Exhibit 10.34
March 26, 2008
Bluefly, Inc.
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxx
Re: Standby Commitment Agreement
----------------------------
Dear Xx. Xxxxxx:
Quantum Industrial Partners LDC, a Cayman Islands limited duration company
("QIP"), SFM Domestic Investments LLC, a Delaware limited liability company
("SFMDI"), Maverick Fund USA, Ltd., a Texas limited partnership ("Maverick
USA"), Maverick Fund, L.D.C., a Cayman Islands exempted limited duration company
("Maverick L.D.C.") and Maverick Fund II, Ltd., a Cayman Islands exempted
company ("Maverick II" and, together with Maverick USA and Maverick L.D.C.,
"Maverick" and together with QIP and SFMDI, the "Purchasers") intending to be
legally bound, hereby irrevocably agree, severally but not jointly, that they
shall provide Bluefly, Inc., a Delaware corporation (the "Company"), up to an
aggregate of Three Million Dollars of debt financing ($3,000,000) (the
"Commitment Amount"). The Commitment Amount may be drawn by the Company, at its
option (as determined by the disinterested members of the Board of Directors of
the Company) upon three business days' written notice to the Purchasers at any
time prior to March 26, 2009 in one or more tranches; provided, however, that
the Company may draw from the Commitment Amount only at such time that its total
cash balances are less than $1,000,000; and provided, further, that the
Commitment Amount shall be reduced by the gross cash proceeds received by the
Company or any of its subsidiaries from the issuance after the date hereof of
any equity or convertible securities, excluding the issuance of equity or
convertible securities in connection with: (1) financing provided by the
Purchasers pursuant to this agreement or (2) exercise of employee options.
Any and all draws against the Commitment Amount shall be made pursuant to
a Note Purchase Agreement in the form of Exhibit I attached hereto and shall be
evidenced by one or more Convertible Promissory Notes in the form of Exhibit II
attached hereto, in each case with such modification as to which the parties
thereto may agree. The Company shall notify the Purchasers in writing within two
business days of the receipt of any funds that would reduce the Commitment
Amount; provided that the Commitment Amount shall automatically be reduced
whether or not the Company provides such notice.
The obligation of each Purchaser in respect of the Commitment Amount shall
be limited to the percentage set forth below opposite such Purchaser's name.
Purchaser Percentage
--------- ----------
QIP 60.316%
SFMDI 1.974%
Maverick USA 7.186%
Maverick L.D.C. 16.300%
Maverick II 14.224%
In consideration of each Purchaser's execution, delivery and performance
under this agreement, the Company shall, promptly following the execution and
delivery hereof, deliver to each Purchaser a duly executed warrant (a "Warrant")
to purchase the number of shares of Common Stock, par value $0.01, of the
Company set forth opposite such Purchaser's name below for a period of five (5)
years. The Warrants shall be issued on the date hereof at an exercise price of
$0.44 per share.
Purchaser Warrant Amount
--------- --------------
QIP 316,659
SFMDI 10,364
Maverick USA 37,725
Maverick L.D.C. 85,577
Maverick II 74,677
Each Warrant shall be in the form of Exhibit III attached hereto and shall
be delivered free and clear of any lien, claim, encumbrance, or security
interest of any kind or nature whatsoever. The parties agree that Purchasers
shall be entitled to registration rights in respect the shares of Common Stock
for which the Warrants are exercisable consistent with the registration rights
granted pursuant to the Stock Purchase Agreement, dated as of June 5, 2006, by
and among the Company, QIP, SFMDI and the other parties thereto (the "2006
Agreement"), applied mutatis mutandis; provided, however, that the 120-day
filing deadline with respect to the Company's obligation to prepare and file a
registration statement covering such shares shall commence on the first day
following the Company's receipt of written notice from the Purchasers requesting
the registration of such shares and the 180 day Required Effectiveness Deadline
(as defined in the 2006 Agreement) shall also commence on the first day
following the Company's receipt of such written notice; and provided, further,
however, that if, despite the Company having used all commercially reasonable
efforts, the Required Effectiveness Deadline (as defined in the 2006 Agreement)
is not satisfied by reason of the failure of the applicable Registration
Statement (as defined in the 2006 Agreement) to be declared effective prior to
such Required Effectiveness Deadline, the penalties set forth in Section 6.1(h)
of the 2006 Agreement shall be deemed not to be triggered by clause (ii) of such
Section 6.1(h) in respect of such shares.
All notices, demands and other communications relating to this agreement
shall be made in the manner set forth in the form of Note Purchase Agreement
attached as Exhibit I hereto. This agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of the parties hereto.
Subject to applicable securities
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laws, each of the Purchasers may assign any of its rights under this agreement
to any of its affiliates but no such assignment shall relieve any Purchaser from
its obligations hereunder. The Company may not assign any of its rights under
this agreement, except to a successor-in-interest to the Company, without the
written consent of all of the Purchasers.
No failure or delay on the part of Company or the Purchasers in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such rights, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. Any amendment, supplement or modification of or to any
provision of this agreement, any waiver of any provision of this agreement, or
any consent to any departure by the Company or the Purchasers from the terms of
this agreement shall be effective only if it is made or given in writing and
signed by all of the parties hereto.
This agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. This agreement together with the Exhibits hereto are
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
If any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof shall
not be in any way impaired, unless the provisions held invalid, illegal or
unenforceable shall substantially impair the benefits of the remaining
provisions hereof.
