PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
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THIS PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of June 24,
2005 (this "Agreement"), is entered into by and between BLUEFLY, INC., a
Delaware corporation (the "Company"), Quantum Industrial Partners LDC ("QIP"),
SFM Domestic Investments, LLC ("SFM," and, together with QIP, the "Xxxxx
Parties") and Investors listed on the signature page attached hereto (the "New
Investors"). The New Investors and the Xxxxx Parties are sometimes referred to
collectively as the "Investors").
RECITALS
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WHEREAS, the Investors desire to purchase from the Company, and the Company
desires to issue and sell to the Investors, seven thousand (7,000) shares (the
"Series F Shares") of the Company's newly-designated Series F Convertible
Preferred Stock, par value $.01 per share (the "Series F Preferred Stock"), of
the Company and warrants in the form attached hereto as Exhibit A (the
"Warrants," and, together with the Series F Shares the "Newly Issued
Securities"), exercisable to purchase up to an aggregate of 603,448 shares of
the Company's Common Stock, $.01 par value (the "Common Stock") at an exercise
price of $2.87 per share of Common Stock, on the terms and subject to the
conditions contained herein;
WHEREAS, simultaneously with the purchase and sale of the Newly Issued
Securities, the New Investors desire to purchase from the Xxxxx Parties, and the
Xxxxx Parties desire to sell to the New Investors, the number of shares of the
Company's Series D Convertible Preferred Stock, par value $.01 per share (the
"Series D Preferred Stock") set forth on Schedules 2A and 2B (collectively, the
"Existing Preferred Shares").
AGREEMENT
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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 NEWLY ISSUED SECURITIES AND EXISTING PREFERRED SHARES
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SECTION 1.1 Purchase and Sale of Newly Issued Securities. 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) the number
of Series F Shares set forth opposite such Investor's name in Schedule 1, for a
purchase price of $1,000 per share ("Series F Subscription Amount"), resulting
in an aggregate purchase price for all Shares sold pursuant to the terms hereof
of
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$7,000,000.00; and (b) the number of Warrants set forth opposite such Investor's
name in Schedule 1, for a purchase price of $0.125 per Warrant (the "Warrant
Subscription Amount," and, together with the Series F Subscription Amount, the
"Subscription Amount"), resulting in an aggregate purchase price for all
Warrants of $75,431.
SECTION 1.2 Purchase and Sale of Existing Preferred Shares. Simultaneously
with the purchase and sale of the Newly Issued Securities, the Xxxxx Parties
hereby sell, transfer and assign the Existing Preferred Shares to the New
Investors for an aggregate purchase price of $3,000,000. The number of Existing
Preferred Shares sold by each Xxxxx Party, the face value and aggregate amount
of accrued and unpaid dividends on such shares and the purchase price of such
shares is set forth in Schedule 2A. The number of Existing Preferred Shares
purchased by each New Investor, the face value and aggregate amount of accrued
and unpaid dividends on such shares and the purchase price of such shares is set
forth in Schedule 2B.
SECTION 1.3 Closing. Upon the terms and subject to the conditions set forth
herein, each Investor shall deliver to the Company via wire transfer immediately
available funds equal to their Subscription Amount and the Company shall deliver
to each Investor their respective Newly Issued Securities as determined pursuant
to Section 1.1 and the other items set forth in Section 1.4 issuable at the
closing. Upon satisfaction of the conditions set forth in Sections 1.4, the
closing shall occur at the offices of the Escrow Agent, or such other location
as the parties shall mutually agree.
SECTION 1.4 Deliveries.
a) On the closing date, the Company shall deliver or cause to be
delivered to the Escrow Agent with respect to each Investor the
following:
(i) this Agreement duly executed by the Company;
(ii) a legal opinion of Company Counsel, in the form agreed to by
the parties;
(iii) a certificate evidencing a number of shares of Series F
Preferred Stock equal to such Investor's Series F
Subscription Amount divided by 1,000, registered in the name
of such Investor;
(iv) a Warrant registered in the name of such Investor to
purchase up to a number of shares of Common Stock set forth
on Schedule 1, with an exercise price equal to $2.87,
subject to adjustment therein; and
(v) the Escrow Agreement duly executed by the
Company.
