AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
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THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is entered into as of September 7, 2011, by and among Bluefly,
Inc., a Delaware corporation (the "Company"), Quantum Industrial Partners
LDC ("QIP"), SFM Domestic Investments, LLC ("SFM" and, together with QIP,
"▇▇▇▇▇"), Maverick Fund USA, Ltd. ("Maverick USA"), Maverick Fund, L.D.C.
("Maverick Fund"), Maverick Fund II, Ltd. ("Maverick Fund II" and, together
with Maverick USA and Maverick Fund, "Maverick"), Prentice Consumer
Partners, LP ("Prentice") and Rho Ventures VI, L.P. ("Rho"; ▇▇▇▇▇,
Maverick, Prentice and Rho are referred to collectively herein as the
"Existing Holders" or the "Investors").
The Company and the Existing Holders entered into a Registration
Rights Agreement, dated as of December 21, 2009, which provided certain
registration rights to the Existing Holders (the "Prior Agreement").
WHEREAS, the Company, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and Rho (the "2011 Purchasers")
have entered into a Securities Purchase Agreement, dated as of September 7,
2011 (the "2011 Securities Purchase Agreement"), pursuant to which ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ and Rho have agreed to purchase, and the Company has agreed to
sell, an aggregate of 3,666,665 shares (the "2011 Shares") of the Company's
common stock, par value $.01 per share (the "Common Stock"), upon the terms
and subject to the conditions set forth therein; and
WHEREAS, the Company desires to grant to the 2011 Purchasers the
registration rights with respect to the 2011 Shares equivalent to those
provided under the Prior Agreement and in connection therewith the parties
desire to amend and restate the Prior Agreement in its entirety as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS.
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1.1. Defined Terms. The following capitalized terms used herein have the
following meanings:
"Additional Shelf Registration Statement" has the meaning set forth in
Section 2.2.3.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Approved Underwriter" has the meaning set forth in Section 2.5.2.
"Blackout Period" has the meaning set forth in Section 2.6.
"Closing" has the meaning given such term in the 2011 Securities
Purchase Agreement
"Commission" means the Securities and Exchange Commission, or any
other federal agency then administering the Securities Act or the Exchange
Act.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Underwriter" has the meaning set forth in Section 2.4.1.
"Cut Back Shares" has the meaning set forth in 2.2.3.
"Deferral Notice" has the meaning set forth in Section 2.5.5.
"Deferral Period" has the meaning set forth in Section 2.5.5.
"Demand Registrable Securities" means, collectively, the ▇▇▇▇▇
Registrable Securities and the Rho Registrable Securities.
"Demand Registration" has the meaning set forth in Section 2.5.1.
"Demand Registration Statement" has the meaning set forth in Section
2.5.1.
"Demanding Holders" has the meaning set forth in Section 2.5.1.
"Event" has the meaning set forth in Section 2.2.4.
"Event Date" has the meaning set forth in Section 2.2.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder, all
as the same shall be in effect from time to time.
"Existing Holders" has the meaning set forth in the preamble to this
Agreement.
"Existing Holders Registration Statements" has the meaning set forth
in Section 2.3.
"Existing Shelf Registrable Securities" means the shares of Common
Stock and the shares of Common Stock underlying securities exercisable for
or convertible into shares of Common Stock, the resale of which was
registered by the Existing Holders Registration Statements.
"Filing Deadline" has the meaning set forth in Section 2.2.1.
"FINRA" has the meaning set forth in Section 3.1.13.
"GPC" has the meaning set forth in the preamble to this Agreement.
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"Holders' Counsel" has the meaning set forth in Section 3.1.1.
"Indemnified Party" has the meaning set forth in Section 4.3.
"Indemnifying Party" has the meaning set forth in Section 4.3.
"Inspector" has the meaning set forth in Section 3.1.9.
"Investors" has the meaning set forth in the preamble to this
Agreement.
"Maverick" has the meaning set forth in the preamble to this
Agreement.
"Maverick Fund" has the meaning set forth in the preamble to this
Agreement.
"Maverick Fund II" has the meaning set forth in the preamble to this
Agreement.
"Maverick Registrable Securities" means (i) the shares of Common
Stock, and the shares of Common Stock underlying securities exercisable for
or convertible into shares of Common Stock, acquired by Maverick directly
from the Company prior to the date hereof, and (ii) any shares of Common
Stock that may be issued upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the Common
Stock described in the foregoing clause (i).
"Maverick USA" has the meaning set forth in the preamble to this
Agreement.
"PC Offshore" has the meaning set forth in the preamble to this
Agreement.
"PCP" has the meaning set forth in the preamble to this Agreement.
"PCP QP" has the meaning set forth in the preamble to this Agreement.
"PEC" has the meaning set forth in the preamble to this Agreement.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity or enterprise of whatever nature.
"Piggy-Back Registrable Securities" means, collectively, the ▇▇▇▇▇
Registrable Securities, the Maverick Registrable Securities, the Prentice
Registrable Securities and the Rho Registrable Securities.
"Piggy-Back Registration" has the meaning set forth in Section 2.4.1.
"Potential Material Event" has the meaning set forth in Section 2.6.
"Prentice" has the meaning set forth in the preamble to this
Agreement.
"Prentice Registrable Securities" means (i) the shares of Common
Stock, and the shares of Common Stock underlying securities exercisable for
or convertible into shares of Common
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Stock, acquired by Prentice directly from the Company on or prior to the
date hereof, including the 2011 Shares purchased by Prentice, (ii) the
shares of Common Stock underlying the Registration Rights Penalty Warrants
(if any) that are issued after the date hereof pursuant to Section 2.2.4
and (iii) any shares of Common Stock that may be issued upon any stock
split, dividend or other distribution, recapitalization or similar event
with respect to the Common Stock described in the foregoing clauses (i) and
(ii).
"Prior Agreement" has the meaning set forth in the recitals to this
Agreement.
"QIP" has the meaning set forth in the preamble to this Agreement.
"Records" has the meaning set forth in Section 3.1.9.
"Registrable Securities" means, collectively, the ▇▇▇▇▇ Registrable
Securities, the Maverick Registrable Securities, the Prentice Registrable
Securities and the Rho Registrable Securities.
"Registration Expenses" has the meaning set forth in Section 3.3.
"Registration Rights Penalty Warrants" has the meaning set forth in
Section 2.2.4.
"Requesting Holders" has the meaning set forth in Section 2.4.1.
"Required Effectiveness Deadline" has the meaning set forth in Section
2.2.1.
"Rho" has the meaning set forth in the preamble to this Agreement.
"Rho Registrable Securities" means (i) the shares of Common Stock, and
the shares of Common Stock underlying securities exercisable for or
convertible into shares of Common Stock, acquired by Rho directly from the
Company on or prior to the date hereof, including the 2011 Shares purchased
by Rho, (ii) the shares of Common Stock underlying the Registration Rights
Penalty Warrants (if any) that are issued after the date hereof pursuant to
Section 2.2.4 and (iii) any shares of Common Stock that may be issued upon
any stock split, dividend or other distribution, recapitalization or
similar event with respect to the Common Stock described in the foregoing
clauses (i) and (ii).
