EXHIBIT 99.4
THE OFFER AND SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE
AND ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. CERTIFICATES REPRESENTING
ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE SHALL INCLUDE A LEGEND TO
SIMILAR EFFECT AS THE FOREGOING.
BLUEFLY, INC.
CONVERTIBLE PROMISSORY NOTE
$1,936,564
New York, New York July 16, 2003
FOR VALUE RECEIVED, the undersigned, BLUEFLY, INC., a Delaware
corporation (the "Payor" or the "Company"), promises to pay to the order of
QUANTUM INDUSTRIAL PARTNERS LDC or its registered assign (the "Payee"), the
principal sum of One Million, Nine Hundred Thirty-Six Thousand Five Hundred and
Sixty-Four Dollars ($1,936,564) and interest on the outstanding principal
balance as set forth herein.
1. Interest Rate; Payment.
(a) The outstanding principal balance of this Convertible
Promissory Note (this "Note") shall bear interest at an annual rate equal to 12%
per annum, with interest accruing, from and including the date hereof, on a
cumulative, compounding basis. Interest shall be computed on the basis of a 365-
or 366-day year, as the case may be, and the actual number of days elapsed, and,
subject to Section 5, shall be payable only upon repayment of the principal on
any Repayment Date (as defined below) in cash.
(b) The outstanding balance of any amount owed under this
Note which is not paid when due shall bear interest at the rate of 2.0% per
annum (the "Default Interest") above the rate that would otherwise be in effect
under this Note with the Default Interest accruing, from and including such due
date, on a cumulative, compounding basis.
(c) The outstanding principal and all accrued and unpaid
interest shall be paid in full no later than January 12, 2004 (the "Maturity
Date"), unless repaid earlier pursuant
to the provisions of Section 2 (the date of any payment pursuant to Section 2
and the Maturity Date, collectively referred to as a "Repayment Date") or unless
converted into Subsequent Round Securities (as defined below) pursuant to
Section 5 on or prior to the Maturity Date. On a Repayment Date, the Payor shall
pay the applicable amount of principal and interest in lawful money of the
United States of America by wire or bank transfer of immediately available funds
to an account designated by the Payee in writing from time to time.
2. Prepayment.
(a) Mandatory Prepayment.
(i) Upon the occurrence of an Event of Default
(under Section 3(d) or (e)), the outstanding principal of and all accrued
interest on this Note shall be accelerated and shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived by the Payor, notwithstanding
anything contained herein to the contrary.
(ii) The Payee shall, at its sole option, have the
right to require the Payor to pay the outstanding principal of and all accrued
interest on this Note upon the occurrence of any of the following events: (1) an
Event of Default under Section 3(a), (b), (c), (f), (g) or (h), (2) the Company
entering into an agreement to effectuate any sale or other disposition of all or
substantially all of its assets, in one transaction or in a series of
transactions, (3) the Company entering into an agreement to effectuate any
consolidation or merger into another entity, or (4) any sale of a majority of
the outstanding equity of the Company (or any other event that constitutes a
Change of Control (as defined below) of the Company), in one transaction or in a
series of transactions. Immediately upon the occurrence of either of the events
set forth in clauses (1), (2) or (3) above, or immediately upon obtaining
knowledge that any person has entered into an agreement to effectuate the event
set forth in clause (4) above, the Company shall give written notice of such
event to the Payee. "Change of Control" means any "Person" (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) or "group" (as defined in Rule 13d-5, promulgated under the
Exchange Act) other than Payee and its affiliates or any group that includes
Payee and/or its affiliates, becoming the beneficial owner (as determined by
Rule 13d-3, promulgated under the Exchange Act), directly or indirectly, of
outstanding shares of stock of the Company entitling such Person or Persons to
exercise 50% or more of the total votes entitled to be cast at a regular or
special meeting, or by action by written consent, of the stockholders of the
Company in the election of directors.
(iii) Any mandatory prepayment under this Section 2(a)
shall include payment of reasonable costs and expenses, if any, of the Payee
associated with such prepayment.
(b) Optional Prepayment. The Company may, at its option,
without premium or penalty, upon five (5) days' prior written notice to the
Payee, repay the unpaid principal amount of this Note, at any time in whole or
from time to time in part, together with interest accrued thereon to the date of
prepayment. Any such prepayment shall be applied first to
the payment of accrued interest and then to repayment of principal. Upon any
partial prepayment of the unpaid principal amount of this Note, the Holder shall
make notation on this Note of the portion of the principal so prepaid. No notice
of prepayment shall in any way prohibit the Payee from converting this Note
pursuant to Section 5.
