Exhibit 99.3
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT (this "Agreement") dated as of July 26,
2005, between BLUEFLY, INC., a corporation duly organized and presently existing
in good standing under the laws of the State of Delaware with chief executive
offices at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Borrower"), Quantum
Industrial Partners LDC, a Cayman Islands limited duration company ("QIP" or
"Account Party"), and Xxxxx Fund Management LLC, a Delaware limited liability
company ("SFM").
W I T N E S S E T H :
WHEREAS, Borrower has entered into a Loan and Security Agreement
(the "Loan Agreement") with Xxxxx Fargo Retail Finance, LLC. ("Lender"), dated
the date hereof, pursuant to which Lender has agreed to make certain credit
accommodations as described therein ("Credit Accommodations") to Borrower;
WHEREAS, QIP has an ownership interest in Borrower and Lender
has agreed to increase the Credit Accommodations available to Borrow provided
that QIP provides to Lender a standby letter of credit (the "Standby Letter of
Credit") to secure in part Borrower's obligations under the Loan Agreement;
WHEREAS, SFM, as manager of QIP, has agreed to arrange and
procure for QIP, and QIP agrees to maintain, the Standby Letter of Credit for
the benefit of Lender provided Borrower agrees to (i) reimburse QIP, as the
account party under the Standby Letter of Credit, for all draws made under the
Standby Letter of Credit by Lender and (ii) pay certain fees to SFM in respect
of the Standby Letter of Credit;
NOW, THEREFORE, for good and valuable consideration, receipt of
which has been acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, all terms
not defined herein shall have the meaning given them in the Loan Agreement.
2. Issuance of Standby Letter of Credit. SFM agrees to
arrange and procure, and QIP as Account Party agrees to maintain, a Standby
Letter of Credit throughout the term of the Loan Agreement for the benefit of
Lender, in an amount equal to $2,000,000, for delivery on the Closing Date (as
defined in the Loan Agreement). The Standby Letter of Credit shall provide that
it can only be drawn by Lender, as beneficiary thereof, upon written
certification to the issuer of the Standby Letter of Credit that (a) the amount
requested to be drawn under the Letter of Credit equals the amount of
Liabilities under the Loan Agreement which Borrower has failed to pay in
accordance with the terms of the Loan Agreement, (b) an Event of Default under
the Loan Agreement has occurred and is continuing and (c) the applicable notice
period as set forth in Section 3.4 of the Loan Agreement has passed from the
date of the occurrence of such Event of Default.
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3. Reimbursement Obligation; Interest; Obligations
Absolute; Role of QIP.
3.1 All amounts paid or incurred by QIP with respect
to the Standby Letter of Credit (each such amount referred to as a "Loan" and
collectively, as the "Loans") shall be due and payable by Borrower immediately
on the day the Standby Letter of Credit has been drawn. The Loans shall bear
interest at the Prime Margin Rate (as determined in the Loan Agreement and may
change from time to time). If a Loan is repaid on the same day that it is made,
one (1) day's interest shall be charged. Interest on all Loans is payable on
demand.
3.2 The obligation of the Borrower to reimburse QIP
for a drawing under the Standby Letter of Credit and to repay any Loans and any
other amounts related thereto, and on the date, paid, or incurred by QIP with
respect to the Standby Letter of Credit, including all fees, costs, and expenses
paid or incurred by QIP to any bank that issues the Standby Letter of Credit,
shall be absolute, unconditional, and irrevocable without presentment, demand,
protest, or other formalities, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including the following:
(a) any lack of validity or enforceability of the Standby
Letter of Credit, this Agreement, the Loan Agreement, or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the obligations of the Borrower
in respect of the Standby Letter of Credit or any other amendment or
waiver of, or any consent to departure from, all or any of the Standby
Letter of Credit, this Agreement, the Loan Agreement, or any other
agreement or instrument relating thereto;
(c) the existence of any claim, counterclaim, set-off,
defense or other right that the Borrower may have at any time against
any beneficiary or any transferee of the Standby Letter of Credit (or
any Person for whom any such beneficiary or any such transferee may be
acting), QIP, or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the Standby Letter
of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;
(d) any draft, demand, certificate or other document
presented under the Standby Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect, or any loss or delay
in the transmission or otherwise of any document required in order to
make a drawing under the Standby Letter of Credit;
(e) any payment by QIP under the Standby Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of the Standby Letter of Credit, or any payment
made by QIP under the Standby Letter of Credit to any Person purporting
to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of the Standby Letter of
Credit, including any arising in connection with any proceeding under
the Bankruptcy Code or any other insolvency statute or procedure; or
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(f) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Borrower.