"Rule 144" means Rule 144 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SAC" has the meaning set forth in the preamble to this Agreement.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the
same shall be in effect from time to time.
"SFM" has the meaning set forth in the preamble to this Agreement.
"Shares" has the meaning set forth in the recitals to this Agreement.
"Shelf Holders" means, collectively, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and Rho.
"Shelf Registrable Securities" means the 2011 Shares.
"Shelf Registration Statement" has the meaning set forth in Section
2.2.1.
"▇▇▇▇▇" has the meaning set forth in the preamble to this Agreement.
"▇▇▇▇▇ Registrable Securities" means (i) the shares of Common Stock,
and the shares of Common Stock underlying securities exercisable for or
convertible into shares of Common Stock, acquired by ▇▇▇▇▇ directly from
the Company on or prior to the date hereof, including the 2011 Shares
purchased by ▇▇▇▇▇, (ii) the shares of Common Stock underlying the
Registration Rights Penalty Warrants (if any) that are issued after the
date hereof pursuant to Section 2.2.4 and (iii) any shares of Common Stock
that may be issued upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the Common Stock
described in the foregoing clauses (i) and (ii).
"Stockholder Approval Condition" has the meaning set forth in the 2011
Securities Purchase Agreement.
"Withdrawal Period" has the meaning set forth in Section 2.5.5.
"2011 Purchasers" has the meaning set forth in the preamble to this
Agreement.
"2011 Securities Purchase Agreement" has the meaning set forth in the
preamble to this Agreement.
"2011 Shares" has the meaning set forth in the preamble to this
Agreement.
1.2. General Interpretive Principles.
1.2.1. Whenever used in this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, any noun or pronoun shall be
deemed to include the plural as well as the singular and to cover all genders.
The name assigned to this Agreement and the section captions used herein are for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect hereof. Unless otherwise specified, the terms "hereof,"
"herein," hereunder" and similar terms refer to this Agreement as a whole
(including exhibits, schedules and disclosure statements hereto), and references
herein to Sections refer to Sections of this Agreement.
2. REGISTRATION RIGHTS.
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2.1. Termination of Prior Registration Rights; Securities Subject to this
Agreement.
2.1.1. Termination of Prior Registration Rights. The Company and the
Existing Holders hereby terminate all registration rights granted to the
Existing Holders under the Prior Agreement. The Existing Holders hereby agree to
accept the registration rights afforded by this Agreement in lieu of the
registration rights granted to them under the Prior Agreement. Following the
execution hereof, this Agreement shall embody all of the registration rights
granted to the Investors.
2.1.2. Securities Subject to this Agreement. For the purposes of
this Agreement, Registrable Securities will cease to be Registrable Securities
when such Registrable Securities are sold and otherwise transferred pursuant to
Rule 144 under the Securities Act or a registration statement covering such
Registrable Securities has been declared effective under the Securities Act by
the Commission and such Registrable Securities have been disposed of pursuant to
such effective registration statement or such Registrable Securities can be sold
under Rule 144 without volume limitations.
2.2. Shelf Registration.
2.2.1. 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 "Shelf Registration Statement") with respect to the offer and sale
of the Shelf Registrable Securities no later than November 15, 2011 (the "Filing
Deadline") and (ii) cause the Shelf Registration Statement to be declared
effective by the Commission, subject to receipt of necessary information from
the Shelf Holders, within one hundred and eighty (180) days following the Filing
Deadline (the "Required Effectiveness Deadline"). The Company shall use
commercially reasonable best efforts to maintain the effectiveness of such Shelf
Registration Statement until the earliest to occur of the following (x) all of
the Shelf Registrable Securities have been disposed of by Shelf Holders pursuant
to the Shelf Registration Statement, (y) all of the Shelf Registrable Securities
can be resold, without registration, pursuant to Rule 144 without volume
limitations or (z) the Company is no longer a public company subject to the
rules and regulations of the Exchange Act.
2.2.2. The Shelf Holders will promptly furnish to the Company in
writing all information reasonably requested by the Company for use in
connection with the preparation of the Shelf Registration Statement and
obtaining the effectiveness thereof. The Shelf Holders hereby severally and not
jointly represent and warrant 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.
2.2.3. Notwithstanding anything to the contrary herein, if at any
time the Commission takes the position that the offering of some or all of the
Shelf Registrable Securities in the Shelf Registration Statement is not eligible
to be made on a delayed or continuous basis under the provisions of Rule 415 as
a result of a characterization by the Commission of the transaction described by
the Shelf Registration Statement as a primary offering by the Company, the
Company shall use its commercially reasonable best efforts to persuade the
Commission that the offering contemplated by the Registration Statement is a
valid secondary offering and not an offering "by or on behalf of the issuer" as
defined in Rule 415. In the event that, despite the Company's commercially
reasonable best efforts
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and compliance with the terms of this Section 2.2.3 the Commission refuses to
alter its position, the Company shall (i) remove from the Shelf Registration
Statement such portion of the Shelf Registrable Securities (the "Cut Back
Shares") and/or (ii) agree to such restrictions and limitations on the
registration and resale of the Shelf Registrable Securities as the Commission
may require to assure the Company's compliance with the requirements of Rule
415; provided, however, that the Company shall have no liability to any Investor
pursuant to Section 2.2.4 or otherwise as a result of the failure to register
any Cut Back Shares as a result of the Commission's application of Rule 415
despite the Company's commercially reasonable best efforts to persuade the
Commission that the offering contemplated by the Shelf Registration Statement is
a valid secondary offering and not an offering "by or on behalf of the issuer"
as defined in Rule 415. Any Cut-Back Shares required to be removed from the
Shelf Registration Statement shall be removed on a pro rata basis among the
Shelf Holders based upon the number of 2011 Shares purchased by each Shelf
Holder. As soon as practicable following such intervening period of time as
shall be required by the Commission or Commission guidance prior to the filing
thereof, the Company shall file one or more additional registration statements
covering the resale of as many Cut Back Shares allowed by the Commission or
Commission guidance to be so registered while maintaining the Company's
compliance with Rule 415 (each, an "Additional Shelf Registration Statement").
Any such Additional Shelf Registration Statement shall cover the Shelf
Registrable Securities on a pro rata basis among the Shelf Holders based upon
the number of 2011 Shares purchased by each Shelf Holder. The Company shall use
its commercially reasonable best efforts to file each Additional Shelf
Registration Statement on or prior to 10 business days after such day that
represents the first opportunity that the Commission allows the Additional
Registration Statement to be filed without the offering of the shares registered
thereunder being deemed a primary offering and cause each Additional Shelf
Registration Statement to be declared effective no later than, as applicable (a)
five business days after the Company receives notice from the Commission that
the Additional Shelf Registration Statement will not become subject to review or
(b) if the Additional Shelf Registration Statement becomes subject to review by
the Commission, 90 days after the filing thereof. With regard to any such
Additional Shelf Registration Statement, all of the provisions of this Section
2.2.3 shall again be applicable to the Cut Back Shares. The Company shall give
Rho, ▇▇▇▇▇ and Prentice prompt notice of the amount of Shelf Registrable
Securities excluded from each Additional Shelf Registration Statement. Each
Additional Shelf Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Shares on Form S-3, in
which case such registration shall be on another appropriate form in accordance
with the Securities Act and the Exchange Act).