3. Events of Default. An "Event of Default" shall occur if:
(a) the Payor shall default in the payment of the principal
of or interest payable on this Note, when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise and such default with respect to the payment of
interest shall continue unremedied for two days;
(b) the Payor shall fail to observe or perform any covenant
or agreement contained in this Note, and such failure shall continue for five
business days after Payor receives notice of such failure;
(c) any representation, warranty, certification or statement
made by or on behalf of the Payor in this Note or in any certificate, writing or
other document delivered pursuant hereto shall prove to have been incorrect in
any material respect when made;
(d) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(A) relief in respect of Payor or of a substantial part of Payor's respective
property or assets, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law (any such law, a "Bankruptcy Law"), (B) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for a substantial part of the property or assets of any Payor,
(C) the winding up or liquidation of any Payor; and such proceeding or petition
shall continue undismissed for 60 days, or an order or decree approving or
ordering any of the foregoing shall be entered;
(e) the Payor shall (A) voluntarily commence any proceeding
or file any petition seeking relief under a Bankruptcy Law, (B) consent to the
institution of or the entry of an order for relief against it, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in clause (d), (C) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for a substantial part of the property or assets of the Payor, (D) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (E) make a general assignment for the benefit of creditors, (F)
become unable, admit in writing its inability or fail generally to pay its debts
as they become due or (G) take any action for the purpose of effecting any of
the foregoing;
(f) one or more judgments or orders for the payment of money
in excess of $250,000 in the aggregate shall be rendered against the Payor and
such judgment(s) or order(s) shall continue unsatisfied and unstayed for a
period of 30 days;
(g) the Payor shall default in the payment of any principal,
interest or premium, or any observance or performance of any covenants or
agreements, with respect to indebtedness (excluding trade payables and other
indebtedness entered into in the ordinary course of business) in excess of
$50,000 in the aggregate for borrowed money or any obligation which is the
substantive equivalent thereof and such default shall continue for more than the
period of grace, if any, or of any such indebtedness or obligation shall be
declared due and payable prior to the stated maturity thereof;
(h) any material provisions of this Note shall terminate or
become void or unenforceable or the Payor shall so assert in writing.
4. Subordination.
(a) Agreement of Subordination. The Payor covenants and
agrees, and the Payee likewise covenants and agrees, that (i) to the extent and
in the manner hereinafter set forth in this Section 4, the obligations of the
Company to pay the principal of and accrued interest on this Note (the
"Obligations") are hereby expressly made subordinate and junior in right of
payment to the prior payment in full of all amounts owing to, under the
Financing Agreement, dated March 30, 2001, as amended (the "Financing
Agreement"), by and between the Payor and Rosenthal & Rosenthal, Inc., a New
York Corporation, whether outstanding at the date hereof or hereinafter incurred
(such indebtedness being hereinafter referred to as the "Senior Indebtedness");
(ii) the subordination is solely for the benefit of any holders of Senior
Indebtedness; and (iii) each holder of Senior Indebtedness whether now
outstanding or hereinafter created, incurred, assumed or guaranteed shall be
deemed to have extended or acquired such Senior Indebtedness in reliance upon
the covenants and provisions contained herein.
(b) Subordination Upon Certain Events. Upon the occurrence
of any Event of Default under Sections 3(d) or (e) of this Note:
(i) Upon any payment or distribution of assets of
the Payor to creditors of the Company, holders of Senior Indebtedness shall be
entitled to receive indefeasible payment in full of all obligations with respect
to the Senior Indebtedness before the holder of this Note shall be entitled to
receive any payment in respect of the Obligations.
(ii) Until all Senior Indebtedness is paid in full,
any distribution to which the Payee would be entitled but for this Section 4
shall be made to holders of Senior Indebtedness, as their interests may appear,
except that the Payee may receive securities that are subordinate to the Senior
Indebtedness to at least the same extent as this Note.
(iii) For purposes of this Section 4, a distribution
may consist of cash, securities or other property, by set-off or otherwise.
