UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 13D
(Amendment No. 3)
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Under the Securities Exchange Act of 1934
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Bluefly, Inc.
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(Name of Issuer)
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Common Stock, par value $.01 per share
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(Title of Class of Securities)
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096227301
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(CUSIP Number)
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Prentice Capital Management, LP
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Mathew B. Hoffman, Esq.
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33 Benedict Place, 2nd Floor
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Lowenstein Sandler PC
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Greenwich, CT 06830
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1251 Avenue of the Americas
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(212) 756-8040
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New York, New York 10020
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Attention: Michael Zimmerman
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(212) 262-6700
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(Name, Address and Telephone Number of Person
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Authorized to Receive Notices and Communications)
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August 13, 2012
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(Date of Event which Requires Filing of this Statement)
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1.
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Names of Reporting Persons.
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I.R.S. Identification Nos. of above persons (entities only):
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Prentice Capital Management, LP
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2.
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Check the Appropriate Box if a Member of a Group (See Instructions):
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(a) o
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(b) x
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions): AF
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5.
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Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
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6.
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Citizenship or Place of Organization: Delaware
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7.
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Sole Voting Power: |
0
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Number of
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Shares Beneficially
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8.
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Shared Voting Power: |
3,848,148
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Owned by
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Each Reporting
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9.
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Sole Dispositive Power: |
0
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Person With
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10.
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Shared Dispositive Power: |
3,848,148
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person: 3,848,148
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12.
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Check if the Aggregate Amount in Row (11) Excludes Certain Shares
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(See Instructions): o
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13.
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Percent of Class Represented by Amount in Row (11): 13.25%
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14.
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Type of Reporting Person (See Instructions): PN
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1.
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Names of Reporting Persons.
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I.R.S. Identification Nos. of above persons (entities only):
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Michael Zimmerman
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2.
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Check the Appropriate Box if a Member of a Group (See Instructions):
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(a) o
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(b) x
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions): AF
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5.
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Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
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6.
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Citizenship or Place of Organization: United States
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7.
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Sole Voting Power: |
0
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Number of
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Shares Beneficially
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8.
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Shared Voting Power: |
3,848,148
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Owned by
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Each Reporting
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9.
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Sole Dispositive Power: |
0
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Person With
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10.
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Shared Dispositive Power: |
3,848,148
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person: 3,848,148
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12.
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Check if the Aggregate Amount in Row (11) Excludes Certain Shares
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(See Instructions): o
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13.
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Percent of Class Represented by Amount in Row (11): 13.25%
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14.
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Type of Reporting Person (See Instructions): IN
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Item 6.
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Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Company.
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PRENTICE CAPITAL MANAGEMENT, LP
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By: /s/ Michael Zimmerman
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Name: Michael Zimmerman
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Title: Investment Manager
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/s/ Michael Zimmerman | ||
Michael Zimmerman
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a.
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Subordination of Junior Debt to Senior Debt. Unless and until this Agreement is terminated by written notice from the Senior Creditor and all Senior Debt is Paid in Full, each Junior Creditor hereby agrees with the Senior Creditor that the Junior Debt is and shall be subject and subordinate to the Senior Debt, whether now existing or hereafter arising. Each holder of Senior Debt, whether such Senior Debt is now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the provisions contained in this Agreement. Notwithstanding the terms of the Junior Loan Documents, each of the
Borrowers hereby agrees that it will not make, and each Junior Creditor hereby agrees that it will not accept, any Distribution with respect to the Junior Debt until the Senior Debt has been Paid in Full; provided, however, that in the case of Rho only, the Junior Debt owed to Rho may be converted into Equity Interests in Bluefly at any time and from time to time in accordance with the terms of the Junior Loan Documents; and provided further, however, that so long as the Payment Conditions have been satisfied, and subject to the terms of this Agreement, the Borrowers may pay, and the Junior Creditors may accept, Permitted Distributions. If any Distribution on account of the Junior Debt that is not permitted to be made by the Borrowers or accepted
by the Junior Creditors under this Agreement is made and received by any Junior Creditor, such Distribution shall not be commingled with any of the assets of such Junior Creditor, shall be held in trust by such Junior Creditor for the benefit of the Senior Creditor and shall be promptly paid over to the Senior Creditor for application to the payment of the Senior Debt then remaining unpaid until all Senior Debt has been Paid in Full.