2.2.4. If: (i) the Shelf Registration Statement is not filed on or
prior to the Filing Deadline or (ii) the Shelf Registration Statement is not
declared effective by the Commission (or otherwise does not become effective) on
or prior to the Required Effectiveness Deadline (any such failure or breach
being referred to as an "Event," and the date on which such Event occurs being
referred to as "Event Date"), then, subject to the satisfaction of the
Stockholder Approval Condition, in addition to any other rights available to the
Shelf Holders, on such Event Date the Company shall issue to the Shelf Holders
warrants in the form attached hereto as Exhibit A (collectively, "Registration
Rights Penalty Warrants") to purchase shares of Common Stock in an aggregate
amount equal to 1% of the fully diluted outstanding shares of Common Stock for
each full 30-day period following the Filing Deadline or the Required
Effectiveness Deadline (as applicable) until such time as the Shelf Registration
Statement is filed or declared effective by the Commission (or otherwise becomes
effective), as applicable; provided however, that such warrant issuances shall
not exceed, in the aggregate, 10% of the fully diluted outstanding shares of
Common Stock; provided further, however,
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unless and until the Stockholder Approval Condition is satisfied, no
Registration Rights Penalty Warrants shall be issued. The Registration Rights
Penalty Warrants shall be allocated to the 2011 Purchasers on a pro rata basis,
based upon the number of 2011 Shares purchased by each Shelf Holder. For
purposes of this section 2.2.4, the term "fully diluted" shall mean the number
of shares of Common Stock outstanding immediately after the giving effect to the
Closing and the number of shares of Common Stock issuable upon conversion,
exercise or exchange of any outstanding securities of the Company and any shares
reserved for issuance to management for the grant of stock options on the
Closing Date (after giving effect to the Closing), not then granted.
2.2.5. In the event that any Registration Rights Penalty Warrants
are issued pursuant to Section 2.2.4, the Company's Board of Directors shall
adopt a resolution in accordance with the procedures set forth in Rule 16b-3
promulgated under the Exchange Act so that the acquisition by the Shelf Holders
and their respective affiliates (and any directors designated by any such Shelf
Holder in accordance with the terms of Voting Agreement) of the securities
pursuant to this Agreement shall be an exempt transaction for purposes of
Section 16 of the Exchange Act.
2.3. Maintenance of Effectiveness of Existing Registration Statement. The
Company has on file effective registration statements on Form S-3 (File No.
333-136866 and File No. 333-165387) registering the resale of the Existing Shelf
Registrable Securities (the "Existing Holders Registration Statements"). The
Company shall use commercially reasonable best efforts to maintain the
effectiveness of the Existing Holders Registration Statements until the earliest
to occur of the following (x) all of the Existing Shelf Registrable Securities
have been disposed of by the Existing Holders pursuant to the Existing Holder
Registration Statements or otherwise, (y) all of the Existing Holder Registrable
Securities can be resold, without registration, pursuant to Rule 144 without
volume limitations or (z) the Company is no longer a public company subject to
the rules and regulations of the Exchange Act.
2.4. Piggy-Back Registration.
2.4.1. Participation. If the Company proposes to file a registration
statement under the Securities Act with respect to an underwritten offering by
the Company for its own account or for the account of any stockholder of any
class of the Company's securities (other than a registration statement on Form
S-4 or S-8 or any successor forms thereto) (a "Piggy-Back Registration"), then
the Company shall, at such time, give prompt written notice of such proposed
filing to each of the holders of Piggy-Back Registrable Securities, and such
notice shall describe in detail the proposed registration and distribution and
shall offer such holders the opportunity to register the number of Piggy-Back
Registrable Securities as each such holder may request. The Company shall, and
shall use commercially reasonable best efforts (within ten (10) days of the
notice provided for in the preceding sentence) to cause the managing underwriter
or underwriters of a proposed underwritten offering (the "Company Underwriter")
to, permit the holders of Piggy-Back Registrable Securities who have requested
in writing (within ten (10) days of the giving of the notice of the proposed
filing by the Company) to participate in the registration for such offering (the
"Requesting Holders") to include such Piggy-Back Registrable Securities in such
offering on the same terms and conditions as the securities of the Company
included therein.
2.4.2. Priority for Piggy-Back Registration. In connection with any
Piggy-Back Registration by the Company for its own account, the Company shall
not be required to include any
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Piggy-Back Registrable Securities therein unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the Company
Underwriter. If, in the written opinion of the Company Underwriter, the
registration of all, or part, of the Piggy-Back Registrable Securities which the
Requesting Holders have requested to be included in the Piggy-Back Registration
is likely to have a significant adverse effect on such Piggy-Back Registration,
then the Company shall be required to include in such Piggy-Back Registration
only that number of Piggy-Back Registrable Securities, if any, which the Company
Underwriter believes may be sold without causing such adverse effect, and the
amount of securities to be offered in such Piggy-Back Registration shall be (i)
first, 100% of the securities that the Company proposes to sell (ii) second, and
only if all the securities referred to in clause (i) have been included, the
number of Piggy-Back Registrable Securities that, in the opinion of the Company
Underwriter, can be sold without having such adverse effect, with such number to
be allocated pro rata among the Requesting Holders based on the relative number
of Piggy-Back Registrable Securities then held by each such Requesting Holder.
If any Requesting Holder would thus be entitled to include more shares than such
holder requested to be registered, the excess shall be allocated among other
Requesting Holders pro rata based upon their total ownership of Registrable
Securities and such other shares of capital stock. In connection with any Demand
Registration by the Company for the account of any stockholder of any class of
the Company's securities, the priority of the securities to be registered for
the benefit of any holder exercising its Piggy-Back Registration rights shall be
as set forth in Section 2.5.3.
2.5. Demand Registration.
2.5.1. Request for Registration. At any time after the date hereof,
either Rho or ▇▇▇▇▇ (the "Demanding Holders") may make a written demand
requiring the Company to effect the registration under the Securities Act of all
or part of its Demand Registrable Securities in the form of an underwritten
offering (a "Demand Registration"), and, subject to the limitations set forth in
Section 2.5.2, the Company shall be required to effect such Demand Registration
pursuant to and subject to the terms herein. Any demand for a Demand
Registration shall specify the number of Demand Registrable Securities proposed
to be sold and the intended methods of disposition thereof. Subject to the
limitations set forth in Section 2.5.2., within forty-five (45) days of a
request for a Demand Registration, the Company shall file a registration
statement relating to such Demand Registration (the "Demand Registration
Statement"), and shall use its commercially reasonable best efforts to cause
such Demand Registration Statement to be declared effective by the Commission.
2.5.2. Limitations on Demand Registrations. The Company shall not be
obligated to (i) effect more than two (2) Demand Registrations in respect of the
Demand Registrable Securities held by ▇▇▇▇▇, (ii) effect more than two (2)
Demand Registrations in respect of the Demand Registrable Securities held by
Rho, (iii) effect more than one (1) Demand Registration in any six (6) month
period or (iv) effect any Demand Registration where the aggregate price to the
public of the Demand Registrable Securities proposed to be sold is less than $10
million. The managing underwriter or underwriters of a Demand Registration shall
be a nationally recognized investment banking firm selected by the Company with
the consent of the Demanding Holders, which consent will not be unreasonably
delayed or withheld (the "Approved Underwriter"). If ▇▇▇▇▇ and/or Rho
participates in an offering pursuant to Section 2.4.1, ▇▇▇▇▇ and/or Rho, as
applicable, will be deemed to have used one (1) of its Demand Registrations to
the extent the conditions set forth in Section 2.5.4 are satisfied and ▇▇▇▇▇
and/or Rho, as applicable, was permitted by the Company Underwriter, in writing,
to include in such offering at least 50% of the Registrable Securities owned by
▇▇▇▇▇ and/or Rho, as applicable, as
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of the date of this Agreement, or such lesser number as was requested by ▇▇▇▇▇
and/or Rho to be included in such offering.
2.5.3. Priority of Securities Registered Pursuant to Demand
Registrations. If the Approved Underwriter advises the Company in writing that
in its opinion the number of securities requested to be included in a Demand
Registration exceeds the number which can be sold in such Demand Registration
without being likely to have a significant adverse effect on such Demand
Registration, the securities to be included in such Demand Registration (i)
first, shall be allocated pro rata among the Demanding Holders who have
requested to participate in such Demand Registration based on the relative
number of Demand Registrable Securities then held by each such holder, (ii)
second, and only if all the securities referred to in clause (i) have been
included, the number of securities that the Company proposes to include in such
Demand Registration that, in the opinion of the Approved Underwriter, can be
sold without having such adverse effect and (iii) next, and only if all the
securities referred to in clause (ii) have been included, the number of
Piggy-Back Registrable Securities that, in the opinion of the Company
Underwriter, can be sold without having such adverse effect, with such number to
be allocated pro rata among the Requesting Holders based on the relative number
of Piggy-Back Registrable Securities then held by each such Requesting Holder.
2.5.4. Effective Registration. A registration will not count as a
Demand Registration until the registration statement filed with the Commission
with respect to such Demand Registration has been declared effective and the
Company has complied with all of its obligations under this Agreement with
respect thereto; provided, however, that if, after such registration statement
has been declared effective and during the period such registration statement is
effective the offering of Demand Registrable Securities pursuant to such Demand
Registration is interfered with by any stop order or injunction of the
Commission or any other governmental agency or court, such registration
statement with respect to such Demand Registration will be deemed not to have
been declared effective, unless and until, such stop order or injunction is
removed, rescinded or otherwise terminated; provided, further, that the Company
shall not be obligated to file a second registration statement until a
registration statement that has been filed is counted as a Demand Registration
or is terminated.
2.5.5. Deferral of Registration. Notwithstanding the foregoing, if,
at any time prior to the effective date of the registration statement with
respect to a Demand Registration, the Company is (i) pursuing an underwritten
offering of shares of its capital stock for its own account, or engaged in or
proposes to engage in (A) a material financing, (B) an acquisition of the
capital stock or substantially all the assets of any other person (other than in
the ordinary course of business) or (C) any disposition of material assets
(other than in the ordinary course of business), any tender offer or any merger,
consolidation, corporate reorganization or restructuring or other similar
transaction; and (ii) the Board of Directors, using good faith, determines that
it would be detrimental to the Company for a registration statement to be filed
at such time, the Company may defer the filing of a registration statement with
respect to any Demand Registration required by this Section 2.5 until a date not
later than 120 days from the date of the Deferral Notice (as defined below) (the
"Deferral Period"). If the Board of Directors of the Company makes such
determination, the Company shall give written notice (the "Deferral Notice") of
such determination to the holders of Registrable Securities; provided, that, the
Company may exercise its right to delay a Demand Registration hereunder only
once in any twelve-month period. The Company shall notify the holders of the
expiration of the Deferral Period and shall cause the registration statement
with respect to the Demand Registration to be filed on the fifth business day
following the expiration of the Deferral Period (the "Withdrawal Period") (or,if
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registration on such date is not practicable, as promptly as possible
thereafter) unless, prior to the expiration of the Withdrawal Period, the
holders holding a majority of Demand Registrable Securities to be included in
any such Demand Registration, by written notice to the Company, withdraw the
request made under this Section 2.5, in which case, such request shall not count
as one of the Demand Registrations permitted hereunder and the Company shall pay
all Registration Expenses in connection with such registration.
2.6. Blackout Period. If at any time or from time to time after the date
of effectiveness of any registration statement that the Company is required to
effect or maintain pursuant to this Section 2, the Company notifies the holders
of Registrable Securities in writing of the existence of a Potential Material
Event (as defined below), such holders shall not offer or sell any of the
Registrable Securities covered by any such registration statement, or engage in
any other transaction involving or relating to such Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
until such holder 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 thirty (30)
consecutive days, and there shall be no more than sixty (60) days (which need
not be consecutive) during any twelve-month period in which a Blackout Period is
in effect.
3. REGISTRATION PROCEDURES.
-----------------------
3.1. Obligations of the Company. Subject to the registration procedures set
forth in Sections 2.2, 2.4 and 2.5, in connection with the Company's
registration obligations under Section 2, the Company shall use its commercially
reasonable best efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof as expeditiously as reasonably practicable, and in
connection therewith the Company shall:
3.1.1. prepare and file with the Commission a registration statement,
and use its commercially reasonable best efforts to cause such registration
statement to become effective under the Securities Act; provided, however, that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall (A) before the filing of such
registration statement and the prospectus included therein or any amendments or
supplements thereto, provide counsel selected by the holders of a majority of
the Registrable Securities being registered in such registration ("Holders'
Counsel") copies of all such documents in substantially the form proposed to be
filed, to enable the Investors and Holders' Counsel to review such documents
prior to the filing thereof, and the Company shall make such reasonable changes
thereto as may be reasonably requested by the Investors and (B) notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the Commission and take all reasonable action required
to prevent the
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entry of such stop order or to remove it if entered. Notwithstanding the
foregoing, to the extent Rho Registrable Securities are included on a
registration statement, with respect to such registration statement, Rho's
counsel shall be promptly notified about any events described, and afforded the
rights set forth, in subsections (A) and (B) hereof;
3.1.2. prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and in compliance with the provisions of the
Securities Act until all Registrable Securities and other securities covered by
such Registration Statement have been disposed of in accordance with the
intended method(s) of distribution set forth in such registration statement
(which period shall not exceed ninety (90) days (or until such earlier date on
which the Company Underwriter shall notify the Company that it is unable to sell
the balance of the Registrable Securities covered by such registration
statement) in the case of a registration statement filed with respect to and
used solely for an underwritten offering, and the applicable period set forth in
this Agreement in any other case;
3.1.3. furnish to each seller of Registrable Securities, prior to
filing a registration statement, copies of such registration statement as is
proposed to be filed, and thereafter such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as each such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
3.1.4. cause its counsel to issue to the Company's transfer agent,
within two business days of the effectiveness date of a registration statement
with respect to any of the Registrable Securities, an appropriate opinion or
opinions (or a letter from the Company acceptable to the transfer agent)
substantially to the effect that the Registrable Securities covered by such
registration statement are subject to an effective registration statement and
can be reissued free of restrictive legend, provided that the Company has not
advised the transfer agent orally or in writing that the opinion has been
withdrawn;
3.1.5. use reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller of Registrable Securities requests, and to continue such
qualification in effect in such jurisdiction for as long as is permissible
pursuant to the laws of such jurisdiction, or for as long as any such seller
requests or until all of such Registrable Securities are sold, whichever is
shortest, and do any and all other acts and things which may be reasonably
necessary or advisable to enable any such seller to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3.1.4, (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction;
3.1.6. use reasonable efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
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3.1.7. notify each seller of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, after delivery to the purchasers of
such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made;
3.1.8. enter into and perform customary agreements (including an
underwriting agreement in customary form with the underwriter, if any, selected
as provided herein) and take such other actions as are reasonably required in
order to facilitate the disposition of such Registrable Securities;
3.1.9. make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition pursuant
to such registration statement, Holders' Counsel and any attorney, accountant or
other agent retained by any such seller or any managing underwriter (each, an
"Inspector" and collectively, the "Inspectors"), during regular business hours
and upon reasonable advance notice, all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees, and
the independent public accountants of the Company, to supply all information
reasonably requested by any such Inspector in connection with such registration
statement;
3.1.10. if such sale is pursuant to an underwritten offering, obtain a
"cold comfort" letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
"cold comfort" letters as Holders' Counsel or the managing underwriter
reasonably requests;
3.1.11. furnish, at the request of any seller of Registrable
Securities on the date such securities are delivered to the underwriters for
sale pursuant to such registration or, if such securities are not being sold
through underwriters, on the date the registration statement with respect to
such securities becomes effective, an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the seller making such request, covering such legal
matters with respect to the registration in respect of which such opinion is
being given as such seller may reasonably request and are customarily included
in such opinions;
3.1.12. cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed, provided, that the applicable listing requirements are satisfied;
3.1.13. cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the Financial Industry Regulatory Authority ("FINRA");
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3.1.14. promptly notify each Investor whose shares of Common Stock are
covered by such registration statement, and promptly confirm such notice in
writing, if such notice was verbally given, (A) when the registration statement
covering the Registrable Securities has become effective and when any post
effective amendments thereto have become effective, (B) of the receipt of any
comments from the Commission with respect to any such document or a document
incorporated by reference therein, and (C) of any request by the Commission or
any other federal or state securities authority for amendments or supplements to
the registration statement or a prospectus or for additional information after
the registration statement has become effective, and
3.1.15. use reasonable efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
3.2. Notice to Discontinue. Each holder of Registrable Securities agrees
that, upon receipt of any written notice from the Company of the happening of
any event of the kind described in Section 3.1.7, such holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3.1.7 and, if so directed by the Company, such holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such registration statement shall be maintained effective pursuant to this
Agreement (including without limitation the period referred to in Section 3.1.2)
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 3.1.7 to and including the date when
the holder shall have received the copies of the supplemented or amended
prospectus contemplated by and meeting the requirements of Section 3.1.7.
3.3. Registration Expenses. The Company shall pay all expenses (other than
underwriting discounts and commissions) arising from or incident to the
Company's performance of, or compliance with, this Agreement, including without
limitation, (i) Commission, stock exchange, NASDAQ and FINRA registration and
filing fees, (ii) all fees and expenses incurred by Company in complying with
securities or blue sky laws (including reasonable fees, charges and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
and (iv) the fees, charges and disbursements of counsel to the Company and of
its independent public accountants and any other accounting and legal fees,
charges and expenses incurred by the Company (including without limitation any
expenses arising from any special audits incident to or required by any
registration or qualification) in connection with any Demand Registration
pursuant to the terms of this Agreement, regardless of whether such registration
statement is declared effective. All of the expenses described in this Section
3.3 are referred to herein as "Registration Expenses."
4. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
4.1. Indemnification by the Company. To the fullest extent permitted by
law, the Company will indemnify each holder of Registrable Securities, each of
its officers, directors, agents, partners, members, stockholders and employees
of each such Person, and each Person, if any, who controls such holder within
the meaning of the Securities Act or Exchange Act, with respect to each
registration which has been effected pursuant to this Agreement (whether prior
to or after the date hereof, including
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without limitation and for the avoidance of doubt, the Existing Holders
Registration Statements) against all claims, losses, damages and liabilities,
including, without limitation, fees and other expenses reasonably incurred in
connection with any investigation relating to, or defending, any such claims,
losses, damages and liabilities (or actions in respect thereof), arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement filed with the Commission in
connection with such registration, including any preliminary prospectus or final
prospectus contained therein, any amendments or supplements thereto or any
"issuer free writing prospectus" (as defined in Rule 433 under the Securities
Act) related thereto, or based on 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; provided, that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based
solely upon written information regarding such holder furnished to the Company
by such holder expressly for use in such registration statement.
4.2. Indemnification by the Investors. To the fullest extent permitted by
law, each of the holders of Registrable Securities will, if Registrable
Securities held by it are included in the securities as to which any
registration pursuant to this Agreement is being effected, severally and not
jointly indemnify the Company, each of its directors and officers, each Person
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement
filed in connection with such registration, including any preliminary prospectus
or final prospectus contained therein, any amendments or supplements thereto or
any "issuer free writing prospectus" related thereto, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements by such holder therein not misleading, and
will reimburse the Company, its directors and officers and Persons who control
the company for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is actually made in such registration statement, including any
preliminary or final prospectus contained therein, any amendments or supplements
thereto or any "issuer free writing prospectus" related thereto, in reliance
upon and in conformity with written information regarding such holder furnished
to the Company by such holder expressly for use in such registration statement.
Notwithstanding the provisions of this Section 4.2, the liability of each
Investor (including any transferee of the registration rights) under this
Section 4.2 shall not exceed the net proceeds actually received by such Investor
in connection with any sale of the Registrable Securities.
4.3. Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder unless, and only to the
extent that, such failure results in the Indemnifying Party's forfeiture of
substantial rights or defenses. If notice of commencement of any such action is
given to the Indemnifying Party as above provided, the Indemnifying Party shall
be entitled, after written notice to the Indemnified Party, to participate in
and, to the extent it may wish, jointly with any other Indemnifying Party
similarly notified,
- 15 -
to assume the defense of such action at its own expense, with counsel chosen by
it and reasonably satisfactory to such Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investigation) shall be paid by the Indemnified
Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the
Indemnifying Party fails to assume the defense of such action within a
reasonable period of time and with counsel satisfactory to the Indemnified Party
in its reasonable judgment, (iii) the Indemnified Party to any such action
(including any impleaded parties) have been advised by such counsel that either
(A) representation of such Indemnified Party and the Indemnifying Party by the
same counsel would be inappropriate under applicable standards of professional
conduct or (B) there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party. No Indemnifying Party shall, without the prior written
consent of each Indemnified Party, settle, compromise or consent to the entry of
any judgment unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party from all liability relating
thereto. All fees and expenses required to be paid to the Indemnified Party
pursuant to this Section 4.3 shall be advanced periodically during the course of
the Indemnified Party's investigation or defense; provided, however, that the
obligations of any Indemnified Party to advance fees and expenses to an
Indemnified Party shall be subject to the receipt by such Indemnified Party of
an undertaking by or on behalf of the Indemnified Party to repay the amounts so
advanced if (and to the extent) it is subsequently determined that the
Indemnified Party is not entitled to indemnification with respect to such
investigation or defense. In either of such cases the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party. No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.
4.4. Contribution. If the indemnification provided for in this Section 4
from the Indemnifying Party is applicable by its terms but unavailable to an
Indemnified Party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall severally and not jointly
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative faults of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Sections 4.1, 4.2, 4.3, any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 4, no Investor
(including any transferee of the registration rights) shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Investor from the sale of the Registrable
Securities subject to the claim, loss, damage, liability or action exceeds the
amount of any damages that such Investor has
- 16 -
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person.
5. UNDERWRITING AND DISTRIBUTION.
-----------------------------
5.1. Rule 144. The Company covenants that for so long as it is a public
company subject to the rules and regulations of the Exchange Act, it shall take
such action as each holder of Registrable Securities may reasonably request
(including providing any information necessary to comply with Rules 144 under
the Securities Act), all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rules may be amended from time to time, or (b) any
similar rules or regulations hereafter adopted by the Commission. The Company
shall, upon the request of any holder of Registrable Securities, deliver to such
holder a written statement as to whether the Company has complied with such
requirements.
5.2. Holdback Agreements.
5.2.1. Restrictions on Public Sale by Holders of Registrable
Securities. To the extent not inconsistent with applicable law, and provided
that all of the Company's executive officers, directors and, to the extent they
are parties to this Agreement, holders of five percent or more of the
outstanding capital stock of the Company enter into substantially similar
agreements, the Investors agree that, in connection with a registered public
offering of the Company's equity securities, they will not effect any public
sale or distribution of any Registrable Securities or of any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Securities Act, during the 90
days beginning on, the effective date of the Company's registration statement
(except as part of such registration), if and to the extent reasonably requested
by the Company in writing in the case of a non-underwritten public offering or
to the extent reasonably requested by the Company Underwriter or Approved
Underwriter in writing in the case of an underwritten public offering.
5.2.2. Restrictions on Public Sale by the Company. The Company agrees
not to effect any public sale or distribution of any of its equity securities,
or any securities convertible into or exchangeable or exercisable for such
equity securities (except pursuant to registrations on Forms S-4 or S-8 of the
Securities Act or any successor or other forms not available for registering
equity securities for sale to the public) during the ten business days prior to,
and during the 30 day period beginning on the effective date of any registration
statement in which the holders of Registrable Securities are participating
unless such registration statement also relates to securities being offered by
the Company. In addition, the Company agrees not to file, without the consent of
Rho, any registration statement for an underwritten offering of its securities
until a Shelf Registration Statement or one or more Additional Shelf
Registration Statements covering all of the Rho Registrable Securities has been
declared effective by the SEC.
6. MISCELLANEOUS.
-------------
6.1. Term. This Agreement shall terminate with respect to each Investor on
the date such Investor no longer owns any Registrable Securities. For the
avoidance of doubt, this Agreement shall
- 17 -
continue to remain in effect with respect to any other Investor that continues
to own Registrable Securities. The provisions of Section 4 and Section 5.1 shall
survive any termination.
6.2. Assignment; Binding Effect. This Agreement and the rights, duties and
obligations of each Investor hereunder may be assigned (in whole or in part) by
such Investor to transferees or assignees of all or any portion of its
Registrable Securities, but only if (i) the such Investor (or subsequent
transferor) agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being transferred or assigned, (iii) at or
before the time the Company received the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained in this Agreement, (iv)
the transferee is an "accredited investor" as that term is defined in Rule 501
of Regulation D and (v) insofar as any assignment covers the Demand Registration
Rights, the transferee or assignee is acquiring at least 50% of the Registrable
Securities owned by such Investor and its Affiliates immediately prior to such
transfer and such Investor and its transferee or assignee allocate the Demand
Registration Rights between them so as not to increase the number of unused
Demand Registrations available to such Investor and its Affiliates in effect
immediately prior to such transfer. This Agreement and the provisions hereof
shall be binding upon and shall inure to the benefit of each of the parties and
their respective successors.
6.3. Notices. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been duly given (a) on the date of delivery, if delivered personally or by
facsimile, upon confirmation of receipt, (b) on the first business day following
the date of dispatch if delivered by a recognized next-day courier services, or
(c) on the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid, to the
parties to this Agreement at the following address or to such other address
either party to this Agreement shall specify by notice to the other party:
If to the Company: Bluefly, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to (which shall not constitute notice):
Dechert LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇ ▇▇▇▇
Facsimile No.: (212 698 3599
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to ▇▇▇▇▇: Quantum Industrial Partners LDC
SFM Domestic Investments LLC
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c/▇ ▇▇▇▇▇ Fund Management LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
If to Maverick: Maverick Fund USA, Ltd.
Maverick Fund, L.D.C.
Maverick Fund II, Ltd.
c/o Maverick Capital, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to (which shall not constitute notice):
Shearman & Sterling, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to Prentice: Prentice Capital Management, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Rho: Rho Ventures VI, ▇.▇.
▇▇▇▇▇▇▇▇ Hall Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 19 -
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇ Procter LLP
The New York Times Building
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
6.4. Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be deemed to be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in
accordance with its terms to the maximum extent permitted by applicable law.
6.5. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
6.6. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties and/or their affiliates with respect to the subject matter
of this Agreement, including, without limitation, the Prior Agreement.
6.7. Modifications and Amendments. Any provision of this Agreement may be
amended or modified if, but only if, such amendment or modification is in
writing and is duly executed and delivered by the Company and the Investors.
6.8. Titles and Headings. Titles and headings of sections of this Agreement
are for convenience only and shall not affect the construction of any provision
of this Agreement.
6.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The parties hereto agree that
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may only be brought in the United States
District Court for the Southern District of New York or any New York State court
sitting in the Borough of Manhattan in New York City, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by Law (as defined in the
Investment Agreement), any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court.
- 20 -
6.10. Waiver of Trial by Jury. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
- 21 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the date first
written above.
BLUEFLY, INC.
By:
---------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
QUANTUM INDUSTRIAL PARTNERS LDC
By:
--------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-fact
SFM DOMESTIC INVESTMENTS LLC
By:
--------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-fact
- 22 -
MAVERICK FUND USA, LTD
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By:
---------------
Name:
Title:
MAVERICK FUND L.D.C.
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By:
---------------
Name:
Title:
MAVERICK FUND II, LTD
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By:
---------------
Name:
Title:
- 23 -
PRENTICE CONSUMER PARTNERS, LP
By: Prentice Consumer Partners GP, LLC
By:
---------------
Name:
Title:
- 24 -
RHO VENTURES VI, L.P.
By: RMV VI, L.L.C., its General Partner
By: Rho Capital Partners LLC, its Managing
Member
By:
---------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member
- 25 -
EXHIBIT A
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE OFFER AND SALE OF THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT, IN WHICH CASE THE COMPANY IS ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH SECURITIES CAN BE SOLD OR
TRANSFERRED PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NO REPRESENTATION IS
MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT FOR RESALES OF THESE SECURITIES.
BLUEFLY, INC.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
Date of Issuance: __________ ___, 20__ Certificate No. ______
THIS CERTIFIES THAT, for value received, [ ] ("[ ]") and its assigns
are entitled to subscribe for and purchase [_____] shares of duly authorized,
validly issued, fully paid and nonassessable Common Stock, par value $0.01 per
share, (as adjusted pursuant to Section 4 hereof, the "Warrant Shares") of
BLUEFLY, INC., a Delaware corporation (the "Company"), at the price of $1.80 per
share (such price and such other price as shall result, from time to time, from
the adjustments specified in Section 4 hereof is herein referred to as the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereinafter set
forth. As used herein the term "Date of Grant" shall mean __________ ___, 20__.
The term "Warrant" as used herein shall be deemed to include any warrants issued
upon transfer or partial exercise of this Warrant unless the context clearly
requires otherwise. This Warrant has been issued pursuant to Section 2.2.4 of
the Amended and Restated Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of September 7, 2011, among the Company, Rho Ventures VI,
L.P., Quantum Industrial Partners LDC, SFM Domestic Investments LLC, Maverick
Fund USA, Ltd., Maverick Fund, L.D.C., Maverick Fund II, Ltd. and Prentice
Consumer Partners, LP.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 P.M. New York City time on the fifth (5th) anniversary of the Date
of Grant (the "Expiration Date").
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) delivery of this Warrant and a notice
of exercise substantially in the form attached hereto as Exhibit A, duly
completed and executed, at the principal office of the Company and the payment
to the Company, by certified or bank check, or by wire transfer to an account
designated by the Company, of an amount equal to the then applicable Warrant
Price multiplied by the number of Warrant Shares then being purchased, or (b)
exercise of the "net issuance" right provided for in Section 9.2 hereof. The
person or persons in whose name(s) any certificate(s) representing the Warrant
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any exercise
of the rights represented by this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof as soon as practicable and,
if requested by the holder of this Warrant, the Company shall cause its transfer
agent to deliver the certificate representing Warrant Shares issued upon
exercise of this Warrant to a broker or other person (as directed by the holder
exercising this Warrant, but subject to the payment by the holder of any
applicable transfer taxes) within the time period required to settle any trade
made by the holder after exercise of this Warrant. The Company shall, upon the
written request of the holder hereof and provided that the Company's transfer
agent is participating in The Depository Trust Company ("DTC") Fast Automated
Securities Transfer Program, use its commercially reasonable efforts to credit
such aggregate number of Warrant Shares to which the holder is
27
entitled pursuant to such exercise to the holder's or its designee's balance
account with DTC through its Deposit Withdrawal Agent Commission system
("DWAC"); provided, that the holder provides the Company the reasonably
necessary details to effect the foregoing DWAC delivery.
3. Stock Fully Paid; Reservation of Warrant Shares. All Warrant Shares
that may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance pursuant to the terms and conditions herein, be fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification or Merger. In case of any reclassification or
change of securities of the class issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in case
of any merger of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation and
which does not result in any reclassification of, or change in, outstanding
shares of Common Stock, including without limitation a merger or consolidation
in which some or all of the outstanding shares of Common Stock are cancelled in
exchange for merger consideration), the Company, or such surviving corporation,
as the case may be, shall duly execute and deliver to the holder of this Warrant
a new Warrant (which, if not in substantially the form of this Warrant, shall be
in form and substance reasonably satisfactory to the holder of this Warrant), or
the Company shall make appropriate provision without the issuance of a new
Warrant, so that the holder of this Warrant shall have the right to receive upon
exercise of this Warrant, at a total purchase price not to exceed that payable
upon the exercise of the then unexercised portion of this Warrant, and in lieu
of the shares of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change or merger by a holder of
the number of shares of Common Stock purchasable under this Warrant immediately
preceding the consummation of such reclassification or merger. Such new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of
this subparagraph (a) shall similarly apply to successive reclassifications,
changes and mergers.
(b) Subdivision or Combination of Warrant Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased and the number of Warrant Shares issuable hereunder
shall be proportionately increased, in the case
28
of a subdivision, and the Warrant Price shall be proportionately increased and
the number of Warrant Shares issuable hereunder shall be proportionately
decreased, in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Warrant
is outstanding and unexpired shall pay a dividend with respect to its Common
Stock payable in Common Stock, then the Warrant Price shall be adjusted, from
and after the record date fixed for the determination of the stockholders of the
Company entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution.
(d) Adjustment of Number of Warrant Shares. Upon each adjustment in
the Warrant Price pursuant to Section 4(c) above, the number of Warrant Shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Warrant Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall make a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (without regard to Section 11 hereof) by first class
mail, postage prepaid to the holder of this Warrant at such holder's last known
address.
6. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company's Board of Directors.
7. Compliance with the Securities Act. This Warrant and all Warrant
Shares issued upon exercise of this Warrant (unless registered under the
Securities Act of 1933, as amended, and any applicable state securities laws)
shall be stamped or imprinted with a legend in substantially the form as set
forth on the first page hereof. Said legend shall be removed by the Company,
upon the request of a holder, at such time as the restrictions on the transfer
of the applicable security shall have terminated.
8. Rights as Stockholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities which may at any time be issuable on the
exercise hereof for any purpose, nor shall
29
anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or (except as provided in Section 9.1) to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this Warrant shall have been exercised and the Warrant Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
9. Additional Rights.
9.1 Notice of Corporate Action. In the event the Company proposes to: (i)
pay, distribute, or take a record of the holders of its Common Stock for the
purpose of determining the holders thereof who are entitled to receive, any
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of capital stock or any other securities or
property, or (ii) consummate any capital reorganization, reclassification,
recapitalization, consolidation, merger, transfer of all or substantially all of
the Company's assets, dissolution, liquidation or winding-up, or any similar
transaction, then, at least 10 days prior to the earlier of any applicable
record date or such event, as the case may be, the Company shall mail to the
holder of this Warrant a notice specifying: (a) the date or expected date on
which any such payment or distribution is to be made or record is to be taken
and the amount and character of any such dividend, distribution or right; (b)
the date or expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation,
winding-up or similar transaction is to take effect and any record date
therefor; (c) the time as of which any holders of record of shares of Common
Stock and/or any other class of securities shall be entitled to exchange their
shares of Common Stock and/or other securities for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation,
winding-up or similar transaction and a description in reasonable detail of such
transaction; and (d) in each case, the expected effect on the Warrant Price or
number of Warrant Shares (if any) of each such transaction or event. The Company
shall update any such notice to reflect any change in the foregoing information.
