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INSTRUCTIONS FOR USE OF THE BLUEFLY, INC.
SUBSCRIPTION CERTIFICATES
CONSULT [ ] (INFORMATION AGENT), OR
YOUR BANK OR BROKER WITH QUESTIONS
The following instructions relate to a rights offering (the "Offering")
by Bluefly, Inc., a Delaware corporation ("Bluefly"), to the holders of its
common stock, par value $.01 per share ("Common Stock"), as described in
Bluefly=s Prospectus dated [________] (the "Prospectus"). Holders of record of
common stock at the close of business on [_________] (the "Record Date") will
receive 1.735 transferable subscription rights (the "Rights") for each share of
common stock held by them as of the close of business on the Record Date. An
aggregate of 8,547,009 Rights exercisable to purchase an aggregate of 8,547,009
shares of the common stock of Bluefly are being distributed in connection with
the Offering. Each Right is exercisable, upon payment of $2.34 in cash (the
"Subscription Price"), to purchase one share of Common Stock (the "Basic
Subscription Privilege"). In addition, subject to the allocation described
below, each Subscription Right also carries the right to subscribe at the
Subscription Price for an unlimited number of additional shares of common stock
(the "Oversubscription Privilege"), up to a total of [_________] shares (subject
to proration). See "The Rights Offering" in the Prospectus.
No fractional Rights or cash in lieu thereof will be issued or paid.
The number of Rights issued to each shareholder will be rounded down to the
nearest full Right.
The Rights will expire at 5:00 p.m., Eastern Standard Time, on
___________, 2001, unless extended by Bluefly (as it may be extended, the
"Expiration Date"). The Rights are expected to trade on [________] under the
symbol [_________] until close of business on the last NASDAQ SmallCap Market
day preceding the Expiration Date.
The number of Rights to which you are entitled is printed on the face
of your Subscription Certificate. You should indicate your wishes with regard to
the exercise or transfer of your Rights by completing the appropriate section on
the back of your Subscription Certificate and returning the Subscription
Certificate to the Subscription Agent in the envelope provided.
YOUR SUBSCRIPTION CERTIFICATES MUST BE RECEIVED BY THE SUBSCRIPTION
AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION
CERTIFICATES MUST BE COMPLIED WITH, ON OR BEFORE THE EXPIRATION DATE. PAYMENT OF
THE SUBSCRIPTION PRICE OF ALL RIGHTS EXERCISED, INCLUDING OVERSUBSCRIPTION
SHARES, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT ON OR BEFORE THE EXPIRATION DATE. ONCE A HOLDER OF RIGHTS HAS
EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE AND/OR THE OVERSUBSCRIPTION
PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED.
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1. SUBSCRIPTION PRIVILEGES.
To exercise Rights, complete the back of the Subscription Certificate
and send your properly completed and executed Subscription Certificate, together
with payment in full of the Subscription Price for each share of Common Stock
subscribed for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege, to the Subscription Agent. Delivery of the
Subscription Certificate must be made by mail or by overnight delivery.
FACSIMILE DELIVERY OF THE SUBSCRIPTION CERTIFICATE WILL NOT CONSTITUTE VALID
DELIVERY. All payments must be made in United States dollars by (i) check or
bank draft drawn upon United States bank or postal, telegraphic or express money
order payable to [___________], as Subscription Agent; or (ii) in the case of
persons acquiring shares at an aggregate Subscription Price of $500,000 or more,
an alternative payment method arranged with the Subscription Agent.
ACCEPTANCE OF PAYMENTS.
Payments will be deemed to have been received by the
Subscription Agent only upon the (a) clearance of any uncertified check, (b)
receipt by the Subscription Agent of any certified check or bank draft drawn
upon a United States bank or postal, telegraphic or express money order or (c)
receipt of funds by the Subscription Agent through an agreed upon alternative
payment method. IF PAYING BY UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE
FUNDS PAID THEREBY MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR. ACCORDINGLY,
HOLDERS OF RIGHTS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED
PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH DATE.
YOU ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK OR
MONEY ORDER.
EXERCISE THROUGH BANK OR BROKER; PROCEDURES FOR GUARANTEED DELIVERY.
You may also transfer your Subscription Certificate to your
bank or broker in accordance with the procedures specified in Instruction 3(a)
below, make arrangements for the delivery of funds on your behalf and request
such bank or broker to exercise the Rights represented by such Subscription
Certificate on your behalf. Alternatively, you may cause a written guarantee
substantially in the form available from the Subscription Agent (the "Notice of
Guaranteed Delivery@) from a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office or correspondent in the
United States, to be received by the Subscription Agent on or prior to the
Expiration Date guaranteeing delivery of your properly completed and executed
Subscription Certificate within three NASDAQ SmallCap Market trading days
following the date of the Notice of Guaranteed Delivery. If this procedure is
followed, your Subscription Certificates must be received by the Subscription
Agent within three NASDAQ SmallCap trading days of the Notice of
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Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery may
be obtained upon request from the Subscription Agent at the address, or by
calling the telephone number, indicated below.