Each of the parties shall execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this agreement. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first written above.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Xxx Xxxxxxxxxxxx
------------------------------------------
Name: Xxx Xxxxxxxxxxxx
Title: Attorney-in-fact
SFM DOMESTIC INVESTMENTS LLC
By: /s/ Xxx Xxxxxxxxxxxx
------------------------------------------
Name: Xxx Xxxxxxxxxxxx
Title: Attorney-in-fact
MAVERICK FUND USA, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
------------------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Limited Partner and General Counsel
MAVERICK FUND, L.D.C.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
------------------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Limited Partner and General Counsel
MAVERICK FUND II, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
------------------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Limited Partner and General Counsel
ACCEPTED AND AGREED:
BLUEFLY, INC.
By: /s/ Kara Xxxxx
----------------
Name: Kara Xxxxx
Title: Chief Financial Officer
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EXHIBIT I
---------
NOTE PURCHASE AGREEMENT
-----------------------
This NOTE PURCHASE AGREEMENT, dated as of [________], 200[ ] (this
"Agreement"), is entered into by and between BLUEFLY, INC., a Delaware
corporation (the "Company"), and the investors listed on Schedule 1 hereto
(each, an "Investor" and, collectively, the "Investors").
RECITALS
--------
WHEREAS, the Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors, convertible promissory notes
in the aggregate principal amount of [_____] dollars ($[_____]), in the form
attached hereto as Exhibit A (the "Notes"), on the terms, and subject to the
conditions, contained herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration for the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF NOTES; STOCKHOLDER APPROVAL
------------------------------------------------
SECTION 1.1 Notes. Subject to the terms and conditions hereof, the Company
hereby issues and sells to the Investors, and each Investor hereby purchases
from the Company, a Note in the aggregate principal amount set forth opposite
such Investor's name in Schedule 1.
SECTION 1.2 Purchase Price. The aggregate purchase price for the Notes to
be purchased by each Investor is the amount set forth opposite such Investor's
name in Schedule 1.
SECTION 1.3 Stockholder Approval. The Company shall take such actions as
are necessary to obtain the Stockholder Approval at the 2008 Annual Meeting of
Stockholders of the Company or, if the Stockholder Approval is not obtained at
such Annual Meeting, to obtain the Stockholder Approval as promptly thereafter
as possible. "Stockholder Approval" means such approval of the stockholders of
the Company as may be necessary under the rules of the Nasdaq Capital Market or
any other national securities exchange or quotation system upon which the Common
Stock may be listed from time to time, in order to permit the exercise in full
of the conversion rights set forth in Section 5 of the Notes (without giving
effect to any limitation in such Section 5 relating to any such rules).
SECTION 1.4 Use of Proceeds. The Company shall use the proceeds from the
issuance of the Notes solely for working capital and general corporate purposes.
SECTION 1.5 Registration Rights. The Investors shall be entitled to
registration rights in respect of the shares of Common Stock or Subsequent Round
Securities (as defined in the Notes) issuable upon conversion of Notes
consistent with the registration rights granted pursuant to the Stock Purchase
Agreement, dated as of June 5, 2006 (the "2006 Agreement"), by and among the
Company and the other parties thereto, applied mutatis mutandis; provided,
however, that the 120-day filing deadline with respect to the Company's
obligation to prepare and file a registration statement covering such shares
shall commence on the first day following the Company's receipt of written
notice from the Investors requesting the registration of such shares and the 180
day Required Effectiveness Deadline shall also commence on the first day
following the Company's receipt of such written notice; and provided, further,
however, that if, despite the Company having used all commercially reasonable
efforts, the Required Effectiveness Deadline (as defined in the 2006 Agreement)
is not satisfied by reason of the failure of the applicable Registration
Statement (as defined in the 2006 Agreement) to be declared effective prior to
such Required Effectiveness Deadline, the penalties set forth in Section 6.1(h)
of the 2006 Agreement shall be deemed not to be triggered by clause (ii) of such
Section 6.1(h) in respect of such shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Investors as follows:
SECTION 2.1 Organization, etc. The Company has been duly formed, and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, and is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a material adverse effect on the assets, liabilities, condition
(financial or other), business or results of operations of the Company (a
"Material Adverse Effect"). The Company has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted. The Company has the requisite corporate power and
authority to enter into, execute, deliver and perform all of its duties and
obligations under this Agreement and to consummate the transactions contemplated
hereby.
SECTION 2.2 Authorization. The execution, delivery and performance of this
Agreement and the issuance of the Notes have been duly authorized by all
necessary corporate action on the part of the Company, including, without
limitation, the due authorization by the affirmative votes of a majority of the
disinterested directors of the Company's Board of Directors.
SECTION 2.3 Validity; Enforceability. This Agreement and the Notes have
each been duly executed and delivered by the Company, and constitute the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by, or subject to, any bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting the enforcement of creditors' rights
generally and subject to general principles of equity.
SECTION 2.4 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 200,000,000 shares of common stock, $0.01 par
value per share (the "Common Stock"), and 25,000,000 shares of preferred stock,
$0.01 par value per share, of which 500,000 shares have been designated Series A
Convertible Preferred Stock, 9,000,000 shares have been designated Series B
Convertible Preferred Stock, 3,500 shares have been designated Series C
Convertible Preferred Stock, 7,150 shares have been designated Series D
Convertible Preferred Stock,1,000 shares have been designated Series E
Convertible Preferred Stock and 7,000 shares have been designated as Series F
Convertible Preferred Stock. The issued and outstanding capital stock of the
Company consists of (i) [_______](1) shares of Common Stock and (ii)
[_______](1) shares of Series F Convertible Preferred Stock. All such shares of
the Company have been duly authorized and are fully paid and non-assessable.
