Form 8-K for BLUEFLY
Entry into a Material Definitive Agreement, Termination of a Material Definitive
Item 1.01 Entry into a Material Definitive Agreement
On May 23, 2013 (the "Closing Date"), Runway
Acquisition Sub, Inc. (the "Purchaser"), an affiliate of
Clearlake Capital Group, purchased from entities affiliated
with the four principal stockholders (the "Principal Stockholders") of Bluefly,
Inc. ("Bluefly"): Rho Ventures VI, LP ("Rho"); Quantum Industrial Partners
LDC; Maverick Fund USA, Ltd., Maverick Fund, L.D.C., and Maverick Fund II,
Ltd.; and Prentice Consumer Partners, LP ("Prentice") all of the shares
of Bluefly's common stock, $0.01 par value, owned by the Principal Stockholders,
which represented approximately 89% of the outstanding shares of Bluefly's
common stock, for a purchase price of $0.0076 per share.
On the same day, Bluefly entered into a Stock Purchase
Agreement (the "Purchase Agreement") with the Purchaser. The Purchase Agreement
provided, among other things, for the sale by Bluefly of 2,850,000 newly
issued shares of Bluefly's common stock (the "Purchased Shares") to the
Purchaser. The acquisition of the Purchased Shares, together with the acquisition
of the shares from the Principal Stockholders, resulted in the ownership
by the Purchaser of an amount of shares in excess of 90% of the then outstanding
shares of Bluefly's common stock. In accordance with the terms of the Purchase
Agreement, the Purchaser consummated a "short form" merger (the "Merger")
on May 23, 2012 (the "Effective Time"), pursuant to Section 253 of the Delaware
General Corporation Law (the "DGCL"), under which the Merger was consummated
without a vote or meeting of Bluefly's stockholders.
At the Effective Time, the Purchaser merged with
and into Bluefly, with Bluefly surviving. As a result of the Merger, each
issued and outstanding share of Bluefly's common stock (other than shares
of common stock owned by the Purchaser or by Clear Mode, LLC,
an affiliate of Clearlake and the sole stockholder of the Purchaser ("Clear
Mode"), shares of common stock held by Bluefly as non-voting treasury shares,
and shares of Bluefly's common stock for which the holder thereof demands
and perfects such holder's right to an appraisal (the "Dissenting Shares")
in accordance with the applicable provisions of the DGCL) were converted
into the right to receive $0.10 in cash per share, without interest.
Bluefly utilized amounts contributed to it under
the Purchase Agreement to, among other things, (a) pay off amounts owed
under the revolving credit facility with Salus Capital, LLC ("Salus"), (b)
pay off promissory notes held by Rho and Prentice, each in the principal
amount of $1.5 million, plus accrued interest, and (c) for other general
corporate purposes. Habib Kairouz, who was designated by Rho to serve on
Bluefly's Board of Directors (the "Board"), is a Managing Partner of Rho.
Mario Ciampi, who was designated by Prentice to serve on the Board, is an
employee of Prentice.
The Purchase Agreement provides for the indemnification
of members of the Board . . .
Item 1.02 Termination of a Material Definitive Agreement.
In connection with the execution of the Purchase
Agreement, on the Closing Date, Bluefly repaid all amounts owed under each
of (a) its Credit Agreement, dated November 13, 2012, by and among Bluefly,
EVT Acquisition Co., LLC and Salus, (b) its Secured Subordinated Convertible
Promissory Note, dated August 13, 2012 and amended as of November 13, 2012,
between Bluefly and Rho, and (c) its Secured Subordinated Promissory Note,
dated August 13, 2012 and amended as of November 13, 2012, between Bluefly
and Prentice, and terminated each of those agreements.
Item 2.01 Completion of Acquisition or Disposition
The information set forth under Item 1.01 is incorporated
by reference herein.
Item 3.01 Notice of Delisting or Failure to Satisfy
a Continued Listing Rule or Standard; Transfer of Listing.
In connection with the closing of the Merger, Bluefly
notified the NASDAQ Stock Market ("NASDAQ") on May 23, 2013 that each outstanding
share of Bluefly's common stock (other than shares of Bluefly's common stock
held by the Purchaser or Clear Mode, shares of Bluefly's common stock held
by the Company as non-voting treasury shares, and Dissenting Shares) was
automatically converted, pursuant to the Merger, into the right to receive
$0.10 per share in cash, without interest. As a result of the Merger and
related transactions, NASDAQ filed with the Securities and Exchange Commission
a Notification of Removal from Listing and/or Registration Under Section
12(b) on Form 25 to delist and deregister Bluefly's common stock under Section
12(b) of the Securities Exchange Act of 1934, as amended.
Item 3.02 Unregistered Sale of Equity Securities.
The information set forth under Item 1.01 is incorporated
by reference herein.
Bluefly offered and sold the Purchased Shares in
a private placement pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act of 1933, as amended, as a transaction
by an issuer not involving a public offering.
Item 3.03 Material Modification to Rights of Security
The information set forth in Items 1.01, 2.01, 3.01,
3.02 and 5.01 of this Current Report on Form 8-K is incorporated by reference
into Item 3.03.
At the Effective Time, each outstanding share of
Bluefly's common stock (other than shares of Bluefly's common stock held
by the Purchaser or Clear Mode, shares of Bluefly's common stock held by
the Company as non-voting treasury shares, and Dissenting Shares) was converted
into the right to receive $0.10 per share in cash, without interest.
Item 5.01 Changes in Control of Registrant.
The information set forth in Items 1.02, 2.01, 3.02,
3.03 and 5.02 of this Current Report on Form 8-K is incorporated by reference
into Item 5.01.
As a result of the purchase by the Purchaser of the
shares of Bluefly's common stock from the Principal Stockholders on May
23, 2013, a change of control of Bluefly occurred. As a result of the Merger,
Bluefly became a wholly-owned subsidiary of Clear Mode. The total amount
of the consideration payable in connection with the change of control transaction
was approximately $505,000.
Item 5.02. Departure
of Directors or Certain Officers; Election of Directors;
Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the Merger, and as contemplated
by the Purchase Agreement, all the directors of Bluefly prior to the Merger
voluntarily resigned from the Board effective as of the Effective Time.
These resignations were not a result of any disagreements between Bluefly
and the former directors on any matter relating to Bluefly's operations,
policies or practices. Pursuant to the terms of the Purchase Agreement,
on May 23, 2013, the directors of Purchaser immediately prior to the Effective
Time became the directors of Bluefly following the Merger.
Pursuant to an incentive arrangement previously approved
by the Special Committee in April 2013, upon recommendation of the Compensation
Committee of the Board, Bluefly's chief executive officer, Joseph Park,
received a cash bonus of $26,500 in connection with the transactions contemplated
by the Purchase Agreement, representing 5% of the aggregate proceeds otherwise
payable to Bluefly's stockholders.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
2.1 Purchase Agreement, dated as of May 23, 2013,
between Bluefly, Inc. and Runway Acquisition Sub, Inc.
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