b) On the Closing Date, each Investor shall deliver or cause to be
delivered to the Escrow Agent the following:
(i) this Agreement duly executed by such Investor;
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(ii) such Investor's Subscription Amount by wire transfer to the
account of the Escrow Agent (provided that the Xxxxx Parties
Subscription Amount shall be paid as described below);
(iii) the purchase price for such New Investor's Existing
Preferred shares by wire transfer to the account of the
Escrow Agent to be disbursed to the Company on behalf of the
Xxxxx Parties as payment in full of their Subscription
Amount);
(iv) the Escrow Agreement duly executed by such Investor (other
than the Xxxxx Parties, who are not parties to the Escrow
Agreement).
c) On the Closing Date, the Xxxxx Parties shall deliver or cause to be
delivered to the Escrow Agent the following:
(i) a certificate evidencing a number of shares of Existing
Preferred Shares as set forth on Schedule 2A.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
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The Company represents and warrants to, and agrees with, 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 the State 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 a whole (a "Material Adverse
Effect"). The Company and its Subsidiary each 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 Newly Issued Securities and the shares of
Common Stock (the "Conversion Shares") issuable upon exercise of the Warrants
and/or conversion of the Series F Shares and the Existing Preferred Shares,
and/or in lieu of any cash payments of any dividends on the Existing Preferred
Shares and the Series F Shares (collectively, the "Convertible Securities") have
been duly authorized by all necessary corporate action on the part of the
Company.
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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 92,000,000 shares of 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 Series F Convertible Preferred Stock. Without giving effect
to the transactions contemplated by this Agreement, as of June 23, 2005,
the issued and outstanding capital stock of the Company consisted of (i)
approximately 15,667,740 shares of Common Stock, (ii) 460,000 shares of
Series A Convertible Preferred Stock, (iii) 8,889,414 shares of Series B
Convertible Preferred Stock, (iv) 1,000 shares of Series C Convertible
Preferred Stock, (v) 7,136.548 shares of Series D Convertible Preferred
Stock and (vi) 1,000 shares of Series E 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. The face value and accrued and
unpaid dividends on the Existing Preferred Stock are as set forth on
Schedule 2. The face value of each share of Existing Preferred Stock is
currently convertible into Common Stock at the rate of $0.76 per share of
Common Stock.
(b) The only Subsidiary of the Company is Clothesline Corporation. The
Subsidiary has no operations or assets. 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 exchangeable for such shares or proprietary interest. "Subsidiary"
means, with respect to the Company, a corporation or other entity of which
more than 50% of the voting power of the outstanding voting equity
securities or more than 50% of the outstanding economic equity interest are
held, directly or indirectly, by the Company.
SECTION 2.5 [INTENTIONALLY OMITTED]
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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 or its Subsidiary, (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, Series B Convertible Preferred
Stock. Series C Convertible Preferred Stock, Series D Convertible Preferred
Stock and Series E Convertible Preferred Stock, and the waiver by the holders of
the Company's convertible notes of their conversion rights with respect to the
transactions contemplated hereby (all of which have been obtained), require any
consent, approval, authorization or permit of, or filing or notification to, any
person, company or entity (including, without limitation, any stockholder or
holder of the Company's equity securities) 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 (collectively, "Agreements") 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. The Company is
in compliance, in all material respects, with the listing requirements of the
Nasdaq SmallCap Market. No material default or breach by the Company or its
Subsidiary exists under any material Agreement, other than any such default or
breach that could not reasonably be expected to have a Material Adverse Effect.
SECTION 2.7 Issuances of Securities. The Series F Shares, the Existing
Preferred Shares and the Warrants have been validly issued, and, upon payment
therefor, will be fully paid and non-assessable. Upon the exercise or conversion
of the Convertible Securities in accordance with the terms thereof, the
Conversion Shares will be validly issued, fully paid and non-assessable. The
offering, issuance, sale and delivery of the Newly Issued Securities and the
Existing Preferred 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 March 31, 2005, there
has not been any: (i) material adverse change in the condition, financial or
otherwise, of the 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
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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 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, 2003 (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). All of the Commission Filings, including the Company's Annual
Report on Form 10-K for the year ended December 31, 2004 and the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 are
available through the Commission's Web site. 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 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). The Company has complied, in all material
respects, with the provisions of the Xxxxxxxx-Xxxxx act of 2002.