Except as set forth on Schedule 2.4 hereto or as otherwise contemplated by this
Agreement, there are no outstanding options, deferred stock units, warrants or
other equity securities that are convertible into, or exercisable for, shares of
the Company's capital stock.
SECTION 2.5 Governmental Consents. The execution and delivery by the
Company of this Agreement, and the performance by the Company of the
transactions contemplated hereby, do not and will not require the Company to
effectuate or obtain any registration with, consent or approval of, or notice to
any federal, state or other governmental authority or regulatory body, other
than periodic and other filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and all required filings with the Nasdaq Capital
Market. The parties hereto agree and acknowledge that, in making the
representations and warranties in the foregoing sentence of this Section 2.5,
the Company is relying on the representations and warranties made by the
Investors in Section 3.4.
SECTION 2.6 No Violation. The execution and delivery of this Agreement and
the performance by the Company of the transactions contemplated hereby will not
(i) conflict with or result in a breach of any provision of the certificate of
incorporation or by-laws of the Company, (ii) result in a default or breach of,
or require any consent, approval, authorization or permit of, or filing or
notification to, any person, company or entity under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, loan, factoring
arrangement, license, agreement, lease or other instrument or obligation to
which the Company is a party or by which the Company or any of its assets may be
bound or (iii) violate any law, judgment, order, writ, injunction, decree,
statute, rule or regulation of any court, administrative agency, bureau, board,
commission, office, authority, department or other governmental entity
applicable to the Company, except, in the case of clause (ii) or (iii) above,
any such event that could not reasonably be expected to have a Material Adverse
Effect or materially impair the transactions contemplated hereby.
----------------------
(1) To be completed upon execution of this Agreement.
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SECTION 2.7 Issuance of Notes. The Notes have been validly issued, and,
upon payment therefor, will be fully paid and non-assessable. The offering,
issuance, sale and delivery of the Notes as contemplated by this Agreement is
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Securities Act"), are being made in
compliance with all applicable federal and (except for any violation or
non-compliance that could not reasonably be expected to have a Material Adverse
Effect) state laws and regulations concerning the offer, issuance and sale of
securities, and are not being issued in violation of any preemptive or other
rights of any stockholder of the Company. The parties hereto agree and
acknowledge that, in making the representations and warranties in the foregoing
sentence of this Section 2.7, the Company is relying on the representations and
warranties made by the Investors in Section 3.4.
SECTION 2.8 Absence of Certain Developments. Since December 31, 2007,
except as disclosed in the Company's public filings (including the Form 10-K for
the fiscal year ended December 31, 2007, drafts of which have been provided to
the Investors), there has not been any: (i) material adverse change in the
condition, financial or otherwise, of the Company or in the assets, liabilities,
properties or business of the Company; (ii) declaration, setting aside or
payment of any dividend or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any capital stock of the Company; (iii)
waiver of any valuable right of the Company or cancellation of any material debt
or claim held by the Company; (iv) material loss, destruction or damage to any
property of the Company, whether or not insured; (v) acquisition or disposition
of any material assets (or any contract or arrangement therefor) or any other
material transaction by the Company otherwise than for fair value in the
ordinary course of business consistent with past practice; or (vi) other
agreement or understanding, whether in writing or otherwise, for the Company to
take any action of the type, or any action that would result in an event of the
type, specified in clauses (i) through (v).
SECTION 2.9 Commission Filings. The Company has filed all required forms,
reports and other documents with the Securities and Exchange Commission (the
"Commission") for periods from and after January 1, 2007 (collectively, the
"Commission Filings"), each of which has complied in all material respects with
all applicable requirements of the Securities Act and/or the Exchange Act (as
applicable). As of their respective dates, the Commission Filings did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. The audited financial statements
and unaudited interim financial statements of the Company included or
incorporated by reference in such Commission Filings have been prepared in
accordance with generally accepted accounting principles, consistently applied
("GAAP") (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q), complied as of their
respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, and fairly present, in all material respects, the financial
position of the Company as of the dates thereof and the results of operations
for the periods then ended (subject, in the case of any unaudited interim
financial statements, to the absence of footnotes required by GAAP and normal
year-end adjustments).
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SECTION 2.10 Brokers. Neither the Company, nor any of its officers,
directors or employees, has employed any broker or finder, or incurred any
liability for any brokerage fees, commissions, finder's or other similar fees or
expenses in connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
-----------------------------------------------
Each Investor represents and warrants to the Company, severally but not
jointly, as follows:
SECTION 3.1 Organization, etc. Such Investor has been duly formed and is
validly existing and in good standing under the laws of its jurisdiction of
organization. Such Investor has the requisite organizational power and authority
to enter into, execute, deliver and perform all of its duties and obligations
under this Agreement and to consummate the transactions contemplated hereby.
SECTION 3.2 Authority. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary organizational or other
action on the part of such Investor.
SECTION 3.3 Validity; Enforceability. This Agreement has been duly
executed and delivered by such Investor, and constitutes the legal, valid and
binding obligation of such Investor, enforceable against such Investor in
accordance with its terms, except as such enforceability may be limited by, or
subject to, any bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity.
SECTION 3.4 Investment Representations. Such Investor acknowledges that
the offer and sale of the Notes to such Investor have not been registered under
the Securities Act, or the securities laws of any state or regulatory body, are
being offered and sold in reliance upon exemptions from the registration
requirements of the Securities Act and such laws and may not be transferred or
resold without registration under such laws unless an exemption is available.
