OFFER TO PURCHASE FOR CASH
BY
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
UP TO 1,216,600 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $2.50 PER SHARE
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THE PRORATION PERIOD AND YOUR RIGHT TO WITHDRAW
SHARES YOU TENDER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JULY 30, 2001, UNLESS THE OFFER IS EXTENDED.
WE MAY EXTEND THE OFFER PERIOD AT ANY TIME.
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Fashionmall invites you to tender your shares of Common Stock for purchase by
Fashionmall on the terms and conditions set forth in this Offer to Purchase and
the Letter of Transmittal and other accompanying documents. We are offering:
o to purchase up to 1,216,600 shares of our Common Stock in this tender offer
at a price of $2.50 per share, net to the seller in cash, without interest;
o if the number of shares tendered is less than 1,216,600, we will purchase all
of the shares tendered, and
o if the number of shares tendered is more than 1,216,600, we will purchase
shares
o first from holders of less than 100 shares who tendered all of their
shares, and
o then, on a pro rata basis from all other shareholders who tendered
shares.
If you want to tender your shares in our offer, you should:
o specify the number of shares you want to tender, and
o follow the instructions in this document and the related documents, including
the accompanying Letter of Transmittal, to submit your shares.
OUR OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. OUR
OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS, AS DISCUSSED IN
SECTION 13.
We reserve the right to increase the number of shares we purchase by an amount
which does not exceed 2% of the outstanding shares of our Common Stock as of
June 29, 2001.
OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER. HOWEVER, NEITHER WE NOR OUR
BOARD OF DIRECTORS, NOR THE INFORMATION AGENT MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER YOUR SHARES. YOU MUST
MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES
TO TENDER.
This document contains or incorporates important information about our offer. We
urge you to read it in its entirety and refer to the information incorporated by
reference.
THE DATE OF THIS OFFER TO PURCHASE IS JULY 2, 2001.
IMPORTANT PROCEDURES
If you want to tender all or part of your shares, you must do one of the
following before our offer expires:
o if your shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee, contact the nominee and have the nominee
tender your shares for you,
o if you hold certificates in your own name, complete and sign the Letter of
Transmittal according to its instructions, and deliver it, together with any
required signature guarantee, the certificates for your shares and any other
documents required by the Letter of Transmittal, to American Stock Transfer &
Trust Company, the depositary for this offer, or
o if you are an institution participating in The Depository Trust Company,
which we call the "book-entry transfer facility" in this document, tender your
shares according to the procedure for book-entry transfer described in
SECTION 3.
If you want to tender your shares but:
o your certificates for the shares are not immediately available or cannot be
delivered to the depositary, or
o you cannot comply with the procedure for book-entry transfer, or
o your other required documents cannot be delivered to the depositary before
the expiration of our offer,
you can still tender your shares if you comply with the guaranteed delivery
procedure described in SECTION 3.
TO TENDER YOUR SHARES YOU MUST CAREFULLY FOLLOW THE PROCEDURES DESCRIBED IN THIS
DOCUMENT, THE LETTER OF TRANSMITTAL AND THE OTHER DOCUMENTS RELATED TO OUR
OFFER.
If you have any questions or need assistance, you should contact American Stock
Transfer & Trust Company, the information agent for our offer. You may request
additional copies of this document, the Letter of Transmittal or the Notice of
Guaranteed Delivery from the information agent. American Stock Transfer & Trust
Company may be reached at:
AMERICAN STOCK TRANSFER & TRUST COMPANY
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇ OR (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇
IF CALLING FROM NEW YORK CITY
SUMMARY TERM SHEET
This summary highlights the most material terms of our tender offer. You should
realize that it does not describe all of the details of our offer to the same
extent that they are described in the body of this document and the Letter of
Transmittal. We urge you to read the entire document and the related Letter of
Transmittal because they contain the full details of our offer. Where helpful,
we have included references to the sections in this document where you will find
a more complete discussion of the item referenced. A table of contents
immediately follows this summary.
WHO IS OFFERING TO PURCHASE MY SHARES? Fashionmall is offering to purchase up to 1,216,600 shares of our outstanding Common
Stock. SEE SECTION 1.
WHAT IS THE PURCHASE PRICE? The purchase price for our offer is $2.50 per share.
HOW AND WHEN WILL I BE PAID? If your shares are purchased in our offer, you will be paid the purchase price, in
cash, without interest, as soon as is practicable after the expiration of the offer
period and the acceptance of the shares for payment. SEE SECTION 4.
HOW MANY SHARES WILL FASHIONMALL PURCHASE IN We will purchase up to 1,216,600 shares of our outstanding Common Stock in our
ALL? offer, or approximately 16.9% of our outstanding Common Stock. We reserve the right
to purchase additional shares up to 2% of the outstanding shares of Common Stock,
subject to applicable legal requirements. Our offer is not conditioned on any
minimum number of shares being tendered.
IF I TENDER MY SHARES, HOW MANY OF MY SHARES All of the shares that you tender in our offer may not be purchased. If more than
WILL FASHIONMALL PURCHASE? 1,216,600 shares are tendered, we will purchase shares based on the following order
of priority:
o First, we will purchase shares from all holders of "odd lots" of less than 100
shares who properly tender all of their shares.
o Second, we will purchase shares from all other shareholders who properly tender
shares, on a pro rata basis, subject to the conditional tender provisions described
in SECTION 5. As a result, we will purchase the same percentage of shares tendered
from each tendering shareholder in this second category. We will announce this
proration percentage, if it is necessary, after our offer expires.
o Finally, if necessary to permit us to purchase 1,216,600 shares, shares
conditionally tendered (for which the condition was not initially satisfied) and not
properly withdrawn prior to the expiration date may be selected by random lot in
accordance with SECTION 5. To be eligible for purchase by random lot shareholders
whose shares are conditionally tendered must have tendered all of their shares.
As noted above, we may also choose to purchase an additional 2% of the outstanding
shares of Common Stock, subject to applicable legal rules. SEE SECTION 14.
HOW WILL FASHIONMALL PAY FOR THE SHARES? We would need a maximum of $3,041,500 to purchase 1,216,600 shares at the price of
$2.50. In addition, we expect to incur fees and expenses in connection with this
offer of approximately $100,000. We intend to fund the purchase of shares with
working capital.
HOW LONG DO I HAVE TO TENDER MY SHARES TO You may tender your shares until our offer expires. The offer is scheduled to expire
FASHIONMALL? on July 30, 2001, at 5:00 p.m., New York City time, but we may choose to extend it
at any time. We cannot assure you that we will extend our offer or, if we extend it,
for how long it will be extended. SEE SECTIONS 1 AND 14.
HOW WILL I BE NOTIFIED IF FASHIONMALL If our offer is extended, we will make a public announcement before 9:00 a.m.,
EXTENDS THIS OFFER? New York City time, on the first business day after the offer was scheduled to
expire. SEE SECTION 14.
WHAT ARE THE CONDITIONS TO FASHIONMALL'S Our obligation to accept and pay for your tendered shares is conditioned on the
OFFER? satisfaction or waiver of the conditions described in SECTION 13. In addition to
customary conditions, these conditions include the following:
(a) We will not be obligated to purchase any shares if, in our good faith reasonable
judgment, our purchase of shares in the offer
o would result in our Common Stock being held of record by fewer than 300
persons, or
o would result in our Common Stock no longer being traded on the NASDAQ National
Market System, or
o would otherwise constitute a "going private transaction" for purposes of
Rule 13e-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934; and
(b) We will not be required to proceed with the offer if we experience a material
adverse change in our business condition or are prohibited from doing so because of
legal process, or if a third party proposes, announces or makes a tender or exchange
offer, merger, business combination or other similar transaction involving us.
HOW DO I TENDER MY SHARES? To tender your shares, you must complete one of the actions described under
"Important Procedures" before the offer expires. You may also contact the
information agent or your broker for assistance. The contact information for the
information agent appears on the last page of this document. SEE SECTION 3 and the
instructions to the Letter of Transmittal.
ONCE I HAVE TENDERED SHARES IN THE OFFER, If you tender your shares and change your mind, you may withdraw your shares at any
CAN I CHANGE MY MIND? time before our offer expires. In addition, after our offer expires, if we have not
accepted for payment the shares you have tendered to us, you may withdraw your
shares at any time after August 27, 2001. SEE SECTION 6. To properly withdraw your
shares, you must timely deliver a written notice of your withdrawal to the
depositary at the address or facsimile number appearing on the last page of this
document. Your notice must specify your name, address and social security number,
the number of shares to be withdrawn, and, if the certificates have been delivered
or otherwise identified, the certificate number(s) for the shares and the name of
the registered holder(s) of the shares. All signatures on the notice of withdrawal
must be guaranteed by an eligible guarantor institution if certificates have already
been delivered. Some additional requirements apply if the certificates for shares to
be withdrawn have been delivered to the depositary or if your shares have been
tendered under the procedure for book-entry transfer set forth in SECTION 3. SEE
SECTION 6.
WHAT DO FASHIONMALL AND ITS BOARD OF Our board of directors has approved this offer. However, neither we nor our board of
DIRECTORS THINK ABOUT THIS OFFER? directors nor the information agent is making any recommendation regarding whether
you should tender or not tender your shares. You must decide whether to tender your
shares. You should discuss whether to tender your shares with your broker or other
financial or tax advisor. Directors, officers and affiliates of Fashionmall have
indicated to us that they do not intend to tender shares pursuant to this offer.
WHAT IS A RECENT MARKET PRICE OF FASHIONMALL Our Common Stock is traded on the NASDAQ National Market System under the symbol
COMMON STOCK? "FASH." On June 27, 2001, a date close to the date of this document, the closing per
share sales price as reported on NASDAQ was $2.02. WE URGE YOU TO OBTAIN MORE
CURRENT MARKET QUOTATIONS FOR YOUR SHARES. SEE SECTION 8.
WILL I HAVE TO PAY BROKERAGE COMMISSIONS OR If you are a registered shareholder and tender your shares directly to the
STOCK TRANSFER TAX IF I TENDER MY SHARES TO depositary, you will not need to pay any brokerage commissions. If you hold shares
FASHIONMALL? through a broker or bank, however, you should ask your broker or bank to see if you
will be charged a fee to tender your shares. Except as otherwise set forth in the
Letter of Transmittal, transfer taxes on the purchase of shares pursuant to this
offer will be paid by Fashionmall. SEE SECTION 1.
WHAT ARE THE UNITED STATES FEDERAL Generally, you will be subject to United States Federal income taxation when you
INCOME TAX CONSEQUENCES IF I TENDER MY SHARES receive cash from us in exchange for the shares you tender. The cash you receive
TO FASHIONMALL? will be treated either as:
o a sale or exchange eligible for capital gains treatment; or
o a dividend subject to ordinary income tax. SEE SECTION 7.
WHAT ARE THE EXPECTED BENEFITS, POTENTIAL We are making this offer because we believe that, given the current market price of
DISADVANTAGES, OF THE OFFER FOR SHAREHOLDERS? the shares, the purchase of the shares of Common Stock on the terms and conditions
outlined in this offer is an attractive investment for Fashionmall. This offer gives
shareholders an opportunity to sell all or part of their investment in our shares on
potentially more favorable terms than would otherwise be available immediately prior
to the tender offer. The offer will provide an opportunity of cash liquidity to
shareholders by allowing them to sell a substantial portion of their stock, while
allowing those shareholders who do not wish to sell at the offer price to elect not
to do so. Shareholders who choose not to tender their shares will realize a
proportionate increase in their relative equity interest in Fashionmall and in our
future earnings and assets. We note that the purchase price of $2.50 per share is
less than the book value per share of the Common Stock of Fashionmall, which was
approximately $4.74 as of March 31, 2001. However, if Fashionmall liquidated and
paid the liquidation preference to which the holder of Fashionmall's preferred stock
is entitled, the amount of such book value per share available to the holders of
Common Stock would be approximately $3.73 before taking into consideration the costs
associated with effecting a liquidation. In addition, in a liquidation of
Fashionmall there may be more cash available to shareholders than is being provided
by this offer. Furthermore, we believe we have more cash than is needed to fund our
current operations and we are considering how best to use such cash, including,
possibly, by making acquisitions, issuing special dividends or finding other options
to provide opportunities for liquidity to our shareholders at some time in the
future (which could result, individually or in the aggregate, in distributions to
shareholders exceeding the amount per share being offered in this offer). Our
purchase of shares in the offer will reduce the "public float" in our Common Stock
(the number of shares owned by outside shareholders and available for trading in the
securities markets). This could result in lower stock prices or reduced liquidity in
the trading market for Common Stock in the future. SEE SECTIONS 2 AND 11.
WHOM DO I CONTACT IF I HAVE QUESTIONS ABOUT You can contact our Information Agent, American Stock Transfer & Trust Company, at
FASHIONMALL'S OFFER? (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇ if calling from New York City, with
questions regarding this offer.
TABLE OF CONTENTS
Forward Looking Statements............................................... 1
Number of Shares; Priority of Purchases; Odd Lots; Proration............. 2
Purpose of the Offer; Certain Effects of the Offer....................... 3
Procedure for Tendering Shares........................................... 5
Purchase of Shares and Payment of the Purchase Price..................... 7
Conditional Tender of Shares............................................. 7
Withdrawal Rights........................................................ 8
Material Federal Income Tax Consequences................................. 8
▇▇▇▇▇, ▇▇▇▇▇▇▇ Price and Dividend........................................ 9
Information About Us..................................................... 10
Information about our Directors, Executive Officers and
Controlling Shareholders................................................. 11
Effect of Offer on Market for Shares;
Registration under the 1934 Act; Effect On Market........................ 12
Certain Legal Matters General............................................ 12
Certain Conditions of this Offer......................................... 13
Cancellation, Extension, Termination and Amendment....................... 14
Fees and Expenses........................................................ 15
Source and Amount of Funds............................................... 15
Recent Transactions in Our Shares........................................ 15
Miscellaneous............................................................ 15
As used in this document, the terms "Fashionmall," "▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.,"
"we," "our" and "us" refer to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation.
Forward-Looking Statements
This document contains a number of forward-looking statements regarding the
financial condition, results of operations and business of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
These statements may be made directly in this document or may be incorporated in
this document by reference to other documents. These statements may also include
references to periods following the completion of our offer. You can find many
of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," "intends," "plans," "may," "will" and "potential"
and for similar expressions. Forward-looking statements involve substantial
risks and uncertainties, including those set forth under the heading "Risk
Factors" in our Annual Report on Form 10-KSB for the year ended December 31,
2000, as well as those detailed in our Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 2001 and in our other public filings. Some of
the factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include, but are not limited to,
the following possibilities:
o The timing and occurrence or non-occurrence of events, including the
conditions to our offer, may be subject to circumstances beyond our
control.
o We expect continuing losses from operations, and future profitability
remains uncertain. However, we are shrinking our losses, possibly
approaching break even, and may even choose, if business continues to
erode, to shutter the current operating business and look for other
opportunities for our corporation.
o We are experiencing increased customer turnover and derive a
substantial percentage of our business from a few customers.
o We are subject to all the risks that affect Internet companies
generally, including that increased use of the Internet as an
advertising medium may have a material adverse effect on our results
of operations.
o Online advertising as a sector has suffered a significant decline of
late and there is no certainty that our current business model will be
able to survive, nor is there any assurance that we will be able to
shift our business model or find other businesses to enter which will
create future growth and profitability.
All subsequent written and oral forward-looking statements concerning our offer
or other matters addressed in this document and attributable to us or any person
acting on our behalf are qualified by these cautionary statements. We do not
undertake any obligation to release publicly any revisions to such
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
1
FASHIONMALL'S OFFER
SECTION 1. NUMBER OF SHARES; PRIORITY OF PURCHASES; ODD LOTS; PRORATION
GENERAL. On the terms and subject to the conditions of our offer, as set forth
in this document and the related Letter of Transmittal, we are offering to
purchase up to 1,216,600 shares of our Common Stock for a purchase price of
$2.50 per share, net to the seller in cash, without interest, the "Purchase
Price."
The term "expiration date" means 5:00 p.m., New York City time, on July 30,
2001, unless and until we, in our sole discretion, extend the period of time for
which our offer will remain open. If extended by us, the term "expiration date"
means the latest time and date at which our offer, as extended, expires. SEE
SECTION 14 for a description of our right to extend, cancel, terminate or amend
our offer.
Shares properly tendered and not withdrawn will be purchased at the Purchase
Price upon the terms and subject to the conditions of our offer, including the
odd lot, proration and conditional tender provisions described below. In
accordance with the rules of the Securities and Exchange Commission, we may, and
we reserve the right to, purchase in our offer an additional amount of shares,
not to exceed 2% of our outstanding Common Stock, without amending or extending
our offer. SEE SECTION 14.
All shares tendered and not purchased because of proration or the conditional
tender procedures, will be returned to you at our expense as soon as practicable
following the expiration date.
Tendering shareholders will not be obligated to pay any charges or expenses of
American Stock Transfer & Trust Company, the depositary for our offer (the
"depositary"), or any brokerage commissions. Except as set forth in Instruction
6 of the Letter of Transmittal, transfer taxes on the purchase of shares
pursuant to this offer will be paid by Fashionmall.
This document and the related Letter of Transmittal will be mailed to record
holders of shares of our Common Stock and will be furnished to brokers, banks
and similar persons whose names or the names of whose nominees appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of our Common Stock.
PRIORITY OF PURCHASES. Upon the terms and subject to the conditions of our
offer, if 1,216,600 or fewer shares are properly tendered and not properly
withdrawn, we will purchase all properly tendered shares at the Purchase Price.
Upon the terms and subject to the conditions of our offer, if more than
1,216,600 shares are validly tendered and not withdrawn, we will purchase such
validly tendered shares in the following order of priority:
o First, we will purchase shares properly tendered and not properly
withdrawn from any "odd lot" holder (as defined below) who
o tenders all the shares owned (beneficially or of record) by the
odd lot holder; and
o completes thesection entitled "Odd Lots" in the letter of
transmittal and, if applicable, in the notice of guaranteed
delivery; and
o Second, after the purchase of all the shares properly tendered by odd
lot holders, subject to the conditional tender provisions described in
SECTION 5, we will purchase shares from all other shareholders who
properly tender shares, on a pro rata basis with appropriate
adjustment to avoid fractional shares. As a result, we will purchase
the same percentage of shares tendered from each tendering shareholder
in this second category. We will announce this proration percentage,
if it is necessary, after our offer expires.
o Finally, if necessary to permit us to purchase 1,216,600 shares,
shares conditionally tendered (for which the condition was not
initially satisfied) and not properly withdrawn prior to the
expiration date, will, to the extent feasible, be selected for
purchase by random lot in accordance with SECTION 5. To be eligible
for purchase by random lot shareholders whose shares are conditionally
tendered must have tendered all of their shares.