SECTION 2.10 Brokers. Except for HPC Capital Management, Inc. ("HPC"),
neither the Company, nor any of its officers, directors or employees, has
employed any broker or finder, or (except for the finders fee due to HPC from
the Company, for which the Company will be solely responsible) incurred any
liability for any brokerage fees, commissions, finder's or other similar fees or
expenses in connection with the transactions contemplated hereby.
SECTION 2.11 Filings, Consents and Approvals. The Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 6.3, (ii) the filing with
the Commission of the Registration Statement and a proxy statement with respect
to the Shareholders
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Meeting, (iii) the filing of the Series F Certificate of Designations with the
Secretary of State of the State of Delaware and (iv) the notice and/or
application(s) to the Nasdaq Stock Market and the Boston Stock Exchange for the
issuance and sale of the Newly Issued Securities and the listing of the
Conversion Shares for trading thereon in the time and manner required thereby
(collectively, the "Required Approvals").
SECTION 2.12 Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of this Agreement, the Escrow
Agreement, the Series F Certificate of Designations and the other documents
delivered in connection herewith (collectively, the "Transaction Documents") or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor, to the Company's knowledge, any director or
officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty that could reasonably be expected to have a Material
Adverse Effect. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
SECTION 2.13 Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business except in each case as could not have
a Material Adverse Effect.
SECTION 2.14 Registration Rights. Other than each of the Investors, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.
SECTION 2.15 Listing and Maintenance Requirements. The Company's Common
Stock is registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the
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Commission is contemplating terminating such registration. The Company has not,
in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements in all material respects.
SECTION 2.16 Acknowledgment Regarding Investors' Purchase of Securities.
The Company acknowledges and agrees that each of the Investors is acting solely
in the capacity of an arm's length Investor with respect to the Transaction
Documents and the transactions contemplated hereby. The Company further
acknowledges that no Investor is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Investor or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Investors'
purchase of the Securities. The Company further represents to each Investor that
the Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INVESTORS
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Each Investor represents and warrants to, and agrees with, the Company and
to each other, 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 Xxxxx Ownership. Each of the Xxxxx Parties, severally but not
jointly, represents and warrants to the New Investors that it owns all of the
Existing Preferred Stock to be sold by it to the New Investors pursuant to this
Agreement free and clear of all liens and
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encumbrances, and that the face value and accrued and unpaid dividends of its
Existing Preferred Stock are as set forth on Schedule 2.
SECTION 3.5 Investment Representations.
(a) Such Investor acknowledges that the offer and sale of the Newly
Issued Securities, the Existing Preferred Shares or the Conversion Shares
(collectively, the "Securities") to such Investor have not been registered
under the Securities Act, or the securities laws of any state or regulatory
body and 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. The Securities, and any certificate for the
Conversion 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 Securities for investment and not
with a view to the resale or distribution thereof and is acquiring such
securities for its own account. Such Investor is purchasing the Securities
in the ordinary course of business and, as of the date hereof, has no
agreements or understandings, directly or indirectly, with any person to
distribute the Securities.
(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,
or together with its advisors, 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. To such Investor's knowledge, neither it, nor any of
its principal owners, partners, members, directors
9
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) Such Investor has adequate funds immediately available to satisfy
all of its obligations hereunder and shall immediately upon its execution
of this Agreement wire in full the aggregate purchase price set forth on
Schedule I opposite its name.
(f) 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
and the Warrant is based on the information contained herein, the
Commission Filings and such Investor's own independent investigation of the
Company.
SECTION 3.6 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
(to the extent applicable) the filing with the Commission of a Schedule 13D,
Form 3 and/or Form 4 under the Exchange Act with respect to the acquisition
and/or sale by such Investor of the Securities.
SECTION 3.7 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 any such violation that could not reasonably be expected to
materially impair the transactions contemplated hereby or have a Material
Adverse Effect.
SECTION 3.8 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.