(a) Such Investor is acquiring the Notes for investment, and not with a
view to the resale or distribution thereof, and is acquiring the Notes for its
own account.
(b) Such Investor is an "accredited investor" (as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act), is
sophisticated in financial matters and is familiar with the business of the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
Such Investor has had the opportunity to investigate on its own the Company's
business, management and financial affairs and has had the opportunity to review
the Company's operations and facilities and to ask questions and obtain whatever
other information concerning the Company as such Investor has deemed relevant in
making its investment decision.
(c) Neither such Investor, nor any of its principal owners, partners,
members, directors or officers is included on the Office of Foreign Assets
Control list of foreign nations,
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organizations and individuals subject to economic and trade sanctions, based on
U.S. foreign policy and national security goals, or a person named on the list
of known or suspected terrorists, terrorist organizations or other sanctioned
persons issued by the U.S. Treasury Department's Office of Foreign Assets and
Control.
(d) No representations or warranties have been made to such Investor by
the Company or any director, officer, employee, agent or affiliate of the
Company, other than the representations and warranties of the Company set forth
herein, and the decision of such Investor to purchase the Notes is based on the
information contained herein, the Commission Filings and such Investor's own
independent investigation of the Company.
SECTION 3.5 Governmental Consents. The execution and delivery by such
Investor of this Agreement, and the performance by such Investor of the
transactions contemplated hereby, do not and will not require such Investor to
effectuate or obtain any registration with, consent or approval of, or notice to
any federal, state or other governmental authority or regulatory body, except
for compliance with the Exchange Act with respect to its acquisition of the
Notes.
SECTION 3.6 No Violation. The execution and delivery of this Agreement and
the performance by such Investor of the transactions contemplated hereby, will
not (i) conflict with or result in a breach of any provision of the articles of
incorporation, by-laws or similar organizational documents of such Investor or
(ii) violate any law, judgment, order, writ, injunction, decree, statute, rule
or regulation of any court, administrative agency, bureau, board, commission,
office, authority, department or other governmental entity applicable to such
Investor, except, in the case of clause (ii) above, any such violation that
could not reasonably be expected to materially impair the transactions
contemplated hereby.
SECTION 3.7 Brokers. Neither the Investors, nor any of their officers,
directors or employees, has employed any broker or finder, or incurred any
liability for any brokerage fees, commissions, finder's or other similar fees or
expenses in connection with the transactions contemplated hereby.
ARTICLE IV
SURVIVAL; INDEMNIFICATION
-------------------------
SECTION 4.1 Survival. The representations and warranties contained in
Articles II and III hereof shall survive until the first anniversary of the date
hereof.
SECTION 4.2 Indemnification. Each party (including its officers,
directors, employees, affiliates, agents, successors and assigns (each an
"Indemnified Party")) shall be indemnified and held harmless by the other
parties hereto (each an "Indemnifying Party") for any and all liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' fees and
expenses) actually suffered or incurred by them (collectively, "Losses"),
arising out of or resulting from the breach of any representation or warranty
made by an Indemnifying Party contained in this Agreement. Notwithstanding the
foregoing, the aggregate liability of any Investor under this Article IV shall
in no event exceed fifty
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percent (50%) of the purchase price paid by such Investor for the Notes
purchased by it and the aggregate liability of the Company under this Article IV
shall in no event exceed fifty percent (50%) of the purchase price paid by the
Investors for the Notes, except that the Company's liability for a violation of
any of the representations and warranties contained in the first two sentences
of Section 2.7 may exceed such limitation, but shall in no event exceed one
hundred percent (100%) of the purchase price paid by the Investors for the
Notes.
SECTION 4.3 Indemnification Procedure. The obligations and liabilities of
the Indemnifying Party under this Article IV with respect to Losses arising from
claims of any third party that are subject to the indemnification provided for
in this Article IV ("Third Party Claims") shall be governed by and contingent
upon the following additional terms and conditions: if an Indemnified Party
shall receive notice of any Third Party Claim, the Indemnified Party shall give
the Indemnifying Party notice of such Third Party Claim promptly after the
receipt by the Indemnified Party of such notice (which notice shall include the
amount of the Loss, if known, and method of computation thereof, and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises); provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from any of its
obligations under this Article IV except to the extent the Indemnifying Party is
materially prejudiced by such failure and shall not relieve the Indemnifying
Party from any other obligation or liability that it may have to any Indemnified
Party otherwise than under this Article IV. Upon written notice to the
Indemnified Party within five (5) days of the receipt of such notice, the
Indemnifying Party shall be entitled to assume and control the defense of such
Third Party Claim at its or his expense and through counsel of its or his choice
(which counsel shall be reasonably satisfactory to the Indemnified Party);
provided, however, that, if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the reasonable judgment
of counsel to the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its or his own counsel in each jurisdiction for which the
Indemnified Party reasonably determines counsel is required, at the expense of
the Indemnifying Party. In the event the Indemnifying Party exercises the right
to undertake any such defense against any such Third Party Claim as provided
above, the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to such Indemnifying Party, at the Indemnifying
Party's expense, all witnesses, pertinent records, materials and information in
the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnifying Party. Similarly,
in the event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party, at the Indemnifying Party's expense, all such witnesses
(including himself), records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating thereto as
is reasonably required by the Indemnified Party. No such Third Party Claim may
be settled by the Indemnifying Party on behalf of the Indemnified Party without
the prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld); provided, however, in the event that the Indemnified
Party does not consent to any such settlement that would provide it with a full
release from indemnified Loss and would not require it to take, or refrain from
taking, any action, the Indemnifying Party's liability for
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indemnification shall not exceed the amount of such proposed settlement. The
Indemnified Party will refrain from any act or omission that is inconsistent
with the position taken by the Indemnifying Party in the defense of a Third
Party Claim unless the Indemnified Party determines that such act or omission is
reasonably necessary to protect its own interest.