(iv) Notwithstanding the foregoing provisions of this
Section 4(b), if payment or delivery by the Company of cash, securities or other
property to the Payee is authorized by an order or decree giving effect, and
stating in such order or decree that effect is
given, to the subordination of this Note to the Senior Indebtedness, and made by
a court of competent jurisdiction in a proceeding under any applicable
bankruptcy or reorganization law, payment or delivery by the Company of such
cash, securities or other property shall be made to the Payee in accordance with
such order or decree.
(c) Limitation on Payment.
(i) Upon receipt by the Company and the Payee of a Blockage
Notice (as defined below), then unless and until (A) all defaults in the payment
of any Senior Indebtedness (the "Senior Defaults") that gave rise to the
Blockage Notice shall have been remedied or effectively waived or shall have
ceased to exist or (B) the Senior Indebtedness in respect of which such Senior
Defaults shall have occurred shall have been paid in full or (C) a notice of
acceleration of the maturity of such Senior Indebtedness shall have been
transmitted to the Company in respect of such Senior Defaults, no direct or
indirect payment (in cash, property, securities or by set-off or otherwise) of
or on account of the principal of or interest on this Note or in respect of any
redemption, retirement, purchase or other acquisition of this Note shall be made
during any period prior to the expiration of the Blockage Period (as defined
below); provided, however, that in no event shall the foregoing prevent the
Payee from converting this Note into shares of Subsequent Round Securities.
(ii) For purposes of this Section 4, a "Blockage Notice" is a
notice of a Senior Default that in fact has occurred and is continuing, given to
the Company and the Payee by any holders of Senior Indebtedness then outstanding
(or their authorized agent); provided, however, that no such notice shall be
effective as a Blockage Notice if an effective Blockage Notice shall have been
given within 360 days prior thereto.
(iii) For purposes of this Section 4, a "Blockage Period" with
respect to a Blockage Notice is the period commencing upon the Company's receipt
of such Blockage Notice and having the duration set forth in the particular
agreement establishing the Senior Indebtedness to which the Company is a party;
provided, that, such Blockage Period is no more than 90 days.
Notwithstanding the foregoing, the Blockage Period shall be inapplicable
or cease to be effective if an Event of Default pursuant to Section 3(d) or (e)
shall have occurred. In addition, any Blockage Period shall cease to be
effective if at any time during such period (i) substantial assets of the
Company are sold or otherwise disposed of outside of the ordinary course of
business for less than fair value or (ii) payment or any distribution of any
character, whether in cash, securities or other property of the Company shall be
made to or received by any creditor on any indebtedness which is on the same
level of priority with or junior and subordinate in right of payment to this
Note.
Upon the expiration or termination of any Blockage Period, the Payee
shall be entitled to exercise any of its rights with respect to this Note other
than any right to accelerate the maturity date of this Note based upon the
occurrence of any Event of Default in respect thereto which has been cured or
otherwise remedied during the Blockage Period.
(d) Payments and Distributions Received. If the Payee shall
have received any payment from or distribution of assets of the Company in
respect of Obligations in contravention of the terms of this Section 4 before
all Senior Indebtedness is paid in full, then and in such event such payment or
distribution shall be received and held in trust for and shall be paid over or
delivered to the holders of Senior Indebtedness to the extent necessary to pay
all such Senior Indebtedness in full.
(e) Proofs of Claim. If, while any Senior Indebtedness is
outstanding, any Event of Default under Section 3(d) or (e) of this Note occurs,
the Payee shall duly and promptly take such action as any holder of Senior
Indebtedness may reasonably request to collect any payment with respect to this
Note for the account of the holders of the Senior Indebtedness and to file
appropriate claims or proofs of claim in respect of this Note. Upon the failure
of the Payee to take any such action, each holder of Senior Indebtedness is
hereby irrevocably authorized and empowered (in its own name or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in respect of this Note and to file claims and
proofs of claim and take such other action as it may deem necessary or advisable
for the exercise or enforcement of any of the rights or interests of the Holder
with respect to this Note.
(f) Subrogation. After all amounts payable under or in
respect of Senior Indebtedness are paid in full in cash, the Payee shall be
subrogated to the rights of holders of Senior Indebtedness to receive payments
or distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the Payee have been applied to the payment of
Senior Indebtedness. A distribution made under this Section 4 to a holder of
Senior Indebtedness which otherwise would have been made to the Payee is not, as
between the Company and the Payee, a payment by the Company on Senior
Indebtedness.
