o
|
Preliminary
Proxy Statement.
|
o
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
o
|
Definitive
Additional Materials
|
o
|
Soliciting
Material Pursuant to
§240.14a-12
|
x
|
No
fee required.
|
o
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
1)
|
Title
of each class of securities to which transaction
applies:
|
|
2)
|
Aggregate
number of securities to which transaction applies:
|
|
3)
|
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):
|
|
4)
|
Proposed
maximum aggregate value of transaction:
|
|
5)
|
Total
fee paid:
|
o
|
Fee
paid previously with preliminary materials.
|
o
|
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.
|
1)
|
Amount
Previously Paid:
|
|
2)
|
Form,
Schedule or Registration Statement No.:
|
|
3)
|
Filing
Party:
|
|
4)
|
Date
Filed:
|
Sincerely, | |
|
1.
|
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.
|
|
2.
|
To
transact such other business as may properly come before the
meeting.
|
By Order of the Board of Directors, | |
|
1.
|
The
Proxy Statement being issued in connection with the 2009 Annual Meeting of
Stockholders;
|
|
2.
|
The
Company’s Annual Report on Form 10-K for the year ended December 31, 2008;
and
|
|
3.
|
The
form of proxy card for use in connection with the 2009 Annual Meeting of
Stockholders.
|
|
1.
|
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.
|
|
2.
|
To
transact such other business as may properly come before the
meeting.
|
Name
of Director
|
Age
|
Director
of the Company Since
|
Riad
Abrahams
|
31
|
2007
to present
|
Mario
Ciampi
|
48
|
2008
to present
|
Barry
Erdos
|
65
|
2005
to present
|
Michael
Helfand
|
49
|
2009
to present
|
Ann
Jackson
|
57
|
2005
to present
|
Martin
Miller
|
79
|
1991
to present
|
Neal
Moszkowski
|
43
|
1999
to present
|
Melissa
Payner-Gregor
|
50
|
2003
to present
|
Anthony
Plesner
|
50
|
2008
to present
|
David
Wassong
|
38
|
2001
to present
|
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
|
%
|
|
|
(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.
|
|
(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.
|
|
(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.
|
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
|
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 $50,000 paid in March 2008 for the fiscal year ended
December 31, 2007.
|
|
(15)
|
Represents
the value of the following awards granted during the year ended December
31, 2007: (a) 4,494 shares of Restricted Stock granted to Ms. Jenny in
February 2007 pursuant to the Company’s Offer to Exchange, in exchange for
Ms. Jenny forfeiting her rights to certain fully vested stock options that
would have been exercisable to purchase an aggregate of 15,458 shares of
Common Stock; and (b) 1,028 Deferred Stock Units granted in February 2007
pursuant to the Company’s Offer to Exchange, in exchange for Ms. Jenny
forfeiting her rights to certain unvested stock options that would have
been exercisable to purchase an aggregate of 1,542 shares of Common
Stock.
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
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.
|
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
|
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.
|
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;
|
|
(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 ($0.72) multiplied by the number of shares of Common
Stock subject to unvested deferred stock units held by Ms. Jenny at
December 31, 2008. Options were excluded as they were out of the money,
and as of December 31, 2008, all Restricted Stock awards had previously
vested.
|
|
(4)
|
The
life insurance proceeds represent the aggregate face value of life
insurance policies for which we pay the premiums and Ms. Jenny is
designated as the beneficiary. The payments are actually paid by the life
insurance company in a lump sum.
|
|
The
disability insurance proceeds represent the annual payout of disability
policies for which we pay the
premiums.
|
|
(5)
|
These
premiums are paid by us when due for one year after termination. The
numbers in the table are based on the premiums paid in fiscal
2008.
|
Name
(1)
|
Fees
Earned
or
Paid
in
Cash
($)
|
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.
|
By Order of the Board of Directors, | |
x Please
mark your
|
votes
as in this
|
example.
|
VOTE
FOR
ALL
NOMINEES
|
VOTE
FOR
ALL
NOMINEES,
except
as
marked to the
contrary
below
|
VOTE
WITHHELD
AUTHORITY
FROM
ALL NOMINEES
|
|||||
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
|
o
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
|
o
|
||||
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.
|
___________________________________
SIGNATURE
OF STOCKHOLDER
|
___________________________________
DATE________________
SIGNATURE
IF HELD JOINTLY
|
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.
|