ARTICLE V
MISCELLANEOUS
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SECTION 5.1 Publicity. Except as may be required by applicable law or the
rules of any securities exchange or market on which securities of the Company
are traded, no party hereto shall issue a press release or public announcement
or otherwise make any disclosure concerning this Agreement and the transactions
contemplated hereby, without prior approval of the others; provided, however,
that nothing in this Agreement shall restrict the Company or any Investor from
disclosing such information (a) that is already publicly available, (b) to the
extent required or appropriate in response to any summons or subpoena or to
comply with applicable law, regulations or the rules of any national securities
exchange or quotation system (provided that the disclosing party will use
commercially reasonable efforts to notify the other parties in advance of such
disclosure under this clause (b) so as to permit the non-disclosing parties, in
the case of a summons or subpoena, seek a protective order or otherwise contest
such disclosure, and the disclosing party will use commercially reasonable
efforts to cooperate, at the expense of the non-disclosing parties, in pursuing
any such protective order) or (c) in connection with any litigation involving
disputes as to the parties' respective rights and obligations hereunder.
SECTION 5.2 Entire Agreement. This Agreement and any other agreement or
instrument to be delivered expressly pursuant to the terms hereof constitute the
entire Agreement between the parties hereto with respect to the subject matter
hereof and supersede all previous negotiations, commitments and writings with
respect to such subject matter.
SECTION 5.3 Assignments; Parties in Interest. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing herein, express or
implied, is intended to or shall confer upon any person not a party hereto any
right, benefit or remedy of any nature whatsoever under or by reason hereof,
except as otherwise provided herein.
SECTION 5.4 Amendments. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the parties
against whom such amendment or modification is sought to be enforced.
SECTION 5.5 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.
8
SECTION 5.6 Notices and Addresses. Any notice, demand, request, waiver, or
other communication under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service, if personally served or sent by
facsimile; on the business day after notice is delivered to a courier or mailed
by express mail, if sent by courier delivery service or express mail for next
day delivery; and on the fifth business day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid and addressed as follows:
To Company: Bluefly, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
With a copy to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
To the Investors: To the address set forth on Schedule 1.
SECTION 5.7 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
SECTION 5.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to conflicts of law principles. The parties agree that the federal and
state courts located in New York, New York shall have exclusive jurisdiction
over any dispute involving this Agreement or the transactions contemplated
hereby, and each party hereby irrevocably submits to the jurisdiction of, and
waives any objection to the laying of venue in, such courts.
SECTION 5.9 Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and
9
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed by facsimile, and a
facsimile signature shall have the same force and effect as an original
signature on this Agreement.
SECTION 5.10 Expenses. The Company shall reimburse the Investors for their
reasonable legal fees and expenses incurred in connection with the negotiation
of this Agreement and the transactions contemplated hereby. Except as provided
above, all costs and expenses, including, without limitation, fees and
disbursements of counsel, incurred in connection with the negotiation, execution
and delivery of this Agreement and its related documents shall be paid by the
party incurring such costs and expenses, whether or not the closing shall have
occurred.
10
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first set forth above.
BLUEFLY, INC.
By: ___________________________
Name:
Title:
QUANTUM INDUSTRIAL PARTNERS LDC
By: ___________________________
Name:
Title:
SFM DOMESTIC INVESTMENTS LLC
By: ___________________________
Name:
Title:
MAVERICK FUND USA, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: ___________________________
Name:
Title:
11
MAVERICK FUND, L.D.C.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: ___________________________
Name:
Title:
MAVERICK FUND II, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: ___________________________
Name:
Title:
12
SCHEDULE 1
INVESTORS AND SHARE AND NOTE ALLOCATIONS
------------------------------------------------------------------------------------------
Aggregate Principal Aggregate Purchase
Name and Address of Investor Amount of Note Price
------------------------------------------------------------------------------------------
Quantum Industrial Partners LDC [_______] [_______]
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx
Xxxxxxx
Xxxxxxxxxxx-Xxxxxxxx
with a copy to:
Xxxxx Fund Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxx Xxxxxxxxxxxx, Esq.
------------------------------------------------------------------------------------------
SFM Domestic Investments LLC [_______] [_______]
c/x Xxxxx Fund Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxx Xxxxxxxxxxxx, Esq.
------------------------------------------------------------------------------------------
Maverick Fund USA, Ltd. [_______] [_______]
c/o Maverick Capital, Ltd.
000 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000)000-0000
Attn: General Counsel:
------------------------------------------------------------------------------------------
Maverick Fund, L.D.C. [_______] [_______]
c/o Maverick Capital, Ltd.
000 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000)000-0000
Attn: General Counsel:
------------------------------------------------------------------------------------------
Maverick Fund II, Ltd. [_______] [_______]
c/o Maverick Capital, Ltd.
