears interest at a rate of 3% per annum, on a cumulative,
compounding basis. The outstanding principal balance and accrued and unpaid
interest on each Note is payable upon the demand of the holder, but in no event
later than March 26, 2003. All or any portion of the Notes are convertible, at
the option of the holders thereof, into a number of fully paid and nonassessable
shares of Series C Preferred Stock obtained by dividing (i) the aggregate
principal amount to be converted plus any accrued and unpaid interest on such
principal amount by (ii) $1,000. The foregoing description of the Notes does not
purport to be complete and is qualified in its entirety by the terms of the
Notes, which are incorporated herein by reference in response to this Item 6.
Waiver and Consent of the Holders of Series A Preferred Stock,
--------------------------------------------------------------------
Series B Preferred Stock and Series 2002 Preferred Stock
---------------------------------------------------------
On September 27, 2002, QIP and SFM Domestic Investments, along with the
other holders, if applicable, of Series A Preferred Stock, Series B Preferred
Stock and Series 2002 Preferred Stock executed the Waiver and Consent of the
Holders of Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock and Series 2002 Convertible Preferred Stock (the "Waiver and Consent") (a
copy of which is incorporated by reference hereto as Exhibit MMM and
incorporated herein by reference in response to this Item 6). Pursuant to the
Waiver and Consent, (i) the holders of Series A Preferred Stock and Series B
Preferred Stock waived their preemptive rights with respect to the issuance of
the Series C Preferred Stock and the Notes, (ii) the holders of Series B
Preferred Stock waived the breach by the Issuer of Section 5.8.9 of the
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), and agreed not to convert any shares of Series B
Preferred Stock to the extent that, after giving effect to such conversion, the
total number of Shares issued from and after September 27, 2002 as a result of
the conversion of shares of Series B Preferred Stock would exceed 13,281,038
(subject to adjustment to reflect any stock split, stock dividend,
reclassification or similar transaction) and (iii) the holders of Series 2002
Preferred Stock agreed to waive their rights to convert the Series 2002
Preferred Stock into shares of Series C Preferred Stock in connection with the
issuance of the shares of Series C Preferred Stock. The foregoing description of
the Waiver and Consent does not purport to be complete and is qualified in its
entirety by the terms of the Waiver and Consent, which is incorporated herein by
reference in response to this Item 6.
Conversion Price of Series B Preferred Stock
--------------------------------------------
In connection with the issuance of the Series C Preferred Stock, the
conversion price of the Series B Preferred Stock was reduced to $0.93 per share
pursuant to Section 5.8.6 of the Issuer's Certificate of Incorporation. The
foregoing description of the Certificate of Incorporation does not purport to be
complete and is qualified in it entirety by the terms of the Certificate of
Incorporation.
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.
Page 14 of 38 Pages
Item 7. Material to be Filed as Exhibits
The Exhibit Index is incorporated herein by reference.
Page 15 of 38 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: October 4, 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 16 of 38 Pages
EXHIBIT INDEX
III. Series C Preferred Stock and Note Purchase Agreement, dated
as of September 27, 2002, by and between Bluefly, Inc. and
the investors listed on Schedule I thereto(1)
JJJ. Form of the Convertible Demand Promissory Note, dated as of
September 27, 2002, by and between Bluefly, Inc. and Quantum
Industrial Partners LDC in the principal amount of
$1,936,600.................................................. 17
KKK. Form of the Convertible Demand Promissory Note, dated as of
September 27, 2002, by and between Bluefly, Inc. and SFM
Domestic Investments LLC in the principal amount of
$63,400..................................................... 26
LLL. Certificate of Powers, Designations, Preferences and Rights
of Series C Convertible Preferred Stock of Bluefly,
Inc.(2)
MMM. Form of the Waiver and Consent of the Holders of Series A
Convertible Preferred Stock, Series B Convertible Preferred
Stock and Series 2002 Convertible Preferred Stock of
Bluefly, Inc................................................ 35
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(1) Filed on September 30, 2002 as Exhibit 99.2 to the Issuer's current report
on Form 8-K (commission File Number 001-14498).
(2) Filed on September 30, 2002 as Exhibit 99.3 to the Issuer's current report
on Form 8-K (Commission File Number 001-14498).