SECTION 3.9 Short Sales and Confidentiality Prior To The Date Hereof. Other
than the transaction contemplated hereunder, such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, executed any disposition, including Short
Sales (but not including the location and/or reservation of borrowable shares of
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Common Stock), in the securities of the Company during the period commencing
from the time that such Investor first received a term sheet from the Company or
any other Person setting forth the material terms of the transactions
contemplated hereunder until the date hereof ("Discussion Time").
Notwithstanding the foregoing, in the case of a Investor that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Investor's assets and the portfolio managers have no direct knowledge of
the investment decisions made by the portfolio managers managing other portions
of such Investor's assets, the representation set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this Agreement.
Other than to other Persons party to this Agreement, such Investor has
maintained the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction).
ARTICLE IV
COVENANTS
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SECTION 4.1 Registration Rights.
(a) The Company shall use its commercially reasonable best efforts to:
(i) prepare and file with the Commission a registration statement under the
Securities Act (as the same may be amended or supplemented from time to
time, the "Registration Statement") with respect to the offer and sale of
the Conversion Shares (collectively, the "Registrable Securities") within
forty-five (45) days of the date of hereof; and (ii) cause the Registration
Statement to be declared effective by the Commission within ninety (90)
days of the date hereof. Provided that no undisclosed Potential Material
Event then exists, the Company shall cause the Registration Statement to be
declared effective by the Commission within three business days of
receiving notification from the Commission that it is willing to issue a
declaration of effectiveness. The Company shall not file any registration
statement under the Securities Act (other than a registration statement on
Form S-8 relating to Common Stock underlying stock options or a
registration statement on Form S-4 relating to securities issued in
connection with a merger or acquisition) prior to the filing of the
Registration Statement. The Company shall use commercially reasonable
efforts to maintain the effectiveness of such Registration Statement until
the earliest to occur of the following (the "Registration Termination
Date"): (i) all of the Registrable Securities have been disposed of by the
Investors pursuant to the Registration Statement; or (ii) (A) the
Conversion Shares issuable upon conversion of the Series F Shares and
Existing Preferred Shares can be resold pursuant to clause (k) of Rule 144,
promulgated under the Securities Act, or any similar provisions then in
effect ("Rule 144"), or can otherwise be resold pursuant to Rule 144 at any
time regardless of the volume restrictions of clause (e) of Rule 144 and
(B) the Conversion Shares issuable upon exercise of the Warrants (including
pursuant to any cashless exercise provision included therein) can be resold
pursuant to Rule 144 or are otherwise freely-tradable without registration.
11
(b) Each Investor will promptly furnish to the Company in writing all
information reasonably requested by the Company for use in connection with
the preparation of the Registration Statement and obtaining the
effectiveness thereof. Each Investor, severally but not jointly, hereby
represents and warrants that all such information furnished by it shall be
true, accurate and complete. In addition, each Investor covenants and
agrees that it will comply with all applicable securities laws when trading
the Company's Common Stock. To the extent that any Investor breaches its
representations, warranties or covenants under this Section 4.1(b), and
such breach could reasonably be expected to cause a delay in, or adversely
impact, the effectiveness of the Registration Statement, the Company shall,
without penalty, be authorized to remove such Investor's Registrable
Securities from inclusion in the Registration Statement.
(c) If at any time or from time to time after the date of
effectiveness of the Registration Statement, the Company notifies the
Investors in writing of the existence of a Potential Material Event (as
defined below), the Investors shall not offer or sell any of the
Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of
notice with respect to a Potential Material Event until such Investor
receives written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a
Potential Material Event (such period of time hereinafter referred to as a
"Blackout Period"). As used herein, "Potential Material Event" means any of
the following: (i) the possession by the Company of material information
not ripe for disclosure in a registration statement, which shall be
evidenced by determinations in good faith by the Board of Directors of the
Company that disclosure of such information in the registration statement
would be detrimental to the business and affairs of the Company; or (ii)
any material engagement or activity by the Company which would, in the good
faith determination of the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the registration statement would be
materially misleading absent the inclusion of such information. No Blackout
Period shall exceed ninety consecutive days, and there shall be no more
than 120 days during any calendar year in which a Blackout Period is in
effect.
(d) All registration and filing fees, fees and expenses of compliance
with securities laws, printing expenses and all independent certified
public accountants fees and expenses of counsel to the Company and other
persons retained by the Company will be borne by the Company. The Company
shall have no obligation to pay any fees or expenses of brokers,
underwriters, or (except as set forth in Section 6.2) counsel or others
retained by any Investor in connection with the sale, or potential sale, of
the Registrable Securities.
(e) The Company agrees to indemnify, to the fullest extent permitted
by law, each Investor and its officers, directors, partners, employees,
advisors and agents against any and all Loss (as hereinafter defined)
arising out of or based upon any untrue, or alleged untrue, statement of a
material fact contained in the Registration Statement or arising out of or
based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
12
the statements therein not misleading, except (i) insofar as the same are
caused by or contained in any information furnished by such Investor
pursuant to Section 4.1(b) or (ii) insofar as the same are caused by a
failure by such Investor to deliver an updated prospectus that has been
filed with the Commission and made available to such Investor or its
representatives for delivery to a purchaser. Each Investor, severally, but
not jointly, agrees to indemnify, to the fullest extent permitted by law,
the Company and its officers, directors, partners, employees, advisors and
agents against any and all Loss arising out of or based upon any untrue, or
alleged untrue statement of a material fact contained in the Registration
Statement or arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading (i) insofar as the same are
caused by or contained in any information furnished by such Investor
pursuant to Section 4.1(b) or (ii) insofar as the same are caused by a
failure by such Investor to deliver an updated prospectus that has been
filed with the Commission and made available to such Investor or its
representatives for delivery to a purchaser. Any indemnity obligation
arising under this Section 4.1 shall be governed by the provisions of
Section 5.2. Notwithstanding the foregoing, the liability of each Investor
under this Section 4.1(e) shall not exceed the net proceeds received by it
in connection with any sale of the Registrable Securities.
(f) The Company shall furnish to each Investor such number of
conformed copies of the Registration Statement and the prospectus included
therein, in conformity with the requirements of the Securities Act, that
such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities.
In connection with any sale of Registrable Securities pursuant to the
Registration Statement, in lieu of delivering physical certificates
representing the Registrable Securities, if the Company's transfer agent is
participating in the Depositary Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the applicable Investor, so
long as the certificates therefore are not required to bear a legend, the
Company shall cause its transfer agent to electronically transmit the
Registrable Securities by crediting the account of such Investor's prime
broker with DTC through its Deposit Withdrawal Agent Commission system
within three (3) business days of such request.
SECTION 4.2 Conversion of Existing Preferred Shares. The New Investors
hereby covenant and agree that the Existing Preferred Shares purchased by them
pursuant to this Agreement shall automatically be converted into Common Stock in
accordance with their terms upon the occurrence of an Automatic Conversion Event
(as such term is defined in the Company's Certificate of Powers, Designations,
Preferences and Rights of Series F Convertible Preferred Stock (the "Series F
Certificate of Designations")). The provisions of this Section 4.2 shall be
deemed the New Investors' and their assigns' irrevocable notice of its election
to convert the Existing Preferred Shares, effective immediately upon the
occurrence of an Automatic Conversion Event, in accordance with Section 6 of the
Series F Certificate of Designations. For purposes of clarification, the
provisions of this Section 4.2 shall require the automatic conversion by the New
Investors and their assigns' Existing Preferred Shares even if the Series F
Convertible Preferred Stock is not
13
automatically converted into Common Stock upon the occurrence of an Automatic
Conversion Event as a result of the provisions of Section 6.2(ii) of the Series
F Certificate of Designations.
SECTION 4.3 Stockholder Approval of Series F Anti-Dilution Adjustment
Provisions. The Company hereby covenants and agrees to include the approval of
the Series F Anti-Dilution Adjustment Provisions (as defined in the Series F
Certificate of Designations) as an item to be voted upon at the next annual
meeting (the "Shareholders Meeting") of its shareholders (provided that Series F
Shares remain outstanding at such time), and to recommend that the shareholders
of the Company vote in favor of the approval of such provisions. The Xxxxx
Parties hereby covenant and agree to vote all shares of the Company held by them
in favor of the approval of the Series F Anti-Dilution Provisions at the
Shareholders Meeting. In accordance with the terms of the Series F Certificate
of Designations, the Series F Anti-dilution Adjustment Provisions will not be
operative until such shareholder approval is obtained.