000 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000)000-0000
Attn: General Counsel:
------------------------------------------------------------------------------------------
TOTAL $[___] $[___]
------------------------------------------------------------------------------------------
13
SCHEDULE 2.4
CAPITALIZATION
--------------
As of the date hereof (except as otherwise provided below), but without
giving effect to the transactions contemplated by this Agreement, the following
equity securities are outstanding and convertible into, or exercisable for
shares of Common Stock:
o Warrants to purchase an aggregate of 1,214,249 shares of Common Stock
are issued and outstanding.
o Options issued to purchase 3,402,560 shares of Common Stock are
issued and outstanding under the Company's 1997 Stock Option Plan,
as amended, and 2000 Stock Option Plan, as amended.
o 9,647,447 shares of Common Stock reserved for issuance upon the
settlement of deferred stock units.
14
EXHIBIT II
----------
THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AND INTERCREDITOR
AGREEMENT, DATED MARCH 26, 2008, BETWEEN XXXXX FARGO RETAIL FINANCE, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, [QUANTUM INDUSTRIAL PARTNERS LDC, A CAYMAN
ISLANDS LIMITED DURATION COMPANY, SFM DOMESTIC INVESTMENTS LLC, A DELAWARE
LIMITED LIABILITY COMPANY, MAVERICK FUND USA, LTD., A TEXAS LIMITED PARTNERSHIP,
MAVERICK FUND, L.D.C., A CAYMAN ISLANDS EXEMPTED LIMITED DURATION COMPANY AND
MAVERICK FUND II, LTD., A CAYMAN ISLANDS EXEMPTED COMPANY.] PAYOR SHALL FURNISH
A COPY OF SUCH SUBORDINATION AND INTERCREDITOR AGREEMENT UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
THE OFFER AND SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE
AND ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. CERTIFICATES REPRESENTING
ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE SHALL INCLUDE A LEGEND TO
SIMILAR EFFECT AS THE FOREGOING.
BLUEFLY, INC.
CONVERTIBLE PROMISSORY NOTE
$[________]
New York, New York [________], 200[_]
FOR VALUE RECEIVED, the undersigned, BLUEFLY, INC., a Delaware
corporation (the "Payor" or the "Company"), promises to pay to the order of
[___________] or its registered assign (the "Payee"), the principal sum of
[______] Dollars ($[______]) and interest on the outstanding principal balance
as set forth herein.
1. Interest Rate; Payment.
-----------------------
(a) The outstanding principal balance of this Convertible
Promissory Note (this "Note") shall bear interest at an annual rate equal to 8%
per annum, with interest
2
accruing, from and including the date hereof, on a cumulative, compounding
basis. Interest shall be computed on the basis of a 365- or 366-day year, as the
case may be, and the actual number of days elapsed, and, subject to Section 5,
shall be payable only upon repayment of the principal on any Repayment Date (as
defined below) in cash.
(b) The outstanding balance of any amount owed under this Note
which is not paid when due shall bear interest at the rate of 2.0% per annum
(the "Default Interest") above the rate that would otherwise be in effect under
this Note with the Default Interest accruing, from and including such due date,
on a cumulative, compounding basis.
(c) The outstanding principal and all accrued and unpaid
interest shall be paid in full no later than [______], 201[_](1) (the "Maturity
Date"), unless repaid earlier pursuant to the provisions of Section 2 (the date
of any payment pursuant to Section 2 and the Maturity Date, collectively
referred to as a "Repayment Date") or unless converted into Conversion
Securities (as defined below) pursuant to Section 5 on or prior to the Maturity
Date. On a Repayment Date, the Payor shall pay the applicable amount of
principal and interest in lawful money of the United States of America by wire
or bank transfer of immediately available funds to an account designated by the
Payee in writing from time to time.
2. Prepayment.
-----------
(a) Mandatory Prepayment.
---------------------
(i) Upon the occurrence of an Event of Default (under
Section 3(d) or (e)), the outstanding principal of and all accrued interest on
this Note shall be accelerated and shall automatically become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which are expressly waived by the Payor, notwithstanding anything contained
herein to the contrary.
(ii) The holders of a Majority of Notes Outstanding
shall, at their sole option, have the right to require the Payor to pay the
outstanding principal of and all accrued interest on this Note upon the
occurrence of any of the following events: (1) an Event of Default under Section
3(a), (b), (c), (f), (g) or (h), (2) the Company entering into an agreement to
effectuate any sale or other disposition of all or substantially all of its
assets, in one transaction or in a series of transactions, (3) the Company
entering into an agreement to effectuate any consolidation or merger with or
into another entity, or (4) any sale of a majority of the outstanding equity of
the Company (or any other event that constitutes a Change of Control (as defined
below) of the Company), in one transaction or in a series of transactions.
Immediately upon the occurrence of either of the events set forth in clauses
(1), (2) or (3) above, or immediately upon obtaining knowledge that any person
has entered into an agreement to effectuate the event set forth in clause (4)
above, the Company shall give written notice of such event to the Payee. "Change
of Control" means any "Person" (as defined in Section 3(a)(9) of
_________________________________
(1) To be the later of three years following issuance and three years and
three months following the date of the debt commitment.
3
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
"group" (as defined in Rule 13d-5, promulgated under the Exchange Act) other
than Payee and/or its affiliates and one or more of Quantum Industrial
Partners, LDC, SFM Domestic Investments, LLC, Maverick Capital, Ltd., Prentice
Capital Management, LP and/or their affiliates or any group that includes any
such Person, becoming the beneficial owner (as determined by Rule 13d-3,
promulgated under the Exchange Act), directly or indirectly, of outstanding
shares of stock of the Company entitling such Person or Persons to exercise 50%
or more of the total votes entitled to be cast at a regular or special meeting,
or by action by written consent, of the stockholders of the Company in the
election of directors.