(g) Relative Rights. This Section 4 defines the relative
rights of the Payee and the holders of Senior Indebtedness. Nothing in this
Section 4 shall (i) impair, as between the Company and the Payee, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest (including Default Interest) on this Note in accordance with its terms;
(ii) effect the relative rights of the Payee and creditors of the Company other
than holders of Senior Indebtedness; (iii) prevent the Payee from exercising its
available remedies upon an Event of Default, subject to the rights, if any,
under this Section 4 of holders of Senior Indebtedness or (iv) prevent the Payee
from exercising its conversion rights under Section 5.
(h) Subordination May Not Be Impaired by the Company. No
right of any holder of any Senior Indebtedness to enforce the subordination of
the Obligations evidenced by this Note shall be impaired by any failure by the
Company or such holder of Senior Indebtedness to act or by the failure of the
Company or such holder to comply with this Note. The provisions of this Section
4 shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Senior Indebtedness is rescinded or must
otherwise be returned by any holder of Senior Indebtedness as a result of the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
(i) Payments. A payment with respect to principal of or
interest on the Obligations shall include, without limitation, payment of
principal of and interest on this Note, and any payment on account of mandatory
prepayment provisions.
(j) Section Not to Prevent Events of Default. The failure to
make a payment on account of principal of or interest on or other amounts
constituting the Obligations by reason of any provision of this Section 4 shall
not be construed as preventing the occurrence of an Event of Default under
Section 3.
5. Conversion.
(a) Right to Convert. Subject to the terms and conditions of
this Section 5 and to stockholder approval (to the extent, and only to the
extent, required by the rules of the Nasdaq SmallCap Market or any other
national securities exchange or quotation system upon which the Payor's common
stock, par value $0.01 per share ("Common Stock"), may be listed from time to
time (for the avoidance of doubt, it being understood that, prior to conversion
of this Note, such approval need only be obtained as to the portion or portions,
if any, of Subsequent Round Securities that the holder would acquire upon
conversion that exceeds the amount that could be acquired without such approval
under the rules of the Nasdaq SmallCap Market or any other national securities
exchange or quotation system upon which the Common Stock may be listed from time
to time)), the Payee shall have the right, at its option, at any time and from
time to time, upon the consummation of any Subsequent Round of Financing (as
defined below), to convert all or any portion of the principal amount of this
Note and any accrued and unpaid interest thereon (collectively, "Note
Obligations") into a number of fully paid and nonassessable Subsequent Round
Securities (with the most favorable terms received by any investor in such
Subsequent Round of Financing) equal to the quotient obtained by dividing the
aggregate amount of Note Obligations to be converted by the lowest price per
Subsequent Round Security paid by any investor in such Subsequent Round of
Financing. Written notice of a Subsequent Round of Financing stating the date on
which such Subsequent Round of Financing is expected to become effective and
describing the terms and conditions of such Subsequent Round of Financing shall
be delivered by the Company to, and received by, the Payee not less than 10 days
prior to the consummation of such Subsequent Round of Financing.
(b) Procedure for Conversion. In order to convert all or any
portion of the Note Obligations, the Payee shall (i) surrender this Note, duly
endorsed, at the office of the Payor and (ii) simultaneously with such
surrender, notify the Payor in writing of its election to convert all or a
portion of the Note Obligations, which notice shall specify the amount of
principal and interest included in the Note Obligations to be so converted. The
date on which the Note is surrendered for conversion is referred to herein as
the "Conversion Date." As soon as practicable after the Conversion Date, the
Payee shall be entitled to receive a certificate or certificates, registered in
such name or names as the Payee may direct, representing the Subsequent Round
Securities issuable upon conversion of the applicable Note Obligations, along
with a new promissory note, in the same form as this Note, reflecting any Note
Obligations that have not been so converted; provided that the Payee shall be
treated for all purposes as the record holder of such Subsequent Round
Securities as of the Conversion Date. The issuance of Subsequent
Round Securities upon conversion of any Note Obligations shall be made without
charge to the Payee for any issuance tax in respect thereof, provided that the
Payor shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the Payee.