3.3 The Borrower shall be deemed to have examined a
copy of the Standby Letter of Credit and each amendment thereto that is
delivered to it and, any claim of noncompliance with the Borrower's instructions
or other irregularity shall be conclusively deemed to have been waived by
Borrower unless the Borrower immediately notifies QIP of such claim of
noncompliance or irregularity.
3.4 The Borrower agrees that, in paying any drawing
under the Standby Letter of Credit, QIP shall not have any responsibility to
obtain any document (other than any sight draft, certificates and documents
expressly required by the Standby Letter of Credit) or to ascertain or inquire
as to the validity or accuracy of any such document or the authority of the
Person executing or delivering any such document. Neither QIP nor any of its
affiliates, directors, officers, employees, agents or advisors nor any of the
correspondents, participants, or assignees of QIP shall be liable to the
Borrower for (i) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (ii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to the Standby Letter of
Credit. The Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of the Standby Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. QIP
nor any of its affiliates, directors, officers, employees, agents or advisors
nor any of the correspondents, participants or assignees of QIP shall be liable
or responsible for any of the matters described in Section 3.2; provided,
however, that anything in Section 3.2 to the contrary notwithstanding, the
Borrower may have a claim against QIP, and QIP may be liable to the Borrower, to
the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by the Borrower which the Borrower proves were
caused by QIP's willful misconduct or gross negligence or QIP's willful failure
to pay under the Standby Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of the Standby Letter of Credit. In furtherance and not in
limitation of the foregoing, QIP may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary, and QIP shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign the Standby Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason.
4. Expenses and Attorneys Fees. Borrower agrees to promptly
pay all reasonable fees, costs and expenses (including reasonable fees of
attorneys) incurred by QIP or SFM in connection with any matters arising out of
the Loan Agreement and this Agreement,
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including, without limitation, any action to enforce any obligation under this
Agreement or collect any payments due from Borrower hereunder, or any action or
proceeding commenced or taken by QIP to seek or secure relief from the automatic
stay or from any similar or other stay in effect under the Bankruptcy Code or
any other insolvency statute, procedure, or case involving the Borrower.
5. Payments. All payments to QIP by Borrower of the
obligations hereunder shall be made in same day funds and delivered by wire
transfer to the following account or such other place as QIP may from time to
time designate:
The Bank of New York
ABA #: 000000000
Account #: 0000-00-0000
Account Name: Natexis Bleichroeder Inc.
F/A/O: Quantum Industrial Partners
Attention: Xxxxxxx Xxxxx
All payments to SFM by Borrower of the obligations hereunder
shall be made in same day funds and delivered by wire transfer to the following
account or such other place as SFM may from time to time designate:
The Bank of New York
ABA #: 000000000
Account Name: Natexis Bleichroeder
Account #: 8540905100
F/A/O: Xxxxx Fund Management LLC
Acct #: 3300687
Ref: Bluefly Standby Letter of Credit
Borrower shall receive credit on the day of receipt for funds
received by QIP or SFM, as applicable, by 5:00 p.m. New York time. In the
absence of timely receipt, such funds shall be deemed to have been paid on the
next Business Day (as defined in the Loan Agreement). Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and fees
due hereunder.
6. Borrower Covenants.
6.1 Borrower shall comply with all laws, rules,
regulations and governmental orders imposed on its business in effect now or in
the future except those the noncompliance with which could not be reasonably
expected to have either individually or in the aggregate a material adverse
effect on Borrower.
6.2 Borrower shall maintain its corporate existence
and all licenses required for its business.
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6.3 At the request of QIP, Borrower shall execute
and deliver to QIP such financing statements, documents, security agreements and
reports as QIP may reasonably request to evidence, perfect the security
interests granted hereunder, or otherwise implement the agreements set forth
herein.
6.4 At QIP's request, Borrower shall provide QIP
copies of all notices and reports required under the Loan Agreement at the same
time such notices and reports are provided to Lender.
7. Fees. As consideration for SFM arranging and procuring
the Standby Letter of Credit, for so long as the Standby Letter of Credit
remains outstanding, the Borrower shall pay to SFM a Standby Letter of Credit
availability fee equal to the Standby Fee for L/C's (as determined in Section
2.18(a) of the Loan Agreement and may change from time to time) per annum
(including an additional two percent (2%) per annum, as per the terms of section
2.18(a) of the Loan Agreement, if an Event of Default has occurred and is
continuing) of the undrawn amount of such Standby Letter of Credit, due and
payable on the Closing Date and each anniversary thereof, and nonrefundable.