(iii) Any mandatory prepayment under this Section 2(a)
shall include payment of reasonable costs and expenses, if any, of the Payee
associated with such prepayment.
(b) Optional Prepayment. The Company may, at its option, without
premium or penalty, upon five (5) days' prior written notice to the Payee, repay
the unpaid principal amount of this Note, at any time in whole or from time to
time in part, together with interest accrued thereon to the date of prepayment.
Any such prepayment shall be applied first to the payment of accrued interest
and then to repayment of principal. Upon any partial prepayment of the unpaid
principal amount of this Note, the Holder shall make notation on this Note of
the portion of the principal so prepaid. No notice of prepayment shall in any
way prohibit the Payee from converting this Note pursuant to Section 5.
3. Events of Default. An "Event of Default" shall occur if:
------------------
(a) the Payor shall default in the payment of the principal of
or interest payable on this Note, when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise and such default with respect to the payment of
interest shall continue unremedied for two days;
(b) the Payor shall fail to observe or perform any covenant or
agreement contained in this Note, and such failure shall continue for five
business days after Payor receives notice of such failure;
(c) any representation, warranty, certification or statement
made by or on behalf of the Payor in this Note or in any certificate, writing or
other document delivered pursuant hereto shall prove to have been incorrect in
any material respect when made;
(d) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(A) relief in respect of Payor or of a substantial part of Payor's respective
property or assets, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law (any such law, a "Bankruptcy Law"), (B) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for a substantial part of the property or assets of any Payor,
(C) the winding up or liquidation of any Payor; and such
4
proceeding or petition shall continue undismissed for 60 days, or an order or
decree approving or ordering any of the foregoing shall be entered;
(e) the Payor shall (A) voluntarily commence any proceeding or
file any petition seeking relief under a Bankruptcy Law, (B) consent to the
institution of or the entry of an order for relief against it, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in clause (d), (C) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for a substantial part of the property or assets of the Payor, (D) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (E) make a general assignment for the benefit of creditors, (F)
become unable, admit in writing its inability or fail generally to pay its debts
as they become due or (G) take any action for the purpose of effecting any of
the foregoing;
(f) one or more judgments or orders for the payment of money in
excess of $250,000 in the aggregate shall be rendered against the Payor and such
judgment(s) or order(s) shall continue unsatisfied and unstayed for a period of
30 days;
(g) the Payor shall default in the payment of any principal,
interest or premium, or any observance or performance of any covenants or
agreements, with respect to indebtedness (excluding trade payables and other
indebtedness entered into in the ordinary course of business) in excess of
$125,000 in the aggregate for borrowed money or any obligation which is the
substantive equivalent thereof and such default shall continue for more than the
period of grace, if any, or of any such indebtedness or obligation shall be
declared due and payable prior to the stated maturity thereof;
(h) any material provisions of this Note shall terminate or
become void or unenforceable or the Payor shall so assert in writing.
4. Reserved.
---------
5. Conversion.
-----------
(a) Right to Convert.
-----------------
(i) Subject to the terms and conditions of this Section
5 and to stockholder approval (and so subject only to the extent required by the
rules of the Nasdaq Capital Market or any other national securities exchange or
quotation system upon which the Payor's common stock, par value $0.01 per share
("Common Stock"), may be listed from time to time), the Payee shall have the
right, at its option, at any time and from time to time, upon or following the
consummation of any Subsequent Round of Financing (as defined below), to convert
all or any portion of the principal amount of this Note (the "Principal
Obligations") into a number of fully paid and nonassessable Subsequent Round
Securities (with the most favorable terms received by any investor in such
Subsequent Round of Financing) equal to the quotient obtained by dividing the
aggregate amount of Principal Obligations to be converted by the lowest price
per Subsequent Round Security paid by any investor in such Subsequent Round of
5
Financing. Written notice of a Subsequent Round of Financing stating the date on
which such Subsequent Round of Financing is expected to become effective and
describing the terms and conditions of such Subsequent Round of Financing shall
be delivered by the Company to, and received by, the Payee not less than 10 days
prior to the consummation of such Subsequent Round of Financing.
(ii) Subject to the terms and conditions of this Section
5 and to stockholder approval (and so subject only to the extent required by the
rules of the Nasdaq Capital Market or any other national securities exchange or
quotation system upon which the Common Stock may be listed from time to time),
the Payee shall have the right, at its option, at any time and from time to
time, to convert all or any portion of the Principal Obligations into a number
of fully paid and nonassessable shares of Common Stock equal to the quotient
obtained by dividing the aggregate amount of Principal Obligations to be
converted by $[____].(2)
(b) Procedure for Conversion. In order to convert all or any
portion of the Principal Obligations, the Payee shall (i) surrender this Note,
duly endorsed, at the office of the Payor and (ii) simultaneously with such
surrender, notify the Payor in writing of its election to convert all or a
portion of the Principal Obligations, which notice shall specify the amount of
Principal Obligations to be so converted, and whether such conversion is for
Common Stock or Subsequent Round Securities. The date on which the Note is
surrendered for conversion is referred to herein as the "Conversion Date." As
soon as practicable after the Conversion Date, the Payee shall be entitled to
receive a certificate or certificates, registered in such name or names as the
Payee may direct, representing the Conversion Securities issuable upon
conversion of the applicable Principal Obligations, along with a new promissory
note, in the same form as this Note, reflecting any Principal Obligations that
have not been so converted and any obligations in respect of accrued and unpaid
interest on converted Principal Obligations; provided that the Payee shall be
treated for all purposes as the record holder of such Conversion Securities as
of the Conversion Date. The issuance of Conversion Securities upon conversion of
any Principal Obligations shall be made without charge to the Payee for any
issuance tax in respect thereof, provided that the Payor shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the Payee.
