<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
fashionmall.com, Inc.
...............................................................................
(Name of Registrant as Specified In Its Charter)
fashionmall.com, Inc.
...............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...............................................................................
2) Aggregate number of securities to which transaction applies:
...............................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
...............................................................................
4) Proposed maximum aggregate value of transaction:
...............................................................................
5) Total fee paid:
...............................................................................
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
...............................................................................
2) Form, Schedule or Registration Statement No.:
...............................................................................
3) Filing Party:
...............................................................................
4) Date Filed: ..........................................................
<PAGE>
FASHIONMALL.COM, INC.
575 Madison Avenue
New York, New York 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of fashionmall.com, Inc.
The Annual Meeting of Stockholders of fashionmall.com,Inc. (the "Company")
will be held at The Rye Town Hilton, 699 Westchester Ave, Rye Brook, NY 10573,
at 4:30 p.m., Eastern Standard Time, on June 30, 2000, for the following
purposes:
1. To elect a Board of Directors for the ensuing year.
2. To ratify the appointment of Arthur Andersen LLP, as the
independent auditors and accountants for the Company for the year
ending December 31, 2000.
3. To transact such other business as may properly come before the
meeting.
All stockholders are invited to attend the meeting. Stockholders of record
at the close of business on May 15, 2000, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting. A complete list
of stockholders entitled to notice of and vote at the meeting will be open to
examination by stockholders beginning ten days prior to the meeting for any
purpose germane to the meeting during normal business hours at the office of the
Secretary of the Company at 575 Madison Avenue, New York, New York 10022.
Whether or not you intend to be present at the meeting, please sign and
date the enclosed proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Benjamin Narasin
Chief Executive Officer, President
And Chairman of the Board of
Directors
New York, New York
May 22, 2000
<PAGE>
FASHIONMALL.COM, INC.
575 Madison Avenue
New York, New York 10022
(212) 891-6064
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of
fashionmall.com, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at The Rye Town Hilton, 699
Westchester Ave, Rye Brook, NY 10573, 4:30 p.m., Eastern Standard New York time,
on June 30, 2000 and any adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers, consultants and employees
of the Company, without extra remuneration, may also solicit proxies personally
by telefax and by telephone. In addition to mailing copies of this material to
stockholders, the Company may request persons, and reimburse them for their
expenses in connection therewith, who hold stock in their names or custody or in
the names of nominees for others to forward such material to those persons for
whom they hold stock of the Company and to request their authority for execution
of the proxies.
The holders of a majority of the outstanding shares of Common Stock, par
value $.01 per share (the "Common Stock"), present in person or represented by
proxy shall constitute a quorum at the Annual Meeting. The approval of a
plurality of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for election of the
nominees as directors. In all other matters, the affirmative vote of the
majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for the adoption of such
matters.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to each matter to be acted upon at the Annual Meeting. Shares of
Common Stock represented by the proxy will be voted, except as to matters with
respect to which authority to vote is specifically withheld. Where the solicited
stockholder indicates a choice on the form of proxy with respect to any matter
to be acted upon, the shares will be voted as specified. Abstentions and broker
non-votes will not have the effect of votes in opposition to a director or
"against" any other proposal to be considered at the Annual Meeting.
All shares of Common Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the instructions,
if any, given therein. If no instructions are provided in a proxy, the shares of
Common Stock represented by such proxy will be voted FOR the Board's nominees
for director and FOR the approval of Proposal 2 and in accordance with the
proxy-holder's best judgment as to any other matters raised at the Annual
Meeting.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, executing and delivering to the Company a later dated proxy reflecting
contrary instructions or appearing at the Annual Meeting and taking appropriate
steps to vote in person.
At the close of business on May 15, 2000, 7,500,000 shares of Common Stock
were outstanding and eligible for voting at the meeting. Each stockholder of
record is entitled to one vote for each share of Common Stock held on all
matters that come before the meeting. Only stockholders of record at the close
of business on May 15, 2000 are entitled to notice of, and to vote at, the
meeting.
No Dissenter's Rights
Under New York law, stockholders are not entitled to dissenter's rights of
appraisal with respect to Proposal 2.
