Page 14 of 36 Pages
EXHIBIT EEE
SERIES 2002 PREFERRED STOCK PURCHASE AGREEMENT
----------------------------------------------
THIS SERIES 2002 PREFERRED STOCK PURCHASE AGREEMENT, dated as of August __,
2002 (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, Two Thousand One Hundred (2,100)
shares (the "Shares") of Series 2002 Convertible Preferred Stock, par value $.01
per share (the "Series 2002 Preferred Stock"), of the Company 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 SERIES 2002 PREFERRED STOCK
------------------------------------------------
Subject to the terms and conditions hereof, the Company hereby issues and
sells to the Investors, and each Investor hereby purchases from the Company, the
number of Shares set for opposite such Investor's name in Schedule 1, for a
purchase price of One Thousand Dollars ($1,000) per share, resulting in an
aggregate purchase price for all Shares sold pursuant to the terms hereof of Two
Million One Hundred Thousand Dollars ($2,100,000).
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 and its Subsidiary (as defined
in Section 2.4(b)) have each been duly formed, and are each validly existing as
a corporation in good standing under the laws of their respective States of
incorporation, and are each 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 and its
Subsidiary taken as
Page 15 of 36 Pages
a whole (a "Material Adverse Effect"). The Company and its Subsidiary each have
have the requisite corporate power and authority to own, lease and operate their
respective properties and to conduct their respective businesses 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 Shares 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 has been duly executed
and delivered by the Company, and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company 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 2.4 Capitalization.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 40,000,000 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 and 2,000 shares have been designated Series 2002 Preferred
Stock. Without giving effect to the transactions contemplated by this Agreement,
the issued and outstanding capital stock of the Company consists of (i)
10,391,904 shares of Common Stock, (ii) 500,000 shares of Series A Convertible
Preferred Stock and (iii) 8,910,782 shares of Series B 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,
warrants or other equity securities that are convertible into, or exercisable
for, shares of the Company's capital stock.
(b) The only Subsidiary of the Company is Clothesline Corporation. The
Company owns all of the issued and outstanding capital stock of its Subsidiary,
free and clear of all liens and encumbrances. All of such shares of capital
stock are duly authorized, validly issued, fully paid and non-assessable, and
were issued in compliance with the registration and qualification requirements
of all applicable federal, state and foreign securities laws. There are no
options, warrants, conversion privileges, subscription or purchase rights or
other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of capital stock or
other securities of, or any proprietary interest in, the Company's Subsidiary,
and there is no outstanding security of any kind convertible into or
Page 16 of 36 Pages
exchangeable for such shares or proprietary interest. "Subsidiary" means, with
respect to the Company, a corporation or other entity of which 50% or more of
the voting power of the outstanding voting equity securities or 50% or more of
the outstanding economic equity interest is held, directly or indirectly, by the
Company.
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"). 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 articles of
incorporation or by-laws of the Company, (ii) result in a default or breach of,
or, except for the approval of the holders of the Company's Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock, 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 or its Subsidiary
is a party or by which the Company or its Subsidiary or any of their respective
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 or its Subsidiary, 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.
SECTION 2.7 Issuances of Securities. The Shares have been validly issued,
and, upon payment therefor, will be fully paid and non-assessable. The offering,
issuance, sale and delivery of the Shares as contemplated by this Agreement are
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, 2001, there
has not been any: (i) material adverse change in the condition, financial or
otherwise, of the
Page 17 of 36 Pages
Company and its Subsidiary (taken as a whole) or in the assets, liabilities,
properties or business of the Company and its Subsidiary (taken as a whole);
(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 its Subsidiary or cancellation of any material debt or claim held by the
Company or its Subsidiary; (iv) material loss, destruction or damage to any
property of the Company or its Subsidiary, 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 or its
Subsidiary 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 or its Subsidiary 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.