(c) Reservation of Shares. Payor shall reserve and keep
available solely for issuance upon the conversion of Principal Obligations such
number of shares of Conversion Securities as will from time to time be
sufficient to permit the conversion of all outstanding Principal Obligations,
and, if applicable, shall take all action to increase the authorized number of
Conversion Securities if at any time there shall be insufficient authorized but
unissued Conversion Securities to permit such reservation or permit the
conversion of all outstanding Principal Obligations. The Payor covenants that
all Conversion Securities that shall be so issued shall be duly authorized,
validly issued, fully paid and non-assessable by the Payor, not subject to any
preemptive rights, and free from any taxes, liens and charges with respect to
the issue
_________________________________
(2) To equal the 20-day trailing average trading price on the date the Note is
issued.
6
thereof. The Payor will take all such action as may be necessary to ensure that
all such Conversion Securities may be so issued without violation of any
applicable law or regulation, or any requirement of any national securities
exchange or quotation system upon which the Common Stock may be listed.
(d) Certain Definitions. For purposes of this Note, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa):
"Conversion Securities" means Common Stock or Subsequent Round
Securities, as applicable.
"Majority of Notes Outstanding" means a majority of the aggregate
outstanding principal amount of notes issued pursuant to the Note Purchase
Agreement dated as of [___], 200[_] by and between the Payor and the Investors
party thereto.
"Subsequent Round of Financing" means the offer and sale for cash by
the Company of its equity securities.
"Subsequent Round Securities" means the equity securities sold in the
Subsequent Round of Financing; provided that, to the extent that two or more
types or classes of equity securities are sold as a unit in the Subsequent Round
of Financing, "Subsequent Round Securities" shall mean a unit consisting of the
same types or classes of equity securities, in the same proportion, as the units
sold in the Subsequent Round of Financing.
6. Suits for Enforcement.
----------------------
(a) Upon the occurrence of any one or more Events of Default,
the holder of this Note may proceed to protect and enforce its rights by suit in
equity, action at law or by other appropriate proceeding in aid of the exercise
of any power granted in this Note, or may proceed to enforce the payment of this
Note, or to enforce any other legal or equitable right it may have as a holder
of this Note.
(b) The holder of this Note may direct the time, method and
place of conducting any proceeding for any remedy available to itself.
(c) In case of any Event of Default, the Payor will pay to the
holder of this Note such amounts as shall be sufficient to cover the reasonable
costs and expenses of such holder due to such Event of Default, including
without limitation, costs of collection and reasonable fees, disbursements and
other charges of counsel incurred in connection with any action in which the
holder prevails.
7. Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in accordance with the provisions of
the Note Purchase Agreement, dated as of the date hereof, by and among the Payor
and the investors listed on Schedule 1 thereto.
7
8. Successors and Assigns. This Note shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
The Payor may not assign any of its rights or obligations under this Note
without the prior written consent of Payee. The Payee may assign all or a
portion of their rights or obligations under this Note to an affiliate without
the prior written consent of the Payor.
9. Amendment and Waiver.
---------------------
(a) No failure or delay on the part of the Payor or Payee in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Payor or
Payee at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Note, any waiver of any provision of this Note and any consent
to any departure by the Payor from the terms of any provision of this Note,
shall be effective (i) only if it is made or given in writing and signed by the
Payor and the Payee and (ii) only in the specific instance and for the specific
purpose for which made or given.
10. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
12. Costs and Expenses. The Payor hereby agrees to pay on demand all
reasonable out-of-pocket costs, fees, expenses, disbursements and other charges
(including but not limited to the fees, expenses, disbursements and other
charges of counsel to the Payee) of the Payee arising in connection with any
consent or waiver granted or requested hereunder or in connection herewith, and
any renegotiation, amendment, work-out or settlement of this Note or the
indebtedness arising hereunder.
13. Waiver of Jury Trial and Setoff. The Payor hereby waives trial by
jury in any litigation in any court with respect to, in connection with, or
arising out of this Note or any instrument or document delivered pursuant to
this Note, or the validity, protection, interpretation, collection or
enforcement thereof, or any other claim or dispute howsoever arising, between
any Payor and the Payee; and the Payor hereby waives the right to interpose any
setoff or counterclaim or cross-claim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or cross-claim except to
the extent that the failure so to assert any such setoff, counterclaim or
cross-claim would permanently preclude the prosecution of the same.
14. Consent to Jurisdiction. The Payor hereby irrevocably consents to
the nonexclusive jurisdiction of the courts of the State of New York and of any
federal court located
8
in such State in connection with any action or proceeding arising out of or
relating to this Note or any document or instrument delivered pursuant to this
Agreement.
15. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
16. Entire Agreement. This Note is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Note
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
17. Further Assurances. The Payor shall execute such documents and
perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations or other actions by, or giving any notices
to, or making any filings with, any governmental authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Note.
IN WITNESS WHEREOF, the Payor has executed and delivered this
Convertible Promissory Note on the date first above written.
BLUEFLY, INC.
By: _________________________________
Name:
Title:
Agreed to and accepted as of the date
first written above:
[PAYEE]
By: ________________________________
Name:
Title:
