March 26, 2008
Bluefly, Inc.
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxx
Re: Standby Commitment Agreement
----------------------------
Dear Xx. Xxxxxx:
Quantum Industrial Partners LDC, a Cayman Islands limited duration company
("QIP"), SFM Domestic Investments LLC, a Delaware limited liability company
("SFMDI"), Maverick Fund USA, Ltd., a Texas limited partnership ("Maverick
USA"), Maverick Fund, L.D.C., a Cayman Islands exempted limited duration company
("Maverick L.D.C.") and Maverick Fund II, Ltd., a Cayman Islands exempted
company ("Maverick II" and, together with Maverick USA and Maverick L.D.C.,
"Maverick" and together with QIP and SFMDI, the "Purchasers") intending to be
legally bound, hereby irrevocably agree, severally but not jointly, that they
shall provide Bluefly, Inc., a Delaware corporation (the "Company"), up to an
aggregate of Three Million Dollars of debt financing ($3,000,000) (the
"Commitment Amount"). The Commitment Amount may be drawn by the Company, at its
option (as determined by the disinterested members of the Board of Directors of
the Company) upon three business days' written notice to the Purchasers at any
time prior to March 26, 2009 in one or more tranches; provided, however, that
the Company may draw from the Commitment Amount only at such time that its total
cash balances are less than $1,000,000; and provided, further, that the
Commitment Amount shall be reduced by the gross cash proceeds received by the
Company or any of its subsidiaries from the issuance after the date hereof of
any equity or convertible securities, excluding the issuance of equity or
convertible securities in connection with: (1) financing provided by the
Purchasers pursuant to this agreement or (2) exercise of employee options.
Any and all draws against the Commitment Amount shall be made pursuant to a
Note Purchase Agreement in the form of Exhibit I attached hereto and shall be
evidenced by one or more Convertible Promissory Notes in the form of Exhibit II
attached hereto, in each case with such modification as to which the parties
thereto may agree. The Company shall notify the Purchasers in writing within two
business days of the receipt of any funds that would reduce the Commitment
Amount; provided that the Commitment Amount shall automatically be reduced
whether or not the Company provides such notice.
The obligation of each Purchaser in respect of the Commitment Amount shall
be limited to the percentage set forth below opposite such Purchaser's name.
Purchaser Percentage
--------- ----------
QIP 60.316%
SFMDI 1.974%
Maverick USA 7.186%
Maverick L.D.C. 16.300%
Maverick II 14.224%
In consideration of each Purchaser's execution, delivery and performance
under this agreement, the Company shall, promptly following the execution and
delivery hereof, deliver to each Purchaser a duly executed warrant (a "Warrant")
to purchase the number of shares of Common Stock, par value $0.01, of the
Company set forth opposite such Purchaser's name below for a period of five (5)
years. The Warrants shall be issued on the date hereof at an exercise price of
$0.44 per share.
Purchaser Warrant Amount
--------- --------------
QIP 316,659
SFMDI 10,364
Maverick USA 37,725
Maverick L.D.C. 85,577
Maverick II 74,677
Each Warrant shall be in the form of Exhibit III attached hereto and shall
be delivered free and clear of any lien, claim, encumbrance, or security
interest of any kind or nature whatsoever. The parties agree that Purchasers
shall be entitled to registration rights in respect the shares of Common Stock
for which the Warrants are exercisable consistent with the registration rights
granted pursuant to the Stock Purchase Agreement, dated as of June 5, 2006, by
and among the Company, QIP, SFMDI and the other parties thereto (the "2006
Agreement"), applied mutatis mutandis; provided, however, that the 120-day
filing deadline with respect to the Company's obligation to prepare and file a
registration statement covering such shares shall commence on the first day
following the Company's receipt of written notice from the Purchasers requesting
the registration of such shares and the 180 day Required Effectiveness Deadline
(as defined in the 2006 Agreement) shall also commence on the first day
following the Company's receipt of such written notice; and provided, further,
however, that if, despite the Company having used all commercially reasonable
efforts, the Required Effectiveness Deadline (as defined in the 2006 Agreement)
is not satisfied by reason of the failure of the applicable Registration
Statement (as defined in the 2006 Agreement) to be declared effective prior to
such Required Effectiveness Deadline, the penalties set forth in Section 6.1(h)
of the 2006 Agreement shall be deemed not to be triggered by clause (ii) of such
Section 6.1(h) in respect of such shares.
All notices, demands and other communications relating to this agreement
shall be made in the manner set forth in the form of Note Purchase Agreement
attached as Exhibit I hereto. This agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of the parties hereto.
Subject to applicable securities
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laws, each of the Purchasers may assign any of its rights under this agreement
to any of its affiliates but no such assignment shall relieve any Purchaser from
its obligations hereunder. The Company may not assign any of its rights under
this agreement, except to a successor-in-interest to the Company, without the
written consent of all of the Purchasers.
No failure or delay on the part of Company or the Purchasers in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such rights, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. Any amendment, supplement or modification of or to any
provision of this agreement, any waiver of any provision of this agreement, or
any consent to any departure by the Company or the Purchasers from the terms of
this agreement shall be effective only if it is made or given in writing and
signed by all of the parties hereto.
This agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. This agreement together with the Exhibits hereto are
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
If any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof shall
not be in any way impaired, unless the provisions held invalid, illegal or
unenforceable shall substantially impair the benefits of the remaining
provisions hereof.
Each of the parties shall execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this agreement. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
3
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first written above.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Xxx X. Xxxxxxxxxxxx
--------------------------------
Name: XXX X. XXXXXXXXXXXX
Title: Attorney-in-Fact
SFM DOMESTIC INVESTMENTS LLC
By: /s/ Xxx X. Xxxxxxxxxxxx
--------------------------------
Name: XXX X. XXXXXXXXXXXX
Title: Attorney-in-Fact
MAVERICK FUND USA, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By:
--------------------------------
Name:
Title:
MAVERICK FUND, L.D.C.
By: Maverick Capital, Ltd.,
Its Investment Manager
By:
--------------------------------
Name:
Title:
Signature Page to Commitment Letter
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first written above.
QUANTUM INDUSTRIAL PARTNERS LDC
By:
--------------------------------
Name:
Title:
SFM DOMESTIC INVESTMENTS LLC
By: /s/ Xxx X. Xxxxxxxxxxxx
--------------------------------
Name: XXX X. XXXXXXXXXXXX
Title: Attorney-in-Fact
MAVERICK FUND USA, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
--------------------------------
Name: XXXX X. XxXXXXXXXX
Title: LIMITED PARTNER AND GENERAL
COUNSEL
MAVERICK FUND, L.D.C.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
--------------------------------
Name: XXXX X. XxXXXXXXXX
Title: LIMITED PARTNER AND GENERAL
COUNSEL
Signature Page to Commitment Letter
MAVERICK FUND II, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By: /s/ Xxxx X. XxXxxxxxxx
--------------------------------
Name: XXXX X. XxXXXXXXXX
Title: LIMITED PARTNER AND GENERAL
COUNSEL
ACCEPTED AND AGREED:
BLUEFLY, INC.
By:
------------------------
Name:
Title:
Signature Page to Commitment Letter
MAVERICK FUND II, LTD.
By: Maverick Capital, Ltd.,
Its Investment Manager
By:
--------------------------------
Name:
Title:
ACCEPTED AND AGREED:
BLUEFLY, INC.
By: /s/ Xxxx X. Jonry
------------------------
Name: Xxxx X. Jonry
Title: Chief Financial Officer
Signature Page to Commitment Letter