9.2 Right to Convert Warrant into Stock; Net Issuance.
(a) Right to Convert. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Common Stock as provided in this Section 9.2 at any time or from
time to time during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of Warrant Shares subject to this
Warrant (the "Converted Warrant Shares"), the Company shall deliver to the
holder (without payment by the holder of any exercise price or any cash or other
consideration) that number of shares of fully paid and nonassessable Common
Stock as is determined according to the following formula:
30
X = B- A
-----
Y
Where: X the number of shares of Common Stock to be issued to the
= holder upon such exercise
Y = the fair market value of one share of Common Stock
A = the aggregate Warrant Price of the specified number of
Converted Warrant Shares immediately prior to the exercise
of the Conversion Right (i.e., the number of Converted
Warrant Shares multiplied by the Warrant Price)
B = the aggregate fair market value of the specified number of
Converted Warrant Shares (i.e., the number of Converted
Warrant Shares multiplied by the fair market value of one
Converted Warrant Share)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined).
(b) Method of Exercise. The Conversion Right may be exercised by
the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement (which may be in the form of Exhibit
A) specifying that the holder thereby intends to exercise the Conversion Right
and indicating the number of shares subject to this Warrant which are being
surrendered (referred to in Section 9.2(a) hereof as the Converted Warrant
Shares) in exercise of the Conversion Right. Such conversion shall be effective
upon receipt by the Company of this Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the "Conversion
Date"). Certificates for the Warrant Shares issuable upon exercise of the
Conversion Right and, if applicable, a new Warrant evidencing the balance of the
Warrant Shares remaining subject to this Warrant, shall be issued as of the
31
Conversion Date and shall be delivered to the holder within thirty (30) days
following the Conversion Date.
(c) Determination of Fair Market Value. For purposes of this
Section 9.2, "fair market value" of a share of Common Stock as of a particular
date (the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded or quoted on the
Nasdaq Global Market, the Nasdaq Global Select Market, the Nasdaq Capital
Market, the New York Stock Exchange or the American Stock Exchange, then the
average of the closing sale prices of the Common Stock for the five (5) trading
days immediately prior to (but not including) the Determination Date;
(ii) If the Company's Common Stock is not traded or quoted on
the Nasdaq Global Market, the Nasdaq Global Select Market, the Nasdaq Capital
Market, the New York Stock Exchange or the American Stock Exchange, but is
traded on the OTC Bulletin Board or in the over-the-counter market or Pink
Sheets, then the average of the closing bid and ask prices reported for the five
(5) trading days immediately prior to (but not including) the Determination
Date; and
(iii) If there is no public market for the Common Stock, then
fair market value shall be determined by the Company's Board of Directors in
good faith.
If closing prices or closing bid prices are no longer reported by a
securities exchange or other trading system, the closing price or closing bid
price shall be that which is reported by such securities exchange or other
trading system at 4:00 p.m. New York City time on the applicable trading day.
10. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and Rho.
11. Notices. Any notice, request, communication or other document required
or permitted to be given or delivered to the holder hereof or the Company shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant with a copy to the Chief Financial Officer at the same address and with
another copy to Dechert LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇; tel. (▇▇▇) ▇▇▇-▇▇▇▇, fax (▇▇▇) ▇▇▇-▇▇▇▇; Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or
at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
12. Transfers. The holder acknowledges that this Warrant and the Warrant
Shares have not been registered under the Securities Act or applicable state
securities laws and agrees that the Warrant and the Warrant Shares may not be
transferred other than (i) pursuant to an effective registration statement under
the Securities Act, (ii) pursuant to an exemption form, or in
32
a transaction not subject to, the registration requirements of the Securities
Act and in accordance with applicable state securities laws or blue sky laws, as
evidenced by a legal opinion of counsel reasonably satisfactory to the Company
and its transfer agent, or (iii) in accordance with Rule 144 under the
Securities Act, in which case the Company is entitled to require an opinion of
counsel reasonably satisfactory to it to the effect that such securities can be
sold or transferred pursuant to Rule 144. Upon surrender of this Warrant to the
Company, together with the assignment hereof properly endorsed, for transfer of
this Warrant as an entirety by the holder, the Company shall issue a new warrant
of the same denomination to the assignee. Upon surrender of this Warrant to the
Company, together with the assignment hereof properly endorsed, by the holder
for transfer with respect to a portion of the Warrant Shares purchasable
hereunder, the Company shall issue a new warrant to the assignee, in such
denomination as shall be requested by the holder hereof, and shall issue to such
holder a new warrant covering the number of Warrant Shares in respect of which
this Warrant shall not have been transferred. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company
and with its transfer agent, without the requirement of a legal opinion, except
to the extent that the transfer agent requests a legal opinion, any transfer of
the Warrants and the Warrant Shares by the holder to any of its affiliates (as
defined in Rule 405 under the Securities Act), provided that the transferee
certifies to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act and provided that such affiliate does not
request any removal of any existing legends on any certificate evidencing the
Warrants or the Warrant Shares.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger or consolidation and all of the
obligations of the Company relating to the Warrant Shares issuable upon the
exercise or conversion of this Warrant shall survive the exercise, conversion
and termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof.
14. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
16. Governing Law; Jurisdiction; Jury Trial. This Warrant shall be
governed by and construed in accordance with, the internal laws of the State of
Delaware, without giving effect to
33
the principles of conflicts of law (whether of the State of Delaware or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
17. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
18. No Impairment of Rights. The Company will not, by amendment of its
certificate of incorporation or through any other means, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
19. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
20. Entire Agreements. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
34
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its corporate name by its duly authorized officer and to be dated as of the Date
of Grant set forth on the first page to this Warrant.
BLUEFLY, INC.
By:
--------------------------
Name:
Title: Chief Financial Officer
Address: Bluefly, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
[Signature page to Warrant]
EXHIBIT A TO WARRANT
NOTICE OF EXERCISE
TO: BLUEFLY, INC. (the "Company")
1. The undersigned hereby:
[_] elects to purchase ___ shares of Common Stock of the Company pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full, or
[_] [elects to exercise its net issuance rights pursuant to Section 9.2 of
the attached Warrant with respect to ___ shares of Common Stock].
2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified
below:
--------------------------------
(Name)
--------------------------------
--------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares, all except as in compliance with applicable securities laws.
--------------------------------
(Signature)
--------------------------------
(Date)
37