8. Security Interest in Collateral.
8.1 To secure the Borrower's repayment of the Loans
and Borrower's prompt, punctual, and faithful performance of any other
obligations of Borrower to QIP hereunder or otherwise, the Borrower hereby
grants to QIP, a continuing security interest in and to, and assigns to QIP, the
Collateral.
8.2 Borrower will take any and all steps and observe
such formalities as QIP may reasonably request from time to time to create and
maintain in QIP's favor a valid and lien upon, security interest in and pledge
of all of the Collateral (subject to Permitted Encumbrances and Encumbrances
granted to Lender), including, without limitation, by way of filing financing
statements and other notices, including, without limitation, notices with the
United States Patent and Trademark Office and the United States Copyright Office
and amendments and renewals thereof that may be requested by QIP to maintain
such security interest in and pledge of the Collateral.
9. Subordination. The parties hereto acknowledge that the
provisions of this Agreement are subject to the terms of a Subordination and
Intercreditor Agreement executed as of the date hereof between Lender and, among
others, QIP (the "Subordination Agreement").
10. Events of Default. The occurrence of any event described
in this Section 10 respectively shall constitute an "Event of Default" herein.
The occurrence of any Event of Default shall also constitute, without notice or
demand, a default under all other agreements between QIP or SFM and the Borrower
and instruments and papers heretofore, now, or hereafter given QIP by the
Borrower.
10.1 The occurrence of an Event of Default under the
Loan Agreement (notwithstanding that the Lender may not have exercised all or
any of its rights on account of such Event of Default).
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10.2 The failure by the Borrower to pay when due any
principal of, interest on, or reimbursement obligations in respect of, the
Loans.
10.3 The failure by the Borrower to pay when due any
fees payable to SFM in respect of the Standby Letter of Credit.
10.4 The failure by the Borrower to promptly,
punctually, faithfully and timely perform, discharge, or comply with any
covenant or agreement set forth herein within ten (10) days following the
earlier of the Borrower's knowledge of a breach of any covenant or agreement or
of its receipt of written notice from QIP of the breach of any of such covenants
or agreements.
10.5 The determination by QIP that any representation
or warranty at any time made by the Borrower herein to QIP was not true or
complete in all material respects when given.
10.6 Any act by, against, or relating to the
Borrower, or its property or assets, which act constitutes the determination, by
the Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of the Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of the Borrower, or
the occurrence of any other voluntary or involuntary liquidation or extension of
debt agreement for the Borrower; the offering by or entering into by the
Borrower of any composition, extension, or any other arrangement seeking relief
from or extension of the debts of the Borrower; or the initiation of any
judicial or non-judicial proceeding or agreement by, against, or including the
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors; and/or the initiation by or on behalf of the Borrower of the
liquidation or winding up of all or any part of the Borrower's business or
operations.
10.7 The failure by the Borrower to generally pay the
debts of the Borrower as they mature; adjudication of bankruptcy or insolvency
relative to the Borrower; the entry of an order for relief or similar order with
respect to the Borrower in any proceeding pursuant to the Bankruptcy Code or any
other federal bankruptcy law; the filing of any complaint, application, or
petition by the Borrower initiating any matter in which the Borrower is or may
be granted any relief from the debts of the Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure; the filing of any complaint,
application, or petition against the Borrower initiating any matter in which the
Borrower is or may be granted any relief from the debts of the Borrower pursuant
to the Bankruptcy Code or any other insolvency statute or procedure, which
complaint, application, or petition is not timely contested in good faith by the
Borrower by appropriate proceedings or, if so contested, is not dismissed within
thirty (30) days of when filed.