This proxy material is first being mailed to stockholders commencing on or
about May 22, 2000.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The number of directors of the Company is set by a resolution adopted by a
majority of the entire Board of Directors. The number of directors is currently
fixed at four. The number of directors to be elected at the Annual Meeting to
constitute the Board of Directors has also been fixed at four. The directors are
to be elected to hold office for a period of one year, and in any event until a
successor has been elected and qualified. It is intended that the accompanying
proxy will be voted in favor of the following persons to serve as directors,
unless the stockholder indicates to the contrary on the proxy. Each of the
nominees is currently a director of the Company.
For reelection to the Board of Directors for one-year terms, the Board of
Directors has nominated the following individuals, each a current director:
BENJAMIN NARASIN
JEROME A. CHAZEN
RICHARD C. MARCUS
ROBERT S. TAUBMAN
The persons named in the accompanying proxy intend to vote for the election
as director of the nominees listed herein. Each nominee has consented to serve
if elected. The Board of Directors has no reason to believe that any nominee
will not serve if elected, but if any of them should become unavailable to serve
as a director, and if the Board of Directors designates a substitute nominee or
nominees, the persons named as proxies will vote for the substitute nominee or
nominees designated by the Board of Directors.
The following table sets forth certain information with respect to each
person who is currently a director or executive officer of the Company and the
individuals nominated and recommended to be elected by the Board of Directors of
the Company and is based on the records of the Company and information furnished
to it by such persons. Reference is made to "Security Ownership of Certain
Beneficial Owners and Management" for information pertaining to stock ownership
by each director and executive officer of the Company and the nominees.
Our current executive officers and directors are set forth below:
Name Age Position
- - - - - - ---- --- --------
Benjamin Narasin............. 34 Chief Executive Officer, President
and Chairman of the Board of Directors
Barry Scheckner.............. 51 Acting Chief Financial Officer
Stephen P. Burke ............ 33 Controller
Jerome A. Chazen(1).......... 73 Director and Senior Consultant
Ronald Forehand.............. 53 Chief of Operations
Anne-Marie Forehand.......... 37 Vice President
Richard C. Marcus(1)......... 61 Director
Robert S. Taubman(1)......... 46 Director
(1) Member of the Audit Committee
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Mr. Taubman serves as the director designee of the preferred stockholder. Other
than stock options, non-employee directors do not currently receive remuneration
for their services as such, but may be reimbursed for expenses incurred in
connection therewith, such as the cost of travel to Board meetings. Officers
serve at the pleasure of the Board of Directors until their successors have been
elected and have qualified.
Benjamin Narasin has served as our Chairman of the Board, Chief Executive
Officer and President of fashionmall.com and our predecessor since our inception
in 1994. Prior to joining us, from
<PAGE>
1986 to 1994, Mr. Narasin served as President for Boston Prepatory Co., an
apparel company which he still owns and at which he developed the concept of
fashionmall.com.
Barry Scheckner has served as our Financial Consultant since September,
1999. Mr. Scheckner is a Certified Public Accountant who served as the Chief
Financial Officer of Finlay Enterprises, Inc., for twelve years. Mr. Scheckner
also serves on the Board of Directors of Michael Anthony Jewelers, Inc.
Stephen P. Burke has served as our Controller since January 2000. Prior to
joining us, from October 1996 to December 1999, Mr. Burke served as Controller
of CopyTele, Inc, a publicly traded telecommunications company. Prior to October
1996, Mr. Burke was with Arthur Andersen LLP in an Audit and Business Advisory
capacity.
Jerome A. Chazen has served as a senior consultant and one of our directors
since March 1999. Since 1996, Mr. Chazen has been Chairman of Chazen Capital
Partners, LLC. Mr. Chazen was a founder of Liz Claiborne, Inc., an apparel
company, where he served in various senior executive positions until his
retirement in 1996 and as a director until 1997. Mr. Chazen also serves as a
director of Taubman Centers, Inc., as a Trustee of Columbia University, and as
Vice-Chairman of the Greater New York Council of the Boy Scouts of America. Mr.
Chazen has various relationships with FM/CCP Investment Partners, LLC.
Ronald Forehand has served as our Vice President of Operations since
October 1998. Prior to joining us, from April 1990 to September 1998, Mr.