SECTION 4.4 Payment of Dividends on Existing Preferred Stock. The Company
hereby covenants and agrees with the New Investors that all currently accrued
and unpaid dividends on the Existing Preferred Stock will be paid in shares of
Common Stock in accordance with the terms of the Certificate of Powers,
Designations, Preferences and Rights of Series D Convertible Preferred Stock of
the Company so long as at the time of issuance such shares of Common Stock may
be resold pursuant to an effective registration statement. If no such
registration statement is effective then all accrued and unpaid dividends on the
Existing Preferred shall be paid in cash, or restricted stock at the option of
the holder, if noted in the conversion notice. The provisions of this Section
4.4 shall be deemed the Company's irrevocable election to pay such dividends in
shares of Common Stock, rather than cash, subject to the foregoing.
ARTICLE V
SURVIVAL; INDEMNIFICATION
-------------------------
SECTION 5.1 Survival. The representations and warranties contained in
Articles II and III hereof shall survive until the first anniversary of the date
hereof.
(a) 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 (hereinafter a "Loss"),
arising out of or resulting from the breach of any representation or
warranty made by an Indemnifying Party contained in this Agreement.
Notwithstanding anything to the contrary otherwise contained herein: (i) no
party's obligations under this Article V shall include any obligation to
compensate for punitive damages; (ii) the liability of any Investor under
this Section 5.1 shall not exceed the proceeds received by such Investor in
connection with any sale of the Securities; and (iii) the liability of the
Company to any Investor under this Section 5.1 shall not exceed the
purchase price of the Newly Issued Securities paid by such Investor.
14
SECTION 5.2 Indemnification Procedure. The obligations and liabilities of
the Indemnifying Party under this Article V with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in this Article V ("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 V 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 V. 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, in
the reasonable opinion of counsel to the Indemnified Party a conflict of
interest that would make it inappropriate in the reasonable judgment of 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 or the Indemnified Party on behalf of the
other without the prior written consent of the other (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.
15
ARTICLE VI
MISCELLANEOUS
-------------
SECTION 6.1 Simultaneous Closing of Transactions. The consummation of the
purchase and sale of the Newly Issued Securities and the Existing Preferred
Shares shall be deemed to have occurred simultaneously, and no portion of such
transactions shall be deemed completed until all such transactions have been
consummated.
SECTION 6.2 Expenses. The Company shall reimburse Palisades for up to
$25,000 of reasonable legal expenses incurred in connection with the negotiation
of this Agreement and the review of the Registration Statement, subject to the
receipt of appropriate supporting documentation and the receipt of all amounts
owed by the Investors hereunder. 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.
SECTION 6.3 Publicity. The Company shall, prior to 9:00 a.m., EST, on the
first Business Day following the Closing, issue a press release announcing the
consummation of the transactions contemplated hereby (which press release shall
be subject to the reasonable approval of HPC and the Xxxxx Parties) and shall,
within four Business Days of the closing, file with the Commission a Current
Report on Form 8-K regarding the same. Except as set forth above or 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 6.4 Non-Public Information. The Company covenants and agrees that,
except as otherwise contemplated by the Transaction Documents, neither it nor
any other Person acting on its behalf will provide any New Investor or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless such New Investor shall have indicated
that it desires to receive material non-public information and written agreement
regarding the confidentiality and use of such information shall then be in
effect. The Company understands and confirms that each New Investor shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
16
SECTION 6.5 Reservation and Listing of Securities.
(a) The Company shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may be required to fulfill its obligations in full under
the Transaction Documents (the "Required Minimum").
(b) If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors of the Company shall use
commercially reasonable efforts to amend the Company's certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time, as
soon as possible and in any event not later than the 90th day after such
date.
(c) The Company shall, if applicable: (i) in the time and manner
required by the Trading Market, prepare and file with such Trading Market
an additional shares listing application covering a number of shares of
Common Stock at least equal to the Required Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common
Stock to be approved for listing on the Trading Market as soon as possible
thereafter, (iii) provide to the Investors evidence of such listing, and
(iv) maintain the listing of such Common Stock on any date at least equal
to the Required Minimum on such date on such Trading Market or another
Trading Market.