11. Rights and Remedies Upon Default. Upon the occurrence
and during the continuance of any one or more of the Events of Default specified
in Section 10 (each a "Default"), and subject in all cases to the terms of the
Subordination Agreement:
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11.1 Borrower shall pay to QIP, as liquidated damages
and as part of the obligations to QIP hereunder, interest at the rate of two
percent (2%) per annum above the Prime Margin Rate upon the unpaid balance of
the Loans or any other fees past due to SFM in respect of the Standby Letter of
Credit from the date of Default until the date of full payment of the
obligations to QIP and SFM hereunder, (ii) Borrower shall pay to QIP and SFM, as
applicable, all costs, disbursements, charges and expenses for the collection
and enforcement of the obligations to QIP or SFM, as applicable, hereunder, for
the protection and enforcement of QIP's security interest, including attorneys'
fees (both in-house and outside), and for any action or proceeding commenced or
taken by QIP to seek or secure relief from the automatic stay or from any
similar or other stay in effect under the Bankruptcy Code or any other
insolvency statute, procedure, or case involving the Borrower, all of which
shall be added to and deemed part of the obligations to QIP or SFM, as
applicable, hereunder, and (iii) QIP shall have the right (in addition to any
other rights QIP may have under this Agreement or otherwise) without further
notice to Borrower, to enforce payment of the Receivables Collateral, to settle,
compromise or release (in whole or in part) any amounts owing on the Receivables
Collateral, to prosecute any action, suit or proceeding with respect to the
Receivables Collateral, to extend the time of payment of any and all Receivables
Collateral, to make allowances and adjustments with respect thereto, to issue
credits in QIP's or Borrower's name, to sell, assign and deliver the Receivable
(or any part thereof) or the Inventory (or any part thereof) or any other of the
Collateral and any returned, reclaimed or repossessed merchandise or other
property held by QIP or by Borrower for QIP's account, at public or private
sale, at broker's board, for cash, upon credit or otherwise, at QIP's sole
option and discretion, and QIP may bid or become purchaser at any such sale if
public, free from any right of redemption which is hereby expressly waived.
Borrower agrees that the giving of ten (10) days' notice by QIP, sent by
certified mail return receipt requested, postage prepaid, to the mailing address
of Borrower set forth in this Agreement, designating the place and time of any
public sale or the time after which any private sale or other intended
disposition of the Receivables Collateral, the Inventory or any other Collateral
is to be made, shall be deemed to be reasonable notice thereof and Borrower
waives any other notice with respect thereto. The net cash proceeds resulting
from the exercise of any of the foregoing rights or remedies shall be applied by
QIP to the payment of the obligations to QIP and SFM, as applicable, hereunder
in such order as QIP may elect, and Borrower shall remain liable to QIP and SFM,
as applicable, for any deficiency. Upon the occurrence of any Default, Borrower
shall assemble all or any part of the Inventory or any other Collateral and make
it available to QIP at a place to be designated by QIP, which is reasonably
convenient to both parties. In addition, QIP may peaceably, by its own means or
with judicial assistance, enter Borrower's or any other premises and take
possession of the Inventory or any other Collateral and remove or dispose of it
on Borrower's premises and Borrower agrees that Borrower will not resist or
interfere with any such action. To the full extent permitted by law, Borrower
hereby expressly waives demand, notice of sale (except as herein provided),
advertisement of sale and redemption before sale.
11.2 Upon the occurrence and during the continuance
of any Default, and subject in all cases to the terms of the Subordination
Agreement, (i) QIP may send a notice of assignment and/or notice of QIP's
security interest to any Account Debtors and thereafter QIP shall have the sole
right to collect the Receivables Collateral; (ii) Borrower hereby constitutes
QIP or QIP's designee as Borrower's attorney-in-fact with power to endorse
Borrower's name upon any notes acceptances, checks, drafts, money orders or
other evidences of payment or
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Collateral that may come into its possession; to sign Borrower's name on any
invoice or xxxx of lading relating to any Receivables Collateral, drafts against
customers, assignments and verifications of Receivables Collateral and notices
to any Account Debtor; to send verifications of Receivables Collateral; to
notify Borrower to such address as QIP may designate; and to do all other acts
and things necessary to carry out this Agreement. Said attorney or designee
shall not be liable for any acts of omission or commission, for any error of
judgment or for any mistake of fact or law, provided that QIP or its designee
shall not be relieved of liability to the extent that its act, error mistake
constituted gross negligence or willful misconduct. This power of attorney being
coupled with an interest is irrevocable until all of the obligations to QIP
hereunder then due and payable are paid in full; and (iii) QIP, without notice
to or consent of Borrower, (A) may xxx upon or otherwise collect, extend the
time of payment of, or compromise or settle for cash, credit or otherwise upon
any terms, any of the Receivables Collateral or any securities, instruments or
insurance applicable thereto and/or release the Account Debtor thereon; (B) is
authorized and empowered to accept the return of goods represented by any of the
Receivables Collateral; and (C) shall have the right to receive, endorse, assign
and/or deliver in its name or the name of Borrower any and all checks, drafts
and other instruments for the payment of money relating to the Receivables
Collateral, and Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed.