Forehand was President of J.P. Callaghan's Outfitters, a men's sportswear
company which he co-founded but which terminated operations when Mr. Forehand
joined us. Mr. Forehand is Anne-Marie Forehand's husband.
Anne-Marie Forehand has served as our employee since February 1998 and
became Vice President in March 1999. Prior to joining us, from April 1990 to
September 1998, Ms. Forehand managed J.P. Callaghan Outfitters, a men's
sportswear company which she co-founded but which has terminated operations. Ms.
Forehand is Ronald Forehand's wife.
Richard C. Marcus has served as our consultant since February 1997 and has
served as one of our directors since March 1999. Since January 1997, Mr. Marcus
has served as a Senior Advisor to Peter J. Solomon Company, a New York
investment banking firm. Mr. Marcus was principal of InterSolve Group Inc., a
management services firm, from its inception in 1991 until January 1997. From
December 1994 until December 1995, Mr. Marcus served as Chief Executive Officer
of the Plaid Clothing Group and as a director of that company from December 1994
through December 1996. In July 1995, Plaid Clothing Group filed a petition of
reorganization under Chapter 11 of the U.S. Bankruptcy Code and was subsequently
sold to Hartmarx in December 1996. From January 1989 to January 1992, Mr. Marcus
was a principal of RCM Consulting, a provider of consulting services to the
retail industry. From 1979 to 1988, he served as Chairman and Chief Executive
Officer of Neiman-Marcus, a department store retailer. Mr. Marcus is currently a
director of Zale Corporation, a public jewelry retail company.
Robert S. Taubman has served as one of our directors since April 1999. Mr.
Taubman has been a director and the President and Chief Executive Officer of
Taubman Centers, Inc., a real estate investment trust which is a leading
developer of malls since 1992. He is also a member of the Board of Governors of
the National Association of Real Estate Investment Trusts, a director of
Comerica Bank, a director of the Real Estate Roundtable and a Trustee of the
International Council of Shopping Centers and of the Urban Land Institute.
-3-
<PAGE>
Stockholder Vote Required
Election of each director requires a plurality of the votes of the shares
of Common Stock present in person or requested by proxy at the meeting and
entitled to vote on the election of directors.
The Board of Directors Recommends a Vote for Election to the Board of
Directors of the Company for Each of the Nominees.
Committees of the Board - Board Meetings
The Board of Directors does not have a nominating committee, a compensation
committee or a stock option committee. These functions are performed by the
Board as a whole. The Board of Directors has an audit committee to assist it in
the discharge of its responsibilities, the principal responsibilities and
members of which are described below. The Board of Directors met or acted by
unanimous written consent on eleven occasions during the fiscal year ended
December 31, 1999. All directors attended at least 75% of the meetings held by
the Board and committees of which they are members.
The Audit Committee of the Board of Directors currently consists of Jerome
A. Chazen, Richard C. Marcus and Robert S. Taubman. The Audit Committee did not
meet during the fiscal year ended December 31, 1999. The Audit Committee is
responsible for recommending the appointment of a firm of independent public
accountants to examine the financial statements of the Company and its
subsidiaries for the coming year. In making this recommendation, it reviews the
nature of audit services rendered, or to be rendered, to the Company and its
subsidiaries. It reviews with representatives of the independent public
accountants the auditing arrangements and scope of the independent public
accountants' examination of the financial statements, results of those audits,
their fees and any problems identified by the independent public accountants
regarding internal accounting controls, together with their recommendations. It
also meets with the Company's Chief Financial Officer to review reports on the
functioning of the Company's programs for compliance with its policies and
procedures regarding financial controls and internal auditing. This includes an
assessment of internal controls within the Company and its subsidiaries based
upon the activities of the Company's internal auditing personnel as well as an
evaluation of their performance. The Audit Committee is also prepared to meet at
any time upon request of the independent public accountants or the Chief
Financial Officer to review any special situation arising in relation to any of
the foregoing subjects.