SECTION 6.6 Short Sales and Confidentiality After The Date Hereof. Each
Investor severally and not jointly with the other Investors covenants that
neither it nor any affiliates acting on its behalf or pursuant to any
understanding with it will execute any short sales as defined in Rule 3b-3 of
the Exchange Act ("Short Sales") during the period after such calendar day when
the Investor was first contacted by anyone regarding an investment in the
Company ("Discussion Time") and ending at the time that the transactions
contemplated by this Agreement are first publicly announced as described in
Section 6.3. Each Investor, severally and not jointly with the other Investors,
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company as described in Section 6.3,
such Investor will maintain, the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this
transaction). Each Investor understands and acknowledges, severally and not
jointly with any other Investor, that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock "against the
box" prior to the Effective Date of the Registration Statement with the
Securities is a violation of Section 5 of the Securities Act, as set forth in
Item 65, Section 5 under Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance. Notwithstanding the foregoing, no
Investor makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced as
described in Section 6.3, provided that all such transactions will comply with
all applicable securities laws.
17
Notwithstanding the foregoing, in the case of a Investor that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Investor's assets and the portfolio managers have no direct knowledge of
the investment decisions made by the portfolio managers managing other portions
of such Investor's assets, the covenant set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement.
SECTION 6.7 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 6.8 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 without the prior written consent of the other parties;
provided, that: (a) the Securities may be transferred (i) pursuant to the
Registration Statement or (ii) in accordance with the legend set forth in
Section 3.4(a); and (b) in connection with any transfer of Securities (the
"Transferred Securities") by Palisades permitted by clause (a)(ii), the
Registration Rights contained in Section 4.1, and the obligation to convert the
Existing Preferred Shares contained in Section 4.2, shall be deemed to have
automatically been transferred to, and assumed by, the transferee with respect
to the Transferred Securities, and the transferee shall be required to execute
documentation agreeing to the transfer and assumption of such rights and
obligations. 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 6.9 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 6.10 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.
SECTION 6.11 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.
18
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Chief Financial Officer and General Counsel
With a copy to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
To the Investors: To the addresses set forth on Schedule 1.
SECTION 6.12 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 6.13 Governing Law; Choice of Forum. 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. Each of the parties
hereto hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of any court of the State of New York or any federal court sitting
in the City of New York for purposes of any suit, action or other proceeding
arising out of this Agreement (and agrees not to commence any action, suit or
proceedings relating hereto except in such courts). Each of the parties hereto
agrees that service of any process, summons, notice or document by U.S.
registered mail at its address set forth herein shall be effective service of
process for any action, suit or proceeding brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement, which is brought by or against it, in the courts of the State
of New York or any federal court sitting in the State of New York and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 6.14 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
19
delivered to the other party, 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 6.15 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
Each Investor has been represented by its own separate legal counsel in their
review and negotiation of the Transaction Documents. The Company has elected to
provide all Investors with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Investors.
SECTION 6.16 Specific Performance. Each of the parties hereto, in addition
to being entitled to exercise all of its rights hereunder, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. Each party agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
[Signature page follows]
20
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first set forth above.
BLUEFLY, INC.
By: ____________________________________
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President and General
Counsel
QUANTUM INDUSTRIAL PARTNERS LDC
By: ____________________________________
Name:
Title:
SFM DOMESTIC INVESTMENTS LLC
By: ____________________________________
Name:
Title:
PEF ADVISORS LTD
By: ____________________________________
Name:
Title:
PALISADES MASTER FUND LP
By: Discovery Management Ltd.
By: ____________________________________
Name:
Title:
21
JGB CAPITAL L.P.
By: ____________________________________
Name:
Title:
CRESCENT INTERNATIONAL, LTD.
By: ____________________________________
Name:
Title:
SRG CAPITAL, LLC
By: ____________________________________
Name:
Title:
BRISTOL INVESTMENT FUND, LTD.
By: ____________________________________
Name:
Title:
PORTSIDE GROWTH AND OPPORTUNITY FUND
By: ____________________________________
Name:
Title:
22