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b.
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Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release Liens.
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i.
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Until the Senior Debt has been Paid in Full, each Junior Creditor’s security interest in and Lien on the Collateral to secure the Junior Debt shall be and hereby are subordinate for all purposes and in all respects to the Senior Creditor’s security interests in and Liens on the Collateral to secure the Senior Debt, regardless of the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien. The Lien priorities set forth in the immediately preceding sentence shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement,
replacement or refinancing of any of the Senior Debt or the Junior Debt, by any failure to perfect the Senior Creditor’s security interest in the Collateral, the subordination of the Senior Creditor’s Lien on the Collateral, the avoidance or invalidation of the Senior Creditor’s Lien or by any other action or inaction which the Senior Creditor may take or fail to take in respect of the Collateral.
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ii.
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Each of the Senior Creditor and each Junior Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral. This Agreement is intended solely to govern the respective Lien priorities as between the Senior Creditor and the Junior Creditors and shall not impose on the Senior Creditor or any Junior Creditor any obligations in respect of the disposition of proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or other governmental authority or any applicable law. Each Junior Creditor agrees that it will not at any time contest the
validity, perfection, priority or enforceability of the Senior Debt, the Senior Loan Documents, or the liens and security interests of the Senior Creditor in the Collateral securing the Senior Debt.
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iii.
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Notwithstanding anything to the contrary contained in any agreement between any Junior Creditor and any Borrower, until the Senior Debt has been Paid in Full, only the Senior Creditor shall have the right to restrict or permit, or approve or disapprove, the sale, transfer, release or other disposition of the Collateral or take any action with respect to the Collateral without any consultation with or the consent of any Junior Creditor. In the event that the Senior Creditor releases or agrees to release any of its Liens or security interests in any portion of the Collateral in connection with the sale or other disposition thereof or any of the Collateral is sold or retained pursuant to a foreclosure or similar action,
each Junior Creditor shall promptly consent to such sale or other disposition and promptly execute and deliver to the Senior Creditor such consent to such sale other disposition, termination statements and releases as the Senior Creditor shall reasonably request to effect the release of the liens and security interests of such Junior Creditor in such Collateral. In the event of any sale, transfer, or other disposition (including a casualty loss or taking through eminent domain) of the Collateral, the proceeds resulting therefrom (including insurance proceeds) shall be applied in accordance with the terms of the Senior Loan Documents until such time as the Senior Debt has been Paid in Full.
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a.
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Modifications to Senior Loan Documents. The Senior Creditor may at any time and from time to time without the consent of or notice to any Junior Creditor, without incurring liability to any Junior Creditor and without impairing or releasing the obligations of any Junior Creditor under this Agreement, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the Senior Debt (including any increase in the amount thereof), or amend in any manner any Senior Loan Document.
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b.
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Modifications to Junior Loan Documents. Until the Senior Debt has been Paid in Full, and notwithstanding anything to the contrary contained in the Junior Loan Documents, the Borrowers and the Junior Creditors shall not, without the prior written consent of the Senior Creditor, agree to any amendment, modification, or supplement to the Junior Loan Documents if such amendment, modification or supplement would add or change any terms in a manner materially adverse to the Borrowers or the Senior Creditor (it being understood and agreed that the addition of any Junior Event of Default not existing on the date hereof would be materially adverse to the Borrowers and the
Senior Creditor), or shorten the final maturity or require any payment to be made sooner than originally scheduled or increase the interest rate applicable thereto.
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a.
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Marshaling. Each Junior Creditor hereby waives any rights it may have under applicable law to assert the doctrine of marshaling or to otherwise require the Senior Creditor to marshal any property of the Borrowers for the benefit of such Junior Creditor.
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b.
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Rights Relating to Senior Creditor’s Actions with Respect to the Collateral. Each Junior Creditor hereby waives, to the extent permitted by applicable law, any rights which it may have to enjoin or otherwise obtain a judicial or administrative order preventing the Senior Creditor from taking, or refraining from taking, any action with respect to all or any part of the Collateral. Without limitation of the foregoing, each Junior Creditor hereby agrees (a) that it has no right to direct or object to the manner in which the Senior Creditor applies the proceeds of the Collateral resulting from the exercise by the Senior Creditor of rights and
remedies under the Senior Loan Documents and (b) that the Senior Creditor has not assumed any obligation to act as the agent for such Junior Creditor with respect to the Collateral. The Senior Creditor shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral until the Senior Debt has been Paid in Full. In exercising rights and remedies with respect to the Collateral, the Senior Creditor may enforce the provisions of the Senior Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole business judgment. Such exercise and enforcement shall include, without limitation, the rights to sell or otherwise dispose of Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender
under the Uniform Commercial Code of any applicable jurisdiction. In conducting any public or private sale under the UCC, the Senior Creditor shall give each Junior Creditor such notice of such sale as may be required by the applicable UCC; provided, however, that 10 days’ notice shall be deemed to be commercially reasonable notice.
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c.
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Preservation of Rights. The Senior Creditor shall have no duty to protect or preserve any rights pertaining to any of the Collateral in its possession and the Senior Creditor shall not have any liability to any Junior Creditor for any claims and liabilities at any time arising with respect to the Collateral in its possession.
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d.
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Collateral Bailee. In the event that possession or control of any Collateral is required under applicable law to perfect a lien therein, then each of the Senior Creditor and each Junior Creditor agrees that it shall hold or control any such Collateral in its possession or control as collateral bailee for the other.
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a.
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This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective before, during and after the commencement of an Insolvency Proceeding. All references in this Agreement to any Borrower shall include such Person as a debtor-in-possession and any receiver or trustee for such Person in any Insolvency Proceeding.
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b.
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In the event of any Insolvency Proceeding involving any Borrower:
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i.
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All Senior Debt shall first be Paid in Full and all commitments to lend under the Senior Loan Documents shall be terminated before any Distribution, whether in cash, securities or other property, shall be made to any Junior Creditor on account of any Junior Debt.
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ii.
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Any Distribution, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Junior Debt shall be delivered to the Senior Creditor, and applied in accordance with the terms of the Senior Loan Documents. Each Junior Creditor irrevocably authorizes, empowers, and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to the Senior Creditor as set forth above. Each Junior Creditor also irrevocably authorizes and empowers the Senior Creditor, in the name of such Junior Creditor, to demand, sue for, collect and receive any and all
such Distributions.
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iii.
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Each Junior Creditor agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection or priority of any portion of the Senior Debt or any Liens and security interests securing any portion of the Senior Debt.
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iv.
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Each Junior Creditor agrees that the Senior Creditor may consent to the use of cash collateral or provide debtor-in-possession financing to the Borrowers on such terms and conditions and in such amounts as the Senior Creditor, in its sole discretion, may decide and, in connection therewith, the Borrowers may grant to the Senior Creditor liens and security interests upon all of the property of the Borrowers, which liens and security interests (i) shall secure payment of all Senior Debt owing to the Senior Creditor (whether such Senior Debt arose prior to the commencement of any Insolvency Proceeding or at any time thereafter) and all other financing provided by the Senior Creditor during such Insolvency Proceeding and (ii) shall
be superior in priority to the Liens in favor of any Junior Creditor on the property of the Borrowers. Each Junior Creditor agrees that it will not object to or oppose any such cash collateral usage or debtor-in-possession financing or any sale or other disposition of any property securing all of any part of the Senior Debt free and clear of security interests, liens, or other claims of any Junior Creditor under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code, if the Senior Creditor has consented to such sale or disposition. Each Junior Creditor agrees not to assert any right it may have to “adequate protection” of such Junior Creditor’s interest in any Collateral in any Proceeding and agrees that it will not seek to have the automatic stay lifted with respect to any Collateral without the prior written consent of the Senior Creditor;
provided that, the Senior Creditor will not object to any request by any Junior Creditor for adequate protection replacement liens on all pre-petition and post-petition property of the Borrowers upon which the Senior Creditor is also granted adequate protection replacement liens, with such liens in favor of such Junior Creditor being subject in all respects to this Agreement; provided further that other than such replacement liens no Junior Creditor will seek any other form of adequate protection. Each Junior Creditor waives any claim it may now or hereafter have arising out of the Senior Creditor’s election, in any Insolvency Proceeding, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security
interest under Section 364 of the Bankruptcy Code by any Borrower, as debtor in possession.
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v.
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Each Junior Creditor agrees to execute, verify, deliver, and file any proofs of claim in respect of the Junior Debt reasonably requested by the Senior Creditor in connection with any such Insolvency Proceeding and hereby irrevocably authorizes the Senior Creditor to file such proofs of claim upon the failure of such Junior Creditor to do so prior to three (3) Business Days before the expiration of the time to file any such proof of claim; provided, however, that the Senior Creditor shall not be permitted to vote such claim and all voting rights with respect thereto shall be retained by the Junior
Creditors. Each of the Junior Creditors agrees not to vote for any plan of reorganization that does not provide for the prior payment in full of the Senior Debt or otherwise vote its claims or interests in any Insolvency Proceeding (including voting for, or supporting, confirmation of any plans of reorganization) in a manner that would be inconsistent with such Junior Creditor’s covenants and agreements contained herein. For the avoidance of doubt, the Senior Creditor shall have no affirmative obligation to file any such proof of claim on behalf of any Junior Creditor.
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vi.
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The Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of the Senior Creditor and the Junior Creditors even if all or part of the Senior Debt or the Liens or security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated, or disallowed in connection with any such Insolvency Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of Senior Debt or any representative of such holder.
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vii.
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Each of the Borrowers, the Senior Creditor and each Junior Creditor acknowledges and agrees with respect to the Collateral that (i) the grants of Liens on the Collateral pursuant to the Senior Loan Documents and the Junior Loan Documents constitute separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Collateral, the Senior Debt and the Junior Debt are fundamentally different from one another and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding of any Borrower. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is determined by a court of
competent jurisdiction that the claims of the Senior Creditor and the Junior Creditors in respect of any Collateral, constitute only one secured claim (rather than separate classes of senior and junior secured claims), then the Senior Creditor shall be entitled to receive, in addition to amounts distributed to it from, or in respect of, the Collateral in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, fees, costs and other charges, irrespective of whether a claim for such amounts is allowed or allowable in such liquidation or Insolvency Proceeding, before any Distribution from, or in respect of, any such Collateral is made in respect of the claims held by any Junior Creditor with each Junior Creditor hereby acknowledging and agreeing to turn over to the Senior Creditor amounts otherwise received or receivable by it to
the extent necessary to effectuate the intent of this sentence, regardless of whether such turnover has the effect of reducing the claim or recovery of such Junior Creditor.
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i.
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EACH OF THE JUNIOR CREDITORS AND EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS SITTING IN SUFFOLK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE JUNIOR CREDITORS AND EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE SENIOR CREDITOR MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY JUNIOR CREDITOR, THE BORROWERS OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY JURISDICTION.
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ii.
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EACH OF THE JUNIOR CREDITORS AND EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (I) OF THIS SECTION. EACH OF THE JUNIOR CREDITORS AND EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
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iii.
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Each of the Junior Creditors and each Borrower agrees that any action commenced by such Person asserting any claim or counterclaim arising under or in connection with this Agreement shall be brought solely in a court referred to in Paragraph (i) of this Section.
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p.
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Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT EACH OTHER PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
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q.
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Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or electronic mail, as follows:
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i.
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if to the Borrowers, to: Bluefly, Inc., Attention: Kara B. Jenny (Fax No. 786-513-3736, email: kara.jenny@bluefly.com), with a copy to Dechert LLP, Attention: Richard Goldberg (Fax No. 212-698-3599, email: richard.goldberg@dechert.com);
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ii.
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if to Prentice, to: Prentice Consumer Partners, L.P., 623 Fifth Avenue, 32nd Floor, New York, New York 10022, with a copy to Goodwin Procter LLP, Attention: Stephen M. Davis (Fax No. 212-355-3333, email: sdavis@goodwinprocter.com);
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iii.
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if to Rho, to: Rho Ventures VI, L.P., 152 West 57th Street, 23rd Floor, New York, New York 10022, with a copy to Goodwin Procter LLP, Attention: Stephen M. Davis (Fax No. 212-355-3333, email: sdavis@goodwinprocter.com); and
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iv.
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if to the Senior Creditor, to: Wells Fargo Bank, National Association Attention: Michele Ayou (Fax No. 617-523-4029, email: Michele.l.ayou@wellsfargo.com), with a copy to Riemer & Braunstein LLP, Attention: Marjorie S. Crider (Fax No. 617-880-3456, email: mcrider@riemerlaw.com);
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