-4-
<PAGE>
Certain Relationships and Related Transactions
Our predecessor, the Internet Design Group, Ltd. commenced operations on
December 22, 1994, and continued operations though August 19, 1995, when it
became Internet Fashion Mall, L.P. We were reorganized as a Delaware limited
liability company, Internet Fashion Mall, LLC, pursuant to a limited liability
company agreement, dated June 26, 1996, by and between Benjamin Narasin, our
Chief Executive Officer, President and Chairman of the Board, and Richard A.
Eisner & Company, LLP ("RAE"). Pursuant to such agreement, Narasin contributed
the Company's business, including fashionmall.com, related intellectual property
and $250,000, for an 80% membership interest, and RAE contributed $100,000 for a
20% membership interest. Narasin and RAE entered into an Amended and Restated
Limited Liability Company Agreement, dated March 1, 1999, which restated the
terms of the original limited liability company agreement and recognized Mr.
Narasin's prior transfer of a 10% membership interest to his minor son, Grant
Narasin.
During the year ended December 31,1998, RAE incurred various costs and
expenses, including, but not limited to, salaries and other general and
administrative expenses, on our behalf, in addition to providing a non-interest
bearing cash loan to us. No additional loans were incurred during the year ended
December 31, 1999. At December 31, 1998 and 1999, the amounts due to RAE in
respect of these loans totaled $118,000 and $0, respectively.
We sublease approximately 7,500 square feet from RAE in New York for our
executive and administrative offices at an annual rental of approximately
$360,000. In addition, prior to our IPO, RAE provided administrative services
such as phone services, accounting and maintenance of books and records at cost.
Such administrative services terminated upon the consummation of the offering.
On March 2, 1999, we sold to FM/CCP Investment Partners, LLC ("FM/CCP")
225,000 shares of our common stock for $1,000,000 ($4.44 per share). In
addition, FM/CCP loaned us $1,000,000 evidenced by a promissory note in the
principal amount of $1,000,000, bearing interest at 6% per annum and due on the
earlier of the closing of the offering or March 2, 2002. In connection with the
foregoing promissory note, FM/CCP received a warrant, expiring March 2, 2004, to
purchase up to 95,000 shares of common stock at an exercise price of $13.65 per
share. With a portion of the proceeds from the IPO, the Company repaid the $1
million promissory note plus accrued interest. Interest expense related to the
note was approximately $15,000. In addition, the Company recorded a $55,000
charge to interest expense representing the unamortized discount relating to the
note. Mr. Chazen, one of our directors and a senior consultant, and certain
affiliates of Mr. Chazen are investors in FM/CCP Investment Partners, LLC.
Pursuant to certain anti-dilution provisions, we will issue up to an additional
12,500 shares of common stock to FM/CCP upon the exercise of such warrants and
certain options granted to Jerome Chazen.
On March 2, 1999, we entered into a consulting agreement (the "Consulting
Agreement") with Jerome M. Chazen. The Consulting Agreement, which expires on
May 26, 2001, stipulates that Mr. Chazen shall provide consulting services to us
aggregating at least 30 hours per month. Mr. Chazen will receive an aggregate of
$150,000 over the term of the Consulting Agreement plus five-year options to
purchase 135,000 shares of common stock at an exercise price of $1.11 per share
and options to purchase 107,500 shares of common stock at an exercise price of
$3.25 per share. Of such options, 50% of them have vested, an additional 16%
shall vest March 1, 2000 and the balance shall vest monthly over the one year
period commencing March 2, 2000. In addition, Mr. Chazen is one of our
directors.
FM/CCP and Mr. Chazen have agreed not to sell or dispose of the securities
acquired by them without our consent, except to certain partners or family
members, until May 27, 2000. In addition, we have agreed to grant FM/CCP and Mr.
Chazen certain demand and "piggyback" registration rights, commencing May 27,
2000 and terminating on March 2, 2004, as to the common stock acquired by them
and underlying their warrants and options.