11.3 Borrower shall reimburse QIP on demand for all
costs of collection incurred by QIP during the continuance of a Default in
efforts to enforce recovery of or realization upon the Receivables Collateral,
the Inventory and any other Collateral, including, without limitation,
attorneys' fees (both in-house and outside) including attorneys' fees incurred
in any action or proceeding commenced or taken by QIP to seek or secure relief
from the automatic stay or from any similar or other stay in effect under the
Bankruptcy Code or any other insolvency statute, procedure, or case involving
the Borrower. All and any fees, costs and expenses, of whatever kind and nature,
including taxes of any kind, which QIP may incur in filing public notices
(including, without limitation, appraisal fees and advertising costs), and the
charges of any attorney whom QIP may engage in preparing and filing documents,
making title or lien examinations and rendering opinion letters, as well as
expenses incurred by QIP (including, without limitation, (i) all attorneys' fees
(both in-house and outside) and (ii) QIP's out of pocket expenses in conducting
periodic field examinations of Borrower and the Receivables Collateral, the
Inventory and any other Collateral, plus QIP's prevailing per diem charge for
each of its examiners in the field and office, now $750 per person per day
(provided that unless a Default is continuing, Borrower shall not be liable for
the expense of more than three field examinations in any year) plus all of QIP's
costs, in protecting, maintaining, preserving, enforcing or foreclosing the
pledge, lien and security interest granted to QIP hereunder, whether through
judicial proceedings or otherwise, or recovery of or realization upon the
Inventory or any other Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to QIP's transactions with Borrower,
including, without limitation, actions or proceedings which may involve any
Person asserting a priority or claim with respect to the Inventory or any other
Collateral, shall be borne and paid for by Borrower on demand, shall constitute
part of the obligations to QIP hereunder).
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11.4 Upon QIP's reasonable request, Borrower will, at
any time and from time to time, at Borrower's expense, deliver to QIP documents
of title representing the Inventory or otherwise evidence QIP's security
interest in such manner as QIP may reasonably require. Any and all assessments,
taxes or other charges that may be assessed upon or payable with respect to the
Inventory or any part thereof shall forthwith be paid by Borrower, and Borrower
agrees that QIP, in its discretion, may effect such payment and charge the
amount thereof to Borrower. Borrower further agrees that except for the pledge,
lien and security interest granted to Lender pursuant to the Loan Agreement and
to QIP by Borrower hereby, Borrower shall not permit the Inventory or any part
thereof to otherwise become liened or encumbered nor shall Borrower grant any
security interest therein to any other Person. Borrower shall not, without QIP's
written consent first obtained, remove or dispose of any of the Inventory except
to bona fide purchasers thereof or for shipments to Borrower at its place of
business in the ordinary course of Borrower's business or as otherwise provided
in this Agreement or the Loan Agreement. Borrower shall make all Inventory and
all of Borrower's records pertaining thereto available to QIP for inspection
during normal business hours upon reasonable prior written notice by QIP. QIP
shall have the right, in QIP's discretion, after a demand is made on Borrower to
pay any liens or claims upon any of the Inventory, including, without
limitation, warehouse charges, dyeing, finishing and processing charges,
landlords' claims, etc. and the amount of any such payment shall be obligations
hereunder. QIP shall not be liable for the safekeeping of any of the Inventory
or for any loss, damage or diminution in the value thereof or for any act or
default of any warehouseman, carrier or other person dealing in and with said
Inventory, whether as QIP's agent or otherwise, or for the collection of any
proceeds thereof but the same shall at all times be at Borrower's sole risk.
Prior to its sale to a bona fide purchaser or shipment to Borrower at its place
of business in the ordinary course of business, Inventory shall at all times
remain at the addresses specified in the Loan Agreement hereof and shall not be
removed therefrom without QIP's prior written consent.
11.5 Nothing contained in this Section 11 or
elsewhere in this Agreement shall be construed to constitute Borrower as agent
of QIP for any purpose whatsoever and QIP shall not be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof
(except to the extent it is determined by a final judicial decision that QIP's
act or omission constituted gross negligence or willful misconduct). QIP shall
not, under any circumstances or in any event whatsoever, have any liability for
any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Receivables Collateral or any instrument
received in payment thereof or for any damage resulting therefrom (except to the
extent that QIP's error, omission or delay constituted gross negligence or
willful misconduct). QIP does not, by anything herein or in any assignment or
otherwise, assume Borrower's obligations under any contract or agreement
assigned to QIP, and QIP shall not be responsible in any way for the performance
by Borrower of any of the terms and conditions thereof.