(c) Reservation of Shares. Payor shall reserve and keep
available solely for issuance upon the conversion of Note Obligations such
number of shares of Subsequent Round Securities as will from time to time be
sufficient to permit the conversion of all outstanding Note Obligations
(collectively, the "Conversion Securities"), and, if applicable, shall take all
action to increase the authorized number of Subsequent Round Securities if at
any time there shall be insufficient authorized but unissued Subsequent Round
Securities to permit such reservation or permit the conversion of all
outstanding Note Obligations and Subsequent Round Securities. The Payor
covenants that all Conversion Securities that shall be so issued shall be duly
authorized, validly issued, fully paid and non-assessable by the Payor, not
subject to any preemptive rights, and free from any taxes, liens and charges
with respect to the issue thereof. The Payor will take all such action as may be
necessary to ensure that all such Conversion Securities may be so issued without
violation of any applicable law or regulation, or any requirement of any
national securities exchange or quotation system upon which the Common Stock may
be listed.
(d) Certain Definitions. For purposes of this Note, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa):
"Subsequent Round of Financing" means the offer and sale for cash by the
Company of its equity securities.
"Subsequent Round Securities" means the equity securities sold in the
Subsequent Round of Financing; provided that, to the extent that two or more
types or classes of equity securities are sold as a unit in the Subsequent Round
of Financing, "Subsequent Round Securities" shall mean a unit consisting of the
same types or classes of equity securities, in the same proportion, as the units
sold in the Subsequent Round of Financing.
6. Suits for Enforcement.
(a) Upon the occurrence of any one or more Events of
Default, the holder of this Note may proceed to protect and enforce its rights
by suit in equity, action at law or by other appropriate proceeding in aid of
the exercise of any power granted in this Note, or may proceed to enforce the
payment of this Note, or to enforce any other legal or equitable right it may
have as a holder of this Note.
(b) The holder of this Note may direct the time, method and
place of conducting any proceeding for any remedy available to itself.
(c) In case of any Event of Default, the Payor will pay to
the holder of this Note such amounts as shall be sufficient to cover the
reasonable costs and expenses of such
holder due to such Event of Default, including without limitation, costs of
collection and reasonable fees, disbursements and other charges of counsel
incurred in connection with any action in which the holder prevails.
7. Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in accordance with the provisions of
the Note Purchase Agreement, dated as of the date hereof, by and among the Payor
and the investors listed on Schedule 1 thereto.
8. Successors and Assigns. This Note shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
The Payor may not assign any of its rights or obligations under this Note
without the prior written consent of Payee. The Payee may assign all or a
portion of their rights or obligations under this Note to an affiliate without
the prior written consent of the Payor.
9. Amendment and Waiver.
(a) No failure or delay on the part of the Payor or Payee in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Payor or
Payee at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Note, any waiver of any provision of this Note and any consent
to any departure by the Payor from the terms of any provision of this Note,
shall be effective (i) only if it is made or given in writing and signed by the
Payor and the Payee and (ii) only in the specific instance and for the specific
purpose for which made or given.
10. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
12. Costs and Expenses. The Payor hereby agrees to pay on demand all
reasonable out-of-pocket costs, fees, expenses, disbursements and other charges
(including but not limited to the fees, expenses, disbursements and other
charges of counsel to the Payee) of the Payee arising in connection with any
consent or waiver granted or requested hereunder or in connection herewith, and
any renegotiation, amendment, work-out or settlement of this Note or the
indebtedness arising hereunder.
13. Waiver of Jury Trial and Setoff. The Payor hereby waives trial
by jury in any litigation in any court with respect to, in connection with, or
arising out of this Note or any
instrument or document delivered pursuant to this Note, or the validity,
protection, interpretation, collection or enforcement thereof, or any other
claim or dispute howsoever arising, between any Payor and the Payee; and the
Payor hereby waives the right to interpose any setoff or counterclaim or
cross-claim in connection with any such litigation, irrespective of the nature
of such setoff, counterclaim or cross-claim except to the extent that the
failure so to assert any such setoff, counterclaim or cross-claim would
permanently preclude the prosecution of the same.
14. Consent to Jurisdiction. The Payor hereby irrevocably consents
to the nonexclusive jurisdiction of the courts of the State of New York and of
any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Note or any document or instrument
delivered pursuant to this Agreement.
15. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
16. Entire Agreement. This Note is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Note
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
17. Further Assurances. The Payor shall execute such documents and
perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations or other actions by, or giving any notices
to, or making any filings with, any governmental authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Note.
BLUEFLY, INC.
By: /s/ Jonathan Morris
--------------------------------
Name: Jonathan Morris
Title: EVP