On April 22, 1999, the Company entered into an agreement with TRG Net
Investors LLC ("TRG Net"), an affiliate of Taubman Centers, Inc., a real estate
investment trust and one of the leading mall developers in the U.S., whereby TRG
Net purchased, for $7,417,000, a 9.9% membership interest in the Company (the
"Series B Interest") and warrants (the "Warrants") to purchase an additional 10%
membership interest. Upon closing of the IPO, the Series B Interest was
contributed for 824,084 shares of convertible preferred stock (the "Preferred
Stock"), which in turn are convertible into an aggregate of 824,084 common
shares and the Warrants can be exercised to purchase 924,898 common shares. The
Preferred Stock is convertible for one year beginning on the first anniversary
of the closing of the IPO by the Company and, based on the $13.00 per share
initial public offering price, the effective conversion price of the Preferred
Stock was $9.00 per share and the exercise price of the Warrants was $13.00 per
-5-
<PAGE>
share. Upon closing of Taubman's investment, the Company allocated $2,377,000 of
the $7,417,000 to represent the fair value of the Warrants. The remaining
portion of the net proceeds of $5,040,000 represents the beneficial conversion
feature of the Preferred Stock, and was allocated to additional paid-in capital
upon closing of the IPO and will be accreted to the book value of the Preferred
Stock. The accretion period will be one year, beginning on the date of closing
of the IPO. As of December 31, 1999, the Company accreted $3,101,000 to the book
value of the Preferred Stock. In connection with this transaction, Robert S.
Taubman, the Chief Executive Officer and the President of Taubman Centers, Inc.,
joined the Company's Board of Directors.
On April 17, 2000, the Company loaned Benjamin Narasin, its Chief Executive
Officer, President and Chairman, $185,000 for a term of one year, bearing
interest at an interest rate equal to 1% over the prime rate.
-6-
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock and the
other equity securities of the Company. Officers, directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equities are required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were complied with.
Summary of Compensation in Fiscal 1999, 1998, and 1997
The following tables sets forth the annual and long-term compensation for
services in all capacities for the fiscal year ended December 31, 1999 paid to
Benjamin Narasin, our President, Chief Executive Officer and Chairman. No other
executive officer received compensation exceeding $100,000 during the fiscal
year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
--------------------
Securities
Underlying
Name and Fiscal Options/
Principal Position Year Salary Bonus SARs (#)
--------------------------------------------------------------
Benjamin Narasin, 1999 $180,000 $40,000 100,000
President/CEO 1998 $180,000(1) - -
and Chairman of the 1997 $120,000(2) - -
Board of Directors
(1) $85,000 of such salary was deferred and was paid in March 1999.
(2) $82,500 of such salary was deferred and $3,500 was paid in March 1999. The
remaining $79,000 was paid upon completion of the offering.
The following table sets forth information regarding stock options granted
to Mr. Narasin pursuant to the fashionmall.com, Inc. 1999 Stock Option Plan
during the year ended December 31, 1999:
OPTIONS GRANTED IN LAST FISCAL YEAR
-----------------------------------
<TABLE>
<CAPTION>
Potential realizable value at
assumed annual rates of stock price
appreciation for
Individual grants option term
----------------- -----------------------------------
Number of Percent of
securities total options
underlying granted to Exercise
options employees in price Expiration
Name granted fiscal year ($/Sh) date 5% ($) 10% ($)
- - - - - - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benjamin Narasin
President/CEO and
Chairman of the
Board Directors 100,000 25% $7.00 6/15/09 $558,000 $1,116,000
</TABLE>
-7-
<PAGE>
The following table sets forth information regarding stock option exercises
during the year ended December 31, 1999 by Mr. Narasin and the values of his
options as of December 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/VALUES
---------------------------------
<TABLE>
<CAPTION>
Number of securities Value of unexercised
Underlying options money options at fiscal year
at fiscal year-end (#) end ($)
---------------------------------------------------------
Shares Value
acquired Realized
Name on exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- - - - - - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benjamin Narasin
President/CEO and
Chairman of the
Board of Directors - $ - 100,000 - $ - $ -
</TABLE>
Employment and Consulting Agreements
We entered into a three-year employment agreement with Benjamin Narasin,
effective as of May 26, 1999, pursuant to which Mr. Narasin shall serve as our
Chief Executive Officer, President and Chairman of the Board and has received an
annual base salary of $180,000 during 1999 and for 2000 will receive $238,225.
Such base salary will be subject to additional increases and bonuses within the
discretion of the Board of Directors which will take into account, among other
things, our performance and the performance, duties and responsibilities of Mr.