11.6 The enumeration of the foregoing rights and
remedies is not intended to be exhaustive, and such rights and remedies are in
addition to and not by way of limitation of any other rights or remedies QIP or
SFM, as applicable, may have under the New York Uniform Commercial Code or other
applicable law. Each of QIP and SFM, as applicable, shall have the right, in its
sole discretion, to determine which rights and remedies, and in which order any
of the same, are to be exercised, and to determine which Receivables Collateral,
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Inventory, or other Collateral are to be proceeded against and in which order,
and the exercise of any right or remedy shall not preclude the exercise of any
others, all of which shall be cumulative. No act, failure or delay by QIP or
SFM, as applicable, shall constitute a waiver of any of its rights and remedies.
No single or partial waiver by QIP or SFM, as applicable of any provision of
this Agreement, or breach or default thereunder, or of any right or remedy which
QIP or SFM, as applicable may have shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provision, breach,
default, right or remedy on a future occasion. Borrower waives presentment,
notice of dishonor, protest and notice of protest of all instruments included in
or evidencing any of the obligations to QIP or SFM, as applicable, hereunder or
the Receivables Collateral and any and all notices or demands whatsoever (except
as expressly provided herein).
12. Cash Collateral Obligation. Upon QIP's request, (i) if
QIP has honored any full or partial drawing request under the Standby Letter of
Credit and such drawing has resulted in a Loan pursuant to Section 3 hereof, or
(ii) if, as of the Termination Date, the Standby Letter of Credit may for any
reason remain outstanding and partially or wholly undrawn, the Borrower shall
immediately pledge and deposit with or deliver to QIP, as Collateral for the
Borrower's obligations to QIP hereunder, cash or deposit account balances in an
amount equal to the face amount of the Standby Letter of Credit and all other
amounts, fees, or charges due or incurred in respect thereof pursuant to
documentation in form and substance reasonably satisfactory to QIP. The Borrower
hereby grants to QIP, a continuing security interest in and to, and assigns to
QIP, all such cash and deposit account balances as security for the obligations
to QIP hereunder. Cash collateral shall be maintained in blocked, non-interest
bearing deposit accounts at a bank or financial institution satisfactory to QIP.
The security interest held by QIP in such cash collateral to secure the
Borrower's obligations to QIP hereunder shall be released upon the satisfaction
of each of the following conditions: (a) the Standby Letter of Credit shall not
be outstanding, (b) all obligations of the Borrower to QIP hereunder shall have
been repaid in full and (c) no Default shall have occurred and be continuing.
13. Waiver of Jury Trial; Submission to Jurisdiction. EACH
PARTY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION
WITH RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT, THE OBLIGATIONS TO QIP
OR SFM, AS APPLICABLE, HEREUNDER OR THE RECEIVABLES COLLATERAL AND HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE OBLIGATIONS TO
QIP OR SFM, AS APPLICABLE, HEREUNDER.
14. Miscellaneous. This Agreement shall be governed by and
shall be construed and enforced in accordance with the internal laws of the
State of New York, without regard to conflicts of law principles. This Agreement
constitutes the entire agreement of the parties hereto and supersedes all prior
commitments, agreements, representations, and understandings, whether oral or
written, relating to the subject matter hereof, but excluding those matters
expressly set forth in that certain fee letter dated the date hereof and entered
into contemporaneously herewith between the Borrower and SFM. This Agreement may
be executed in any number of
11
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. This
Agreement shall be binding upon and inure to the benefit of all the parties
hereto and their successors and assigns except that Borrower may not assign its
rights or obligations hereunder without the prior written consent of QIP.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
BLUEFLY, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: COO and CFO
QUANTUM INDUSTRIAL PARTNERS LDC
By: Xxx X. Xxxxxxxxxxxx
------------------------
Name: Xxx X. Xxxxxxxxxxxx
Title: Attorney-In-Fact
XXXXX FUND MANAGEMENT LLC
By: Xxx X. Xxxxxxxxxxxx
------------------------
Name: Xxx X. Xxxxxxxxxxxx
Title: Attorney-In-Fact
