UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 17)*
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)
March 12, 2003
--------------------------
(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 51 Pages
Exhibit Index: Page 17
SCHEDULE 13D
CUSIP No. 096227103 Page 2 of 51 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)
Not Applicable
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 46,890,033
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 46,890,033
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
46,890,033
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)
90.2%
14 Type of Reporting Person (See Instructions)
OO; IV
SCHEDULE 13D
CUSIP No. 096227103 Page 3 of 51 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)
Not Applicable
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 46,890,033
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 46,890,033
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
46,890,033
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)
90.2%
14 Type of Reporting Person (See Instructions)
PN; IA
SCHEDULE 13D
CUSIP No. 096227103 Page 4 of 51 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
QIH 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)
Not Applicable
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 46,890,033
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 46,890,033
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
46,890,033
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)
90.2%
14 Type of Reporting Person (See Instructions)
OO
SCHEDULE 13D
CUSIP No. 096227103 Page 5 of 51 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)
Not Applicable
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 46,890,033
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 46,890,033
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
46,890,033
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)
90.2%
14 Type of Reporting Person (See Instructions)
OO; IA
SCHEDULE 13D
CUSIP No. 096227103 Page 6 of 51 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)
Not Applicable
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 1,534,332
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,534,332
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,534,332
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)
13.1%
14 Type of Reporting Person (See Instructions)
OO
SCHEDULE 13D
CUSIP No. 096227103 Page 7 of 51 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)
Not Applicable
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 48,424,365
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 48,424,365
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
48,424,365
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
90.8%
14 Type of Reporting Person (See Instructions)
IA
Page 8 of 51 Pages
This Amendment No. 17 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. 17 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. 17 is being filed by the Reporting Persons to report that QIP
(as defined herein) and SFM Domestic Investments (as defined herein) have
entered into an agreement with the Issuer as described herein, whereby QIP and
SFM Domestic Investments each: A) purchased from the Issuer shares of preferred
stock convertible into Shares; B) agreed to convert the shares of the Series
2002 Convertible Preferred Stock, par value $.01 per share (the "Series 2002
Preferred Stock") held for the accounts of QIP and SFM Domestic Investments into
shares of preferred stock convertible into Shares, and C) agreed to convert
certain convertible demand promissory notes held for the accounts of QIP and SFM
Domestic Investments into shares of preferred stock convertible into Shares.
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 LLC ("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.
Effective December 31, 2002, QIH Management, Inc. was converted
into QIH Management LLC. On such date, Mr. Soros, the sole owner of QIH
Management LLC, contributed his interest in QIH Management LLC to Soros Private
Funds Management LLC, a Delaware limited liability company ("SPFM"), an entity
wholly-owned by Mr. Soros. SPFM is the sole managing member of QIH Management
LLC. Neither SPFM nor QIH Management LLC have executive officers or directors.
As a result, that portion of Annex A of the Initial Statement listing the
directors and officers of QIH Management, Inc., is hereby deleted.
Page 9 of 51 Pages
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 $4,867,763 of its working capital to purchase the
securities reported herein as having been acquired since January 13, 2003 (60
days prior to the date hereof). Of this amount, $3,899,463 was expended to
purchase shares of Series D Preferred Stock (as defined herein) pursuant to the
Purchase Agreement (as defined herein). In addition, as more fully set forth in
Item 6 herein, pursuant to the Purchase Agreement, QIP acquired additional
shares of Series D Preferred Stock upon conversion of the shares of Series 2002
Preferred Stock and the QIP 2003 Note (as defined herein) held for QIP's
account. Finally, QIP expended $968,300 of its working capital on January 28,
2003 to purchase a warrant to purchase 24,208 shares ("Warrant No. 19"). SFM
Domestic Investments expended $159,360 of its working capital to purchase the
securities reported herein as having been acquired since January 13, 2003 (60
days prior to the date hereof). Of this amount, $127,660 was expended to
purchase shares of Series D Convertible Preferred Stock reported herein as being
acquired pursuant to the Purchase Agreement. In addition, as more fully set
forth in Item 6 herein, pursuant to the Purchase Agreement, SFM Domestic
Investments acquired additional shares of Series D Preferred Stock upon
conversion of the shares of Series 2002 Preferred Stock and the SFM 2003 Note
(as defined herein) held for SFM Domestic Investments' Account. Finally, SFM
Domestic Investments expended $31,700 of its working capital on January 28, 2003
to purchase a warrant to purchase 792 shares ("Warrant No. 20").