Narasin. We also agreed to pay for certain life insurance policies for the
benefit of Mr. Narasin's family which is still due and to indemnify him and his
minor son, Grant Narasin, for tax liabilities arising from our reorganization
into a C corporation. Mr. Narasin's agreement also permits him to devote up to
10% of his time to Boston Prepatory Co., an apparel company owned by him,
provided that the Board of Directors makes a determination that such company is
not directly competitive to us. In the event of a change of control as defined
in the agreement, Mr. Narasin may terminate the agreement and receive three
times his compensation, including bonuses earned during the previous 12 months,
and his compensation for the balance of the term.
On March 2, 1999, we entered into a consulting agreement (the "Consulting
Agreement") with Jerome Chazen, the sole owner of FM/CCP, Inc., which is the
manager of FM/CCP Investment Partners, LLC. The Consulting Agreement, which
expires on May 26, 2001, stipulates that Mr. Chazen shall provide consulting
services to us aggregating at least 30 hours per month. In addition, Mr. Chazen
agreed to become a director. Mr. Chazen will receive an aggregate of $150,000
over the term of the Consulting Agreement plus five-year options to purchase
135,000 shares of common stock at an exercise price of $1.11 per share and
options to purchase 107,500 shares of common stock at an exercise price of $3.25
per share. Of such options, 50% became exercisable upon the closing of our IPO,
an additional 16% becomes exercisable on March 1, 2000, and the balance becomes
exercisable in equal monthly installments over the one year period commencing
March 2, 2000.
We currently do not have written employment agreements with any of our
other officers or directors.
1999 Stock Option Plan
We adopted the 1999 Stock Option Plan in May 1999.
The 1999 Plan provides for the grant of options to purchase up to, but not
in excess of, 1,125,000 shares of common stock to our officers, directors,
agents, consultants and independent contractors. Options may be either
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code, or non-qualified options. Incentive stock options may be granted
only to our employees or employees of our subsidiaries, while non-qualified
options may be issued to non-employee directors and consultants, as well as to
our employees or employees of our subsidiaries.
The 1999 Plan is administered by a committee selected by the Board of
Directors or by the Board of Directors (the "Administrator"), which determines,
among other things, those individuals who receive options, the time period
during which the options may be exercised, the number of shares of common stock
issuable upon the exercise of each option and the option exercise price.
Pursuant to the 1999 Plan, the Administrator determines, among other things,
those individuals who receive options, the time period during
-8-
<PAGE>
which the grants will be made, the number of shares of common stock to be
granted and the price (if any) to be paid by such key employees thereafter.
The exercise price per share of common stock subject to an incentive stock
option may not be less than the fair market value per share of common stock on
the date the option is granted. The per share exercise price of the common stock
subject to a non-qualified option may be established by the Administrator. If
the aggregate fair market value, as determined as of the date the option is
granted, of common stock for which any person may be granted incentive stock
options which first become exercisable in any calendar year exceeds $100,000,
such stock option shall be treated, to the extent of such excess, as an option
which does not qualify as an incentive stock option. No person who owns,
directly or indirectly, at the time of the granting of an incentive stock option
to such person, 10% or more of the total combined voting power of all classes of
stock of the company (a "10% Stockholder") shall be eligible to receive any
incentive stock options under the 1999 Plan unless the exercise price is at
least 110% of the fair market value of the shares of common stock subject to the
option, determined on the date of grant. Non-qualified options are not subject
to such limitation.
No stock option may be transferred by an optionee other than by will or the
laws of descent and distribution, and, during the lifetime of an optionee, the
option will be exercisable only by the optionee. In the event of termination of
employment other than by death, retirement, permanent and total disability,
unless extended by the Administrator on or before such employee's date of
termination of employment, the optionee will have no more than three months
after such termination during which the optionee shall be entitled to exercise
all or any part of such employee's option, unless otherwise determined by the
Administrator. Upon termination of employment of an optionee by reason of death,
retirement, permanent and total disability, such optionee's options remain
exercisable for one year thereafter to the extent such options were exercisable
on the date of such termination.