(a) 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, 2001 (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). The Company has
heretofore made available to the Investors all of the Commission Filings,
including the Company's Annual Report on Form 10-K for the year ended December
31, 2001 and the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2002. 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
consolidated financial statements and unaudited interim consolidated 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 consolidated 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 consolidated financial position of the
Company and its Subsidiary as of the dates thereof and the results of operations
for the periods then ended (subject, in the case of any unaudited consolidated
interim financial statements, to the absence of footnotes required by GAAP and
normal year-end adjustments).
(b) The Company shall file as promptly as practicable with the Commission its
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002 (the
"June 2002 10-Q"), substantially in the form previously presented to the
Investors. The June 2002 10-Q shall comply in all material respects with all
applicable requirements of the Securities Act and/or the Exchange Act (as
applicable). As of its date of filing, the June 2002 10-Q shall 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.
Page 18 of 36 Pages
The unaudited consolidated interim financial statements of the Company included
or incorporated by reference in the June 2002 10-Q shall have been prepared in
accordance with GAAP (except as may be indicated in the notes thereto or as
permitted by Form 10-Q), shall comply 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 shall fairly
present, in all material respects, the consolidated financial position of the
Company and its Subsidiary as of the dates thereof and the results of operations
for the periods then ended (subject to the absence of footnotes required by GAAP
and normal year-end adjustments).
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.
(a) Such Investor acknowledges that the offer and sale of the Shares
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
Page 19 of 36 Pages
registration under such laws unless an exemption is available. The certificates
representing the Shares will be imprinted with a legend in substantially the
following form:
"THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT AND UNDER ANY
APPLICABLE STATE SECURITIES LAWS UNLESS, IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND STATE
SECURITIES LAWS IS AVAILABLE."
(b) Such Investor is acquiring the Shares for investment, and not with
a view to the resale or distribution thereof, and is acquiring such securities
for its own account.
(c) 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.
(d) Such Investor is in compliance with the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001. Neither such Investor, nor any of its principal owners,
partners, members, directors or officers is included on: (i) the Office of
Foreign Assets Control list of foreign nations, organizations and individuals
subject to economic and trade sanctions, based on U.S. foreign policy and
national security goals; (ii) Executive Order 13224, which sets forth a list of
individuals and groups with whom U.S. persons are prohibited from doing business
because such persons have been identified as terrorists or persons who support
terrorism or (iii) any other watch list issued by any governmental authority,
including the Commission.
(e) 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 Shares is based on the
information contained herein, the Commission Filings and such Investor's own
independent investigation of the Company.
Page 20 of 36 Pages
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
the filing with the Commission of an amendment to such Investor's Schedule 13D
under the Exchange Act with respect to its acquisition of the Shares.
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 such Investor, 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 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 percent (50%) of the purchase price paid by such Investor for the
Shares 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 Shares, 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 Shares.
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
Page 21 of 36 Pages
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 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.