Banks, brokers and other nominee holders of Rights who
exercise the Basic Subscription Privilege and the Oversubscription Privilege on
behalf of beneficial owners of Rights will be required to certify to the
Subscription Agent and Bluefly as to the aggregate number of Rights that have
been exercised, and the number of shares of Common Stock that are being
subscribed for pursuant to the Oversubscription Privilege, by each beneficial
owner of Rights (including such nominee itself) on whose behalf such nominee
holder is acting. In the event such certification is not delivered in respect of
a Subscription Certificate, the Subscription Agent shall for all purposes
(including for purposes of any allocation in connection with the
Oversubscription Privilege) be entitled to assume that such certificate is
exercised on behalf of a single beneficial owner. If more shares are subscribed
for pursuant to the Oversubscription Privilege than are available for sale,
shares will be allocated among beneficial owners exercising the Oversubscription
Privilege in proportion to such owner=s exercise of Rights pursuant to the Basic
Subscription Privilege.
CONTACTING THE SUBSCRIPTION AGENT.
The address and telecopier numbers of the Subscription Agent
are as follows:
By First Class Mail: By Overnight or
Registered Delivery:
______________________________ _______________________
______________________________ _______________________
Telephone: [________]
Facsimile: [________]
PARTIAL EXERCISES; EFFECT OF OVER- AND UNDERPAYMENTS.
If you exercise less than all of the Rights evidenced by your
Subscription Certificate, the Subscription Agent either (i) will issue to you a
new Subscription Certificate evidencing the unexercised Rights or (ii) if you so
indicate on your Subscription Certificate, will transfer the unexercised Rights
in accordance with your instructions. However, if you choose to have a new
Subscription Certificate sent to you or to a transferee, you or such transferee
may not receive any such new Subscription Certificate in sufficient time to
permit sale or exercise of the Rights evidenced thereby. If you have not
indicated the number of Rights being exercised, or if the dollar amount you have
forwarded is not sufficient to purchase (or exceeds the amount necessary to
purchase) the number of shares subscribed for, you will be deemed to have
exercised the Basic Subscription Privilege with respect to the maximum number of
whole Rights which may be
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exercised for the Subscription Price payment delivered by you. To the extent
that the Subscription Price payment delivered by you exceeds the product of the
Subscription Price multiplied by the number of Rights evidenced by the
Subscription Certificates delivered by you (such excess being the "Subscription
Excess"), you will be deemed to have exercised your Oversubscription Privilege
to purchase, to the extent available, that number of whole shares of Common
Stock equal to the quotient obtained by dividing the Subscription Excess by the
Subscription Price.
2. DELIVERY OF STOCK CERTIFICATES, ETC.
The following deliveries and payments to you will be made to the
address shown on the face of your Subscription Certificate unless you provide
instructions to the contrary on the back of your Subscription Certificate.
(a) BASIC SUBSCRIPTION PRIVILEGE. As soon as practicable after the
valid exercise of Rights and the Expiration Date, the
Subscription Agent will mail to each exercising Rights holder
certificates representing shares of Common Stock purchased
pursuant to the Basic Subscription Privilege.
(b) OVERSUBSCRIPTION PRIVILEGE. As soon as practicable after the
Expiration Date and after all prorations and adjustments
contemplated by the terms of the Offering have been effected,
the Subscription Agent will mail to each Rights holder who
validly exercises the Oversubscription Privilege the number of
shares allocated to such Rights holder pursuant to the
Oversubscription Privilege. See "The Offering" in the
Prospectus.
(c) EXCESS PAYMENTS. As soon as practicable after the Expiration
Date and after all prorations and adjustments contemplated by
the terms of the Offering have been effected, the Subscription
Agent will mail to each Rights holder who exercises the
Oversubscription Privilege any excess funds received (without
interest or deduction) in payment of the Subscription Price
for shares that are subscribed for but not allocated to such
Rights holder pursuant to the Oversubscription Privilege.