Options under the 1999 Plan must be issued within ten years from the
effective date of the Plan. Incentive stock options granted under the 1999 Plan
cannot be exercised more than ten years from the date of grant. Incentive stock
options issued to a 10% Stockholder are limited to five-year terms. All options
granted under the 1999 Plan will provide for the payment of the exercise price
in cash or check or by delivery to us of shares of common stock having a fair
market value equal to the exercise price of the options being exercised, or by a
combination of such methods, or by such other methods approved by the
Administrator pursuant to the 1999 Plan. Therefore, an optionee may be able to
tender shares of common stock to purchase additional shares of common stock and
may theoretically exercise all of such optionee's stock options with no monetary
investment.
Each director holds office until our annual meeting of stockholders and
until his successor is duly elected and qualified. Officers are elected by the
Board of Directors and hold office at the discretion of the Board of Directors.
There are no family relationships between any of the directors or executive
officers of the Company. See footnote No. 9 in the financial statements for a
breakout of the stock option activity for the year ended 1999.
Report On Repricing of Stock Options
The Company did not adjust or amend the exercise price of stock options
previously awarded to the Company's executive officers during the fiscal year
ended December 31, 1999.
-9-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company, as of May
1, 2000, regarding the beneficial ownership of the Company's voting securities
by (i) each person who is known by the Company to beneficially own more than 5%
of the outstanding Common Stock, (ii) each of the Company's directors and each
of the executive officers named in the compensation table under Item 10,
"Executive Compensation", and (iii) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the stockholders listed
in the table below has sole voting and dispositive power with respect to shares
beneficially owned by such stockholder.
Amount and nature Percentage of
Name of beneficial owner (1) of beneficial outstanding stock
- - - - - - ------------------------- ownership owned
--------- -----
Benjamin Narasin(2)................. 3,528,100 shares 46.4%
TRG Net Investors LLP(3) ........... 824,084 shares 9.9%
Robert S. Taubman (4) .............. 834,084 shares 10.0%
FM/CCP Investment Partners, LLC(5).. 320,000 shares 4.3%
Jerome Chazen (5)................... 513,088 shares 6.7%
Richard Marcus (6).................. 30,000 shares --
Executive Officers and Directors (7)
as a group (four persons) ........ 4,081,188 shares 52.1%
- - - - - - -----------
(1) Except as otherwise indicated, the address for the referenced stockholders
is c/o fashionmall.com, Inc., 575 Madison Avenue, New York, New York 10022.
(2) Includes 427,500 shares owned by Grant Narasin, the minor son of Mr.
Narasin. Mr. Narasin has voting power over Grant Narasin's shares until
April 9, 2018. Also includes 100,000 shares of common stock underlying
options that were granted to Mr. Narasin upon the consummation of the
offering.
(3) Includes 824,084 shares of common stock underlying convertible preferred
stock owned by TRG Net Investors LLC that is not convertible until one year
after the offering. Does not include 924,898 shares of common stock
underlying a warrant which is not exercisable until one year after this
offering. TRG Net Investors LLC is owned (i) 75% by The Taubman Realty
Group Limited Partnership ("TRG LP") and (ii) 25% by Taubman Net LLC, which
is the Managing Member of TRG Net Investors LLC and which is owned 100% by
The Taubman Company Limited Partnership, a shopping mall property manager
which is 99% directly and indirectly owned by TRG LP. Consequently, TRG LP
owns directly or indirectly over 99% of TRG Net Investors LLC. In turn,
Taubman Centers, Inc., a public real estate investment trust, is the
Managing General Partner of and owns 62.8% of TRG LP.
(4) Includes 10,000 shares of common stock underlying options, which were
granted to Mr. Taubman upon the consummation of the offering. Robert S.
Taubman is the President and Chief Executive Officer of TRG Net Investors
LLC. Mr. Taubman disclaims any beneficial ownership interest in the shares
owned or which may be acquired by TRG Net Investors LLC beyond his indirect
interest therein through his pecuniary interest in TRG LP, which directly
or indirectly owns substantially all of TRG Net Investors LLC. The address
of Robert S. Taubman and TRG Net Investors LLC is 200 East Long Lake Road,
Suite 300, Bloomfield Hills, Michigan 48303-0200.