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 46,890,033 Shares (approximately 90.2% of the total
number of Shares outstanding assuming the exercise and conversion of all of the
securities 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) 26,503,096 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) 1,274,078 Shares currently issuable upon the
conversion of 968.3 shares of Series C Preferred Stock held for the account of
QIP, J) 9,092,525 Shares currently issuable upon the conversion of the 6,910.319
shares of Series D Preferred Stock held for the account of QIP; and K) 24,208
shares issuable upon the exercise of Warrant No. 19 held for the account of QIP.
(ii) SFM Domestic Investments may be deemed the beneficial owner
of 1,534,332 Shares (approximately 13.1% of the total number of Shares
outstanding assuming the exercise and conversion of all the securities 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) 866,942 Shares
Page 10 of 51 Pages
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) 41,710 Shares currently issuable upon
the conversion of 31.7 shares of Series C Preferred Stock held for its account,
J) 297,669 Shares issuable upon the conversion of 226.229 the shares of Series D
Preferred Stock; and K) 792 Shares issuable upon the exercise of Warrant No. 20
held for its account.
(iii) Mr. Soros may be deemed the beneficial owner of 48,424,365
Shares (approximately 90.8% of the total number of Shares outstanding assuming
the exercise and conversion of all of the securities held for the accounts of
QIP and SFM Domestic Investments). This number consists of A) 46,890,033 Shares
which may be deemed to be beneficially owned by QIP as described above, and B)
1,534,332 Shares which may be deemed to be beneficially owned by SFM Domestic
Investments as described above. Mr. Soros disclaims beneficial ownership of any
securities not held directly for his account.
(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 46,890,033 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 1,534,332 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
48,424,365 Shares which may be deemed to be beneficially owned by QIP and SFM
Domestic Investments as described above.
(c) Except for (a) the transactions described in Item 6 below,
and (b) certain transactions listed in Annex A hereto, all of which were
effected in privately negotiated transactions, there have been no transactions
effected with respect to the Shares since January 13, 2003 (60 days prior to the
date hereof) by any of the Reporting Persons.
(d) (i) The shareholders of QIP, including Quantum Industrial
Holdings, Ltd., a British Virgin Islands international business company, have
the right to participate in the receipt of dividends from, or proceeds from the
sales of, the securities held for the account of QIP in accordance with their
ownership interests in QIP.
(ii) Certain members of SFM Domestic Investments have the
right to participate in the receipt of dividends from, or proceeds from the sale
of, the securities held for the account of SFM Domestic Investments.
(e) Not applicable.
Page 11 of 51 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Series D Preferred Stock Purchase Agreement
-------------------------------------------
On March 12, 2003, the Issuer entered into a Series D Preferred
Stock Purchase Agreement (the "Purchase Agreement") with QIP and SFM Domestic
Investments. Pursuant to the terms of the Purchase Agreement, QIP purchased
3,899.463 shares of the Issuer's Series D Convertible Preferred Stock, $.01 par
value per share (the "Series D Preferred Stock") for an aggregate purchase price
of $3,899,463, and SFM Domestic Investments purchased 127.660 shares of Series D
Preferred Stock for an aggregate purchase price of $127,660. In addition,
pursuant to the terms of the Purchase Agreement, QIP acquired an aggregate of
3,010.856 shares of Series D Preferred Stock upon conversion of 2,033.43 shares
of Series 2002 Preferred Stock and the convertible demand promissory note, dated
January 28, 2003 (the "QIP 2003 Note"), with an aggregate amount of principal
and accrued and unpaid interest of $977,426, and SFM Domestic Investments
acquired an aggregate of 98.569 shares of Series D Preferred Stock upon
conversion of 66.57 shares of Series 2002 Preferred Stock and the convertible
demand promissory note, dated January 28, 2003 (the "SFM 2003 Note"), with an
aggregate amount of principal and accrued and unpaid interest of $31,999.
Pursuant to the Purchase Agreement, the Issuer elected to prepay
the aggregate principal amount of the convertible demand promissory note, dated
September 27, 2002, issued by the Issuer to QIP, in the aggregate principal
amount of $1,936,600 and the convertible demand promissory note, dated September
27, 2002, issued by the Issuer to SFM Domestic Investments, in the aggregate
principal amount of $63,400 (the "Series C Convertible Notes") (forms of which
were previously filed as Exhibits JJJ and KKK, respectively, to Schedule 13D
Amendment No. 15 and are incorporated herein by reference in response to this
Item 6), together with interest accrued thereon. The foregoing description of
the Series C Convertible Notes does not purport to be complete and is qualified
in its entirety by the terms of the Series C Convertible Notes.