3. TO SELL OR TRANSFER RIGHTS.
(a) SALE OF RIGHTS THROUGH A BANK OR BROKER. To sell all Rights
evidenced by a Subscription Certificate through your bank or
broker, sign the Subscription Certificate under "To Transfer
Rights," have your signature guaranteed (as described in
Instruction 3(b)) on your Subscription Certificate and deliver
your properly completed and executed Subscription Certificate
to your bank or broker. If your Subscription Certificate is
completed without designating a transferee, the Subscription
Agent may thereafter treat the bearer of the Subscription
Certificate as the absolute owner of all of the Rights
evidenced by such Subscription Certificate for all purposes,
and the Subscription Agent shall not be affected by any notice
to the
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contrary. Because your bank or broker cannot issue
Subscription Certificates, if you wish to sell less than all
of the Rights evidenced by a Subscription Certificate, either
you or your bank or broker must instruct the Subscription
Agent as to the action to be taken with respect to the Rights
not sold, or you or your bank or broker must first have your
Subscription Certificate divided into Subscription
Certificates of appropriate denominations by following the
procedures set forth in Instruction 4 below. The Subscription
Certificates evidencing the number of Rights you intend to
sell can then be transferred by your bank or broker in
accordance with the instructions in this Instruction 3(a). (2)
(b) TRANSFER OF RIGHTS TO A DESIGNATED TRANSFEREE. To transfer all
of your Rights to a transferee other than a bank or broker,
you must complete your Subscription Certificate in its
entirety, execute the Subscription Certificate and have your
signature guaranteed by an Eligible Guarantor Institution (as
defined in Rule 17Ad-15 of the Securities Exchange Act of
1934), subject to the standards and procedures adopted by the
Subscription Agent. A Subscription Certificate that has been
properly transferred in its entirety may be exercised by a new
holder without having a new Subscription Certificate issued.
In order to exercise, or otherwise take action with respect
to, such a transferred Subscription Certificate, the new
holder should deliver the Subscription Certificate, together
with payment of the applicable Subscription Price (with
respect to the exercise of both the Basic Subscription
Privilege and the Oversubscription Privilege) and complete
separate instructions signed by the new holder, to the
Subscription Agent in ample time to permit the Subscription
Agent to take the desired action. Because only the
Subscription Agent can issue Subscription Certificates, if you
wish to transfer less than all of the Rights evidenced by your
Subscription Certificate to a designated transferee, you must
instruct the Subscription Agent as to the action to be taken
with respect to the Rights not sold or transferred, or you
must divide your Subscription Certificate into Subscription
Certificates of appropriate smaller denominations by following
the procedures set forth in Instruction 4 below. The
Subscription Certificate evidencing the number of Rights you
intend to transfer can then be transferred by following the
procedures set forth in this Instruction 3(b).
4. TO HAVE A SUBSCRIPTION CERTIFICATE DIVIDED INTO SMALLER DENOMINATIONS.
To have a Subscription Certificate divided into smaller
denominations, send your Subscription Certificate, together with complete
separate instructions (including specification of the denominations into which
you wish your Rights to be divided) signed by you, to the Subscription Agent,
allowing a sufficient amount of time for the Subscription Certificates to be
issued and returned so that they can be used prior to the Expiration Date.
Alternatively, you may ask a bank or broker to effect such actions on your
behalf. Your signature must be guaranteed by an Eligible Guarantor Institution
if any of the new Subscription Certificates are to be issued in a name other
than
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that in which the old Subscription Certificate was issued. Subscription
Certificates may not be divided into fractional Rights, and any instruction to
do so will be rejected. As a result of delays in the mail, the time of the
transmittal, the necessary processing time and other factors, you or your
transferee may not receive such new Subscription Certificates in time to enable
the Rights holder to complete a sale or exercise by the Expiration Date. Neither
Bluefly nor the Subscription Agent will be liable to either a transferor or
transferee for any such delays.
5. EXECUTION.
(a) EXECUTION BY REGISTERED HOLDER. The signature on the
Subscription Certificate must correspond with the name of the
registered holder exactly as it appears on the face of the
Subscription Certificate without any alteration or change
whatsoever. Persons who sign the Subscription Certificate in a
representative or other fiduciary capacity must indicate their
capacity when signing and, unless waived by the Subscription
Agent in its sole and absolute discretion, must present to the
Subscription Agent satisfactory evidence of their authority so
to act.
(2) EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the
Subscription Certificate is executed by a person other than
the holder named on the face of the Subscription Certificate,
proper evidence of authority of the person executing the
Subscription Certificate must accompany the same unless the
Subscription Agent, in its discretion, dispenses with proof of
authority.
(3) SIGNATURE GUARANTEES. Your signature must be guaranteed by an
Eligible Guarantor Institution (A) if you wish to transfer
your Rights, as specified in Instruction 3(b) above, to a
transferee other than a bank or broker, (B) if you wish a new
Subscription Certificate or Certificates to be issued in a
name other than that in which the old Subscription Certificate
was issued, as specified in Instruction 4 above, or (C) if you
specify special payment or delivery instructions.
6. METHOD OF DELIVERY.
The method of delivery of Subscription Certificates and
payment of the Subscription Price to the Subscription Agent will be at the
election and risk of the Rights holder. If sent by mail, it is recommended that
they be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
the Subscription Agent prior to the Expiration Date.
7. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH DEPOSITORY
FACILITY PARTICIPANTS.
In the case of holders of Rights that are held of record
through The Depository Trust Company ("DTC"), exercises of the Basic
Subscription Privilege and the Over Subscription
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Privilege may be effected by instructing DTC to transfer Rights (such Rights,
"Depository Rights") from the DTC account of such holder to the DTC account of
the Subscription Agent, together with payment of the Subscription Price for each
share of Common Stock subscribed for pursuant to the Basic Subscription
Privilege and the Over Subscription Privilege.
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