Page 22 of 36 Pages
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Change of Control Provision. For so long as any of the Shares
are owned by the Investors or their affiliates, the Company will not agree to,
or take any action to approve or otherwise facilitate any, merger or
consolidation or Change of Control (including granting approvals required under
applicable anti-takeover statutes), unless provision has been made for the
holders of the Shares to receive from the acquiror or any other person or entity
(other than the Company) as a result of and in connection with the transaction
an amount in cash equal to the aggregate liquidation preference for the Shares
held by them, as set forth in the Certificate of Powers, Designations,
Preferences and Rights of the Series 2002 Preferred Stock. The parties hereto
agree that irreparable damage would occur in the event that the provisions of
this Section 5.1 were not performed in accordance with their terms and the
Investors shall be entitled to specific performance of the terms of this Section
5.1 in addition to any other remedies at law or in equity. For purposes of this
Section 5.1: a "Change of Control" shall mean any of the following (i) any
person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
becoming the beneficial owner, directly or indirectly, of outstanding shares of
Capital 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 shareholders of the Company in the election
of directors (the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 of the Exchange Act), (ii) a majority of the Board of Directors of
the Company shall consist of Persons other than Continuing Directors, (iii) a
recapitalization, reorganization, merger, consolidation or similar transaction,
in each case with respect to which all or substantially all the Persons who are
the respective beneficial owners, directly or indirectly, of the outstanding
shares of Capital Stock of the Company immediately prior to such
recapitalization, reorganization, merger, consolidation or similar transaction,
will own less than 50% of the combined voting power of the then outstanding
shares of Capital Stock of the Company resulting from such recapitalization,
reorganization, merger, consolidation or similar transaction, (iv) the sale or
other disposition of all or substantially all the assets of the Company in one
transaction or in a series of related transactions, (v) any transaction occurs
(other than one described in (iv) or (v))), the result of which is that the
Common Stock is not required to be registered under Section 12 of the Exchange
Act and in which the holders of Common Stock of the Company do not receive
common stock of the Person surviving such transaction which is required to be
registered under Section 12 of the Exchange Act, or (vi) immediately after any
merger, consolidation, recapitalization or similar transaction, a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act), other than a group
that includes the Investors and/or their affiliates, shall be the beneficial
owners, directly or indirectly, of outstanding shares of Capital Stock of the
Company (or any Person surviving such transaction) entitling them collectively
to exercise 50% or more of the total voting power of shares of Capital Stock of
the Company (or the surviving Person in such transaction) and in connection with
or as a result of such transaction, the Company (or such surviving Person) shall
have incurred or issued additional indebtedness such that the total indebtedness
so incurred or issued equals at least 50% of the consideration payable in such
transaction; "Capital Stock" shall mean, with
Page 23 of 36 Pages
respect to the Company, any and all shares, interests, participations, rights
in, or other equivalents (however designated and whether voting or non-voting)
of, the Company's capital stock; and "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity; and "Continuing Directors" shall mean any
member of the Board of Directors on the date hereof and any other member of the
Board of Directors who shall be recommended or elected to succeed or become a
Continuing Director by a majority of the Continuing Directors who are then
members of the Board of Directors.
SECTION 5.2 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) that may
be required or appropriate in response to any summons or subpoena (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 to 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 5.3 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 5.4 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 5.5 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 5.6 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.
Page 24 of 36 Pages
SECTION 5.7 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: Xxxxxxxx X. Xxxxxx
With a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
To the Investors: To the address set forth on Schedule 1.
SECTION 5.8 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 5.9 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 5.10 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
Page 25 of 36 Pages
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 5.11 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.
Page 26 of 36 Pages
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:
Page 27 of 36 Pages
SCHEDULE 1
INVESTORS AND SHARE ALLOCATIONS
--------------------------------------------------------------------------------
Aggregate Purchase
Name and Address of Investor Shares Purchased Price
---------------------------- ---------------- ------
--------------------------------------------------------------------------------
Quantum Industrial Partners LDC 2,033.43 $2,033,430
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: Xxxxxxx Xxxxxxx, Esq.
--------------------------------------------------------------------------------
SFM Domestic Investments LLC 66.57 $ 66,570
c/x Xxxxx Fund Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
--------------------------------------------------------------------------------
TOTAL 2,100 $2,100,000
--------------------------------------------------------------------------------
Page 28 of 36 Pages
SCHEDULE 2.4
CAPITALIZATION
--------------
As of the date hereof, 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:
1. 500,000 shares of Series A Convertible Preferred Stock (the "Series A
Stock") are issued and outstanding. The Series A Stock is convertible
into 4,273,504 shares of Common Stock.
2. 8,910,782 shares of Series B Convertible Preferred Stock (the "Series
B Stock") are issued and outstanding. The Series B Stock is
convertible into 13,281,038 shares of Common Stock.
3. Warrants to purchase an aggregate of 1,069,144 shares of Common Stock
are issued and outstanding.
4. Options issued to purchase 3,935,912 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.