So long as any shares of Series D 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 of Series D Preferred Stock to receive in connection
with such transaction an amount in cash equal to the greater of (i) $1,000 per
share of Series D Preferred Stock plus any accrued and unpaid dividends on such
share and (ii) the amount that the holder of such share of Series D Preferred
Stock would receive if it were to convert such share (without regard to any
limitation on conversion and without actually requiring to be so converted) into
Shares (the "Series D 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 D Preferred Stock were covered by the registration rights
set forth in the Investment Agreement. The
Page 12 of 51 Pages
amended definition of "Registrable Securities" includes, along with any other
securities already included in such definition, the Shares issuable upon
conversion of the Series D 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.
QIP and SFM Domestic Investments agreed to provide the Issuer
with additional financing up to an aggregate of $1,000,000 on a standby basis
which, subject to certain terms and conditions, the Issuer may draw upon at any
time prior to January 1, 2004. Any draws against the standby commitment amount
will be affected through the purchase of shares of Series E Preferred Stock
having rights substantially identical to the Series D Preferred Stock except as
set forth in the Purchase Agreement.
The Issuer has agreed to put forth proposals seeking stockholder
approval of the conversion rights of the Series D Preferred Stock and the
Issuer's Series E Convertible Preferred Stock, $.01 par value per share (the
"Series E Preferred Stock") at the Company's next annual or special meeting of
stockholders. The Issuer has agreed to take all reasonable action to convene a
meeting of the Issuer's stockholders on or before December 31, 2003.
The foregoing description of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by the terms of the
Purchase Agreement, which is attached in Exhibit OOO and is incorporated herein
by reference in response to this Item 6.
Certificate of Powers, Designations, Preferences and Rights of Series D
Convertible Preferred Stock
--------------------------------------------------------------------------------
Pursuant to the terms of the Certificate of Powers, Designations,
Preferences and Rights of Series D Convertible Preferred Stock (the "Series D
Preferred Certificate of Designations") filed by the Issuer with the Delaware
Secretary of the State on March 12, 2003, the shares of Series D Preferred Stock
are entitled to cumulative dividends at a rate of 12% per annum, compounding
annually. The dividends are payable only upon a conversion of the shares of
Series D Preferred Stock into Shares, a liquidation, dissolution or winding up
of the Issuer or a redemption of the shares of Series D Preferred Stock. The
holders of shares of Series D Preferred Stock are entitled to a preference on a
liquidation, dissolution or winding up of the Issuer in an amount per share
equal to the Series D Liquidation Preference.
The holders of shares of Series D 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 the Shares, on an as-converted basis.
Notwithstanding the foregoing, (i) the holders of shares of Series D Preferred
Stock are not entitled to vote with respect to the approval of the conversion
rights of the Series D Preferred Stock or any equity securities issued in
connection with the funding of the standby commitment amount under the Purchase
Agreement and (ii) until the Issuer's stockholders approve the conversion rights
of the Series D 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
D Preferred Stock may not exceed 2,204,803 (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 D Preferred Stock remain outstanding,
the Issuer may take the actions enumerated in Section 5.1 of the Series D
Preferred Certificate of
Page 13 of 51 Pages
Designations only with the approval of a majority of the shares of Series D
Preferred Stock, voting separately as a class. In addition, so long as any
shares of Series D 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 D 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 D 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) $0.76 (as adjusted, the "Series D
Conversion Price"). The Series D Conversion Price may be adjusted upon the
occurrence of certain events described in the Series D 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 D
Conversion Price in which case the Series D Conversion Price will be adjusted to
equal the New Issue Price. Upon conversion, the accrued and unpaid dividends on
each share of Series D 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 D 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 D 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 March 12, 2003 as a
result of the conversion of shares of Series D Preferred Stock would exceed
2,204,803 (subject to adjustment to reflect any stock split, stock dividend,
reclassification or similar transaction).
The holders of shares of Series D 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 D Preferred Stock at redemption
prices equal to multiples of the Series D Conversion Price, as set forth in
Section 7 of the Series D Preferred Certificate of Designations.