ODD LOT HOLDERS. For purposes of our offer, the term "odd lot holder" means any
person who owns, beneficially or of record, a total of fewer than 100 shares. As
set forth above, shares of odd lot holders will be accepted for payment before
proration, if any, of the purchase of other tendered shares. To qualify for this
preference, an odd lot holder must tender all shares owned, beneficially or of
record, by the odd lot holder and must so indicate in the Letter of Transmittal
or, if applicable, the Notice of Guaranteed Delivery. This preference is not
available to beneficial or record holders of a total of 100 or more shares, even
if these holders have separate accounts or certificates representing fewer than
100 shares.
2
PRORATION. If proration of tendered shares is required, we will determine the
final proration factor as promptly as practicable after the expiration date.
Proration for each shareholder tendering shares, other than odd lot holders,
will be based on the ratio of the number of shares tendered by such shareholder
to the total number of shares tendered by all shareholders (other than odd lot
holders), subject to the conditional tender provisions described in SECTION 5.
This ratio will be applied to shareholders tendering shares to determine the
number of shares (rounded up to the nearest whole share) that will be purchased
from each such shareholder pursuant to our offer.
Because of the potential difficulty in determining the number of shares properly
tendered and not properly withdrawn, including shares tendered by guaranteed
delivery procedures as described in SECTION 3, and because of the odd lot
procedures described above and the conditional tender procedures described in
SECTION 5, we do not expect that we will be able to announce the final proration
percentage or commence payment for any shares purchased under our offer until
seven to ten business days after the expiration date. The preliminary results of
any proration will be announced by press release as soon as practicable after
the expiration date. Shareholders may obtain preliminary proration information
from the information agent and may be able to obtain this information from their
brokers.
As described in SECTION 7, the number of shares that we will purchase from a
shareholder under our offer may affect the United States federal income tax
consequences to that shareholder and, therefore, may be relevant to a
shareholder's decision whether or not to tender shares. The Letter of
Transmittal affords each shareholder the opportunity to designate the order of
priority in which shares are to be purchased in the event of proration, should a
shareholder decide to do so for federal income tax reasons. In addition,
shareholders may choose to submit a "conditional tender" under the procedures
discussed in SECTION 5 in order to structure their tender for federal income tax
reasons.
SECTION 2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
On August 11, 2000, our Board of Directors approved our repurchase of up to
1,000,000 shares of our Common Stock. From the approval of that share buyback to
June 11, 2001, we have repurchased approximately 284,000 shares of our Common
Stock in open market transactions and remain significantly short of our initial
buyback goal. Restrictions on company buybacks and the relatively thin trading
volume of our stock have limited the quantity of shares we have been able to
purchase during portions of the buyback period. On June 11, 2001 our board of
directors approved this offer.
PURPOSE OF THE OFFER. We are making this offer because our board of directors
believes that, given our business, assets and prospects and the current market
price of the shares, the purchase of the shares pursuant to the offer is an
attractive investment for Fashionmall. We have sufficient resources, in
available cash, to fund the amount required to purchase shares under the offer
and pay related expenses.
In addition, we believe the offer may be attractive from the perspective of our
shareholders:
o The offer provides shareholders who are considering a sale of all or a
portion of their shares the opportunity to sell their shares pursuant
to the offer for cash without the usual transaction costs associated
with market sales.
o Any odd lot holders whose shares are purchased pursuant to the offer
not only will avoid the payment of brokerage commissions for their
sale of shares directly to Fashionmall, but also will avoid any
applicable odd lot discounts payable on sales of odd lots.
o The offer also may give shareholders the opportunity to sell their
shares at the Purchase Price which may be greater than market prices
prevailing immediately prior to the announcement of the offer.
o The offer will provide an opportunity of cash liquidity to
shareholders by allowing them to sell a substantial portion of their
stock, while allowing those shareholders who do not wish to sell at
the offer price to elect not to do so.
o To the extent the purchase of shares in the offer results in a
reduction in the number of shareholders of record, the costs to us for
services to shareholders will be reduced.
o This offer allows shareholders to sell a portion of their shares while
retaining a continuing equity interest in Fashionmall. Shareholders
who determine not to accept the offer will increase their
proportionate interest in Fashionmall's equity, and thus in
Fashionmall's future operations and assets, subject to Fashionmall's
right to issue additional shares and other equity securities in the
future.
3
The offer also presents some potential risks and disadvantages to Fashionmall
and our continuing shareholders.
o The offer will result in a decrease in the amount of cash held by
Fashionmall. While Fashionmall believes it has excess cash given its
current operations, it is considering other strategies, including the
possibility of making acquisitions, which could turn out to be
beneficial to shareholders. SEE SECTION 9.
o The offer will reduce the "public float" (the number of shares owned
by outside shareholders and available for trading in the securities
markets). This may result in lower stock prices or reduced liquidity
in the trading market for Common Stock in the future.
o The purchase price of $2.50 per share is less than the book value per
share of the Common Stock of Fashionmall, which was approximately
$4.74 as of March 31, 2001. However, if Fashionmall liquidated and
paid the liquidation preference to which the holder of Fashionmall's
preferred stock is entitled, the amount of such book value per share
available to the holders of Common Stock would be approximately $3.73
before giving effect to any costs associated with a liquidation of the
corporation and all of its assets. In addition, in a liquidation of
Fashionmall there may be more cash available to shareholders than is
being provided by this offer.
o The purchase price of $2.50 per share is less than the amount offered
by various third parties to purchase Fashionmall recently (though no
formal tender offers were made by such parties). It should be noted,
however, that Fashionmall's Board of Directors rejected all such
offers.
o Fashionmall is considering a variety of strategies, and, while there
can be no assurance that we will find a suitable opportunity,
Fashionmall may, at its option, enter into a merger transaction, make
acquisitions, sell assets, issue special dividends (which could,
individually or in the aggregate, exceed the amount per share being
offered in our offer) or find other options to provide opportunities
for liquidity to our shareholders at some time in the future.
o Our Chief Executive Officer, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, currently holds in
excess of 50% of the outstanding shares of our Common Stock. Following
this offer, ▇▇. ▇▇▇▇▇▇▇'▇ percentage ownership of our Common Stock
will likely increase, which could make an acquisition of Fashionmall
by a third party difficult.
We may in the future purchase additional shares on the open market, in private
transactions, through tender offers or otherwise, subject to the approval of our
board of directors. Future purchases by us may be on the same terms or on terms
that are more or less favorable to the shareholders than the terms of our offer.
Rule 13e-4 promulgated under the 1934 Act prohibits us and our affiliates from
purchasing any shares, other than pursuant to our offer, until at least ten
business days after the expiration date. Any possible future purchases by us
will depend on many factors, including market price of the shares, the results
of our offer, our business and financial position and general economic and
market conditions.
Shareholders who do not tender their shares pursuant to our offer and
shareholders who otherwise retain an equity interest in Fashionmall (including
as a result of a partial tender of their shares, or a proration pursuant to the
offer or a conditional tender the condition for which was not satisfied) will
continue to be shareholders of Fashionmall with the attendant risks and rewards
associated with owning the equity securities of Fashionmall.
OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER. HOWEVER, NEITHER WE NOR OUR
BOARD OF DIRECTORS, NOR THE INFORMATION AGENT MAKES ANY RECOMMENDATION AS TO
WHETHER A SHAREHOLDER SHOULD TENDER OR REFRAIN FROM TENDERING HIS OR HER SHARES,
AND NEITHER WE NOR OUR BOARD OF DIRECTORS HAS AUTHORIZED ANY PERSON TO MAKE ANY
SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL
INFORMATION CONTAINED IN THIS OFFER, CONSULT THEIR OWN INVESTMENT AND TAX
ADVISORS AND MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER. DIRECTORS, OFFICERS AND AFFILIATES OF FASHIONMALL HAVE
INDICATED TO US THAT THEY DO NOT INTEND TO TENDER SHARES PURSUANT TO THIS OFFER.
SECTION 10 PROVIDES INFORMATION ABOUT THEIR CURRENT SHARE OWNERSHIP.
4
USE OF SHARES ACQUIRED. The shares we purchase pursuant to this offer will
become treasury stock and will be available for issuance by Fashionmall in the
future without further shareholder action (except as may be required by
applicable law or the rules applicable to companies with shares traded on the
NASDAQ National Market System or any other securities exchange on which the
shares may be listed) for purposes including, but not limited to, the
acquisition of other businesses, the raising of additional capital for use in
our businesses and the satisfaction of obligations under existing or future
employee benefit plans. We do not currently issue shares under any compensatory
and benefit plans other than our stock option plan, and we currently have no
plans for the issuance of shares purchased pursuant to our offer.
SECTION 3. PROCEDURE FOR TENDERING SHARES
To tender shares pursuant to our offer, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with the certificates
representing the tendered shares and any other required documents, must be
transmitted to and received by the depositary at its address set forth on the
last page of this document prior to the expiration date of the offer. The method
of delivery of all required documents is at the option and risk of the tendering
shareholder. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended.
In the Letter of Transmittal, the tendering shareholder must: (i) set forth his
name and address; (ii) set forth the number of shares he is tendering; and (iii)
set forth the number of the stock certificate(s) representing such shares.
In cases where shares are tendered by a registered holder of Fashionmall Common
Stock who has completed either the box entitled "Special Payment Instructions"
or the box entitled "Special Delivery Instructions" on the Letter of
Transmittal, all signatures on the letters of transmittal must be guaranteed by
an "Eligible Institution." An "Eligible Institution" is a bank, broker dealer,
credit union, savings association or other entity that is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as that term is defined in Rule 17Ad-15 promulgated
under the Securities Exchange Act of 1934, as amended. If the certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if certificates for unpurchased shares are to be issued to a
person other than the registered holder(s), the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signature(s) on the certificates or stock powers guaranteed as aforesaid.
A tender of shares pursuant to the procedures described below in this Section
will constitute a binding agreement between the tendering shareholder and
Fashionmall upon the terms and subject to the conditions of our offer.
THE METHOD OF DELIVERING ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT YOUR ELECTION AND
RISK. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
ALL DELIVERIES IN CONNECTION WITH OUR OFFER, INCLUDING A LETTER OF TRANSMITTAL
AND CERTIFICATES FOR SHARES, MUST BE MADE TO THE DEPOSITARY AND NOT TO US, OR
THE BOOK-ENTRY TRANSFER FACILITY. ANY DOCUMENTS DELIVERED TO US OR THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT BE FORWARDED TO THE DEPOSITARY AND
THEREFORE WILL NOT BE DEEMED TO BE PROPERLY TENDERED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY DELIVERY. The depositary will establish an account with respect to
the shares at The Depository Trust Company ("DTC") for purposes of our offer
within two business days after the date of this document. Any financial
institution that is a participant in DTC's system may make book-entry delivery
of shares by causing DTC to transfer such shares into the depositary's account
in accordance with DTC's procedure for such transfer. Even though delivery of
shares may be effected through book-entry transfer into the depositary's account
at DTC, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantee, or an Agent's Message
in the case of a book-entry transfer, and any other required documentation, must
in any case be transmitted to and received by the depositary at its address set
forth on the last page of this document prior to the expiration date, or the
guaranteed delivery procedures set forth herein must be followed. Delivery of
the Letter of Transmittal(or other required documentation) to DTC does not
constitute delivery to the depositary.
GUARANTEED DELIVERY. If you want to tender your shares pursuant to our offer but
your share certificates are not immediately available, the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach the depositary prior to the expiration
date, you can still tender your shares if all the following conditions are met:
o the tender is made by or through an Eligible Institution;
o the depositary receives by hand, mail, overnight courier or facsimile
transmission, prior to the expiration date, a properly completed and
duly executed Notice of Guaranteed Delivery in the form we have
provided with this document (with signatures guaranteed by an Eligible
Institution); and
o the depositary receives, within three NASDAQ National Market System
trading days after the date of its receipt of the notice of guaranteed
delivery,
o the certificates for all tendered shares, or
confirmation of receipt of the shares pursuant to the
procedure for book-entry transfer as described above,
and
5
o a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), or an Agent's
Message in the case of a book-entry transfer, and any
other documents required by the letter of transmittal.
In any event, the exchange of the Purchase Price for shares tendered and
accepted for purchase pursuant to our offer will be made only after timely
receipt by the depositary of certificates for the shares, properly completed,
duly executed letter(s) of transmittal and any other required documents.
To avoid backup federal income tax withholding with respect to the Purchase
Price received by a shareholder pursuant to our offer, the shareholder must
provide the depositary with a correct taxpayer identification number or certify
that he or she is not subject to backup Federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO OBLIGATION
TO GIVE NOTICE OF DEFECTS. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of shares will be
determined by us in our sole discretion, and our determination will be final and
binding. We reserve the absolute right to reject any or all tenders determined
by us not to be in proper form or the acceptance or purchase for which may, in
the opinion of our counsel, be unlawful. We also reserve the absolute right to
waive prior to the expiration date any condition (other than the nonwaivable
conditions) or any defect or irregularity in the tender of any shares. No tender
of shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. Our interpretation of the terms and
conditions of our offer (including this document, the Letter of Transmittal and
its instructions and other offer materials) will be final and binding. Neither
we, the depositary nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares or
will incur any liability for failure to give any such notification.
YOUR REPRESENTATIONS AND WARRANTIES; OUR ACCEPTANCE CONSTITUTES AN AGREEMENT. A
tender of shares under any of the procedures described above will constitute
your acceptance of the terms and conditions of our offer, as well as your
representation and warranty to us that:
o you have a "net long position" in the shares or equivalent securities
at least equal to the shares tendered within the meaning of Rule 14e-4
promulgated by the SEC under the Exchange Act, and
o the tender of shares complies with Rule 14e-4.
It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
shares for that person's own account unless, at the time of tender and at the
end of the proration period, the person so tendering:
o has a "net long position" equal to or greater than the amount tendered
in the subject securities or securities immediately convertible into,
or exchangeable or exercisable for, the subject securities, and
o will deliver or cause to be delivered the shares in accordance with
the terms of the tender offer.
Rule 14e-4 provides a similar restriction applicable to the tender or guarantee
of a tender on behalf of another person.
Our acceptance for payment of shares tendered under our offer will constitute a
binding agreement between you and us upon the terms and conditions of our offer
described in this and related documents.
FEDERAL BACKUP WITHHOLDING TAX. Under the United States federal backup
withholding tax rules, 31% (30.5% effective August 7, 2001) of the gross
proceeds payable to a shareholder or other payee in the tender offer must be
withheld and remitted to the United States Treasury, unless the shareholder or
other payee provides such person's taxpayer identification number (employer
identification number or social security number) to the depositary and certifies
under penalties of perjury that such number is correct or otherwise establishes
an exemption. If the depositary is not provided with the correct taxpayer
identification number or another adequate basis for exemption, the holder may be
subject to certain penalties imposed by the Internal Revenue Service. Therefore,
each tendering shareholder should complete and sign the substitute Form W-9
included as part of the Letter of Transmittal in order to provide the
information and certification necessary to avoid backup withholding, unless such
shareholder otherwise establishes to the satisfaction of the depositary that the
shareholder is not subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign shareholders (in addition to foreign corporations)) are not subject to
these backup withholding rules. In order for a foreign shareholder to qualify as
an exempt recipient, that shareholder must submit an IRS Form W-8 or a
Substitute Form W-8, signed under penalties of perjury, attesting to that
shareholder's exempt status. The applicable form can be obtained from the
depositary. See Instruction 9 of the Letter of Transmittal.
TO PREVENT FEDERAL BACKUP WITHHOLDING TAX, CURRENTLY EQUAL TO 31% (30.5%
EFFECTIVE AUGUST 7, 2001) OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES
PURCHASED UNDER OUR OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN
EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE
SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE OTHER
INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL.
For a discussion of United States federal income tax consequences to tendering
shareholders, SEE SECTION 7.
6
SECTION 4. PURCHASE OF SHARES AND PAYMENT OF THE PURCHASE PRICE
ACCEPTANCE. Upon the terms and conditions of our offer, as soon as practicable
following the expiration date, we will:
o pay for shares properly tendered and not properly withdrawn, and
o accept for payment, pay for and thereby purchase, shares properly
tendered and not properly withdrawn. The acceptance for purchase and
the purchase of shares validly tendered and not withdrawn will be made
as soon as practicable after all the conditions to our offer have been
satisfied or waived. For purposes of our offer, we will be deemed to
have accepted for purchase and thereby acquired tendered shares as, if
and when we give oral or written notice to the depositary of our
acceptance of the tenders of such shares (the "Acceptance Notice").
Upon the terms and conditions of our offer, as soon as practicable after the
expiration date, we will accept for payment and pay a single per share purchase
price for 1,216,600 shares, subject to increase or decrease as provided in
SECTIONS 1 and 14, if properly tendered and not properly withdrawn, or such
lesser number of shares as are properly tendered and not properly withdrawn, at
the Purchase Price of $2.50.
DEPOSITARY. Delivery of the aggregate Purchase Price in exchange for shares
pursuant to our offer will be made by the depositary as soon as practicable
after receipt of the Acceptance Notice. The depositary will act as agent for
tendering shareholders for the purpose of receiving the Purchase Price from us
and remitting the same to tendering shareholders. Under no circumstances will we
pay interest by reason of any delay in making such payment.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN AND
RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO FEDERAL INCOME BACKUP WITHHOLDING TAX OF 31%
(30.5% EFFECTIVE AUGUST 7, 2001) OF THE GROSS PROCEEDS PAID TO THE SHAREHOLDER
OR OTHER PAYEE UNDER OUR OFFER. SEE SECTION 3. ALSO SEE SECTION 7 REGARDING
ADDITIONAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
RETURN OF CERTIFICATES. If any tendered shares are not accepted for purchase
pursuant to the terms and conditions of our offer for any reason, or if
certificates are submitted for more shares than are tendered, or if we should
cancel the offer because any other condition of our offer is not satisfied or
waived, certificates for such unpurchased shares will be returned to the
tendering shareholder by the depositary as soon as practicable following
consummation, cancellation or termination of our offer.
SECTION 5. CONDITIONAL TENDER OF SHARES
Under the circumstances described above in SECTION 1, we may prorate the number
of shares purchased pursuant to our offer. Shareholders may wish to tender their
shares, but only on the condition that all or some other minimum number of their
shares are purchased. In addition, as discussed in SECTION 7, the number of
shares to be purchased from a particular shareholder may affect the tax
treatment of the purchase to the shareholder and the shareholder's decision
whether to tender and how many shares to tender. The conditional tender
alternative allows a shareholder to tender shares subject to the condition that
a specified minimum number of the shareholder's shares tendered pursuant to a
Letter of Transmittal - which may be all of the shares tendered - must be
purchased if any of the shareholder's tendered shares are purchased. The
conditional tender alternative is made available so that a shareholder may: (i)
know with certainty the number of his shares, if any, which will be purchased
pursuant to our offer (provided his shares are properly tendered and the
condition of his tender is otherwise satisfied); or (ii) seek to structure the
purchase of shares pursuant to our offer in such a manner that it will be
treated as a sale of such shares by the shareholder, rather than the payment of
a dividend to the shareholder, for federal income tax purposes. EACH SHAREHOLDER
IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR.
If you wish to make a conditional tender you must indicate this in the box
captioned "Conditional Tenders" in the Letter of Transmittal or, if applicable,
in the Notice of Guaranteed Delivery. You also must calculate and appropriately
indicate the minimum number of shares that must be purchased if any are to be
purchased. After our offer expires, if more than 1,216,600 shares have been
properly tendered and not properly withdrawn and we must prorate our acceptance
of and payment for tendered shares, we will calculate a preliminary proration
percentage based upon all shares properly tendered, conditionally or
unconditionally. If the effect of this preliminary proration would be to reduce
the number of shares to be purchased from any shareholder below the minimum
number specified by that shareholder, the conditional tender will automatically
be regarded as withdrawn, unless chosen by lot for reinstatement as discussed in
the next paragraph.
After giving effect to these withdrawals, we will accept the remaining shares
properly tendered, conditionally or unconditionally, on a pro rata basis, if
necessary. If we are able to purchase all of the remaining tendered shares and
the number that we would purchase would be below 1,216,600, then, to the extent
feasible, we will select enough of the conditional tenders that would otherwise
have been deemed withdrawn to permit us to purchase 1,216,600 shares. To be
eligible for purchase by random lot, shareholders whose shares are conditionally
tendered must have tendered all of their shares.
All shares tendered by a shareholder subject to a conditional tender pursuant to
the Letter of Transmittal or Notice of Guaranteed Delivery, regarded as
withdrawn as a result of proration and not eventually purchased, will be
returned as soon as practicable after the EXPIRATION DATE without any expense to
the shareholder.
7
SECTION 6. WITHDRAWAL RIGHTS
Shares tendered pursuant to our offer may be withdrawn at any time prior to the
time the offer expires on the EXPIRATION DATE. In addition, unless earlier
accepted for purchase in the offer, shares tendered may also be withdrawn at any
time after August 27, 2001. For a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be
received by the Expiration Date by the depositary at its address set forth on
the last page of this document and must specify the name of the person having
tendered the shares to be withdrawn and the number of shares to be withdrawn,
and, if certificates have been delivered or otherwise identified to the
depositary, the name of the registered holder and the serial numbers of the
particular certificates evidencing the shares withdrawn must also be furnished
to the depositary.
If certificates have already been delivered, the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution (i.e., a bank, broker
dealer, credit union, savings association or other entity that is a member in
good standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which is an
"eligible guarantor institution," as that term is defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended) unless such
shares have been tendered for the account of any Eligible Institution.
All questions as to the form and validity (including time of receipt) of notices
of withdrawal will be determined by us in our sole discretion, and our
determination will be final and binding. Neither we, the depositary nor any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any shares properly withdrawn will be
deemed not to have been validly tendered for purposes of our offer. However,
withdrawn shares may be re-tendered by following one of the procedures described
under SECTION 3 at any time prior to the expiration date.
SECTION 7. MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. federal income tax consequences
to holders of shares relevant to our offer. The discussion contained in this
summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), temporary and final Treasury Regulations promulgated thereunder,
proposed Treasury Regulations, published rulings, notices and other
administrative pronouncements of the Internal Revenue Service ("IRS"), and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could materially affect the tax
consequences described herein.
This summary assumes that the shares are held as capital assets, within the
meaning of Section 1221 of the Code. This summary does not address all of the
tax consequences that may be relevant to particular shareholders in light of
their personal circumstances, or to certain types of shareholders including,
without limitation, financial institutions, dealers in securities or
commodities, securities traders that elect to mark to market, foreign persons,
insurance companies, tax-exempt organizations, persons who hold shares as a
position in a straddle or as a part of a hedging or conversion transaction, and
persons who acquired shares pursuant to an exercise of employee stock options or
rights or otherwise as compensation. In particular, the discussion of the
consequences of an exchange of shares for cash pursuant to our offer applies
only to a United States holder. For purposes of this summary, a "United States
holder" is a holder of shares that is: (i) a citizen or resident of the United
States; (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States, any state or any political subdivision
thereof; (iii) an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or (iv) a trust whose administration is
subject to the primary supervision of a U.S. court and the trustees of which are
one or more U.S. persons who have the authority to control all substantial
decisions of the trust.
The summary does not address the state, local or foreign tax consequences of
participating in our offer. Each shareholder should consult its own tax advisor
concerning the decision to participate in our offer as well as the specific tax
consequences (foreign, federal, state and local) applicable to it.
An exchange of shares for cash pursuant to our offer by a United States holder
will be a taxable transaction for U.S. federal income tax purposes. As a
consequence of the exchange, a United States holder will, depending on such
holder's particular circumstances, be treated either as having sold such
holder's shares or as having received a dividend distribution from Fashionmall,
with the tax consequences described below.
Under the Code, a United States holder whose shares are exchanged for cash
pursuant to our offer will be treated as having sold such holder's shares,
rather than as having received a dividend, if the exchange: (i) results in a
"complete termination" of such holder's equity interest in Fashionmall; (ii) is
"substantially disproportionate" with respect to such holder; or (iii) is "not
essentially equivalent to a dividend" with respect to the holder. For purposes
of this analysis, in addition to shares actually owned by a United States
holder, such holder will be deemed to constructively own certain shares. For
purposes of these constructive ownership rules, a holder is deemed to
constructively own shares which are owned by other persons, such as certain
family members, certain trusts or other entities. Because the constructive
ownership rules are complex, each United States holder should consult its own
tax advisor as to the applicability of these rules.
If a United States holder sells shares to persons other than Fashionmall at or
about the time such holder also sells shares to Fashionmall pursuant to our
offer and the various sales effected by the holder are part of an overall plan
to reduce or terminate such holder's proportionate interest in Fashionmall, then
the sales to persons other than Fashionmall may, for U.S. federal income tax
purposes, be integrated with the holder's sale of shares pursuant to our offer
and, if integrated, should be taken into account in determining whether the
holder satisfies any of the three tests described below.
A United States holder will satisfy the "complete termination" test if either
(1) all of the shares actually and constructively owned by such holder are
exchanged for cash pursuant to our offer, or (2) all of the shares actually
owned by such holder are exchanged for cash pursuant to our offer and, with
respect to the shares constructively owned by such holder which are not
exchanged pursuant to the offer, such holder is eligible to waive (and
effectively waives) constructive ownership of all such shares. Holders
considering making such a waiver should do so in consultation with their own tax
advisors.
8
A United States holder will satisfy the "substantially disproportionate" test if
immediately after the exchange such holder owns, actually or constructively,
less than 50% of the total combined voting power of all classes of stock of
Fashionmall entitled to vote and such holder's percentage interest in
Fashionmall (i.e., the number of voting shares actually and constructively owned
by such holder divided by the number of voting shares outstanding) is less than
80% of such holder's percentage interest in such voting shares in Fashionmall
prior to the exchange.
A United States holder will satisfy the "not essentially equivalent to a
dividend" test if the reduction in such holder's percentage interest in
Fashionmall, as described above, constitutes a "meaningful reduction of the
holder's proportionate interest" given such holder's particular facts and
circumstances. The IRS has indicated in published rulings that a minority
shareholder in a publicly traded corporation whose relative stock interest is
minimal and who exercises no control with respect to corporate affairs is
considered to have a "meaningful reduction" generally if such shareholder has
some reduction in such shareholder's stock ownership percentage.
Fashionmall cannot predict whether or to what extent our offer will be
oversubscribed. If our offer is oversubscribed, proration of tenders pursuant to
our offer will cause Fashionmall to accept fewer shares than are tendered.
Therefore, a holder can be given no assurance that a sufficient number of such
holder's shares will be exchanged pursuant to our offer to ensure that such
exchange will be treated as a sale, rather than as a dividend, for U.S. federal
income tax purposes pursuant to the rules discussed above. A holder may wish to
condition his tender on a minimum number of shares being redeemed as described
in SECTION 5 above, so that none of such holder's shares are redeemed unless
Fashionmall accepts a sufficient number of his shares so that he satisfies one
or more of the tests described above. While such a conditional tender may ensure
that a redemption of a holder's shares would be treated as an exchange for
federal income tax purposes, a conditional tender may result in no shares being
accepted by Fashionmall. In determining the minimum number of shares to be
accepted for purchase in such a conditional tender, a holder should take into
account shares constructively owned by the holder pursuant to the rules
discussed above. Shareholders considering a conditional tender due to the
foregoing reasons are urged to consult with their tax advisors regarding the
relative advantages and disadvantages of such a tender.
If a United States holder's sale of its shares satisfies one of the tests
described above, such holder will recognize capital gain or loss equal to the
difference between the amount of cash received and such holder's tax basis in
the shares sold. Any capital gain or loss so recognized generally will
constitute long-term capital gain or loss if the holding period for the holder's
shares sold is greater than one year as of the date of the sale. In the case of
a United States holder that is an individual, estate or trust, such long-term
capital gain or loss generally will be taxed at a maximum rate of 20%. The
federal income tax rates applicable to capital gains for taxpayers other than
individuals, estates and trusts are currently the same as those applicable to
ordinary income. A United States holder's ability to deduct capital losses from
ordinary income is limited. Capital losses generally may be used by a corporate
taxpayer only to offset capital gains, and by a taxpayer other than a
corporation only to the extent of capital gains plus $3,000 of ordinary income
per year.
If a United States holder who sells shares pursuant to our offer does not meet
one of the tests described above and, thus, is not treated as having exchanged
such holder's shares for cash, the entire amount of cash received by such holder
will be treated as a dividend to the extent of Fashionmall's current and
accumulated earnings and profits. Fashionmall does not anticipate its current
and accumulated earnings and profits will be sufficient to cover the amounts of
any such dividend. Therefore, Fashionmall believes no gain or loss will be
recognized by such holders. As to an exchange which is treated as a dividend, a
United States holder's tax basis in the shares sold generally will be added to
such holder's tax basis in such holder's remaining shares. To the extent that
cash received, if any, in exchange for shares is treated as a dividend to a
corporate United States holder, such holder will be: (i) eligible for a
dividends-received deduction (subject to applicable limitations); and (ii)
subject to the "extraordinary dividend" provisions of the Code. To the extent,
if any, that the cash received by a United States holder exceeds Fashionmall's
current and accumulated earnings and profits, it will be treated first as a
tax-free return of such holder's tax basis in the shares and thereafter as
capital gain.
Shareholders whose shares are not purchased pursuant to the offer will not incur
any tax liability as a result of the consummation of our offer.
FASHIONMALL SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PRECISE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THIS OFFER.
SECTION 8. SHARE, TRADING PRICE AND DIVIDEND INFORMATION
SHARES OUTSTANDING. On May 21, 1999, we completed our initial public offering of
3,000,000 shares of Common Stock at a per share price of $13, resulting in net
proceeds, after related expenses, to Fashionmall of approximately $35,000,000.
As of June 29, 2001, we had outstanding 7,216,600 shares of Common Stock, $.01
par value. The 1,216,600 shares of Common Stock that we are offering to purchase
represent approximately 16.9% of our issued and outstanding Common Stock as of
June 29, 2001. Assuming that we purchase all 1,216,600 shares of Common Stock
that we are offering to purchase, the number of our issued and outstanding
shares of Common Stock would be reduced to 6,000,000 shares immediately after
the offer.
9
SHARE PRICES. Our Common Stock is traded on the NASDAQ National Market System
under the symbol "FASH." The following table shows the high and low bid prices
for our Common Stock for each quarter since December 31, 1998. No dividends have
been paid on the Common Stock during the past two years.
YEAR
QUARTER LOW HIGH
------- --- ----
2001
1st Quarter $1.406 $4.750
2000
1st Quarter $3.188 $5.750
2nd Quarter $2.000 $3.750
3rd Quarter $1.750 $2.625
4th Quarter $1.250 $5.000
1999
1st Quarter n/a n/a
2nd Quarter $6.375 $15.875
3rd Quarter $5.000 $12.250
4th Quarter $4.188 $8.250
On June 27, 2001, a date close to the date of this document, the last per share
sale price of Fashionmall Common Stock as reported on the NASDAQ National Market
System was $2.02. WE URGE YOU TO OBTAIN CURRENT QUOTATIONS OF THE MARKET PRICE
OF OUR COMMON STOCK.
Since August 11, 2000, we have repurchased approximately 284,000 shares of our
Common Stock with prices ranging from $1.43 to $2.20 in open market
transactions. To our knowledge, other than the purchases of our Common Stock by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ described in SECTION 10, there have been no transactions in our
Common Stock by any of our directors, executive officers or controlling
shareholders or by any executive officer or director of any of our subsidiaries
within the 60 day period preceding the date of this document.
SECTION 9. INFORMATION ABOUT US
GENERAL. Fashionmall was founded in 1994, launched its first website in July
1995, and was incorporated on February 26, 1999. In connection with
Fashionmall's initial public offering completed on May 21, 1999, Internet
Fashion Mall, LLC, a limited liability company, changed its name to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. Fashionmall operates multiple Internet properties within
the fashion lifestyle segment and generates revenues from these properties by
charging fees for the placement of either a store, links, advertising, content
or other materials on the sites. Fashionmall's properties include
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, a general fashion mall, ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇, an online
outlet mall, and ▇▇▇.▇▇▇.▇▇▇, a global style guide for the Web. Fashionmall's
clients, which typically pay a fixed or variable fee for site placements tied to
the location and or amount of traffic they are exposed to, include traditional
and on-line retailers and catalogs as well as manufacturers, magazines, and
advertisers who desire to tap into our consumer traffic.
WHERE YOU CAN FIND ADDITIONAL INFORMATION. We are subject to the information and
reporting requirements of the Exchange Act, and in accordance with such laws we
file with the SEC periodic reports, proxy statements and other information
relating to our business, financial condition and other matters. We are required
to disclose in these proxy statements filed with the SEC certain information, as
of particular dates, concerning our directors and executive officers, their
compensation, stock options granted to them, the principal holders of our
securities and any material interest of such persons in transactions with us. We
have also filed with the SEC an Issuer Tender Offer Statement on Schedule TO,
which includes additional information with respect to our offer. The reports,
statements and other information (including any exhibits, amendments or
supplements to such documents) we file may be inspected and copied at the public
reference facilities maintained by the SEC at Room ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; and at the following regional offices of the SEC: 7
World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Copies of this
material can also be obtained by mail, upon payment of the SEC's customary
charges, by writing to the Public Reference Section at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The SEC also maintains a web site on the Internet at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
PLANS OR PROPOSALS. Except as described in this document, we currently have no
plans, proposals or negotiations that relate to or would result in:
o any extraordinary transaction (such as a merger, reorganization or
liquidation) involving Fashionmall or any of its subsidiaries;
o any purchase, sale or transfer of a material amount of the assets of
Fashionmall or any of its subsidiaries;
o any material change in the present dividend rate or policy, or
indebtedness or capitalization of, Fashionmall;
10
o any change in the present board of directors or management of
Fashionmall (including any plans or proposals to change the number or
the term of directors or to fill any existing vacancies on the board
or to change any material term of the employment contract of any
executive officer);
o any other material change in Fashionmall's corporate structure or
business;
o Fashionmall's Common Stock ceasing to be authorized to be traded on
the NASDAQ National Market System;
o Fashionmall's Common Stock becoming eligible for termination of
registration under Section 12(g)(4) of the 1934 Act;
o the suspension of Fashionmall's obligation to file reports under
Section 15(d) of the 1934 Act;
o the acquisition by any person of additional securities of Fashionmall,
or the disposition of securities of Fashionmall; or
o any changes in Fashionmall's articles of incorporation or bylaws or
other actions that could impede the acquisition of control of
Fashionmall.
We should note that we believe we have more cash than is needed to fund our
current operations and we are considering how best to use such cash, including,
possibly, by making acquisitions, issuing special dividends (which could,
individually or in the aggregate, exceed the amount per share being offered in
our offer) or finding other options to provide opportunities for liquidity to
our shareholders at some time in the future. Notwithstanding the foregoing, we
expect continuing losses from operations and future profitability remains
uncertain. If business continues to erode, we may choose to shutter the current
operating business and/or look for other opportunities for our corporation,
which may include, without limitation, entering into a new line of business or
engaging in a merger transaction or a sale of assets.
PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. Except for outstanding
options or warrants to purchase shares of our Common Stock and the agreements
governing Fashionmall's preferred stock, and except as otherwise described
herein, Fashionmall is not aware of any agreement, arrangement or understanding,
whether or not legally enforceable, between Fashionmall (or any executive
officer or director of Fashionmall) and any other person with respect to any
securities of Fashionmall.
SECTION 10. INFORMATION ABOUT OUR DIRECTORS, EXECUTIVE OFFICERS
AND CONTROLLING SHAREHOLDERS
As of June 29, 2001, our executive officers were:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Chief Executive Officer,
President and Chairman of the Board
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Acting Chief Financial Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chief Operating Officer
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Executive Vice President
As of June 29, 2001, our directors were:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SECURITIES OWNERSHIP. The following table sets forth certain information
regarding the beneficial ownership of our Common Stock as of June 29, 20001 for
each of our executive officers and directors and all of our directors and
executive officers as a group. The business address of each director and
executive officer is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless
otherwise set forth below.
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------------- -------------------- --------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇(1).................3,768,655 shares 51.5%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (2)...............12,700 shares 0.2%
▇▇▇▇▇▇ ▇▇▇▇▇▇ (3)...................486,174 shares 6.5%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (4)..................20,000 shares 0.3%
Executive Officers and Directors (5)
as a group (seven persons).......4,287,529 shares 56.4%
------------------------
NOTES:
(1) Includes 427,500 shares owned by ▇▇▇▇▇ ▇▇▇▇▇▇▇, the minor son of ▇▇.
▇▇▇▇▇▇▇, 427,500 shares owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the minor daughter of ▇▇.
▇▇▇▇▇▇▇, and 100,000 shares of common stock underlying options. ▇▇. ▇▇▇▇▇▇▇ has
voting power over ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ shares until April 9, 2018 and
September 9, 2020, respectively.
11
(2) Includes 10,000 shares of common stock underlying options, and 2,700 shares
of common stock owned by ▇▇. ▇▇▇▇▇▇▇'▇ wife. The address of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
(3) FM/CCP, Inc., the Manager of FM/CCP Investment Partners, LLC, is
wholly-owned by ▇▇. ▇▇▇▇▇▇, and certain affiliates of ▇▇. ▇▇▇▇▇▇ are members of
FM/CCP Investment Partners, LLC. FM/CCP, Inc. and/or ▇▇. ▇▇▇▇▇▇ may be deemed
the beneficial owner of securities owned by FM/CCP Investment Partners, LLC. ▇▇.
▇▇▇▇▇▇ disclaims such beneficial ownership. FM/CCP Investment Partners, LLC's
ownership includes 95,000 shares underlying warrants and does not include up to
12,500 shares issuable pursuant to certain anti-dilution provisions upon
exercise of such warrants and the options owned by ▇▇. ▇▇▇▇▇▇ referred to below.
The amount shown as owned by ▇▇. ▇▇▇▇▇▇ includes common stock beneficially owned
by FM/CCP and 166,174 shares underlying options. The address of FM/CCP
Investment Partners, LLC and ▇▇▇▇▇▇ ▇▇▇▇▇▇ is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
(4) Includes 20,000 shares of common stock underlying options.
(5) See footnotes (1), (2), (3) and (4) above.
To our knowledge, except as set forth below, none of our directors, executive
officers or controlling shareholders has engaged in any transaction within the
past sixty days with respect to any of our securities except in connection with
our stock compensation plans.
From April 20, 2001 to May 7, 2001, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ purchased an aggregate of
105,680 shares of our Common Stock on the open market at prices ranging from
$1.55 to $2.30 per share and, on May 3, 2001, ▇▇. ▇▇▇▇▇▇▇ purchased an aggregate
of 134,875 shares of our Common Stock from non-affiliates of Fashionmall in
privately negotiated transactions at a price of $2.50 per share, each as more
fully described in Amendment No. 1 to Schedule 13D, filed by ▇▇. ▇▇▇▇▇▇▇ with
the Securities and Exchange Commission on May 8, 2001.
We have been advised by our officers, directors and affiliates that they do not
intend to tender any shares of Common Stock pursuant to this offer.
SECTION 11. EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION
UNDER THE 1934 ACT; EFFECT ON MARKET.
As of June 29, 2001, there were 7,216,600 shares of Common Stock outstanding.
The purchase of shares pursuant to our offer will reduce the number of shares
that might otherwise trade publicly and may reduce the number of holders of
Fashionmall Common Stock. Nonetheless, we believe that there will still be a
sufficient number of shares outstanding and publicly traded following our offer
to ensure a continued trading market in the shares. Based on the published
guidelines of the NASDAQ National Market System, we do not believe that our
purchase of shares pursuant to our offer will cause our remaining shares of
Common Stock to be delisted from the NASDAQ National Market System. We have
conditioned our offer so that we may cancel the offer, and not purchase any
shares, if the offer would result our the Common Stock being delisted from the
NASDAQ National Market System.
MARGIN SECURITIES. The shares are currently "margin securities" under the rules
of the Federal Reserve Board. This has the effect, among other things, of
allowing brokers to extend credit on the collateral of the shares. We believe
that, following the purchase of shares pursuant to our offer, the shares will
continue to be "margin securities" for purpose of the Federal Reserve Board's
margin regulations.
REGISTRATION UNDER THE 1934 ACT. The shares are registered under the 1934 Act,
which requires, among other things, that Fashionmall furnish certain information
to its shareholders and to the SEC and comply with the SEC's proxy rules in
connection with meetings of Fashionmall's shareholders. Fashionmall believes
that its purchase of shares pursuant to our offer will not result in the shares
becoming eligible for deregistration or not subject to the reporting obligations
under the 1934 Act. We have conditioned our offer so that we may cancel the
offer, and not purchase any shares, if the offer would result in the Common
Stock being held of record by fewer than 300 persons.
SECTION 12. CERTAIN LEGAL MATTERS GENERAL.
We are not aware of any license or regulatory permit which appears to be
material to our business and which is likely to be adversely affected by our
acquisition of shares pursuant to our offer or of any approval or other action
by any state, federal or foreign government or governmental agency that would be
required prior to or as a result of the acquisition of shares pursuant to our
offer. We expressly reserve the right to challenge the validity and
applicability of any state, foreign or other statutes or regulations purporting
to require approval of the commencement or consummation of our offer.
There can be no assurance that any license, permit, approval or other action, if
needed, would be obtained and, if obtained, there can be no assurance as to the
date of any such license, permit or approval or the absence of any litigation
challenging any such license, permit or approval. Similarly, there can be no
assurance that adverse consequences might not result to Fashionmall or to its
business in the event of adverse regulatory action or inaction.
12
SECTION 13. CERTAIN CONDITIONS OF THIS OFFER
OFFER SUBJECT TO CONDITIONS. Notwithstanding any other provisions of our offer,
we will not be required to accept for purchase or purchase any shares, may
postpone the acceptance for purchase of or the purchase of shares tendered and
may cancel, terminate or amend our offer as provided herein if any of the
following conditions are not satisfied or waived on or before the expiration
date.
AVOIDANCE OF RULE 13e-3 TRANSACTION CONDITION. Fashionmall may amend or
terminate our offer, and shall not be required to accept for purchase any shares
tendered if, in our good faith reasonable judgment, any purchase of shares under
the offer could result in the offer being considered a "going private
transaction" under Rule 13e-3 of the Securities and Exchange Commission, that
is,
o if our purchase of shares pursuant to this offer would result in our
Common Stock being held of record by fewer than 300 persons; or
o if our purchase of shares pursuant to this offer would result in our
Common Stock no longer being authorized for trading on the NASDAQ
National Market System.
The Avoidance of Rule 13e-3 Transaction Condition is a nonwaivable condition to
our offer.
NO LEGAL PROHIBITION CONDITION. Fashionmall will not be obligated to close our
offer if a preliminary or permanent injunction, decree or order has been entered
by any governmental authority, or another legal restraint or prohibition is in
effect, which enjoins, restrains or prohibits our offer (the "No Legal
Prohibition Condition"). As of the date of this document, no such injunction,
decree, order, restraint or prohibition exists, nor to Fashionmall's knowledge
has any of the foregoing been threatened. However, Fashionmall can give no
assurance that an injunction, decree, order, restraint or prohibition will not
exist in the future. In any event, the No Legal Prohibition Condition is a
nonwaivable condition to our offer.
MATERIAL ADVERSE CHANGE CONDITION. Fashionmall will not be obligated to close
our offer if, after the date of this document, there has occurred: (i) the
declaration of any banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory); (ii) any general
suspension of trading in, or limitation on prices for, securities on any U.S.
national securities exchange or in the over-the-counter market; (iii) the
commencement of war, armed hostilities or any other national or international
crisis directly or indirectly involving the United States; (iv) any limitation
(whether or not mandatory) by any governmental, regulatory or administrative
agency or authority on, or any event which, in the sole judgment of Fashionmall
might materially affect, the extension of credit by banks or other lending
institutions in the United States; (v) any significant decrease in the market
price of the shares or in the market prices of equity securities generally in
the United States or any change in the general political, market, economic or
financial conditions in the United States or abroad that could have in the sole
judgment of Fashionmall a material adverse effect on the business, condition
(financial or otherwise), operations or prospects of Fashionmall and its
subsidiaries, taken as a whole, or on the trading in the shares; (vi) in the
case of any of the foregoing existing at the time of the announcement of our
offer, a material acceleration or worsening thereof; (vii) any decline in the
Dow ▇▇▇▇▇ Industrial Average or the S&P 500 Composite Index or the NASDAQ
National Market Composite Index by an amount in excess of 10% measured from the
close of business on June 29, 2001; or (viii) any change in the business,
condition (financial or otherwise), operations or prospects of Fashionmall and
its subsidiaries, taken as a whole which, in the sole judgment of Fashionmall,
is or may be materially adverse to Fashionmall and its subsidiaries taken as a
whole (the "Material Adverse Change Condition"). Fashionmall is not aware of any
of these events having occurred. In any event, Fashionmall reserves the right
(but is not obligated), subject to the rules and regulations of the SEC, to
waive or amend on or before the expiration date the Material Adverse Change
Condition.
NO COMPETING OFFER CONDITION. Fashionmall will not be obligated to close our
offer if, after the date of this document, a tender or exchange offer with
respect to some or all of the shares (other than our offer), or merger or
acquisition proposal for Fashionmall has been proposed, announced or made by
another person or Fashionmall has learned that: (i) any person or "group"
(within the meaning of Section 13(d)(3) of the 1934 Act) has acquired or
proposes to acquire beneficial ownership of more than 5% of the outstanding
shares, whether through the acquisition of stock, the formation of a group, the
grant of any option or right or otherwise (other than as disclosed in a Schedule
13D or 13G (or an amendment thereto) on file with the SEC on the date of this
document); or (ii) any such person or group that on or prior to the date of this
document had filed such a Schedule with the SEC thereafter has acquired or has
proposed to acquire, whether through the acquisition of stock, the formation of
a group, the grant of any option or right or otherwise, beneficial ownership of
additional shares representing 2% or more of the outstanding shares; or (iii)
any person or group has filed a Notification and Report Form under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, reflecting an intent to
acquire Fashionmall or any of the shares (the "No Competing Offer Condition").
Fashionmall is not aware of any such event having occurred. In any event,
Fashionmall reserves the right (but is not obligated), subject to the rules and
regulations of the SEC, to waive or amend prior to the expiration date the No
Competing Offer Condition.
WAIVER OF CONDITIONS. Fashionmall reserves the absolute right, prior to the
expiration date, to waive these conditions (other than the Avoidance of Rule
13e-3 Transaction Condition and the No Legal Prohibition Condition, which
conditions are not waivable). Waiver or amendment of any of these conditions may
require an extension of the expiration date and our offer.
EFFECT OF FAILING TO SATISFY CONDITIONS. If any of the conditions have not been
satisfied or waived by the expiration date, we may elect either to: (i) extend
the expiration date and our offer and retain all shares tendered until the
expiration date of the offer as extended, subject to the right of a tendering
shareholder to withdraw his or her shares; (ii) waive the conditions (other than
the Avoidance of Rule 13e-3 Transaction Condition and the No Legal Prohibition
Condition), extend our offer for a period of ten business days if our offer is
scheduled to expire prior thereto, if such waiver constitutes a material change
in our offer, and thereafter purchase all properly tendered shares; or (iii)
terminate our offer and purchase none of the shares and return all tendered
shares. Fashionmall will not accept for purchase any shares pursuant to our
offer until such time as the conditions have been satisfied or waived.
13
TENDERING OF SHARES BY OFFICERS AND DIRECTORS OF FASHIONMALL. We have been
advised by our officers, directors and affiliates that they do not intend to
tender any shares of Common Stock pursuant to this offer.
SECTION 14. CANCELLATION, EXTENSION, TERMINATION AND AMENDMENT
We expressly reserve the right to cancel our offer if any of the conditions to
our offer are not satisfied by the time the offer period expires. Those
shareholders who tendered shares to Fashionmall, prior to the expiration date,
will receive prompt return of their share certificates and other related
documentation from the depositary as soon as practicable following the
cancellation of our offer.
We reserve the right, in our sole discretion, at any time and from time to time,
to extend the period of time during which our offer is open and to delay
acceptance for payment of, and payment for, any shares by giving oral or written
notice of such extension to the depositary and making a public announcement of
such extension. Our reservation of the right to delay acceptance for payment is
limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires
that we must pay the consideration offered or return the shares tendered
promptly after termination or withdrawal of our offer.
We also reserve the right, in our sole discretion, to terminate our offer and
not accept for payment or pay for any shares not previously accepted for payment
or paid for or, subject to applicable law, to postpone payment for shares if any
conditions to our offer fail to be satisfied by giving oral or written notice of
such termination or postponement to the depositary and making a public
announcement of such termination or postponement. Our reservation of the right
to delay payment for shares which we have accepted for purchase is limited by
Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we must
pay the consideration offered or return the shares tendered promptly after
termination or withdrawal of our offer.
Subject to compliance with applicable law, we further reserve the right, in our
sole discretion, and regardless of whether or not any of the events or
conditions described in SECTION 13 have occurred or are deemed by us to have
occurred, to amend our offer in any respect, including, without limitation, by
decreasing or increasing the consideration offered in our offer to holders of
shares or by decreasing or increasing the number of shares being sought in our
offer. Amendments to our offer may be made at any time and from time to time by
public announcement, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., New York City time, on the next business day
after the last previously scheduled or announced expiration date.
Without limiting the manner in which we may choose to make a public
announcement, except as required by applicable law, we have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release through Business Wire, Dow ▇▇▇▇▇ News Service or
another comparable news service.
If we materially change the terms of our offer or the information concerning our
offer, we will extend our offer to the extent required by Rules 13e-4(d)(2),
13e-4(e)(3) and 13e-4(f)(1) promulgated under the Exchange Act. These rules and
certain related releases and interpretations of the SEC provide that the minimum
period during which a tender offer must remain open following material changes
in the terms of the tender offer or information concerning the tender offer
(other than a change in price or a change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. If we take any of the following actions:
o increase or decrease the price to be paid for the shares,
o increase the number of shares being sought in our offer by more than
2% of our outstanding Common Stock, or
o decrease the number of shares being sought in our offer, and our offer
is scheduled to expire within 10 business days from the date notice of
such increase or decrease is first published, sent or given to
security holders in the manner specified in this SECTION 14, then our
offer will be extended until the expiration of such period of 10
business days.
Fashionmall also reserves the right to delay acceptance for purchase of, or
purchase of, any shares pursuant to our offer, regardless of whether such shares
were theretofore accepted for purchase, and to amend or terminate our offer and
not accept for purchase or purchase any shares not theretofore accepted for
purchase, or purchased, upon the failure of any of the conditions of our offer
to be satisfied or waived on or before the expiration date.
Any cancellation, extension, termination, amendment or delay of our offer will
be followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date. Without limiting the manner in which we may choose to make such
public announcement, we will not, unless otherwise required by rules of the SEC,
have any obligation to make any such public announcement other than by making a
release to Business Wire, Dow ▇▇▇▇▇ News Service or another comparable news
service. If, prior to the expiration date, we increase the Purchase Price
offered to holders of Fashionmall Common Stock, such increase will be applicable
to all holders whose shares are accepted for purchase pursuant to our offer and
if, at the time notice of such increase is first published, sent or given to
holders of Fashionmall Common Stock, our offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from and including the date that such notice is first so published, sent or
given, our offer will be extended until the expiration of such period of ten
business days. For purposes of our offer, a "business day" means any day other
than a Saturday, Sunday or federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
14
SECTION 15. FEES AND EXPENSES
Fashionmall has retained American Stock Transfer & Trust Company to act as the
Depositary and Information Agent in connection with our offer. American Stock
Transfer & Trust Company may contact shareholders by mail, telephone, facsimile,
telex, telegraph or other electronic means, and may request brokers, dealers,
commercial banks, trust companies and other nominee shareholders to forward
materials relating to the offer to beneficial owners. American Stock Transfer &
Trust Company will receive reasonable and customary compensation for its
services in connection with our offer, plus reimbursement for out-of-pocket
expenses, and will be indemnified by Fashionmall against certain liabilities and
expenses in connection therewith, including liabilities under the federal
securities laws.
No fees or commissions will be payable by us to brokers, dealers, commercial
banks or trust companies (other than fees to the parties described above) for
soliciting tenders of shares under our offer. Shareholders holding shares
through brokers or banks are urged to consult the brokers or banks to determine
whether transaction costs are applicable if shareholders tender shares through
such brokers or banks and not directly to the depositary. Brokers, dealers,
commercials banks and trust companies will be reimbursed by Fashionmall for
customary mailing and handling expenses incurred by them in forwarding material
to their customers.
SECTION 16. SOURCE AND AMOUNT OF FUNDS
The amount of funds required to purchase the maximum number of shares pursuant
to our offer is $3,041,500 . We expect the fees and expenses applicable to our
offer to be approximately an additional $100,000. All of the funds necessary to
pay such amounts will be provided from available cash and cash equivalents. As
of March 31, 2001, Fashionmall had approximately $27,827,000 of cash and cash
equivalents on its balance sheet.
SECTION 17. RECENT TRANSACTIONS IN OUR SHARES
Since August 11, 2000, we have repurchased approximately 284,000 shares of our
Common Stock with prices ranging from $1.43 to $2.20 in open market
transactions. To our knowledge, other than the purchases of our Common Stock by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ described in SECTION 10, there have been no transactions in our
Common Stock by any of our directors, executive officers or controlling
shareholders or by any executive officer or director of any of our subsidiaries
within the 60 day period preceding the date of this document.
SECTION 18. MISCELLANEOUS
NO PERSON HAS BEEN DIRECTLY OR INDIRECTLY EMPLOYED OR RETAINED BY, OR IS TO BE
COMPENSATED BY, FASHIONMALL TO MAKE SOLICITATIONS OR RECOMMENDATIONS IN
CONNECTION WITH OUR OFFER. WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION ABOUT OUR OFFER THAT IS DIFFERENT FROM, OR IN
ADDITION TO, THAT CONTAINED, OR INCORPORATED, IN THIS DOCUMENT OR IN THE RELATED
LETTER OF TRANSMITTAL. THEREFORE, IF ANYONE DOES GIVE YOU INFORMATION OF THIS
SORT, YOU SHOULD NOT RELY ON IT. IF YOU ARE IN A JURISDICTION WHERE OUR OFFER TO
PURCHASE SHARES OF COMMON STOCK IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT
IS UNLAWFUL TO DIRECT THIS TYPE OF OFFER, THEN THE OFFER PRESENTED IN THIS
DOCUMENT DOES NOT EXTEND TO YOU. THE INFORMATION CONTAINED IN THIS DOCUMENT
SPEAKS ONLY AS OF THE DATE OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
Fashionmall is not aware of any jurisdiction where the making of our offer is
not in compliance with applicable law. If Fashionmall becomes aware of any
jurisdiction where the making of our offer is not in compliance with any valid
applicable law, Fashionmall will make a good faith effort to comply with such
law. If, after such good faith effort, Fashionmall cannot comply with such law,
our offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of shares residing in such jurisdiction.
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THE DEPOSITARY FOR OUR OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY.
BY MAIL, HAND OR OVERNIGHT DELIVERY:
AMERICAN STOCK TRANSFER & TRUST COMPANY
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
BY FACSIMILE TRANSMISSION:
AMERICAN STOCK TRANSFER & TRUST COMPANY
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
CONFIRM BY TELEPHONE:
(▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇ OR (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇
IF CALLING FROM NEW YORK CITY
THE INFORMATION AGENT FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇ OR (▇▇▇) ▇▇▇-▇▇▇▇ ▇ ▇▇▇▇
IF CALLING FROM NEW YORK CITY
E-MAIL: ▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT AT THE ADDRESS AND PHONE NUMBER LISTED ABOVE. REQUESTS FOR ADDITIONAL
COPIES OF THE OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR OTHER
DOCUMENTS RELATED TO THE OFFER MAY BE DIRECTED TO THE INFORMATION AGENT.
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