(5) FM/CCP, Inc., the Manager of FM/CCP Investment Partners, LLC, is
wholly-owned by Mr. Chazen, and certain affiliates of Mr. Chazen are
members of FM/CCP Investment Partners, LLC. FM/CCP, Inc. and/or Mr. Chazen
may be deemed the beneficial owner of securities owned by FM/CCP Investment
Partners, LLC. Mr. Chazen disclaims such beneficial ownership. FM/CCP
Investment Partners, LLC's ownership includes 95,000 shares underlying
warrants which became exercisable upon completion of the offering 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 Mr.
Chazen referred to below. The amount shown as owned by Mr. Chazen includes
common stock beneficially owned by FM/CCP and 121,250 shares underlying
options which became exercisable by Mr. Chazen upon consummation of the
offering, 19,400 shares underlying options that became exercisable by Mr.
Chazen on March 1, 2000, 42,438 shares underlying options that become
exercisable in monthly installments over a one year period commencing March
2, 2000,
-10-
<PAGE>
and an additional 10,000 shares underlying options that become exercisable
by Mr. Chazen on May 26, 2000. The address of FM/CCP Investment Partners,
LLC and Jerome Chazen is 767 Fifth Avenue, New York, New York 10153.
(6) Includes 30,000 shares of common stock underlying options that were granted
upon consummation of the offering.
(7) See footnotes (2), (4), (5) and (6) above
-11-
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent accountants for the fiscal year ended December 31, 2000 and to
render other professional services as required.
The appointment of Arthur Andersen LLP is being submitted to stockholders
for ratification.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, where they will have the opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
Stockholder Vote Required
The affirmative vote of the holders of a majority of the outstanding Common
Stock entitled to vote at the Annual Meeting is required to ratify the
appointment of public accountants.
The Board of Directors recommends a vote FOR the ratification of Arthur
Andersen LLP as independent auditors of the Company, which is designated as
Proposal 2 on the enclosed proxy card.
-12-
<PAGE>
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2001
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the Company's 2001 Annual Meeting of Stockholders
must be received at the Company's offices at 575 Madison Avenue, New York, New
York 10022, no later than 120 days prior to the Company's next Annual Meeting,
for inclusion in the Company's proxy statement and form of proxy relating to
such meeting. All proposals must comply with applicable Securities and Exchange
Commission rules and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those
set forth in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named as
proxies intend to vote the shares they represent in accordance with their best
judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, FASHIONMALL.COM, INC., 575 MADISON AVENUE, NEW
YORK, NEW YORK 10022.
-13-
<PAGE>
The Directors recommend a vote FOR Proposal 2 ------ Please mark
X your votes
------ as this
example
-------
COMMON
1. Election of Directors ---------- --------
---------- --------
FOR All WITHHOLD
nominees AUTHORITY
listed to vote
(except for all
as marked nominees
to the listed
contrary, at left
see
instruction
below)
Benjamin Narasin, Jerome
A. Chazen, Richard C.
Marcus and Robert S.
Taubman
INSTRUCTION: To withhold authority to vote for any individual nominee, line
through the name of the nominee above.
2. Proposal to ratify -------- -------- --------
Arthur Andersen LLP as -------- -------- --------
independent auditors. FOR AGAINST ABSTAIN
The above named proxies are granted the authority, in their discretion, to
act upon such other matters as may properly come before the meeting or any
postponement or adjournment thereof.
Date, 2000
Signature(s)_____
Signatures_____
Please sign exactly as your name appears and return this proxy
immediately in the enclosed stamped self-addressed envelope.
<PAGE>
FASHIONMALL.COM, INC.
Annual Meeting of Stockholders - June 30, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of fashionmall.com, Inc. ("Company") hereby
constitutes and appoints Benjamin Narasin and Stephen P. Burke, and each of
them, his true and lawful attorneys and proxies, with full power of substitution
in and for each of them, to vote all shares of the Company which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held at The Rye
Town Hilton, 699 Westchester Ave, Rye Brook, NY 10573, on June 30, 2000, 4:30
p.m., Eastern Standard Time, or at any postponement or adjournment thereof, on
any and all of the proposals contained in the Notice of the Annual Meeting of
Stockholders, with all the powers the undersigned would possess if present
personally at said meeting, or at any postponement or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ON THE REVERSE SIDE and FOR THE APPROVAL OF PROPOSAL 2.