The foregoing description of the Series D Preferred Certificate
of Designations does not purport to be complete and is qualified in its entirety
by the terms of the Series D Preferred Certificate of Designations, which is
attached in Exhibit PPP, and is incorporated herein by reference in response to
this Item 6.
Waiver and Consent of the Holders of Series A Convertible Preferred Stock,
---------------------------------------------------------------------------
Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and
-------------------------------------------------------------------------------
Series 2002 Convertible Preferred Stock
----------------------------------------
On March 12, 2003, QIP and SFM Domestic Investments executed the
Waiver and Consent of the Holders of Series A Convertible Preferred Stock,
Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and
Series 2002 Convertible Preferred Stock (the "Waiver and Consent"). Pursuant to
the Waiver and Consent, (i) the holders of Series A Preferred Stock, Series B
Preferred Stock
Page 14 of 51 Pages
and Series C Preferred Stock waived their preemptive rights with respect to the
issuance of the shares of Series D Preferred Stock, and (ii) the holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series 2002 Preferred Stock consented to the issuance of the shares of Series D
Preferred Stock and the prepayment of the Series C Convertible Notes. 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 attached in Exhibit QQQ, and is incorporated herein by reference in response
to this Item 6.
Conversion Price of Series B Convertible Preferred Stock and Series C
----------------------------------------------------------------------
Convertible Preferred Stock
-----------------------------
In connection with the issuance of the shares of Series D
Preferred Stock, the conversion price of the Series B Preferred Stock was
reduced to $0.76 per share pursuant to Section 5.8.6 of the Issuer's Certificate
of Incorporation (a copy of which was previously filed as Exhibit RR to Schedule
13D Amendment No. 8 and is incorporated herein by reference in response to this
Item 6), and the conversion price of the Series C Preferred Stock was reduced to
$0.76 per share pursuant to Section 6.5 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 was
previously filed as Exhibit LLL to Schedule 13D Amendment No. 15 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 foregoing
descriptions of the Certificate of Incorporation and the Series C Preferred
Certificate of Designations do not purport to be complete and are qualified in
their entirety by the terms of the Certificate of Incorporation and the Series C
Preferred Certificate of Designations.
Except as set forth herein, the Reporting Persons do no have any
contracts, arrangements, understandings or relationships with respect to any
securities of the Issuer.
Item 7. Material to be Filed as Exhibits
The Exhibit Index is incorporated herein by reference.
Page 15 of 51 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: March 14, 2003 QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Attorney-in-Fact
QIH MANAGEMENT INVESTOR, L.P.
By: QIH Management LLC,
its General Partner
By: Soros Private Funds Management LLC,
its Managing Member
By: George Soros,
its Sole Member
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Attorney-in-Fact
QIH MANAGEMENT LLC
By: Soros Private Funds Management LLC,
its Managing Member
By: George Soros,
its Sole Member
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Attorney-in-Fact
SOROS FUND MANAGEMENT LLC
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Assistant Counsel
SFM DOMESTIC INVESTMENTS LLC
By: George Soros
Its Managing Member
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Attorney-in-Fact
GEORGE SOROS
By: /s/ John F. Brown
-----------------------------------
John F. Brown
Attorney-in-Fact
Page 16 of 51 Pages
ANNEX A
RECENT TRANSACTIONS IN THE SECURITIES OF
BLUEFLY, INC.
For the Date of Nature of Number of
Account of Transaction Transaction Securities Price
---------- ----------- ----------- ---------- -----
QIP 1/28/03 Purchase 24,208 (1)
Warrants
SFM Domestic 1/28/03 Purchase 792 (2)
Investments Warrants
----------------------------
(1) Issued to QIP as additional consideration in connection with the purchase
of certain convertible demand promissory notes from the Issuer.
(2) Issued to SFM Domestic Investments as additional consideration in
connection with the purchase of certain convertible demand promissory notes
from the Issuer.
Page 17 of 51 Pages
EXHIBIT INDEX
OOO. Form of the Series D Preferred Stock Purchase
Agreement, dated as of March 12, 2003, by and
between Bluefly, Inc. and the investors listed on
Schedule I thereto........................................ 18
PPP. Form of Certificate of Powers, Designations,
Preferences and Rights of Series D Convertible
Preferred Stock of Bluefly, Inc........................... 34
QQQ. Form of Waiver and Consent of the Holders of Series
A Convertible Preferred Stock, Series B Convertible
Preferred Stock, Series C Convertible Preferred
Stock and Series 2002 Convertible Preferred Stock
of Bluefly, Inc........................................... 48